Politics and the Lords of Money
PAUL JAY: Welcome to The Real News Network. I’m Paul Jay. We’re at Bretton Woods, New Hampshire, at the INET Conference. This was the birthplace of the International Monetary Fund. And now joining us to discuss this conference and the economy and politics in America is Tom Ferguson. Tom’s–teaches at the University of Massachusetts in Boston, and a senior fellow at the Roosevelt Institute. Thanks for joining us.
THOMAS FERGUSON: Hi there.
JAY: So let me tell you how I imagine American politics after being an observer and being in DC and covering it.
FERGUSON: After being a Canadian.
JAY: Well, I’m an American too, and I got both hats on here.
FERGUSON: I understand.
JAY: So I imagine, watching The Tudors on television, where you see British aristocrats all vying for power to take, influence the king, to appoint the king, to take down the king, and I imagine America’s not so far from that, in that in America what you have is you have a stratum of a billionaires–some (maybe) multimillionaires get kind of close to this.
FERGUSON: It does have an uncomfortable resemblance to some of Shakespeare’s history plays. I agree with that.
JAY: And at least in England it was all kind of out in the open. Here’s the lords, and they’re the ones that own the land, and here’s the king. And everybody kind of–peasants are peasants, and the church plays its role, and everybody kind of knows this is a class society.
FERGUSON: I’m shocked. Do you think this could be true, Paul?
JAY: So, like, in America you’ve got these billionaires (read, the lords), but between them and the public you have politicians who are so dependent, most of them–not all, but most, so dependent–.
FERGUSON: Just about all of them need a very large amount of money to run for anything.
JAY: And as they say, who’s got the money? And if you have one dollar per vote, who gets to vote most?
FERGUSON: Maybe Michael Bloomberg could finance his own campaign, but even–you know, if he’s thinking about running, he’s not planning to finance the whole thing on his own.
JAY: Running for president, yeah.
JAY: So how realistic is that as a picture? Then, if it is, we don’t actually get to see that world of billionaires very often, except the odd movie that kind of pokes through it here and there. How does–what is this relationship?
FERGUSON: Well, you’ve got to remember the only time most scholars want to say anything about, you know, anybody–Rockefeller, Carnegie, Ford–is they want to thank them for a grant. That’s your first problem in American scholarship. The journalism story is, I regret to say, about the same. I mean, the average American journalist, I have to tell you, having met a lot of them, there are some really excellent journalists out there.
JAY: And just to be fair, let’s–to be completely transparent here, this conference at INET is funded by George Soros, and he’s–. And, like, everywhere you have activists [crosstalk] he’s also an activist.
FERGUSON: There are going to be exceptions. There–look–. Yeah. But, you know, fundamentally–. Yeah, but this is actually an important point. And it’s actually–here is where the billionaire story can be a little misleading. If you start adding up the sums of cash in politics, you will see very quickly that an enormous amount of it comes from corporations, and now formally from corporations, thanks to Citizens United. And just–I mean, I will guarantee you it’s true that–.
JAY: Very fast, Citizens United, for anyone who didn’t follow it or may not live in the US, Supreme Court decision that says now corporations are like individuals and they can more or less spend as much as they want on advertising–with certain limits, but not many.
FERGUSON: Yeah, yeah, but the key thing about Citizens United is you can just use direct corporate funds, you can just open the gate and start handing out the money, as long as it stays independent of anybody’s official campaign. In other words, you could do it on your own, but hey. Okay. The thing is is that there’s an enormous amount of corporate cash. And, yeah, the billionaires in some sense belong–you can range–. You know, I remember once talking to a Texas oil guy. This is a true story. This guy said to me, well, you know, I finally sold my refinery. I split it with Mobil. We each took $500 million. This was back in the ’70s, and that was a lot of money. And I thought to myself, oh, that’s kind of neat. Oh, he split his refinery with Mobil. Alright. Mobil is now part of Exxon. You know, just–that’s how the world has changed. Anyway. So–.
