Bernie and Hillary Both Wrong About Evil Bankers

Everybody hates bankers and Wall Street, and so politicians hate them too. Senator Bernie Sanders (I-VT) has made much of Hillary Clinton’s Wall Street connections. “I don’t know any progressive who has a super PAC and takes $15 million from Wall Street,” Sanders has said. Hillary accuses Bernie of “innuendo.”

But they both want you to believe that “greedy bankers” rather than stupid government policy cause the Crash of 2008. So we need Dodd-Frank to keep the bankers tame and obedient.

My thinking on greedy bankers diverged from the conventional wisdom many years ago when I read an article about the most important government program. It is not the armed forces, or even the Social Security pensions. The most important program is the government’s program to sell its debt. To do that it needs bankers. Think of banker Jay Cooke, who sold the bonds that paid for the Civil War. Now you know why politicians and bankers get on so well, despite the politicians pretending that they hate bankers and bankers pretending that there’s nobody here but us chickens. They need each other.

So of course Hillary goes speechifying to Goldman Sachs; of course Ted Cruz married a Goldman Sachs banker; of course Chelsea Clinton married a Goldman Sachs alumnus. You could say that they are all in the same business. My son-in-law tells me that Goldman encourages its bankers so marry into politics.

Of course, the bankers are just middlemen. Behind the bankers are the merchants. The merchants have always run on credit, and they know a lot about it. But credit is not enough. Businesses need a stable and predictable economic environment, and they need protection from pirates and plunderers. The politicians need credit to finance their political machines and to protect their regimes from foreign invaders. It’s a marriage made in heaven, with the matchmaking bankers in the middle. It’s just like Oklahoma: the CEO and the politician should be friends.

But nobody, particularly the left, is satisfied with a bunch of guys taking care of business. They want to see a vast Cruzian conspiracy for world domination instead of this happy marriage. Writes young leftist Fredrik deBoer:

A functioning, healthy left political movement would recognize the fundamental illegitimacy of the nation-state. It would see that structure as the product of capitalism and imperialism. It would recognize the nation-state as recently invented for the express purpose of enabling war.

(Dontcha just love that lefty-speak?)

The problem with deBoer’s statement is that it is half true, but completely misses the point.

Yes, the nation-state was invented for enabling war -- but out of desperation, not cunning. A monarch like Henry VIII desperately needed to disarm his nobles, create a national army, and fund it from national taxes and credit from the London merchants because otherwise England would have become a province of France or Spain.

On this view, capitalism and imperialism were not a cause of the nation-state but a consequence of the successful condominium between the nation-state monarch and the credit of the merchants. Once the nation-state project got started, with the merchants funding the monarch and the monarch protecting the merchants’ trade, what’s not to like? How about a blue-water navy to protect the merchants’ argosies as they sailed the oceans of the world? How could the merchants not call for a bit of muscle when the going got tough in North America, in India, in Africa, or in China? Hey, if Melissa Click does it…

The only trouble is that power is power, and it needs to be limited because otherwise the powerholders will abuse their power and foul the nest. You expect a politician like Hillary Clinton to romance the bankers: she needs the money. You expect the Googles to twist arms for a bit of net-neutrality in exchange for helping the Obama campaign with their Big Data. But someone has to tell them when to stop.

The nation-state plus capitalism, plus imperialism, plus bankers, plus CEOs is the most powerful thing ever. Why, it has increased per-capita income by 3,000 percent in 200 years. But it still needs to be housetrained.

That’s why I hate all this talk about “greedy bankers” and wailing about the power of Goldman Sachs. Instead, let’s get to work rebalancing the credit system and keep the government’s influence to a dull roar. Let’s not just rail against crony capitalists, but just work every day to keep the rules of the market system fair and honest. Don’t rail against uncontrolled immigration, just keep it sensible and lawful.

It’s up to us, the voters. Politicians gotta fund their political machines. CEOs gotta pay-to-play. But we are called to limit the corrupt bargain between politicians and their cronies, in other words to limit government. And that’s just what Bernie and Hillary and the Millennial Kids for Socialism don’t understand.

Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also see his American Manifesto and get his Road to the Middle Class.

Everybody hates bankers and Wall Street, and so politicians hate them too. Senator Bernie Sanders (I-VT) has made much of Hillary Clinton’s Wall Street connections. “I don’t know any progressive who has a super PAC and takes $15 million from Wall Street,” Sanders has said. Hillary accuses Bernie of “innuendo.”

But they both want you to believe that “greedy bankers” rather than stupid government policy cause the Crash of 2008. So we need Dodd-Frank to keep the bankers tame and obedient.

My thinking on greedy bankers diverged from the conventional wisdom many years ago when I read an article about the most important government program. It is not the armed forces, or even the Social Security pensions. The most important program is the government’s program to sell its debt. To do that it needs bankers. Think of banker Jay Cooke, who sold the bonds that paid for the Civil War. Now you know why politicians and bankers get on so well, despite the politicians pretending that they hate bankers and bankers pretending that there’s nobody here but us chickens. They need each other.

So of course Hillary goes speechifying to Goldman Sachs; of course Ted Cruz married a Goldman Sachs banker; of course Chelsea Clinton married a Goldman Sachs alumnus. You could say that they are all in the same business. My son-in-law tells me that Goldman encourages its bankers so marry into politics.

Of course, the bankers are just middlemen. Behind the bankers are the merchants. The merchants have always run on credit, and they know a lot about it. But credit is not enough. Businesses need a stable and predictable economic environment, and they need protection from pirates and plunderers. The politicians need credit to finance their political machines and to protect their regimes from foreign invaders. It’s a marriage made in heaven, with the matchmaking bankers in the middle. It’s just like Oklahoma: the CEO and the politician should be friends.

But nobody, particularly the left, is satisfied with a bunch of guys taking care of business. They want to see a vast Cruzian conspiracy for world domination instead of this happy marriage. Writes young leftist Fredrik deBoer:

A functioning, healthy left political movement would recognize the fundamental illegitimacy of the nation-state. It would see that structure as the product of capitalism and imperialism. It would recognize the nation-state as recently invented for the express purpose of enabling war.

(Dontcha just love that lefty-speak?)

The problem with deBoer’s statement is that it is half true, but completely misses the point.

Yes, the nation-state was invented for enabling war -- but out of desperation, not cunning. A monarch like Henry VIII desperately needed to disarm his nobles, create a national army, and fund it from national taxes and credit from the London merchants because otherwise England would have become a province of France or Spain.

On this view, capitalism and imperialism were not a cause of the nation-state but a consequence of the successful condominium between the nation-state monarch and the credit of the merchants. Once the nation-state project got started, with the merchants funding the monarch and the monarch protecting the merchants’ trade, what’s not to like? How about a blue-water navy to protect the merchants’ argosies as they sailed the oceans of the world? How could the merchants not call for a bit of muscle when the going got tough in North America, in India, in Africa, or in China? Hey, if Melissa Click does it…

The only trouble is that power is power, and it needs to be limited because otherwise the powerholders will abuse their power and foul the nest. You expect a politician like Hillary Clinton to romance the bankers: she needs the money. You expect the Googles to twist arms for a bit of net-neutrality in exchange for helping the Obama campaign with their Big Data. But someone has to tell them when to stop.

The nation-state plus capitalism, plus imperialism, plus bankers, plus CEOs is the most powerful thing ever. Why, it has increased per-capita income by 3,000 percent in 200 years. But it still needs to be housetrained.

That’s why I hate all this talk about “greedy bankers” and wailing about the power of Goldman Sachs. Instead, let’s get to work rebalancing the credit system and keep the government’s influence to a dull roar. Let’s not just rail against crony capitalists, but just work every day to keep the rules of the market system fair and honest. Don’t rail against uncontrolled immigration, just keep it sensible and lawful.

It’s up to us, the voters. Politicians gotta fund their political machines. CEOs gotta pay-to-play. But we are called to limit the corrupt bargain between politicians and their cronies, in other words to limit government. And that’s just what Bernie and Hillary and the Millennial Kids for Socialism don’t understand.

Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also see his American Manifesto and get his Road to the Middle Class.