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Rob Johnson is the Director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute and is a regular contributor to the Institute's blog NewDeal2.0. He serves on the UN Commission of Experts on Finance and International Monetary Reform.
Previously, Dr. Johnson was a Managing Director at Soros Fund Management where he managed a global currency, bond and equity portfolio specializing in emerging markets. He was also a Managing Director at the Bankers Trust Company. Dr. Johnson has served as Chief Economist of the US Senate Banking Committee under the leadership of Chairman William Proxmire and was Senior Economist of the US Senate Budget Committee under the leadership of Chairman Pete Domenici. Dr. Johnson was an Executive Producer of Taxi to the Dark Side, an Oscar Winning documentary produced and directed by Alex Gibney.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay. We're continuing our conversation with Rob Johnson. He's a senior fellow at the Roosevelt Institute. He's also the director of INET. Thanks for joining us again.ROB JOHNSON, SENIOR FELLOW, ROOSEVELT INSTITUTE: My pleasure.JAY: So for those of you that were--watched us during our last fundraising campaign, we have a new tagline we're rolling out this year, and the tagline is: don't roll over, take over. And we're going to do news for people who want to take over. And so what I want to ask you is that, you know, lobbying people need to lobby. But, you know, you go and you lobby on the Dodd-Frank finance bill and you try to lobby on regulation, which people are doing and should do, but you're up against--what is it?--40, 50 to 1 in terms of Wall Street lobbyists versus people trying to lobby for real reform. So lobbying needs to go on, but people also need to have clear idea of demands they want from the system, demands they want from the politicians, and things they should be doing themselves. So start with that. Like, what should--what kind of policy would make sense for ordinary people to be demanding?JOHNSON: I would say the first thing is public financing of elections. Second thing I would say is media companies are given their license by the government, and they should be forced to allocate some of their bandwidth, some of their time to public service announcements for political elections. What I'm essentially saying is it's very hard to stop the money flow into politics, but you should stop the need for a politician to have money in order to get elected, in which case the politician will represent people more and special interests and lobbyists that come with money less. You talked about the number of lobbyists on the Dodd-Frank bill. But the fact of the matter is it's the number of dollars, not the number of lobbyists that really matters. Yeah, you've got to pay to have 100 guys there lobbying on Dodd-Frank, and those law firms or billable hours are very expensive. But it's the hundreds of millions of dollars of campaign contributions, media programs, and lobbyists that those people can afford that the citizens cannot. And we've got to change the rules of the game.JAY: And, of course, the Supreme Court decision [incompr.]JOHNSON: Citizens United made it worse.JAY: Made it worse.JOHNSON: And significantly worse. And senators and congressmen are acutely aware somebody could drop in with a $40 million smear campaign six days before their election that they can't respond to under current rules. The old days, you had to stop 60 days before the election. When we look at reforming the American political process, many people are saying we need to get rid of the Electoral College. And I'm actually concerned about that, because if you get rid of the Electoral College, after Citizens United, you unleash national corporate money. If you say, okay, two states are the swing states, Florida and Ohio matter, there are enough benevolent wealthy people and grassroots money coming from the Internet that you can pick a major media fight in those two swing states. But if you have to fight in all 50 states, money'll drown you. So when I talk to people about the kind of things they would like to see, a more representative democracy makes sense to me. But a more representative national democracy by eliminating the Electoral College will strengthen the hand of money before it strengthens the hand of the population. What we need is to reform money in politics and then eliminate the Electoral College.JAY: President Obama--I don't know if he ever believed in it, 'cause he gave up on it relatively easily--fought for, advocated a public option in health care. And he said--in fact, when he was fighting for it, he said it's the only way to have real cost controls in health care and the only way to actually discipline that sector of the economy. So if it made sense for health care, why doesn't it make sense in finance, to start with?JOHNSON: It made sense in health care. It makes sense in finance. But the people who are making dollars and cents are the people who can stop you from doing those things. And he had to let go of the public option in order to pass legislation. And the question of banking and capital and so forth, a public option competing with the private option is something that Wall Street will heartily resist. As a matter of fact, the demonization of Freddie Mac and Fannie Mae is in part