I’ve spent a fair amount of time in these remarks discussing the general outlines of the thesis that the cash-nexus is artificially expanded, and forcibly deformed, into the patterns of actually-existing capitalism, by means of government privilege to big players; and discussing the many monopolies (once the Big Four; now the Big Nine, at least) that provide some of the most pervasive and intense points of force that dispossess working people, favor big, centralized forms of business, and coercively favor capitalistic, formalized, commercialized uses of resources over non-commercialized alternatives.^[1] One of the objections which may have occurred to you by now is that government intervention in the economy goes in more than one direction. It may be true that the monopolies Tucker and I have named tend to benefit entrenched players and conventionally capitalistic arrangements. But what about government regulations that benefit poor people (such as government welfare schemes) small players (such as, say, Small Business Administration loans), or which are supposed to regulate and control large-scale, concentrated forms of enterprise (such as antitrust legislation)?

I would respond, first, that this kind of response seems to suggest an unusual faith in the efficacy of government regulation and welfare state programs to achieve their stated ends. In fact, as I’ve already suggested, much of the "progressive" regulatory structure, supposedly aimed at curbing big business, has largely served to cartelize big business, and to create large fixed costs which tend to drive out potential competitors from the rigged markets in which they have entrenched themselves. Historical work by Gabriel Kolko (in The Triumph of Conservatism) and Butler Shaffer (In Restraint of Trade) has, I think, convincingly shown that these regulatory measures mainly served to rigidify the positions of existing market incumbents and to bail out failing cartelists so as to prevent freedom from disrupting a well-regulated market. And there are good a priori reasons – from the public choice analysis of the incentives faced by politically-appointed regulators — to believe that such regulatory efforts will always be highly prone to capture by the concentrated interests of market incumbents, to be wielded against the dispersed interests of consumers, workers, and would-be start-up competitors.

Second, it is important to keep in mind questions of priority and scale. While I object to SBA loans, antitrust legislation, social welfare programs, and other government interventions as much as any other free marketeer, I think that in this age of trillion-dollar bank bailouts it ought to be clear that, even if government is putting its finger on both sides of the scale, one finger is pushing down a lot harder than the other.

You may also be concerned that I have had so little to say, so far, about some of the conventional explanations that free market economists have offered for the efficiency and scalability of capitalistic arrangements – arguments based, for example, on the division of labor, or on economies of scale, or the gains from trade. But I am not denying the value of either the division of labor, or gains from trade; I am suggesting that labor and trade might be organized along different lines than they are currently organized, in alternative forms of specialization and trade such as co-ops, worker-managed firms, or independent contracting, with comparatively less centralization of decision-making, less hierarchy, less management, and, in many cases, more trade and entrepreneurial independence among the workers involved. Centralized, capitalistic forms of organization are only one sort of cash nexus among many others. And the cash nexus itself is only one way of facilitating a division of labor and a mutually-beneficial exchange can take place; returning to the broader sense of markets as a space of social experimentation, there are all kinds of other social experiments, not necessarily based on quid pro quo exchanges or on cash media, that provide places for people to meet, work and swap.

It is also common for pro-capitalist libertarians to point to economies of scale as an economic reason for believing that large, centralized corporations, industrial agribusiness, et cetera would survive even without the government subsidies and monopolies they currently enjoy. But while I’d hardly deny the importance of economies of scale, I think it is important to remember that economies of scale represent a trade-off between gains and losses. There are diseconomies of scale, just as there are economies of scale – as scale increases, so do the costs of communication and management within the larger workforce, the costs of maintaining heavier equipment, the difficulty of accounting and efficiently allocating resources as more transactions are internalized within the firm, and the difficulty of regearing such a large mechanism to respond to new challenges from new competitors and changing market conditions.^[2] The question is not whether or not there are economies of scale; there are, and there is also a point at which the economies of scale are outweighed by the diseconomies. The question is where that point is; and whether, in a free market, the equilibrium point would tend to shift towards smaller scales, or towards larger scales. When government monopolies and rigged markets artificially encourage large, consolidated, bureaucratic forms of organization — organizations which can better afford the high fixed costs imposed by regulatory requirements, can better lobby for subsidies, can better capture regulatory bodies and use them to advance their own interests, etc. — that shifts the balance by forcing up the rewards of scale. When the same measures punish small competitors in favor of market incumbents, and especially when it punishes informal, small-scale community or personal uses of scarce resources, in favor of formalized commercial uses, government forcibly pushes the diseconomies of scale down, by suppressing competitors who might eat the eggs of the political-economic dinosaurs. In both cases, the most pervasive and far-reaching forms of government economic intervention tend to deform economic life towards formalization, commercialization, consolidation, hyperthyroidal scale and the complex hierarchy that’s needed to manage it. Not because these things are naturally demanded by economies of scale, but rather because they grow out of control when the costs of scale are socialized and the competitive pressures and alternatives burned out by government monopoly.

