I would like to make three quick comments about this session:
We focused a lot on financial issues. If and when we get past this crisis, we’ve got to turn to what I think is the more fundamental crisis, and some people have addressed it. We’ve had a wage crisis in America for 30-35 years and we don’t necessarily need a lot of federal spending to deal with it. We need enforcement of labor laws, we need enforcement of union organizing laws. The list goes on and on. I won’t list everything we can think of. Some of it has to do with the dollar policy; some of it has to do with some adjustment to fed policy. And I think some of it has to do with the attitude of the President: who should not be afraid to say the truth when CEOs make unconscionable amounts of money, and their workers make less money. Business is afraid to be singled out and scolded by presidents, and we haven’t done that for many years.
« As Rahm Emanuel once said, a good crisis should never be wasted.»
Number two: Ideology. Ideology is often a cover for self-interest, but ideology has carried us where we a e, a free-market ideology that’s widely adopted not only by a conservative group of economistsand policy makers, but I think by the media as well. There is push-back on it. Fannie Mae did this to us. Some people try to explain to us that it was really Roosevelt that caused the Great Depression. There are serious papers about all that these days. And there will be more of push-back. As Rahm Emmanuel said, “a good crisis should never be wasted”; I think those words will live on, much like “there’s nothing to fear but fear itself”. They are an echo of Milton Friedman’s, who said something similar in 1982, after the fact, and attributed his own success to the crisis of the 1970s.And finally, one quick word about the nature of the corporation.
We’re talking about financial firms allocating risk. There is a serious agency problem, as economists call it, in these financial firms: the people making the decisions weren’t taking risks. There was a joke always on Wall Street about IBGYBG - « I’ll be gone, you’ll be gone. Let’s just do it ». Stan O’Neill, after putting Merrill Lynch under, took away $190 million. Raines at Fannie Mae almost took away $90 mil- lion. It didn’t seem to me they were taking on much risk. They put their institutions and the nation at risk and made a heck of a lot of money themselves. I think the nation has to address the issue of the corporation and the agency problem. Now a question to Allen Sinai: why are you so timid about your stimulus plan when Goldman Sachs is calling for $500 billion in stimulus?