Answers and Insults

After you look at the data on another terrible month for US jobs, ponder one of the best compressed answers I've seen to the question of "what should we do," put to Robert Weissman of the Multinational Monitor. Then, after you've read the quotation below, look at Jon Stewart's great rip of CNBC's history of booster financial pseudo-journalism.

AMY GOODMAN: What are the recommendations that you make, Rob Weissman?
ROBERT WEISSMAN: Well, the first thing is that all these deregulatory moves ought to be repealed. But beyond that, we think it’s time for a big picture look at this stuff, and we’re worried that, although Wall Street is obviously on its heels right now, they are not—they are not absent from Washington. This lobbying activity is ongoing, including on a variety of small things being debated in Congress today. But in the big picture, we think there has to—we can’t just get mired down in some of these details.
The financial sector itself ought to be much smaller. In the preceding three or four years, the financial sector was taking about a third of all corporate profits in the United States. It was way too big relative to the rest of the economy. It shouldn’t be more than ten percent. So it should be shrunk down.
There is a range of activities that ought to be prohibited altogether. A lot of these exotic financial derivatives, which serve no social purpose, should be just banned. Any new instruments that are put on the market ought to be required to get pre-approval from government regulators, just the way a new pharmaceutical product has to get pre-approval, be shown to be safe and serve some social benefit before it’s allowed on the market.
We ought to erect again regulatory walls and barriers that prohibit institutions from doing different kinds of things. Banks ought not to be engaged in these exotic derivatives. They should not be putting taxpayer-insured money at risk in this kind of stuff. Consumers need to be directly empowered to organize themselves, so that they are a counterbalance to the influence of the commercial financial sector.
And I think we ought to have a financial transactions tax, a speculation tax, so we slow down the level of speculative activity. That kind of tax would be highly progressive, because it’s only rich people who are engaged in mass transactions on Wall Street. It would bring in a lot of money, have major social benefits.
And finally, I think if you look back over what happened in the last four or five years or the last decade, it’s clear that a huge amount of money was made on Wall Street, but the firms themselves are now in complete crisis. They’re needing the taxpayer money. Some of them are going bankrupt. They’re being merged out of existence. So the companies themselves destroyed themselves.
Why did they do that? What were the incentives that led them to take such crazy risks that they actually destroyed themselves? And it’s very hard to avoid looking at the way individual people were compensated. They got massive bonuses, sometimes five, ten, twenty times their regular compensation level, based on what they did in the previous year. So I think we have to have compensation caps, for sure, on executives and others. But even more importantly, the incentive mechanisms can’t be that they get paid on how they did that year, when they can manipulate it or they can benefit from a bubble. It has to be, any compensation incentives that are going to be in the form of bonuses have to be tracked to a very long-term performance by these companies.