1. ^[1]For more on the last point, see Three notes for the critics of the critics of apologists for Wal-Mart.↩
2. ^[2]For a detailed discussion of the diseconomies of scale, see Kevin Carson (2007), Economic Calculation in the Corporate Commonwealth.↩

I saw this on SNL (yeah, I know) a couple weeks ago while I was visiting my folks in Alabama.

This is a truly awful impression, but if you can get around that, I think that the sketch is one of the few things SNL has done in a long time that’s both genuinely funny and politically insightful.

Thanks to a mention by Matt Welch, here’s Chris Hedges, in truthdig last month, writing Stop Begging Obama and Get Mad:

The right-wing accusations against Barack Obama are true. He is a socialist, although he practices socialism for corporations. He is squandering the country's future with deficits that can never be repaid. He has retained and even bolstered our surveillance state to spy on Americans. He is forcing us to buy into a health care system that will enrich corporations and expand the abuse of our for-profit medical care. He will not stanch unemployment. He will not end our wars. He will not rebuild the nation. He is a tool of the corporate state.

The right wing is not wrong. It is not the problem. We are the problem. If we do not tap into the justifiable anger sweeping across the nation, if we do not militantly push back against corporate fraud and imperial wars that we cannot win or afford, the political vacuum we have created will be filled with right-wing lunatics and proto-fascists. The goons will inherit power not because they are astute, but because we are weak and inept.

— Chris Hedges, truthdig (2009-09-14): Stop Begging Obama and Get Mad

And here’s Robert Scheer on the Changeling’s first year of rule:

A president has only so much capital to expend, both in tax dollars and public tolerance, and Barack Obama is dangerously overdrawn. He has tried to have it all on three fronts, and his administration is in serious danger of going bankrupt. . . . Yes, Obama was presented with a series of crises not of his making but for which he is now being held accountable. He is not a "socialist" who grew the federal budget to astronomical proportions. That is the legacy of George W. Bush, who raised the military budget to its highest level since World War II despite the end of the Cold War and the lack of a formidable military opponent— a legacy of debt compounded by Bush's decision to first ignore the banking meltdown and then to engage in a welfare-for-Wall-Street bailout. And it was Bush who gave the pharmaceutical companies the gift of a very expensive government subsidy for seniors' drugs.

But what is nerve-racking about Obama is that even though he campaigned against Bush's follies he has now embraced them. He hasn't yet managed to significantly reduce the U.S. obligation in Iraq and has committed to making a potentially costlier error by ratcheting up America's "nation-building" role in Afghanistan.

Just as he was burdened with the Afghanistan situation, Obama was saddled with a banking crisis he didn't cause, and the worst that can be said of his attempted solutions to the financial mess is that they were inherited from Bush Treasury Secretary Henry Paulson. But Obama, who raised questions before his election about the propriety of a plan that would rescue the banks but ignore the plight of ordinary folks, has adopted that very approach as president. He elevated Lawrence Summers and Timothy Geithner, the two Democrats most closely aligned with Paulson's policy, to top positions in his government.

. . . Without a government program as a check on medical costs, Obama will end up with a variant of the Massachusetts program, one that forces consumers to sign up with private insurers and costs 33 percent more than the national average. He will have furthered the Bush legacy of cultivating an ever more expensive big government without improving how the people are served.

— Robert Scheer, truthdig (2009-09-15): Obama's Presidency Isn't Too Big to Fail

Here’s Jesse Walker, in an article from a couple weeks ago for reason.com, Obama Is No Radical: But maybe we’d be better off if he were.

Thus far, the president’s domestic agenda has been many things, but radical it isn’t. Radicals make sudden turns. Obama sometimes slams his foot on the accelerator—just look at projected spending for the next few years—but he hardly ever tries to change direction. Radicals tear down centers of power. When Obama is faced with a crumbling institution, his first instinct is to prop it up.

That was most obviously true with the bailouts, a series of corporate preservation programs that began before he took office and have only increased since then. Candidate Obama voted for the Troubled Asset Relief Program, the 2008 bailout for failing financial institutions, and he personally intervened to urge skeptical liberals to support it. After Congress refused to authorize a bailout of the car companies, Obama followed George W. Bush in ignoring the plain language of the law and funneling funds to them anyway. Like Bush before him, Obama took advantage of such moments to adjust the institutional relationship between these nominally private businesses and the state: firing the head of General Motors, urging the company to consolidate brands, pushing for new controls on Wall Street pay. But the institutions themselves were preserved, in some cases enriched. The radical thing to do would have been to let them collapse.

And no, I’m not using “radical” as a euphemism for “free-market libertarian.” A radical Obama still might have extended assistance to the people displaced by the corporate failures, perhaps even setting up a generous guaranteed income scheme. He might have broken up the big banks. He might have done all sorts of things, some wiser than others. But he would not have strengthened the corporate-state partnerships bequeathed to him by Bush.

