Fri. Jun 2nd, 2023

Here is an example of why American democracy and, by extension, the economy is irrational in real terms. Banks and financial institutions such as investment ratings agencies like Standard and Poor’s created a climate of perverse economic incentives in which they benefited from engaging in risky market transactions that led to the Great Recession. The numbers discussed in this story about how profitable S&P has become by providing (possibly) inflated ratings for investments that banks have undertaken are proof of two things:

1. We did not learn some important lessons from the Great Recession.

2. If we did learn those lessons, this knowledge has not translated into practice.

Why do we continue to allow banks and financial institutions to engage in such brazenly risky and short-sighted market behavior focused solely on profit maximization? Do we believe this kind of activity leads to innovation, job creation, and that “all boats will lift with the rising of the tide”? Doesn’t the Great Recession falsify this idealization that increased wealth means a better life for everyone?

The last recession was precipitated by the same large actors. Trillions were lost in assets. Millions lost their jobs. Why are we allowing this to happen again? Why do we tolerate a democratic process that permits the privatization of profit and the socialization of risk? Ask these questions, and read more about President Obama’s and Congress’s single biggest failure to address the problem of inequality in this country.—It’s the economy, stupid! We need to change it.

Read the story here.

By Editor