HERESTHETICS

Many years ago a famous political scientist named William Riker (who I bet never tired of Star Trek related jokes) coined the term "heresthetics" to describe the process of "structuring the world so you can win." The best example in recent years is the successful efforts to brand third trimester abortions "partial birth" abortions by the National Right to Life Committee in the mid-nineties. Nobody is going to support something called a partial birth abortion. So the efforts by the NRLC and Chuck Canady to saturate the media and political spheres with the term – one that was simply made up by an NRLC lawyer – structured the debate so that they could easily win it, hence the Partial-Birth Abortion Ban Act. They succeeded in defining the debate, and consequently the issue was debated when, where, and how the NRLC wanted. Well played.

To see an even clearer example we need look no farther than today's headlines. Frank Luntz's talking points have so totally defined the debate over financial reform that there is no plausible way to reach any outcome that is less than a smashing victory for our Too Big to Fail banking institutions.

Everyone – and I mean everyone, from Krugman to to Ambinder to Obama to the average liberal on the street – is conducting this debate according to the terms set by the Senate GOP and their masters. Just look at the primary point of contention with the proposed reform bill, the $50 billion "cleanup" fund for the next time our lending institutions walk up to the button labeled "DO NOT PRESS" and press the living hell out of it. Republicans have followed Luntz's advice to call this a "bailout" in what Krugman has not-so-implausibly called "possibly the most dishonest argument" in the history of politics. Democrats have responded by pointing out that the $50 billion is posted by the banks themselves, a security deposit against their own potentially damaging behavior in the future.

They are correct, of course, but also missing the point entirely. As we are completely distracted by this debate – the primary point of contention between Senate Democrats and Republicans – we are conveniently ignoring the question of real importance: What in the hell good is $50 billion going to do when this system collapses again, which the absence of meaningful derivative reform in the legislation essentially guarantees will happen? The financial industry does not want anyone to discuss this, so they have structured the debate in a way that distracts us with an irrelevant symbolic issue. And it worked.

Estimates of the total cost of the interventions into the financial industry range from hundreds of billions to $12 trillion dollars. The much-debated Cleanup Fund is like change in the couch cushions compared to numbers like that. But here we are nonetheless, debating what Wall Street would prefer we debate rather than creating a system that might, you know, stop this from happening. Mike summarizes the reform proposals quite well: "The realization, and I’ve reflected on this a lot, is that we are rebuilding the 2007 financial sector with some additional legal powers for regulators to exercise in the middle-of-the-next financial crisis." On some levels I think he means this as a good thing. I see it as both terribly depressing and indicative of how completely our economic betters won this debate before it even started.

This is a reform bill without any meaningful reforms, and history has shown that window dressing is considerably worse than doing nothing at all. It creates a thin veneer of "reform" and "regulation" over the financial system when in reality it does little beyond making us slightly better prepared for the inevitable repeat of this entire process. And when that happens, Wall Street and its allies will have the "We failed because of excessive regulation!" argument ready to serve. They haven't merely structured the world so that they can win the current debate; they're also laying the groundwork for winning the next one as well. A neutered reform-in-name-only bill will leave them well situated to do exactly that.

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18 Responses to “HERESTHETICS”

  1. ts46064 Says:

    I often wonder what the political climate would be like today had the all the bailed out banks failed. Massive financial regulation? Single payer? New Deal like programs?
    Or would we have less regulation because regulation is "bad for business" and MADE the banks fail.

  2. Usually post under another name Says:

    Hey Ed, I don't know if you read these things, but if so I've hacked together a teaching tool that would be very directly up your alley. Email me at the "will not be published" address.

  3. Ecks Says:

    @ts46064, my understanding is that if we'd let all the banks fail you would have seen almost all the banks fail, and they would take out lots of companies (large and small) and pension plans and such with them. The banks were all so interlinked that critical failures cascade from one to the other, and that affects all the large institutions that had large amounts of their assets percolating through banks. This used to happen all the time back before the 30's when the banks were small, but there was no FDIC to prevent bank runs from cascading.