. . . Now we have health care reform. Here you might actually expect the president to veer in a new direction and let a powerful institution die. After all, it’s been only six years since he described himself as “a proponent of a single-payer, universal health care plan,” and if he were serious about that it would mean the end of the private health insurance industry. . . .

First, it’s increasingly unlikely that a public option will be a part of the bill that emerges, in which case we’ll be left with an enormous boondoggle for the industry: a law requiring every American to buy health insurance or else face legal sanctions. . . . Second, and more important, a system with more government-provided insurance, even one with only government-provided insurance, would still accept the institutional premises of the present medical system. Consider the typical American health care transaction. On one side of the exchange you’ll have one of an artificially limited number of providers, many of them concentrated in those enormous, faceless institutions called hospitals. On the other side, making the purchase, is not a patient but one of those enormous, faceless institutions called insurers. The insurers, some of which are actual arms of the government and some of which merely owe their customers to the government’s tax incentives and shape their coverage to fit the government’s mandates, are expected to pay all or a share of even routine medical expenses. The result is higher costs, less competition, less transparency, and, in general, a system where the consumer gets about as much autonomy and respect as the stethoscope. Radical reform would restore power to the patient. Instead, the issue on the table is whether the behemoths we answer to will be purely public or public-private partnerships.

So I can’t agree with Horowitz, Hannity, or Andy Williams. The president could pal around with militiamen, hook a money hose from the Treasury to ACORN HQ, and sleep each night with a Zapatista plush doll, but as long as his chief concern is preserving and protecting the country’s largest corporate enterprises, the biggest beneficiaries of his reign will be at the core of the American establishment.

— Jesse Walker, reason (2009-09-30): Obama Is No Radical: But maybe we’d be better off if he were.

If you want a recipe for real disgust with the prevailing political establishment, and a real opening for radical critique, one of the things that has to happen is that dissidents need to begin to see that even the longed-for best-case scenario can’t possibly deliver what they want, because what they were promised just won’t fit through the political channels that they had put their hope in. An obvious tool like George W. Bush inspires a lot of fear and loathing; but he also inspires a lot of faith in the myth that if only someone who wasn’t such an obvious tool were in power, these problems would all get sorted out right quick. But when you have a ballyhooed reformer holding the reins of power, over-promising and under-delivering — and when it becomes increasingly clear that politics as usual will keep on keeping on — that’s often when you begin to see a real chance for a crack-up. If the organizers and the dissidents know what to make of the situation, knows how to connect with that kind of disappointment and anger, and can offer a real alternative to the failure of within-the-system political reforms. (Which is part of the reason why I take out-Lefting the Left, and introducing people-powered, direct-action alternatives to electoral politics, to be really essential for left-libertarians right now.)

Perhaps it’s appropriate that we’re watching this go down as we pass through the 20^th anniversary of Fall 1989. I can only Hope^TM that we might yet see Barack Obama end up playing the Gorbachev of American imperial politics.

• Checking out the competition.

  

  Via Wendy McElroy (2009-04-29): The Farce is strong with this one. Your challenge, should you choose to accept it: write your own caption in the comments.

• Mutual Aid. bfp, flip flopping joy (2009-05-26): Help bring single mamis to the Allied Media Conference. So dig deep into your pockets and spread the word. We need these mamis here, and as such, we need your help. SPREAD THE WORD. Demand people buy the CD’s. Refuse to free people’s pet rocks until they have donated.

• Established churches only, please. Drew Zahn, WorldNetDaily (2009-05-22): Home: No place for Bible study. In which a San Diego home Bible study group is confronted by the county government’s war on the informal sector.

• The War on the Informal Sector, cont’d. Brad, WendyMcElroy.com (2009-04-26): Book Rental Is Illegal?

• Against the Intellectual Enclosure Movement. Kevin Carson, Center for a Stateless Society (2009-05-15): Copyright Communism?

• Gagsters in Blue. Kevin Carson, Center for a Stateless Society (2009-05-22): Gangsters in Blue and William Grigg, LewRockwell.com Blog (2009-05-13): Gang-Bangers in Blue. The Gangsters are still on their game. If we hope to resist it, the first thing to do is to understand it, and in that interest, I encourage all anti-statists to make as much use of this phrase as possible. And not just because I run GangstersInBlue.org (Rather, I run the website because I think it’s important to get the phrase out there.)

• We’re like a tick. Hey man, you said it, not me. Birmingham, Alabama is getting its own storm-trooper elite saturation squad to swarm targeted neighborhoods, apparently with a special focus on socioeconomic cleansing (street corner issues like narcotics and prostitution). (Cf. GT 2008-12-05: Don’t turn your back on the Wolfpack on saturation tactics.)

