Glass-Steagall, single-payer, and populist befuddlement

To students of politics, populism is a thing of demagogic beauty, mass psychological wonder, and even intense personal conflict; watching it in action is a bit like watching your loud, ignorant, drunken right-wing brother-in-law careen over a 200-foot bluff in your new Cadillac. Does one celebrate the gain, or grieve the concomitant loss? Cognitive dissonance abounds — all this fun at such a cost.

At any rate, populist politics is the purest form of democracy, which is another way of saying, what the founders feared most — and for good reason. Democratic populism feeds and satisfies the rawest and simplest emotions at the expense of sound and complex reasoning. Look around. If ever there was a year of populism unleashed to the mobocratic detriment of small-r republicanism, it's this horrifying yet vastly entertaining year of Donald Trump, Ted Cruz, Marco Rubio, or who or what have you on the right. While barking in the base's defense, has even one among the pack of GOP "presidential" candidates yapped one sensible idea?

For those of us who justifiably cast our eyes in amused horror at big-r Republican bedlam, however, let us also examine ourselves, our gaping emotions, our populist impulses. For this is the year of not only the right's psychological wonder, but of the left's.

Single-payer, for instance, is a splendid idea of immense appeal — with as much chance of becoming law as I have of winning the lottery. Check that: My chance of winning the lottery is far greater than single-payer ever winning approval in a Republican House or filibustering Senate. It just ain't gonna happen. Yet before a singular stump it does receive roars of approval, which, realist that I am, stumps the hell out of me.

Or, let's take the bogeyman of Glass-Steagall, always an eminently populist crowd-pleaser. None other than the progressive Paul Krugman has observed that "repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis [of 2008]." The Washington Post's superb Steven Pearlstein has observed that "Repeal of Glass-Steagall has become for the Democratic left what Fannie Mae and Freddie Mac are for the Republican right — a simple and facially plausible conspiracy theory" of virtually no merit. And today the Post's excellent Catherine Rampell observes that "Glass-Steagall had nothing to do with the 2008 financial crisis"; that Glass-Steagall is "a distraction from the reforms we still need"; that had Glass-Steagall's "repealed provisions … still been on the books, almost none of the institutions at the epicenter of the [2008] crisis would have been covered by it"; and, simply, that "Glass-Steagall, or the lack thereof, is a red herring."

And yet, continues Rampell, restoring Glass-Steagall has "become the left’s litmus test for whether a politician is 'tough' on Wall Street." Democratic pols who "advocate reviving Glass-Steagall" are "populist heroes," while those don't are deemed to be "in the pocket of Big Banks." Now of course it could be that some pols are, or will so be — in the pocket of big banks, that is — but such a capture has nothing to do with the almost trivial insignificance of restoring Glass-Steagall.

Nothing, though, receives a bigger, progressive-populist cheer than such a statutory restoration, excepting the absolutely impossible passage of single-payer health insurance.

I "get" idealism. I admire and applaud idealism. Progressive idealism whispers to our aspiring angels. Again, I get that. But to this realist, what amounts to outright progressive-populist idealistic delusions are merely the right's selfsame barricade to the ultimate ideal of politics: winning the freaking election.

 

Comments

[Peter G]

Yep. You omitted that other litmus test of progressive nobility and that is trade. The longstanding belief on the left that a real progressive would merely rewrite the rules of economics or cancel or simply rewrite painfully negotiated trade agreements to the advantage of American workers never seems to survive contact with reality. I'm sure Obama had every intention of getting rid of NAFTA as he promised before his first term. Then someone told him what the consequences would be and that ended that promise.

For me the biggest indicator of the disconnection from reality of a lot of the progressive movement was the grand campaign to decry the loss of a completely useless provision of Dodd-Frank which the president conceded in return for something of actual value. This particular regulation required that banks not pay bonuses to senior staff out of deposited funds. It was and is a stupid regulation. There was no chance of it ever coming into play. Ever. No chance. But it did require some absolutely purposeless bookkeeping that by its very definition constituted useless government red tape. It always pains me somewhat to admit when the Republicans are right about something but they were. The furor on the left at this presidential betrayal was rabid and also stupid. Ultimately the rage started to abate when people like Elizabeth Warren got around to explaining that this regulation was really just for show but it was the principal of the thing that really mattered. Which was bullshit. The president did the right thing.

Let me conclude by saying that this is not to me merely about winning elections. I would go so far as to say that populist ideas can help you win elections as they clearly did for Obama. But they often make for really crappy policy.

[Anne J]

I think Hillary is the only one that doesn't promise to do this or that on DAY ONE in office like so many candidates do. If people better understood how congress worked, maybe they would be more discerning when deciding which presidential candidate to vote for.

