Monday, September 22, 2008

McCain is right

In 1870, just before Italian troops occupied the Vatican and just after most delegates from the Western hemisphere hurriedly left for home, the first Vatican council promulgated the dogma of papal infallibility. It was not the church's finest hour, but it led to one of the most-quoted dicta in the English language. Lord Acton, an English Catholic, wrote this to the Anglican bishop of London in 1887:
I cannot accept your canon that we are to judge Pope and King unlike other men with a favourable presumption that they did no wrong. If there is any presumption, it is the other way, against the holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it.
Members of the U.S. Congress should be forced to pay attention to that quotation--the whole paragraph, not just the famous sentence--several times an hour as they decide what to do about the current financial crisis. If there is a Congressional sound system, perhaps Lord Acton's words could regularly interrupt the soft music. Because no matter how dangerous the current financial situation, we may be facing even more dangerous abuses of power if Congress votes to give the treasury secretary everything he wants.

Paul Krugman, in this morning's New York Times op ed piece, "Cash for Trash," noted that some "are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq."

Krugman summarizes the administration's proposal thus:
... a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out.... Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.
"After having spent a year and a half telling everyone that things were under control," Krugman says, "the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now."

This sounds uncomfortably like the situation in 2001-2, when the president argued and Congress agreed that Mr. Bush needed to be authorized to do whatever he deemed necessary to fight terrorism. One result of the Authorization for Use of Military Force has been a major increase in executive power, often at the expense of human rights. If Congress decides to give the treasury secretary free rein to do whatever he deems necessary to fight world financial meltdown, executive power will increase still more.

In 1973, during President Nixon's second term, historian Arthur Schlesinger Jr. wrote a book called The Imperial Presidency. In 2004 in his book Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy, journalist Charlie Savage applied Schlesinger's term to the George W. Bush administration. If Congress passes the treasury secretary's proposed legislation, presidential power will have gone way past imperial. What term will historians and journalists coin to describe the result?

John McCain was slow to see the financial juggernaut coming, but his comment this morning was right on:
"Never before in the history of our nation has so much power and money been concentrated in the hands of one person, a person I admire and respect a great deal, Secretary Paulson," McCain said. "This arrangement makes me deeply uncomfortable. And when we're talking about a trillion dollars of taxpayer money, 'trust me' just isn't good enough."


Monte said...

Whether or not there will be a quid pro quo on the part of those being bailed out remains to be seen. Nothing has been voted yet and the negotiations continue, but it appears that it is the Democrats who are holding out for the kind of thing you advocate, not the Republicans. McCain appears to be siding with the Democrats in his statements in the last day or so. There must be some mechanism for oversight and monitoring of the role of the Treasury Secretary in this, especially since the person who will exercise much of the power (and dispense much of the money) will not be the current incumbent by an unknown individual in a yet-to-be-determined administration.

But there is another dimension to this that you did not touch on. We got into this mess because major Wall Street firms have exercised tremendous power to create the situation. How do we balance off the power of these massive, multinational corporations and banks that do not seem to have any patriotism or morality? In fact, why have we Evangelicals not raised the point that the current, widely-held concept that corporations have all the rights of individuals, but none of the moral requirements, is in and of itself an immoral concept. Banks and corporations should be held to higher moral standards than individuals for the practical reason that they end up hurting far larger numbers when they misbehave. Instead the concept of "its just business" has become a license for Christians and others to ignore the teachings of Jesus in the marketplace.

Anonymous said...

While not relieving Wall Street of some of the fault, to just say that we got into this mess because of Wall Street is to ignore that the mess was created in Washington and Wall Street went along, somewhat willingly, somewhat by force - both competative and regulatory. This outcome certainly can't be considered good for the businesses involved. Many don't exist anymore and the rest have taken huge stock hits. The group that is unlikely to get punished for this and will continue behavior that sets up these kinds of events are largely sitting on Capitol Hill. And they currently look to be the key beneficiaries of the whole affair.

As an aside, if I were in the Republican leadership, there is no way I'd agree to an oversight mechanism. You'd be agreeing to dump tens of millions of dollars into Democratic election coffers. That probably says more about the over-all proposal than the oversight specifics. It's typical Washington, with the politicians trying to "do something" and looking likely to top the Sarbanes-Oxley fiasco.

I also wouldn't say that there is a widely-held concept that corporations have all the rights as individuals. They have no natural rights and only have whatever legal rights are allowed them by law. There is a concept that business should be relatively unfettered and that in doing so, the net is greatly beneficial to the material welfare of the society - particularly of the lowest members of society, and to do this, we assign certain "rights" to business. But part of that package is the destruction that goes with that system. If one wants to make a moral argument of corporation behavior, it needs to be on a much higher level that includes the positive portion of the ledger sheet instead of just the negative.