A hilarious video of a self-proclaimed Tea Party Congressman from Illinois yelling at his constituents during a campaign appearance made the rounds this week. Representative Joe Walsh (no relation to the talented rocker, whose best song is right here) makes himself ridiculous, though to his credit he seems to realize by the end of this two-minute video how badly he's lost his cool (the woman he's yelling at easily wins the fight with the simple power of a patient smile). Here's what he's saying:
CONGRESSMAN: I don't want government meddling in the marketplace. Yeah, they move from Goldman Sachs to the White House. I understand all that. But you've got to be consistent.
And it's not the private marketplace that's created this mess. What created this mess is your government, which has demanded for years that everybody be in a home, and we have made it as easy as possible for people to be in homes. All the marketplace does is respond to what the government does. The government sets the rules. Don't blame banks and don't blame the marketplace for the mess we're in right now. I am tired of hearing that crap.
WOMAN: Don't you think --
CONGRESSMAN: I am tired of hearing that crap.
WOMAN: -- exploiting the situation? Taking and doing out money to people they know couldn't afford --
CONGRESSMAN: They're are already mechanisms in place --
WOMAN: You don't have to scream at me, I can hear you.
CONGRESSMAN: This pisses me off. Too many people don't listen. There are already mechanisms in place to do that. Are they doing their job? No. But what do you want to do? You want to bombard them with more regulations, more government?
WOMAN: No, I want smart reform.
CONGRESSMAN: Government screwed this problem up. You know what you got? You got Dodd-Frank. You got Dodd-Frank now, that's tying everybody's hands. You want more reform, more regulation? That's what you got. Do you want more regulation? Is that what you want? Do you want Dodd-Frank?
Even though this foolish tantrum is funny enough to go viral, the tone of Rep. Walsh's tirade is sadly typical of the level of many public discussions about the US economy. Opinionated citizens on the left and right feel proud of their rage; we deliver our loud speeches as a cry from the heart. We're mad -- aren't you impressed? With the Tea Party movement and the Occupy Wall Street movement both in full swing, we now have loud protests on both the right and the left, and yet there's little indication that the better ideas of either protest movement are actually changing the way our government or banks operate. It's easy for concerned American citizens to feel bewildered and helpless amidst all the noise.
I proposed last weekend to begin a series of blog posts examining how intelligent and well-meaning protesters inspired by either the Tea Party or Occupy Wall Street might find common ground on their core principles and work together to promote meaningful change. We'll break this into four sections over several weeks: the economy, social issues, foreign policy and the environment. The financial disaster that followed the economic crash of 2007/2008 is often the primary topic in both movements, so let's start by talking about the economy.
This is a topic of monumental complexity, but we can't let this fact discourage us, because a unified protest platform might be the only way to rescue our public dialogue (as currently manifested in insipid television news, newspaper and radio coverage) on critical problems: if we protesters truly care about the US economy, we better start working together, because the lack of a coherent public voice has left our government dysfunctional. Currently, the single biggest barrier to common ground between Tea Party and Occupy protesters on the economy is the divided narrative over what went wrong when our banking system crashed between February 2007 and September 2008, depleting the savings and destroying the livelihoods of many hard-working Americans. Two separate narratives have emerged to explain what went wrong to cause this crash.
Historians have observed that different nations often develop vastly different narratives for past events (consider, for instance, the vast difference in the way Israelis and Palestinians describe the Six Day War, or the way English, French, Russian or German 19th Century writers portray Napoleon). What's amazing about the divided narrative between conservative and liberal Americans over the economic disaster of 2007/2008 is that this divide is sustained within a unified society. It is not foreigners but our own neighbors, co-workers and even family members who hold radically incongruous beliefs about what happened in our own country three years ago. We speak the same language, and yet we've developed vastly different stories.
The narrative behind the Tea Party protest, often reflected also by traditional conservative or Republican pundits and politicians, is that the economy crashed because the US government pushed a program of easy and cheap home ownership for lower middle class Americans, creating a mortgage bubble that crashed in 2007 when many of these home owners could not pay their mortgages. According to this narrative, the government's plan amounted to an insidious form of socialism, manipulating "funny money" to control the economy and subsidize the poor while profiting from the financial exploitation of everyone involved.
