By “Matt Lewis & The News” guest blogger R.J. Moeller
One of my favorite books in recent memory is Money, Greed and God: Why Capitalism is the Solution and not the Problem by Dr. Jay Richards. Jay is one of the smartest, most well-spoken advocates for free enterprise and limited government that I’ve ever come across. This guy is the real deal.
He is the coauthor of the New York Times bestseller Indivisible. He is the Distinguished Fellow at the Institute for Faith, Work & Economics and a Senior Fellow at the Discovery Institute. And, for reasons that I assume are rooted deeply in his rooting-for-the-under-dog charitable nature, he’s been a friend and mentor to me for the past five years.
His latest effort, Infiltrated: How to Stop the Insiders and Activists Who Are Exploiting the Financial Crisis, dropped earlier this month and is a must-read account of what exactly has transpired in our economic, financial and political institutions since the fiscal meltdown in 2008.
Here are five questions I had for Dr. Richards…
1) Tell me why someone should want to read your Russian spy novel Infiltrated? That’s what it’s about, right? Cold War-era espionage?
Well, despite the notable absence of Russian spies in the story, I wrote the book because I thought it was a tale that needed to be told. Ever since Money, Greed and God came out in May of 2009, I’ve been grappling with the claim that the financial crisis was the result of unfettered competition, capitalism, and Wall Street greed. Greed only “caused” the financial crisis in the sense that gravity “causes” plane crashes. The real story is more interesting and more complicated.
The book title might suggest malevolent espionage by hostile powers, but the infiltration I write about involves many well-meaning people who have wedded their good intentions with a misguided political and economic philosophy. It involves the 2008 financial crisis—a paradigmatic picture of good intentions leading to bad results—but goes well beyond that. There have been many books on the financial crisis, but few have told the story of insiders who first shaped the policies that created the crisis, and then used the crisis as a pretense to increase their own power over our financial lives, while supporting news coverage designed to camouflage rather than illuminate the role of the federal government in the crisis.
Understanding the details of this story are essential for anyone who wants to resist what in my opinion is a creeping soft tyranny.
2) Is Dodd-Frank the worst piece of legislation ever, or simply one of the worst? On a scale from 1 to 10 – (1 being “Sharknado” and 10 being “The Godfather”), rank Dodd-Frank in the pantheon of counter-productive, anti-free market bills passed by congress since 1789? Why exactly is it such a disaster?
Well, federal legislation is an expansive rogue’s gallery, so it’s hard to determine which one is the worst. Besides, one way we judge legislation is by its long-term consequences. But we’re still in the opening chapter of the Annals of Dodd-Frank. That said, the act is certainly hovering in the Sharknado territory. The official name of Dodd-Frank is the Wall Street Reform and Consumer Protection Act. What crazy person wouldn’t want to reform Wall Street and protect consumers? But you know what they say about the angel of light…
Two examples. First, we know that part of the problem with the financial crisis was an implicit “too big to (be allowed to) fail” mentality on the part of certain players, both in the large banks, and in government-sponsored enterprises such as Fannie Mae and Freddie Mac. Well, Dodd-Frank turns that implicit assumption into mandated policy. It requires that certain (very large, well connected) financial institutions be dubbed “systemically important financial institutions” (SIFI), which is bureaucratese for ‘too big to be allowed to fail.” Worse, it also requires that certain non-financial institutions—such as big insurance companies—carry the “systemically important” label as well. It’s very hard to see how that’s going to help things long term. This is cronyism on East German steroids, though, admittedly, the cronyism amounts to an unpleasant protection racket common in the mafia.
Second, Dodd-Frank established a new bureaucracy, the Consumer Financial Protection Bureau (CFPB), which may well be unprecedented in the history of federal legislation. If bureaucracies tend to operate like unidirectional ratchets, the CFPB is an automated ratchet factory. It is in some senses a sovereign entity. It’s outside the control of Congress. Although it is officially under the Fed, neither the Fed board nor Fed chairman has much control over it. It has been given jurisdiction over virtually every financial transaction in the country—whether it be a credit card, mortgage loan, or watch swap at your local pawnshop. I really think Americans need to look at this entity with grave suspicion, and not be fooled by the earthly green tones of its logo and its benign-sounding name.
3) Who in your mind are a couple of the people we should be most disturbed by their presence in the federal government? Who exactly has infiltrated the bureaucracy? I want you to name names!
Well, there are a lot of names, some known, some not-so-well known. Among the well known is Elizabeth “Sacajawarren” Warren. The CFPB was, incidentally, her brainchild. She’s now a US Senator from Massachusetts who sits on the Senate Banking Committee. Early indications are that she’s going to do a lot of mischief from that perch. I give evidence in the book that she has long been confused and misguided about some basic economic realities.
Other key characters in the book are mortgage bankers Herb and Marion Sandler. The Sandlers ran a very financially successful savings and loan, called World Savings, headquartered in California. They pioneered the “option ARM loan,” which the New York Times dubbed the “Typhoid Mary” of the housing crisis. At the peak of the market, they sold their company to Wachovia Bank in North Carolina. (The same Wachovia that then went belly up a couple of years later.) With their proceeds, they established a very large charitable foundation.
Even before the sale, they had been very active donors to a variety of progressive causes. That alone isn’t a scandal of course. But when you look closely, you discover that their charitable giving in the non- and not-for-profit sector (to outfits such as ACORN) sometimes cynically served their for-profit ventures. After they sold their company, they put their money into operations such as the Center for Responsible Lending (which Herb Sandler had proposed around 2001). They also established a news company called ProPublica with an initial, and renewable, grant of ten million dollars, and helped fund PBS’s Frontline series. Both of these media venues have spent years churning out what I call “Sandler stories of interest.”
The full laundry list of rotten actors in this fiscal tragedy is too long to mention here.
4) What should under-30 Americans know about the fiscal future that awaits them (at our current pace)? Why should a young hipster riding his tall bike around Venice Beach take note of “fiscal cliffs” and government shutdowns and things like the debt clock?
I’m naturally an optimist but I’m not especially optimistic about the prospects for those who are under-30. Between crushing unfunded liabilities and government debt, and a political sphere that is slowly engulfing the other spheres of society, things could get bad within a decade. Think far higher taxes, far fewer useful government services accompanied by more government activity, and far less freedom. The only way I can see that this can be avoided (short of some technological innovation that can’t be anticipated) is if enough influential young hipsters decide to take notice, and to put their representatives on notice. At the moment, there are some good folks in Washington who understand the depths of the problem. But as long as the vast majority of Americans are unaware of it, few politicians will have the political incentive to tell us the complete truth, and to do something about it.
5) As someone who takes exercising very seriously, do you ever covet Michelle Obama’s guns? You have to admit, they’re fabulous arms!
Yeah, her arms are amazingly cut, but I assume she has access to the very best trainers, chefs and nutritionists. All I have is whey protein, bodybuilding.com and grit.
R.J. Moeller is a blogger, podcast host and CEO of the media/entertainment company Hashtag Productions LL