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Ferguson Pt3: No change on finance side is due to the fact that US has a money-driven political system

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PAUL JAY: Welcome back to The Real News Network. We’re in Boston, Massachusetts, with Tom Ferguson. He teaches at the University of Mass. in Boston. Thanks for joining us again, Tom. So in the first few segments of the interview we essentially came down to the issue of bank regulation and what’s happening in the whole finance sector. And the crash of the bubble in the finance sector gave rise to all kind—a chorus of “It’s time for regulation.” It looks like not much is happening there. The stimulus, as you were saying, is not nearly big enough. The health-care bill is more or less being weakened, the public option. Like, all the various things Obama planned, but perhaps most importantly on the finance sector side, nothing much is changing. Why?

THOMAS FERGUSON: Well, I’m afraid it’s the love that dare not speak its name, that is to say, money in American politics. I mean, ironically, just as the Supreme Court appears on the verge of ruling out all restrictions on corporations spending in politics, even with those restrictions these guys have got enough to—they’ve put up enough cash directly in campaigns, but also in the enormous amounts of what an unsympathetic observer like myself would regard as bribes, in the form of speeches and things like that for White House officials. Now [inaudible] in the White House they’re presumably not still taking $100,000 for speeches from Wall Street firms, but just about everybody was before they went into the White House. What’s the matter? I mean, why isn’t it obvious that we have a money-driven political system?

JAY: Well, talk specifically about Obama, ’cause Obama’s certainly in the election campaign the last half was—.

FERGUSON: Now, here on this one I can claim to be free of sin. That is to say, I said from the beginning that the Obama candidacy was floated by the financial industry most of all.

JAY: So what’s the evidence of that?

FERGUSON: Well, I do my own tabulations on money, and I did put out this little thing back in March 2008. That’s well before the primaries, you know, before he was actually sort of confirmed as the nominee, though it was pretty well over by then. My sample of large investors showed he was running dead even with Hillary Clinton, which was all through 2007 and in 2008. And then he broadened out later.

JAY: Ran “dead even” you mean in terms of the amount of money raised on Wall Street.

FERGUSON: No, I mean in terms of the number of people from America’s richest—the richest people and corporations in the United States, if you just count them all evenly, they were just about dead even in terms of numbers, contributors. That’s remarkable given that, you know, Clinton had been in American politics at a very high level for a decade or more. I mean, it’s really quite amazing. And, I mean, it’s now no secret. I’m not—I mean, at the time it kind of was a secret. I mean, certainly nobody talked about it in the US press. But, I mean, now we all hear that Robert Rubin and his proteges have a huge hold on the Obama administration. It’s all true. We hear a little less—in fact, we don’t hear much at all, not nearly enough, about the Financial Services Committee, Barney Frank and company, or about the Senate Banking Committee. These two are heavy pockets of cash. You know, I mean, Frank told The Boston Globe just a week or two ago with a straight face that he believed he was getting all this money, ’cause his donations are way up, because he was charming. Looks to me like he got it ’cause they were in effect gutting the derivatives bill in that committee. That would be my guess.

JAY: Is there any reason to see that this administration is any more beholden to Wall Street than the previous or any other—I mean, is this, like, just par for the course for American politics? Or is there something specific going on?

FERGUSON: Well, it’s all worse in the last 30 years in the sense—strictly from the financial standpoint. Finance now [inaudible] so enormously in, say, the per-share profits in the whole economy, and about 2005, 2006 just about half or more of all corporate profits were sitting in finance. That’s pretty crazy. That’s bigger. I mean, and so, yeah, they’re likely to have a particular hold there. I would say this, though. If you look at the—sort of compare the finance [inaudible] Democrats and Republicans, which I’ve actually done for now a couple of decades, typically the finance role in the financing of the party as a proportion of all the other folks involved is often higher, at least among the largest investors in the party. In that sense, it’s—I mean, in the Republican Party, you know, you have big oil, big mining, big nearly everybody. In the Democrats, you typically have a smaller bloc. I mean, the finance folks, technology, a lot of capital-intensive industries of various sorts. However impressed you are with the Democratic money, the Republican stream is always larger. It’s like an Amazon against a Mississippi.

JAY: Well, is there any reason that the Republicans—certainly one wouldn’t expect any more regulation of the finance sector then you’d get out of the Democrats. Is the Obama administration going to give us somewhat more regulation than one would see out of the Republicans?

FERGUSON: I don’t see any sign of it thus far.

JAY: So it really just doesn’t make any difference.

FERGUSON: They haven’t asked for anything substantive. They got even less out of financial services as the bill goes through the Senate. There’s not much—at the moment, not much promise of that happening. No, I think the real service the Obama administration has done for finance that the Republicans couldn’t do is to sort of cool down public sentiment, in the sense that everybody still walks around with this quite rather obsolete model of the Democrats are the party of the people. I mean, I see this even in well-known economist’s writings. But the Democrats are the party of people and the Republicans are the party of Wall Street. Well, there’s nothing better than if the party of Wall Street in fact is the party of the people at the sort of popular understanding, and then they just chill everybody out. I think nobody else could do that. And the Obama administration, you know, you can actually see them occasionally telling unions and progressive spokespersons that, oh, well, you’ve got to be patient, it’s very difficult, blah blah blah blah.

JAY: And most of the unions believe it. Seem to.

FERGUSON: One might well wonder how foolish many union leaders really are. I don’t—.

JAY: Well, there’s a great feeling—I’ve talked to a lot of them—there’s a great feeling he’s still our guy, he’s doing his best. And there’s truth to it, is there not? I mean, it’s very hard to pass anything in the Senate.

FERGUSON: Well, it depends what you mean. Everything depends on the frame of reference. Compared to what? You know, if the choice is, you know, whichever of the many serial adulterers there are in the Republican Party competing for the presidency or something, absolutely for sure. You know. Sure, Obama’s got to be their guy. On the other hand, if you actually want something done about financial regulation, if you’d like to see some reasonable labor regulations, if you’d actually indeed like to see forms of government intervention that would go down to the level of the ordinary person, you know, with mortgage relief and serious jobs programs, he’s not your guy.

JAY: Okay. In the next segment of our interview, let’s just talk about what kind of recovery is it, anyway, when we may be approaching something like 20 percent unemployment. Thanks for joining us, and join us again for the continuation of our interview with Tom Ferguson.

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Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.