Yet the Supreme Court further strengthened U.S. oligarchs
April 4, 2014 12:00 AM
This past Sunday on “60 Minutes,” Michael Lewis, the Damon Runyon of modern Wall Street, looked into the camera and uttered the potent thesis of his latest book, “Flash Boys.” “The stock market,” he said, “is rigged.”
The tale he told was so appalling that it’s no wonder the book is already in the upper ozone of Amazon’s best-seller list. He described how fat-cat Wall Street high-frequency traders game the markets to give themselves a decisive split-second edge in making trades — thus making the rest of us into chumps. They essentially find out what you want to buy and — in the split second between your broker initiating the trade and the deal going through — they step in front of you in line, buy what you wanted, jack up the price and sell it straight back to you.
It’s called front-running and it’s illegal … unless you do it by exploiting inefficiencies in high-tech fiber optics and black box algorithms that regulators haven’t caught up with yet.
What makes the story even more horrifying is that it shouldn’t be the least bit surprising. We live in a new golden age of financial abuse in which old-fashioned scam artists have found new ways to get rich using technology and then protect their ill-gotten assets with a nearly untouchable status amid America’s political-financial oligarchy.
Greed is good, say the new (very old) rules, but Wall Street has learned a few things since the days of Michael Milken and Ivan Boesky: Spread a few crumbs in front of the right members of your co-dependents in the political establishment and you’ll receive your Washington, D.C.-approved get-out-of-jail-free card.
Just ponder the recent glorious past of our financial history. The financial community persuades Washington to get off its back by posting its top executives in top positions for decades. Then, when the same execs who said they would self-regulate blew up their banks with mortgage-backed security scams, they called up Washington and said, “Please bail us out or the system will collapse, crushing the little guy.”
Then they got bailed out, propping their banks back up but somehow forgetting to help the little guy who was left holding the bag for mortgages Wall Street actively sold to him, no matter his credit. Then when the cry came to regulate, Wall Street pushed back so hard that today, thanks to inadequate reforms, there are more too-big-to-fail banks than there were before the crisis that the too-big-to-fail banks caused.
Don’t stop there. We also now have simultaneously occurring major scandals involving corruption in global FOREX markets, corruption in setting LIBOR interbank interest rates and this front-runner scandal. Oh, and the fines (or as Wall Street likes to call them, the cost of doing business) associated with the last round of scandals were so meager that they barely bit into the hyper-profitability of these firms. In fact, the big Wall Street CEOs who oversaw the crisis have not only been kept on but also have gotten giant raises after the fines were imposed.
But it’s not just that the market is rigged. It’s our entire system that’s rigged.
If that was not clear to you before Wednesday, the Supreme Court may have done one useful thing with its otherwise atrocious decision to declare most campaign finance limits unconstitutional. They may have made the craven, corrosive role of money in politics even clearer.
One of the main working parts — let’s say, the crankshaft — of this rigged system is the utterly corrupt relationship between the check-writers of Wall Street (and Las Vegas, Silicon Valley and everywhere in between) and the check-takers of Washington, D.C.
The operating assumption that has driven the court since the perverse and profoundly destructive Citizens United decision of 2010 — that somehow “money is speech” and is thus protected by the First Amendment — is at work again in Wednesday’s McCutcheon ruling. The problem with this idea is that, in practice, it means that people with more money have louder voices (more free speech to exercise) than people with less money. It is contrary to the intent and spirit not only of our constitution but of the entire rationale behind any democracy, much less the one that used to hold itself up as an example to the world.
It’s going to get worse before it gets better. That buzzing you hear is the consultants and bundlers of the permanent money machines of the political parties and of the secret, not-yet-actually-legal-but-active-as-hell bankrollers of the likely 2016 presidential candidates responding to the giant judicial KA-CHING that emanated from within the marble walls of our highest court this week.
The next presidential election will inevitably become the most high-spending free-for-all in American electoral history. Forget Iowa. The only primary that matters now is who can court the most billionaires and centimillionaires who will choose which candidates can raise the $1.5 billion it will probably take to win the White House.
In a practical sense, what Chief Justice John Roberts and his right-wing gang did was make it far more likely that the winning candidates for each party will be the ones who play the best moneyball. And that probably means Hillary Clinton (wife of President Bill) and Jeb Bush (son of President George H.W. and brother of President George W.).
So take that, democracy fans. Here in this nation of 314 million people, our message to future generations may be that we think only two families are capable of producing our leaders.
As it happens, of all the possible GOP candidates, I prefer Jeb Bush — whom I have met a couple times, watched in action and found exceptionally impressive. And of all the candidates mentioned so far, Hillary Clinton is the one who would get my vote.
But it’s a bit ridiculous, right? Two families?
It’s not a reflection on the Bushes or the Clintons to say that the system is so skewed toward money and brand names, proven commodities and fund-raising networks, that we’ve actually brewed up our own aristocracy. Take that, Vladimir. Between our money class and our political class, you and your oligarchs have nothing on us.
David Rothkopf is CEO and editor of Foreign Policy.