and parcel to stopping the public allocation of capital, 'cause you can't imagine a Congress going before the people now and saying, well, we lost $170 billion playing with this housing finance mechanism; let us have a capital infrastructure bank now. The public doesn't trust that. One of the ironies of the most recent period of the bank bailouts is that the markets made a mess: intervention in Wall Street, manipulation of regulators, manipulation of legislation, and manipulation of Congress led to a lax, unenforced financial system that blew itself up. Now everybody blames the government, and they want less government, which probably means you get more of that willy-nilly out-of-control financial system.JAY: Well, that's a really important point, because at the really sharpest points of the crisis, there was lots of talk about possible nationalizations and possible role of a public-interest type of banking.JOHNSON: I think it's a bit surprising that the American people cannot do what I call comparative economic systems. Everybody says, oh, the Chinese are kicking our butt. And the Chinese are building infrastructure, doing--increasing R&D, investing in education. And what we're doing is saying, we have a municipal crisis, 'cause Wall Street blew up the economy. We've tipped over. And so what we have to do is cut teachers' pensions. Well, everybody says, oh, look at teacher pensions; they're getting too much. Well, if you want to invigorate the next generation, education, human capital, and inspire productivity here in the 48 states of the United States, making teachers less secure and lower-paid is contrary to that objective. And most Wall Street guys talk about education, but they act like what you can do is reduce the price of teachers and probably increase the income of investment bankers and somehow produce better education. That's kind of silly.JAY: So what's the real logic here, then, for people that are pushing for these kinds of cuts? It's not like they're dumb. They know the repercussions. They know this could lead to even longer recession.JOHNSON: I think the most pernicious thing that's happening in America right now is that you see large financial institutions and investment funds all putting together what I will call infrastructure funds. And what they basically want to do is, with campaign contributions, go out to these state and local governments in crisis. Probably the first act is like Greece. They get them to paint some crazy derivative that hides things until after that mayor or governor's election. Then, when they get done with that, they want privatizations, and privatizations not done with ethical, wide open auctions with the highest bidder, but a handful of oligopoly guys bidding, maybe some campaign contributions, selling the private assets at $0.20 on the dollar.JAY: Russian style.JOHNSON: And then they give them these monopolies, which they set up, and then they charge the American people tooth and nail. And these are what you might call preventable crises. But when financiers can make money because they see a crisis coming and they can prepare for it, they can set up a fund, they can play games with politicians and fundraisers, they can buy privatizations at $0.20 on the dollar, they don't want to preserve the services for the people. They want to make more money.JAY: This issue of privatization is perhaps even the biggest piece of this agenda, isn't it? Like, when you look at the Greek situation, it's the picking the bones of the Greek economy and the privatization that's the real fruit for them of all of this. They know the debt's a screwup. They're going to have to do--.JOHNSON: Yup. Andrew Mellon wasn't stupid. He had ideas about liquidation, liquidation, liquidation, 'cause he knew how to make money from buying assets in distress. And there are an awful lot of people with money now--excuse me. There are very few people that have an awful lot of money right now who have what you might call the incentive to grind everything down and buy everything on the cheap.JAY: So pick the bones of the American public economy.JOHNSON: Right, and not tolerate much inflation, because that erodes the wealth that they already [incompr.]JAY: So one thing people watching should be doing is watching for the types and the extent of privatization in their states.JOHNSON: Privatization can be a good thing. I mean, it's not, like, always and everywhere an evil. And there are times when the private sector can provide services much more efficiently than the public sector. But when you do the privatization, you should get for the public the value of the assets. If you look at Russia, what you might call the state, the people, the former Soviet Republic's population, owned all of those natural resources. It wasn't like all the guys who became billionaires in Russia invented great things, cured cancer, did what Steve Jobs did, or whatever. These guys just worked the political system and created windfall oligarch billions. And in America, I'm afraid, we've kind of learned the lesson of what they did. It's a bad example, but it's an attractive one to aggressive people.JAY: If you're sitting on enough capital.JOHNSON: Yeah.JAY: Thanks for joining us.JOHNSON: My pleasure.JAY: And thank you for joining us on The Real News Network.
End of Transcript
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