Wall Street WARZONE
Allan Meltzer’s Ideology Waivers: “Market Failure? Or Government Failure?” No, There are 25 Reasons the “Invisible Hand,” the Soul of Capitalism, is Dead!
by Paul B Farrell, JD, PhD
| Discuss | Print | 4/30/2010

Allan Meltzer’s Op-Ed in The Journal. “Market Failure or Government Failure?” is a must-read. While CMU Professor Meltzer, author of the definitive History of The Federal Reserve, sticks to his conservative free-market ideology, it’s obvious some ambivalence exists, as his headline reveals: Is it market failure? Is it government failure? The truth is, of course, it’s both, so he hedges his bet: “Regulation often fails either because regulators are better at announcing rules than at enforcing them, or because the regulated circumvent the regulations.”

But step outside partisan ideology and you see a third alternative: In the last generation free-market Reaganomics has virtually replaced the original Adam Smith’s 1776 model of capitalism, and is now America’s leading economic ideology. That’s true for both political parties as well as fringe political groups, for Wall Street and Main Street, for consumers and investors as well as American voters. Moreover, today’s government is little more an extension of the new capitalism that’s controlled by Wall Street.

What most distinguishes the “New American Capitalism” from Smith’s original brand of capitalism? We’ve lost our ”soul.” In the New Capitalism there is no soul, it is dead. Wall Street, the original spirit-guide of capitalism is now soulless, lacking a moral compass. That was not the goal of Smith’s model: In his Theory of Moral Sentiments Smith clearly saw capitalism driven by a moral code. The “invisible hand” guiding capitalism and government was not a soulless network of materialistic algorithms designed simply to maximize wealth and concentrate power in the hands of the few. But it is today. We wrote about this historic turning point at length for MarketWatch in “The Death of the ‘Soul of Capitalism:’ 25 reasons why America has ‘lost its soul’ and collapse is inevitable.” (More)

Oliver Stone: “Greed is Great” for Wall Street Fat-Cat CEOs. But Why Did Greed Also Become the New “American Dream” for 95 Million Main Street Investors?
by Paul B Farrell, JD, PhD
| Discuss | Print | 4/12/2010

Two decades ago Oliver Stone’s classic movie “Wall Street” focused a spotlight on New York’s investment banking world. Hedge funds and private equity firms were in their infancy. Mutual funds and 401(k) plans were still a smaller part of the retirement planning world, with employer-sponsored retirement plans dominant. Exchange-Traded Funds and 529 college savings plans didn’t exist. And Corporate America’s CEO were still making reasonable compensation compare to workers.

In the past twenty years the belief that “greed is good” has not only spread rapidly across the top-layers of America’s business and financial world, it has filtered down through the ranks and out to the Main Street America. Greed is the driving force in the new American Dream, reflected everywhere in our culture, not just in the increasing gap between the wealthy at the top and the average worker. We see it in huge lottery payoffs, game shows like “Who Wants to Be a Million” and a Chase bankcard commercial echoing the band Queen’s hit melody: “I want it all, I want it all, I want it all, and I want it now!’

If a picture is worth a thousand words, an editorial page cartoon is worth a million. They capture more than an entire paper about contemporary America. Yet, as with the old court jesters poking fun at a king faults, after a nervous laugh, the message is ignored … until historians write of the empire’s demise. Here’s the scene: Board members sitting around a big table. CEO asks: “Raise your hands those in favor of saving their soul, rather than the company.” That “Salt and Pepper” cartoon on The Journal’s editorial page says volumes about today’s “American Soul.” (More)