JAY: But you still have billionaires having dominant positions within the big corporations.
FERGUSON: Yeah, yeah, but here’s my point. You’ve got an enormous chunk of–there’s an awful lot of corporate cash out there not relatable to any individual billionaire. I mean, I actually can do a pretty good job of sorting this out. I have. And the truth is is that the corporate cash, if you start to get all the banks of America, for example, to start pouring cash in to say–just to make something up that sounds completely crazy, like block Elizabeth Warren from becoming a consumer advocate inside the new consumer protection agency inside the Federal Reserve, you know, just to–then you’re looking at a sort of, you know, tsunami of cash here. And a few billionaires against that can’t–I mean, those are not great odds. I’m not saying, you know, you can’t–I mean, you know, we all know David and Goliath.
JAY: You mean a few billionaires that don’t want to achieve the same ends the banks do, because most of the billionaires are probably on the same page the banks are.
FERGUSON: A lot, a lot. But you also see–like, let me guarantee you that there’s a lot of hedge funds, even as we speak, that are trying to be declared not too big to fail, and tell them do the banks, not us, it’s–I mean, I guarantee you that that, right this week [inaudible]
JAY: Let me just add one point, then. So you’ve got these individual billionaires who own stuff–they’re not just sitting on money. And they’ll own important positions in these big corporations.
JAY: And then you’ve got a managerial class that runs these corporations.
FERGUSON: It’s enormous, yes. The Business Roundtable is mostly not billionaires. They’re–I mean, the CEOs are mostly–they’re very rich. They’re not billionaires. They’re not on average–.
JAY: They’re certainly wannabes.
FERGUSON: That’s–the wannabe is one thing, and the actual-is is another. And–anyway, my point here is really, and the reason we care about this is, if you’re running a big business today, what the state does matter to you. It’s going to matter in taxes. But, I mean, look, just look at the financial crisis and just sort through, I mean, the disaster that hit in 2008. You just look at the way, say, the automobile industry was treated, say, from the financial industry, more specifically the big banks, alright, the big banks were total–were basically rescued. They were–I mean, the population of the United States just transferred large sums to them. Banks took that money. They’re–they basically didn’t lend it out. Instead, they paid themselves huge bonuses again. They’re almost back to, you know, I mean, they’ve done very well for themselves out of that. And now they’re turning around and saying, how dare you even think of regulating us. You know, how crazy is that? I mean–.
JAY: As opposed to the auto industry.
FERGUSON: The auto industry, you know, some of those folks actually went bust. Lots of people lost their–the CEOs were told to actually leave. Well, some of them got sold. And–or just in the case of, say, the pharmaceutical industry and the FDA or the Federal Trade Commission or the Consumer Product Safety Commission, the real one, not the thing that’s in the Fed for just financial stuff, there’s a lot of stuff in modern business where the state has to intersect with it. And so–or telecommunications regulation. I mean, the entire telecom sector spends an enormous amount of money. It’s–I wouldn’t write off, I wouldn’t–’cause there’s so many ways to hide political money. I mean, I actually have this little table of, you know, the spectrum of political money, and most of it is invisible to the average person [inaudible]
JAY: So what’s an example of how money’s hidden?
FERGUSON: Well, I mean, one very simple one is the number of people out there talking about public policy who are in fact on somebody’s payroll, either directly as consultants or indirectly through a donation to a think tank.
JAY: Who wind up on cable talk shows and–.
