Hacker News Reader

Comment by cawel | Hacker News Reader

I thought the formulation of the OWS's protests was both succinct and accurate:

The Anglo-Saxon model claimed that free markets would create prosperity; many voters feel instead that they got a series of debt-fuelled asset bubbles and an economy that was rigged in favour of a financial elite, who took all the proceeds in the good times and then left everybody else with no alternative other than to bail them out.

But it's painful to see The Economist recasting the problem along the lines of state interference (especially at the end of the article: Western governments have failed their citizens once) whereas the issue here is the co-optation of the political sphere by the financial sphere (the repeal of the Glass-Steagall Act under Clinton in 1993 being only one example).

View on HN

the repeal of the Glass-Steagall Act under Clinton in 1993 being only one example

The removal of a regulation is quite different from co-opting the government to do the industry's bidding. Certainly, there are plenty examples of business having undue influence in government. But likewise, there are examples of government having undue influence in business[1].

The one thing I've heard anyone in OWS suggest that I can get behind is a separation of business and state.

Too often, the regulatory machine helps business (see Regulatory Capture[2]) -- and this cuts in many directions, like the governmental support of labor unions, as in the recent Boeing case. But it would still be a mistake to go to the other extreme and have the behemoth of government driving business.

It seems to me that the Economist is right, and getting the government to just get the heck out is the best solution. They shouldn't do anything to help or hinder[3] business.

[1] How often have we heard various content industries (movies, music, video games, comic books) promise to "self-regulate" lest government pass some threatened laws.

[2] http://en.wikipedia.org/wiki/Regulatory_capture

[3] short of ensuring that business is conducted fairly, e.g., protecting us from fraud, helping ensure disclosure, etc.

The removal of a regulation is quite different from co-opting the government to do the industry's bidding.

In 1993, the Clinton administration repealed the Glass-Steagall Act under pressure from Wall Street because Clinton wanted to secure Wall Street's financial support for his coming reelection. Wall Street money effectively contributed to shape the financial system in Wall Street's favor, that is, towards less financial regulation.

With this perspective, I see the removal of the Glass-Steagall Act regulation as an example of co-optation.

Minor correction, Glass-Steagall was repealed in 1999 by the Graham-Leech-Bliley Act. (It was originally signed into law in 1933, which might be where your 3 is coming from...).

http://en.wikipedia.org/wiki/Glass-Steagall_Act

But otherwise, yes Clinton signed it ostensibly for the reasons you mention (needed Wall St. campaign funds for Dems), but it was led by Sen. Phil Graham, poster boy for the revolving-door between Wall St. & Washington (and now on the board of UBS).

I stand corrected. 1999 it is. Thanks for caring about historical accuracy.

Reply on news.ycombinator.com