    In other words, you would have screwed an enormous number of people who weren't responsible for the bad decisions that set this whole big mess up. We wouldn't be debating single payer, we'd be debating redonkulous unemployment and a second great depression.

    Which really underlines the need for good financial reform – banks collectively serve a critical function in society, and when they are allowed to create the conditions for these extended bank runs they really can hold the rest of the economy hostage. That's why we can't afford to let them get there.

  4. ts121790 Says:

    Fair enough and obviously I nor most sane people would not want that to happen. Its just unfortunate that it takes something massive to really change policies.

  5. HoosierPoli Says:

    What I can't fathom for the life of me is why the banks would fight regulation designed to prevent them from unwittingly burning down their own house. It would be like consumer groups fighting laws designed to make sure that wiring is properly insulated. It won't hurt their "profits", it would ideally keep them from wildly overestimating their profits, then having to take firm-wrecking writedowns when their derivatives untangle. So either they have no brains at all or they're asking for government complicity in investor fraud (but most likely both).

  6. ts121790 Says:

    @HoosierPoli They are against it because they don't give a shit if they burn the house burns down. Its not like the people in charge will ever be held accountable for their actions.

    Also you would be surprised how many people are against electrical codes and building codes in general. "its my property and my house i dont need no gumement weasel tellin me how to wire my house" Sadly that's an exact quote from some dumbass relative of mine.

  7. displaced Capitalist Says:

    The problem is still not a failure of regulation. The regulations as they currently exist (in theory) work just fine! The problem is a total failure to enforce those regulations. The SEC was masturbating the entire time that Bernie Madoff and Goldman Sachs and Bank of America, and etc. were all stealing the public's money.

  8. Aslan Maskhadov Says:

    Indeed they don't care if they burn the house down, because as you can see, it's not their house. Wherever you see a country in the thoes of a massive crisis, you will always find a small group which remains or rises above the flotsam.

  9. PB92708 Says:

    @ ts121790; not only do they not give a shit, we paid these bastards bonuses for striking the match.

  10. jazzbumpa Says:

    As Aslan pointed out, the reason the bankers don't care is that they are personally enriching themselves while the institutions they are supposed to be running go down the sewer with everything else.

    Fiduciary responsibility – such a quaint concept. Rather like the Geneva conventions.

    WASF,
    JzB

  11. Nunya Says:

    Ed,

    Tanks for the word of the day! I've often remarket that the GOP is the party of business and businesses hire the mest markets and ad men they can to convince customers to buy their products no matter how worthless or poorly constructed. All of this is done by branding.

    The Republicans managed to co-op religion into their brand (the most brilliant move in US political history) and then simultaneously make deregulation analogous to making those welfare queens work for a living.

    People are emotional at their core. If they hear that God is for this party, naturally the religious will flock to it. Hard working people want to belong to the party that opposes welfare cheats hence massive cuts to social services. The GOP and their masterful use of emotional triggers to draw i low-information voters is to be marveled at.

    I fear the Progressives are going to have to play the same game in order to win anything. Logic and nuanced arguments can't exist then "that guy is a homo, commie, God-raping socialist" is what grabs the headlines.

  12. Zeb Says:

    Sed quis custodiet ipsos custodes?

  13. Crazy for Urban Planning Says:

    One of my pet peeves is just how complex things are. I buy an individual health insurance plan – today in the mail I get this huge envelope which I open up to find that (shocker!) my premiums are increasing on June 1st. Then I need to read through 150 pages of shit. Why is it so complex?

    I listened to the News Hour on PBS tonight. In the montage coverage the Goldman Sachs dude was sitting their speaking English – but I didn't understand a fuckin word of what he was saying. "I was long and I wanted to go short…" huh?

    I'm just glad to have Ed. Spot on column. Frank Luntz is an evil genius laughing all the way to the bank.

  14. Simon Says:

    Indeed they don't care if they burn the house down, because as you can see, it's not their house. Wherever you see a country in the thoes of a massive crisis, you will always find a small group which remains or rises above the flotsam.

  15. anns Says:

    "A neutered reform-in-name-only bill will leave them well situated to do exactly that."

    actually, there's an underlying disease: American stupidity/apathetic free-riding on the citizenship activities of others.