Wall Street and other major corporate sectors not only control our economy. Through huge campaign contributions, they also disproportionately influence our political system, its legislation, and therefore everything – from the air we breathe, the taxes we pay and the safety of our food supply, to the cost of our education and whether we will get a decent job after graduating.
- Corporations’ major goal is politically to block any limits on their ability to maximize their profits, including regulations and taxes.
- Unfortunately this frequently leads to both bad economic policy and bad social policy for the majority of Americans.
- While corporate profits have soared, the wages of ordinary Americans have stagnated for decades.
- Many major corporate sectors, like energy, oil, and gas receive huge government subsidies, paid for by taxpaying citizens.
- Every election cycle, the single largest contributions to candidates (dwarfing all others) comes from the financial, real estate and insurance sector called FIRE. (Since 1990 nearly $4 Billion)
- Business contributions dwarf those of labor. In 2013-14 business contributed 72% of all donations; labor contributed 6%.
There is hope…
Fair Elections would ensure that politicians were accountable to the voters rather than to big corporate funders. The greed of Wall Street and corporations would be held in check when politicians no longer rely on them for funding their election campaigns. Economic and other polices would be made in the best interests of the American people as a whole, rather than in the interests of wealthy corporate-based elites.
The 2008 recession was rooted in the politics of deregulation – especially as it affected banking and financial institutions. Since the 1980’s Wall Street has been able to achieve its primary political goal: the erosion of the regulatory mechanisms put in place by the New Deal. These were government controls placed on the behavior of banks and other financial institutions to prevent conflicts of interest and deceptive practices. This has occurred because the presumed regulators themselves oppose regulations. But most importantly this erosion of control has been a result of the political clout bought by huge Wall Street and other banking campaign contributions.
Since 1990 the Finance/Insurance/Real Estate sector has made political contributions in excess of $4 billion, far more than any other sector. In exchange, Congress has responded. Symbolic was the repeal, in 1999, of the Glass-Steagall law, the corner-stone of the New Deal financial regulation. This repeal signaled the beginning of an economic crisis that brought the U.S. economy and indeed the world economic system to its knees.
The financial sector used its wealth to reward politicians who turned a blind eye to market excesses and to punish those who wanted to curb financial greed. As U.S. Senator Dick Durbin quipped about Congress, “The banks own this place!”
A lesson that goes back to Adam Smith is that business people are the last ones who should be trusted to set market rules. The effective policing of financial markets requires the construction of a rigid wall separating business and politicians – the market rule makers in the government – is critical. Such a wall is necessary because business – if allowed to influence or control rule setting with campaign contributions to politicians – will do so to their own advantage, not that of society as a whole.
But when office-holders are dependent upon campaign contributions made by big investment houses and banks, the distinction between policing and participating is jeopardized. It will take “fair elections” – financing electoral campaigns with public funds – to ensure that the wall that is needed will be not be breached.
The Center for Responsive Politics https://www.opensecrets.org/industries/
Jobs With Justice www.jwj.org
Economic Policy Institute www.epi.org