[cgordon]

Some people have attacked single payer and bank regulation as "socialism." You seem to be attacking it as "populism." I'm not sure I understand the difference.

Also, Anne J, Bernie Sanders says at every at every campaign stop and most interviews and on his web site "If you elect me President I can't do anything without the support of millions and millions of people."

[Tom Benjamin]

Single payer has zero chance. Not only is it impossible politically, it is very difficult to imagine how you get from the existing system to a single payer system. Who funds hospitals? How do you decide what doctors get paid? If you are not going to use money to ration care, who decides what procedures are funded and which procedures are not? How does Bernie control costs in his system? These are real questions in a single payer system - ask any Canadian - and Bernie doesn't have any answers. He doesn't even acknowledge that these are issues.

He doesn't have any answers on Wall Street either. It is very easy to decry income inequality, but it is very difficult to come up with practical solutions to the problem. Aside from increasing the minimum wage - there's new idea! - he has nothing.

It is always easy to find someone to blame - in Bernie's case it is the rich, in Trump's case it is immigrants - but actually governing is hard.

[Peter G]

If they are then I'm all for socialism. A couple of questions occur to me when analyzing a solution to a given problem. The main one being does it work? Does it solve the problem it is purported to address? The next question revolves around what consequences might be expected that aren't desirable. I give a pass on the unforeseeable but few things qualify for that.

Now restoring Glass Steagle will do little besides putting deposit taking institutions on shaky ground. That's why they modified it in the first place. No one was depositing because better returns were to be found just about anywhere else. They were dying on the vine the same as Savings and Loans before they were deregulated. Nor was that at the root of the meltdown.

Breaking up the banks likewise does nothing besides giving some people a sense of satisfaction. It does not make the banking sector a lick more stable. It just makes it more difficult to regulate. So why do something pointless just because it is popular? If you're going to regulate then you should do it properly and cover the whole financial sector which most emphatically includes the risk management or insurance sector where the real problems lie.

So does anybody know what a captive insurance company is? Essentially it is an insurance company that insures its owner. Doesn't that sound cozy? Companies lay off their risk to entities that they own. What could go wrong there? The three major domiciles for captive insurance firms are the Bahamas, the Grand Caymans and (surprise) the State of Vermont. Such locations are chosen for the liberality of their supervision (which means next to none). There are now nearly a thousand such firms registered in Vermont and the numbers are rising fast. I can't help but wonder why Bernie can't seem to ever see that the root of the financial collapse was poor risk management. And why the state from which he hails is leading the charge on getting around regulation of risk management. It's very curious.

[cgordon]

Tom and Peter, to a great extent I was asking for better arguments than "populism." Both of you have given them.

The question of political viability is relevant, but one has to consider the political viability of other candidate's agendas, and consider to what extent one is being realistic, or just settling.

Also, as both of you point out, the devil is in the details, and one has to consider to what extent the candidate would prove to be pragmatic about compromising on details in order to advance a larger goal.

And Peter, I agree with you that Bernie Sanders has too much of a tendency to blame individuals, rather than the financial system. But can the system ever be changed when it is dominated by individuals who profit greatly from it? And as an aside, the laws of Vermont are made by the State Legislature, of which Sanders is not a member.

I guess the final question I'd ask is whether health care, some 6 years after passage of the ACA, is really worth the focus. Might there be more pressing problems or better opportunities elsewhere? Climate change suggests itself as a problem, but is Bernie Sanders a good choice there or is there a better one?

Thanks for your comments.

[Tom Benjamin]

Health care is always a focus, I think, but the ACA built on the existing system. The challenge is now to improve the ACA. (Here in Canada, the challenge is to improve our single payer system.)

One of Obama's legacies is that he has addressed every single important issue (except, arguably, race). The Democratic nominee is going to have to defend his record and extend his accomplishments. That is exactly what Hillary says she intends to do. Climate change? Pick up where Obama has left off. Criminal justice? Obama won't be done with that. Immigration? Keep on pushing. Financial reform? Extend Dodd-Frank because it is the right idea.

Bernie is running against Obama. Obama's health care reform was not good enough, so let's chuck it and start over. His trade package is a trade package so let's junk it and ignore the geopolitical ramifications of Chinese hegemony in Asia. Dodd-Frank did not destroy Wall Street so we'd better waste our time doing irrelevant stuff around Glass Steagall. And so on.

If the Democratic standard bearer is going to run against the most successful President since FDR, Democrats have gone as crazy as the Republicans.

Well, maybe not quite that crazy, but crazy.