Our federal system sometimes gets bad press
from the Electoral College to the way healthcare functions
there are frequent calls to revise and even scrap the system's that divide power
between the national government
and the individual state governments Washington DC
is always ready take on new powers. We often hear about positive developments
new national powers led to. What we don't often hear about
is all the trouble that our federalized system has saved us from
today would like to tell one of those stories. You all know about the evils of
our current financial system of too big to fail banks.
The roots of that system go much further back to Bush or even Clinton.
The current model of unleashed financial capitalism goes back to the 1970s and
1980s
Adam Curtis, sort of a British Michael Moore
has told the story in The Mayfair Set a documentary series
for the BBC you can find on YouTube. Curtis's relation to the facts is often
as problematic as Moore's
but he tells interesting story. From World War II
until the nineteen seventies the British and American economies were dominated by
corporate managers
the post-war economic boom allowed these managers to set up friendly
relationships between capital, labor, and government.
Economists like John Kenneth Galbraith claimed that capitalism had
changed from a battle to a carefully organized and
planned system. There was no longer any need for the entrepreneurs and
self-made man who had built the international economy.
The 1970s proved how wrong they were.
As post-war growth petered out, the planned system proved unable to deal with the
challenges of
new competition and emerging market players who had little respect for the
comforts of the developed world. A solution was developed
but as always happens it presented its own problems.
The power the shareholders, the actual owners of the
great industrial companies was unleashed. Corporate raiders and
takeover specialists began to liquidate the old companies
freeing up value but also ending millions of
economically efficient jobs. On balance
I believe that this process was necessary and has yielded some valuable results.
The costs, of course, are indisputable. But Anglo- American capitalism,
as it is sometimes described, has had very different careers in Britain and the
United States. Some of this is due to size of course.
But much of it has to do with our different systems. Britain is occasionally
described as an "elective dictatorship".
Due to stronger party loyalty and less constitutional restraint on the central power,
in the nineteen eighties financial capital was able to capture the British
government
to an extent that we are only now reaching the United States.
In the US, Wall Street had to deal with a whole class of
senators, representatives, and state and local attorneys
with real power bases outside of the national system.
When a corporate raider wanted to liquidate a US company
the process was more difficult. These other power centers couldn't stop
the process, but they changed it, slowed it down,
and may actually have improved it for all involved.
It is important to remember that pioneering corporate raiders,
michael milken and ivan boesky, ended their careers in jail,
while their British equivalents ended up with knighthoods. This is why the United States
still has a car industry, and a manufacturing industry,
and possibly why the US has such a robust
technology industry. The differing centers of political power
have managed to preserve multiple centers economic power.
The story is not this simple but it is a part of
the story worth paying attention to. Financial capitalism brought great rewards to
both countries in the years leading up to 2008.
The rewards, however, hid a disturbing fact.
The UK was becoming a one-horse economy.
There is London's financial industry, and a bunch of northern cities competing
desperately
for the annual title of a European Capital of Culture
and the few tourist dollars that that brings in.
The crisis started in 2008 me this difference very clear.
Both countries experienced economic devastation.
In the US however, the unemployed could moved to Texas
or benefit from years of unemployment insurance paid for by the government
debt.
The British government did not have that luxury.
They had to react to a massive recession with massive cuts
in the social safety net. London's continued resurgence seems to have saved them for now,
but it's a tentative recovery at best. The US economy is in much better shape,
and we owe that, in part, to our federal system.
thanks for watching , please Subcribe.