FERGUSON: Yeah, yeah. I mean, look, I–this is still so wonderful. I mean, there was a Brookings study before the Telecommunications Act of 1996, and there was a guy in there who wrote some essay saying, oh, no, if you deregulate cable TV, your rates are going to go down. You know. And I knew that was ridiculous at the time. And you show me a person whose rates have gone down since 1996. And–you know. But that kind of study, that stuff is worthless. But it’s–I mean, I have talked to representatives, and they will occasionally say, well, you know, I remember getting a call on the morning that they actually put the audit-the-Fed provision–and this is a true story. They called me up and they said, look, could you sign a small petition? I said, sure [inaudible] And I said, well, we just discovered that something–I think the number was 15, 15 economists had signed a position saying this was a terrible idea to audit the Fed, and then we’ve just discovered that I think it was about nine of them were Federal Reserve consults. And so we need some folks to just tell the caucus, you know, that they’re going to vote on this today, that this is not crazy. And I said it’s not going to make your hair fall out. Children will still be born normal with all their limbs. No, go ahead and audit the Fed. Nothing terrible will happen. And, you know, I–and they actually took it down that day [inaudible] it went over that day. I mean, Barney Frank made a pitch against it, and then Grayson from Florida made a pitch for it with that petition. I mean, I [inaudible]
JAY: [inaudible] combined with Ron Paul.
FERGUSON: Yes. There was–that was a sort of left-right coalition. Yeah, the libertarians were also part of it.
JAY: Well, the other big example of this is the health care debate, when first of all the White House was so afraid of the pharmaceutical industry, they made a kind of sweetheart deal right at the beginning not to [inaudible]
FERGUSON: Yeah. They told you they don’t have to bargain. The government won’t bargain the prices of pharmaceuticals down. How crazy is that?
JAY: But then they go to war and you can start to see all of a sudden there’s a mass movement against some health care reform, which makes no sense, given how badly people need health insurance.
FERGUSON: Well, yeah. I mean, there was a lot–that was something like–reminds me of the–what was that?–1813 Battle of the Nations outside Leipzig, where something like seven or nine kingdoms had armies. I mean, the health care thing, we could do a whole segment on that. I think that is actually quite worth taking apart. It was so big and so complex. And any number of these folks who were in there had enough money that would in normal times have actually just sufficed to deliver a majority in Congress for probably anything. The problem was that they were now heavily contesting among each other there. So the point to sort of grasp here is we’re not–it’s a mistake to portray American politics as what sort of Iliad or The Odyssey, where the gods (meaning some billionaires) looked down on the rest of us and just do their thing. Well, they’d like to help these mortals or that mortals. Far better to understand that the state systematically affects business, so businesses are systematically trying to affect the state. And an awful lot of the rhetoric on this stuff–. I mean, you know what the oldest trick in the book is as well as I do, which is, if you don’t like what your regulator is doing to you, you start calling it socialism. And immediately, you know, people snapped to attention. You know, in the long run we are all red. Sort of a paranoia hits. I mean, this stuff is really nuts. I mean, I remember–if I–the health care debate, I remember having an argument with a New York Times correspondent because a guy had done a very nice so-called event analysis of a vote in the Senate, one of the Senate committees on health care, and what it was was an unexpected result. I mean, you can say, how can this be unexpected? You’ve got to–I’m going stipulate it’s true, okay? That is, the health insurers had won the vote somewhat unexpectedly, and their stocks popped up within–actually within minutes of that and went up well above the market as a whole. And this guy sort of showed you this is what’s going on in here. And, you know, then you had all these folks who didn’t like the health bill screaming "state socialism" while the market as a whole is going way up [inaudible] middle of a big rally. And I said, guys–you know, I went to the Times guy, one of their financial folks, and I said, now, this is a really interesting story. This is as clear an evidence as you will ever find that we’re dealing with, in effect, redistribution inside business sectors. And their response to me was this is not news. You know, to–but, you know, I don’t understand how that’s not news but, you know, the US Chamber of Commerce just telling everybody this is socialism is news. You tell me that news judgment–you try to tell me how it’s rational.
JAY: Well, I guess that’s–goes back to who owns the media. Thanks for joining us, Tom. And thank you for joining us on The Real News Network.
End of Transcript
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