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Rob Johnson: Unregulated campaign financing and central bank policies have contributed to the decline of democratic institutions

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JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.

There’s been plenty in the news recently to suggest that democracy is eroding in the United States. A study recently published by Princeton University and Northwestern scholars and says that the general public has little to no influence on government policy. And with the Supreme Court’s McCutcheon decision, which will allow more money in politics, there’s even greater concern for the state of democracy.

But this problem goes beyond the United States, with right-wing parties due to make gains in European Parliament and a coup government with widespread support of other nations having come to power in Ukraine. So the question is: are we in a worldwide crisis of democracy?

Now joining us to discuss this is Robert Johnson. Robert is the executive director of the Institute for New Economic Thinking and a senior fellow and director of the Global Finance Project on Financial Reform for the Roosevelt Institute.

Thanks for joining us, Rob.

So, Rob, what role have the financial institutions like central banks played in problems of democratic governance?

ROB JOHNSON, DIRECTOR, ECONOMIC POLICY INITIATIVE, ROOSEVELT INSTITUTE: Well, to the extent that central banks are very responsive to financial institutions and, as we saw in the leadup to 2008, unreceptive to strong supervision and strong regulation, they–how you say [incompr.] problem erupted [incompr.] crisis.

On the other hand, they can’t play a stabilizing role. And as they sit in that intersection between markets and people, as a government institution they can fortify what you might call the democratic needs or structures that create a healthy society and a healthy financial market. We have a lot of work to do to put that back in place right now.

DESVARIEUX: Do you see a declining influence or ability of the nations to control multinational corporations?

JOHNSON: I think we’ve been in that decline for quite some time, maybe 40, 50 years. The mobility of financial capital, the mobility of technological capital, has pitted state against state, region against region, and nation against the nation. As we’ve seen with the large low cost labor based economies of China and India being integrated with the world economy, we’ve had a very, very profound change in inequality, what you might call a race to the bottom in labor rights and a race to the bottom in environmental conditions.

The power of capital has never been higher, and the power of citizens is such that governments are now agents of capital to keep what you might call the production locations in their district. And the historic role of the capital versus labor fight, the state being the referee, has changed form. As [incompr.] a famous scholar at [incompr.] University said, we now have a deterioration of representation, where the state works with capital to keep down the demands of labor in order to maintain capital in place, how we say, within the domain [incompr.]

DESVARIEUX: Alright. Let’s pivot and talk about Europe. Elections are coming up at the end of May, and several right-wing parties are expected to make some gains in the European Parliament. Do you see right-wing populist movements as playing a significant role in worsening this problem?

JOHNSON: I think right-wing populism is a symptom of the despair of the feeling that there is no direction home, as Bob Dylan used to say in his “Like a Rolling Stone” song. There’s no sense of order, there’s no sense of fairness, there’s no sense of rules, and what ones we have are rules made for the elite, for the powerful. You’re looking at places like Greece and Spain with 50 percent youth unemployment. These are not places where people are going to be attracted to anything other than a restoration of order and an alleviation of their fear. You see the same thing taking place in India right now. [incompr.] Modi is running on a kind of make-the-trains-run-on-time authoritarian agenda. And people are responsive to this ’cause they don’t see any coherence in the system.

DESVARIEUX: So what do you see as the solution, then?

JOHNSON: A solution? A solution, I believe, involves substantial reforms to diminish the power of money and diminish the power of large corporations in relation to individuals. Corporations are not people. Right now they have the rights of people but none of the responsibilities. They need to be taken out of the game. You need in the United States go back to the Fourteenth Amendment of the Constitution and say what matters is not personhood, what they call natural personhood. A corporation is an artificial persons. They should not be able to play a big role in democracy, and the money and wealth of individuals should not be able to play a role in either.

DESVARIEUX: But how would you actually do that, Rob? ‘Cause it seems like a pipe dream now, especially after this McCutcheon decision. How would one go about doing something like this?

JOHNSON: Well, it’s very, very hard. We’ve let things get way out of balance in this country over the last 40 years. And I would say it’s not easily feasible. But activity and outrage and protest, hopefully nonviolent protest, but nonetheless raising the temperature on the part of the body politic that this is what is not tolerable has to be a part–it has to be part of the equation.

DESVARIEUX: Alright. Rob Johnson, thank you so much for joining us.

JOHNSON: My pleasure.

DESVARIEUX: And as you know, you can follow us on Twitter @therealnews. Please send me questions or comments @Jessica_Reports.

Thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.

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Rob Johnson is President of the Institute for New Economic Thinking. He was previously Director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute and is a regular contributor to the Institute's blog NewDeal 2.0. He serves on the UN Commission of Experts on Finance and International Monetary Reform.

Dr. Johnson was also 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.