Capitalism

Gretchen Morgenson, a common-sense capitalist, doesn't want us to ruin capitalism with stupidity and greed. Alan Greenspan, a libertarian capitalist, was the Fed chair for many years; to some, he appeared to be a financial/economic genuis. Apparently even President Clinton, a Democrat, fell under his economic charms. President Clinton, in one of the worst decisions of his presidency, signed the bill that repealed the Glass-Steagall Act. After the Great Depression, Glass-Steagall was passed to put a wall between the capital of commercial banks and the capital of investment banks. Speculative (high-risk) investment could not put at risk the capital of commercial banks and bring them down if the investments went bad. Glass-Steagall represented common sense capitalism, the kind that Gretchen Morgenson, financial journalist for the New York Times, believes in. Morgenson saw the Great 2008 Recession coming in advance. All the signs of unregulated financial markets were there. Morgenson saw them; Greenspan did not.

An analogy. A modern highway with thousands of cars requires some regulation for the safety of the common good---speed limits and stop signs.  A stupid libertarian would remove most of the stop signs and increase the speed limits. But a common sense Department of Transportation would keep them in place. Gretchen Morgenson is a dyed-in-the-wool capitalist; she once worked for the conservative Forbes business magazine. She wants capitalism to work well for all citizens; she wants to avoid the boom and bust cycles which hurt everyone.  Capitalism needs some stop signs and speed limits, some common sense rules and regulations to control speculation, greed, corruption and crime. Clinton and Greenspan began to pull up some of the stop signs; Bush and Greenspan continued to pull up more. A big crash became inevitable; it almost turned into another Great Depression. Apart from unprecedented action by the Fed, it would have become a Depression. 

Here is how Dean Starkman describes Mortenson, the common sense capitalist, in an article in the July 6, 2009, The Nation, entitled "The Most Important Financial Journalist of her Generation: Gretchen Morgenson of the New York Times."  According to Starkman, Morgenson understood and fearlessly reported on the financial mess well ahead of most business reporters. She realized that "something in the system had gone deeply awry. She came to identify excessive "compensation [that] lies at the center of today's [financial] crisis."  

Morgenson asserts: "I believe in capitalism. To me it is natural that I would go after the people that are wrecking it."  For her, capitalism needed both better ethics and better regulation. For her, too much of modern American capitalism had become corrupt and often criminal. The mortgage crisis was rigged; it was predatory lending. "Capitalism should be made to work for everyone, not just the big shots." Corruption and crime may be inevitable when more people are making money by handling money than from producing goods.

In 2014, it is proving hard to put the hyperindividualistic, libertarian genie back into the financial bottle. Morgenson is still a financial journalist for the Times. Google her to find out her current analysis. She thinks that current laws and regulation are too lax. Some financial institutions are not only too big to fail, they are also too big and secretive to regulate. If you think capitalism itself is a problem and you want an alternative, google Mondragon to examine a cooperative economic model created by a Spanish Catholic priest.