Down with (Banking) Profits!

A correspondent pointed me to this op-ed in the New York Times, which quotes some people in the know saying that the Dodd-Frank regulation is too complex and will compromise the financial industry's ability to do its job and drive the economy forward:

However you feel about banks — and I know that many people harbor enormous, justifiable anger at what they did — our economy can’t function without them. And they needed to be regulated. But three years ago, overly complex securities were one of the root causes of the crisis. So why, then, do we have faith that overly complex regulations will prevent the next crisis? Sad but true: they won’t.       

Now I don't pretend to know or understand what's in Dodd-Frank; frankly I'm clueless about the details of it so I can't really defend the bill.

However, I will say that if the new rules make banks less profitable, that would be a feature, not a bug. A big problem with the banking industry is that they're making too much money by taking risks that are too destructive to the rest of the economy. We need those reckless risk-taking types to get out of the banking industry and go into something that won't bring the whole economy down- I'd rather see those guys create tech startups or something.

One other thing I'd say is that Dodd-Frank need not be a static reform. If Republicans would return from CrazyTown, they could propose changes to Dodd-Frank that Democrats would probably be happy to approve. Right now, however, they seem to be saying that we should just return to the pre-2008 world of regulation that we know was a failure.

"Moderate" Doesn't Mean What You Think it Means in the GOP

It occurs to me, in watching the Republican race for the presidential nomination, that the framing of "conservative" candidates (Gingrich, Perry, Bachman, Cain) and "moderates" (Romney, Huntsman) isn't really very precise.  For starters, we now have two ostensibly arch-conservative candidates (Gingrich and Perry) viciously attacking Romney from Left on his history as a "vulture capitalist" (to use Perry's term). We have Romney displaying foreign policy positions that are as right-wing as can possibly be imagined, and Huntsman's economic platform is as conservative as anyone's.

Romney's history is certainly not as conservative as the others in the race, but he's been running as fast as he can away from those old positions.  Yet he still can't seem to break into the Conservative Club no matter how hard he runs.

So I think that's because being a conservative today isn't really about policy positions, it's about style.  Gingrich has this thing nailed down perfectly- he's caustic, hyperbolic, and choked with rage all the time.  Perry has a less angry way about him, but his Texas Good Old Boy shtick, so reminiscent of George W. Bush, signals "conservative" to voters. 

Mitt Romney just doesn't speak to the Tea Party id, much as he tries.  Mitt is hyperbolic like Newt, but he can't carry it off with quite the same snarl that's really the hallmark of the Right these days.  And of course Mitt comes from the old Eastern establishment elite wing of the Republican party- he has so much of the patrician about him he just can't shake it.  It looks like he'll win the nomination anyway, thanks to superior organization and money, but he just doesn't seem to fit the Republican party any more.  The party is now dominated by the South and mountain West, and they like their policians "down home".  George W. Bush is the model for that party now- you don't have to be a regular guy (both GWB and McCain were very rich), but you're supposed to come off like one.  Romney just doesn't, and I think that's really why the party is holding their noses while voting for him.

Newt Gingrich: Class Warrior or Just Really Pissed at Romney?

Newt Gingrich and his minions have been putting out a mean campaign against Mitt Romney, focusing on his history at Bain Capital.  It's actually pretty shocking- Democrats timidly suggesting Wall Street regulation and a 4% increase in the top marginal tax rate have been accused of engaging in "class warfare" by Republicans, but now we have Gingrich putting out a 30 minute video filled with heart-rending stories of regluar people whose work lives were ruined by Bain layoffs.  I particular love the line that Bain's "greed was matched only a willingness to do anything to make millions in profits.”  Although that is nonsensical, it's a lot closer to class warfare than anything President Obama has said in the past few years.

So why did Gingrich do it?  On the surface it seems like the right winger is flip-flopping and has moved to the Left, and the GOP elites are reportedly livid about this line of attack, which could hurt Romney greatly in the general election.

I think the answer is that Gingrich is in a frothing rage at Romney over the negative ads put out by Romney's super-PAC allies in Iowa, which basically sunk Newt's campaign.  There's no question that Newt was trying to run a positive campaign (vis a vis the other Republicans anyway; he's quite willing to be outrageously negative and misleading about Obama), but when he took the lead and started threatening Romney's front-runner status, the gloves came off and Romney just wiped him out with negativity.

I think Newt sees this as payback.  He was trying to play by what he thought were the rules.  Then Romney changed the rules at the last minute, without giving Gingrich the time to make it up in Iowa.  Now Gingrich is finished, but he wants to take Romney down with him.  Why should he just give up when he's been screwed over?

It's just hard to believe that Newt Gingrich is about to become a redistributionist social democrat.  This is just him shooting wildly, trying to wound in order to satisfy his rage.  Well, nobody ever said Newt Gingrich had the temperament to be president.

One More Thing About Romney

One other point about Mitt Romney.  As I wrote yesterday, there's nothing wrong with his history as a corporate raider and serial layoffer of workers.  I don't hate capitalists.

 

What gets me hating, though, is when corporate raider-types are seen as some sort of Heroes. I don't even like all the paens to Steve Jobs as some sort of saviour. Mitt Romney and Steve Jobs were well rewarded for their service to society, and made no sacrifices that weren't extremely well compensated. Firemen running into burning buildings and soldiers patrolling valleys in Afghanistan, and social workers staffing homeless shelters are contributing to society in ways far more heroic, and they're not seeing 8-figure annual incomes. Romney's work at Bain is totally fine, and if he stayed there I would have no complaints about his work (even though I wouldn't want to do it). But he's trying to claim that his experience there qualifies him to "create jobs" as a political actor, and that's just ridiculous. Businessmen know how to make money- that's what Romney's good at. They don't know the first thing about how to make political things happen from the legislative end, and their business experience doesn't give them any worthwhile knowledge about how to manage a large economy.

Mitt Romney, Ruthless Capitalist

So now Mitt Romney is catching heat from Newt and his other rivals about his career at Bain Capital.  Basically the Republicans are starting to notice that what this important businessman did during his career was to work for a venture capital firm that made its money not by creating jobs, but by laying people off and making companies lean and mean.  Sometimes they even made money by stripping companies, selling off the good parts, and leaving the rump corporation to go bankrupt.  Romney's claim that he "created 100,000 jobs" while at Bain has been proven to be complete bullshit.

So let me be clear about my criticism here: I don't think Mitt Romney and his minions at Bain Capital did anything wrong, illegal, or even immoral.  It's Capitalism, and you're allowed to make money.  If lots of powerless workers get screwed over in the process, well that's capitalism and the resulting increased efficiencies in our economy probably produce more wealth for all of us in the long run.

But....

When Romney campaigns on the basis of his business experience, we should keep in mind what his experience actually is.  He doesn't "know how to create jobs".  That's not really close to what he did- he made money mostly by making companies more efficient by uncreating jobs.  Again, that's totaly fine, and more power to him.  But don't tell us that means he can figure out how to get America back to work- it's simply not relevant experience.