Friday, May 22, 2015

The political right wants to privatize Social Security, and 25% of those who would manage our retirement accounts are willing and eager to break the law

Above: President Franklin Roosevelt and his fellow New Deal policymakers were effective in reining in financial wrongdoing. Unfortunately, most of today's policymakers are either clueless, weak, or bought. We have paid a steep price for their less-than-adequate financial oversight, and we're likely to pay an even steeper price in the future. Image above used by permission of the Estate of Rollin Kirby Post.

Many conservative politicians--and the super-wealthy Americans who fund them--want to privatize Social Security. They see vast amounts of money that can be gambled with on Wall Street, and they can't stand the fact that the money is currently in a government program that provides steady payments to retirees. They want to put some risk into the system. (See, e.g., "Social Security Privatization: Then and Now," Huffington Post, May 7, 2015)

There are two main problems with privatization. First, the fluctuations of the market can wreak havoc on a person's retirement account. As the National Committee to Preserve Social Security & Medicare puts it: "Nest eggs can disappear in an instant - and take months, if not years, to rebuild." The second problem is that there are a large number of people who work in the financial services industry who don't mind breaking the law. For example, a recent survey by the University of Notre Dame and the law firm Labaton Sucharow found that 25% of those who work in the financial services industry admit that they "would likely use non-public information to make a guaranteed $10 million if there was no chance of getting arrested for insider trading" and nearly 20% "feel financial services professionals must at least sometimes engage in illegal or unethical activity to be successful" (find the link to the survey in the article "Seven Years Later, Wall Street Hasn't Learned Anything," The Atlantic, May 20, 2015).

And these inclinations to break the law play out in the real world. In the latest settlement with the Justice Department, five big banks, including Citigroup and JP Morgan Chase, admitted manipulating the world's currencies to their financial advantage. Some of the people who ran the scheme referred to themselves as "The Cartel." And this scheme, of course, is just the tip of the iceberg. Over the past several years big banks have paid fines and settlements related to insider trading, tax evasion, money laundering, mortgage & securities fraud, illegally foreclosing on the homes of soldiers in combat zones, and much more.

The criminal behavior on Wall Street is unlikely to end. Few people have faced jail time for their criminal activity, powerful players on Wall Street contribute millions to politicians (thus creating a protection racket), and attempts to rein in the financial services industry or break up the big banks (so that they're no longer too big to fail or too big to jail), are routinely denounced by the political right as "socialism" and a threat to "freedom." In effect, criminal & civil wrongdoing on Wall Street has been normalized, as long as an occasional fine is paid. In our new plutocratic society, there's nothing we can do about it. This is why a U.S. Senator can tell a Wall Street CEO, "I think you guys are breaking the law," and the CEO can respond with a smile, "So hit me with a fine. We can afford it." ("Guess What Happened When JP Morgan's CEO Visited Elizabeth Warren's Office," Huffington Post, March 31, 2015)

So, we have to ask ourselves: Do we want our Social Security placed in the hands of "arrogant" and "testosterone-laden, souped-up young people who think that they’re indestructible" and also to "Numerous individuals [who] continue to believe that engaging in illegal or unethical activity is part and parcel of succeeding..."? (links to quotes here and here). Or, do we want Social Security to be a bulwark against corporate greed, corruption, and crime--as well as plain old incompetence--as New Deal policymakers intended?

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