The narrative behind the Occupy Wall Street protests, often reflected also by traditional liberal or Democratic pundits and politicians, is that the economy crashed because the regulations that have kept our banking system honest since the Great Depression had been gradually removed in pursuit of unnatural levels of profit, allowing executives of companies like Chase, JP Morgan, Citibank, Wells Fargo, Wachovia, Goldman Sachs, Bank of America, AIG, Lehman Brothers and Merrill Lynch to become obscenely wealthy while disregarding the obvious risk their new products of unregulated finance -- hedge funds, credit default swaps, securitized mortgages -- presented to the American economy. According to this narrative, the fact that securitized mortgages from the housing bubble caused the 2007/2008 crash is nearly irrelevant; Wall Street had already become rotten with "too big to fail" schemes and scams by this time, and if the mortgage bubble hadn't taken the economy down, something else would have soon enough.
Who's right? The answer is simple: both narratives speak the truth. And both narratives converge when they describe what happened next: embarrassed Wall Street-fed Republicans and embarrassed Wall Street-fed Democrats, including both President Bush and President Obama, agreed to bail out the banks to prevent complete economic collapse. We were told that this was a necessary step, and it may have been, even though it outraged Americans of every political persuasion. So, if Tea Partiers and Occupiers can agree on our outrage about the bailout of 2008, why must we continue to sustain separate narratives about what led to the failure in the first place, and why is there so little clarity about what is needed to restore honesty and common sense to our economy?
In order for concerned Americans to take the first step towards a unified protest platform, we must all come to terms with the full narrative of what went wrong to cause the crash of 2007/2008. It's a double-guilt narrative: unregulated capitalism and big government both failed us. It's a sad fact that every bad financial decision made by the banks was enthusiastically supported by our Congress and our Presidents (and, let's not forget, by our "brilliant" and highly educated business journalists, pundits and economics professors too). The deregulation trend that began under the presidency of Ronald Reagan continued under George H. W. Bush, Bill Clinton and George W. Bush. Both Democrats and Republicans backed the activities of government mortgage associations like Fannie Mae and Freddie Mac. Every single major American politician in recent memory seemed to endorse the gung-ho economic optimism -- grow! grow! grow! -- of the Federal Reserve Board's celebrity chairman Alan Greenspan.
But the greatest confusion lying within our divided narratives involves the role of regulation in the US economy. Congressman Joe Walsh's tirade is not only remarkable for its obnoxious delivery but also for a logical fallacy at its core. Tea Partiers are correct to be angry about the government, but their argument becomes highly suspect when they begin throwing around the word "regulation". The government was a big part -- maybe the biggest part -- of the problem, but not because it was regulating too much. Fannie Mae and Freddie Mac were not regulating bodies. The bailout of 2008 was an obscene act of government arrogance and injustice -- but the bailout was not an act of regulation. It was, in fact, the erosion of regulations, like the revocation of the important Glass-Steagall Act in 1999, that allowed banks to become too big to fail, leading to the disaster that followed.
To put this in simple logical terms, the following two statements are true:
PREMISE 1. The federal government's activities in the mortgage market were a primary cause of the crash.
PREMISE 2. The federal government is responsible for regulating the financial marketplace.
However, these premises do not imply that:
CONCLUSION: Federal regulations were a primary cause of the crash.
This is an invalid and clearly false conclusion, and I challenge anyone to support Congressman Joe Walsh's strange tantrum by providing an example of how government regulation, rather than government deregulation, led to the crash of 2007/2008.
This is an absolutely critical point, and I wish I could meet with Representative Joe Walsh of Illinois and yell this back in his face (if I could get him to calm down long enough) to see if he can possibly formulate a counter-argument. I doubt he'd find much to say. There's plenty wrong with our government and our banking system, and these systems need to be radically changed. But attempts at sane regulation like the Dodd-Frank Bill are not part of the problem; they are weak (too weak) attempts at a solution.
Please let me know how you think this experiment in rational public dialogue is going so far. Of course, we can't cover everything we need to discuss regarding a unified protest platform for the US economy in a single blog post, so I'd like to pick this topic up again next weekend from a different angle.