• On principles. Julian Sanchez (2009-05-04): Morality Isn’t Free

• Pull the other one. Sheldon Richman, Free Association (2009-05-19): The CIA Wouldn’t Lie! Reality dials Washington, D.C. and gets sent straight to voicemail.

• Today in news of the obvious. Las Vegas Sun (2009-05-23): [A government] Safety program goes awry and Las Vegas Sun (2009-05-19): Bank bailout does little for those who need help most . Don’t look so surprised.

• State socialism means never having to say you’re sorry. @ndy, Andy the Slack Bastard (2009-05-25): Dear President Chávez. In which Hugo Chávez, revolutionary President-for-Life, continues his far-sighted socialist leadership by having 14 union steelworkers sent to prison for 5 to 10 years as punishment for going on strike. He was able to do this because their boss is the Venezuelan government, due to a nationalization which state socialists hailed as a triumph for the working class. Meanwhile, Australian Anarchists reply by sending an open invitation for Citizen Chávez to come to Australia for a special fraternal greeting from the Biotic Baking Brigade.

• The Two Socialisms and the Revenge of Proudhon. Coming to a theater near you this summer. Shawn Wilbur, In the Libertarian Labyrinth (2009-05-07): French mutualism beyond Proudhon

• You say pissed-off, man-hating, dykes with an excess of body hair like it's supposed to be a bad thing..., cont’d. Roderick Long, Austro-Athenian Empire (2009-05-25): How to convert a big tent into a small one.

• Unbreaking the business model. Roderick Long, Austro-Athenian Empire (2009-05-25): Contingency markets and IP Want to reward innovation? Don’t fall back Intellectual Protectionism to force others to support your broken business model; instead, use the web to discover demand and pay for supply.

• On the web as distributed computing platform. Tim Bray, ongoing (2009-05-25): HTTP and the Fallacies of Distributed Computing

• On living with summer stars and dystopia. soul searching with christ and gacy (2009-05-25): the dead flag blues

Communications:

• Modesto Anarcho #11. Issue #11 of the valley’s insurrectionary journal of class struggle is out and now available for reading online.

• 2nd annual Hamilton Anarchist Bookfair (June 6). Pat Murtagh, Molly’sBlog (2009-05-24): CANADIAN ANARCHIST MOVEMENT-HAMILTON: POLICE KEEPING A BEADY EYE ON THE HAMILTON ANARCHIST BOOKFAIR. Check it out both for the announcement of the bookfair (which is coming up on June 6 in Hamilton, Ontario), and also for a report on and reply to Ontario hate-cops who have lots of government funding and nothing better to do with their time than nose around for hate crimes at anarcho book bazaars.

• San Jose Anarchist Cafe (June 7). The Anarchist Cafe is not a place, it’s an event: an informal meet-up for folks interested in hometown anarchy. There’s a new A-Cafe getting started in San Jose, California; the first-ever meeting is happening on Sunday, June 7, 2009. See http://sanjose.anarchistcafe.org/ for details and contact information.

• Quote for the Day: After the end of the Civil War, many former slavers tried to contact the black men and women they had once enslaved — even those who had escaped during the war and headed north — to try to convince them to return to the plantation and work the land as hands or tenant farmers. One of those freedmen, Jourdon Anderson, wrote a letter back to his former captor, explaining the terms on which would return. This may be my favorite thing that I read all week. Emphasis is added.

  Dayton, Ohio, August 7, 1865

  To My Old Master, Colonel P.H. Anderson
  Big Spring, Tennessee

  Sir: I got your letter and was glad to find you had not forgotten Jourdon, and that you wanted me to come back and live with you again, promising to do better for me than anybody else can. I have often felt uneasy about you. I thought the Yankees would have hung you long before this for harboring Rebs they found at your house. I suppose they never heard about your going to Col. Martin’s to kill the Union soldier that was left by his company in their stable. Although you shot at me twice before I left you, I did not want to hear of your being hurt, and am glad you are still living. It would do me good to go back to the dear old home again and see Miss Mary and Miss Martha and Allen, Esther, Green, and Lee. Give my love to them all, and tell them I hope we will meet in the better world, if not in this. I would have gone back to see you all when I was working in the Nashville hospital, but one of the neighbors told me Henry intended to shoot me if he ever got a chance.

  I want to know particularly what the good chance is you propose to give me. I am doing tolerably well here; I get $25 a month, with victuals and clothing; have a comfortable home for Mandy (the folks here call her Mrs. Anderson), and the children, Milly, Jane and Grundy, go to school and are learning well; the teacher says Grundy has a head for a preacher. They go to Sunday School, and Mandy and me attend church regularly. We are kindly treated; sometimes we overhear others saying, Them colored people were slaves down in Tennessee. The children feel hurt when they hear such remarks, but I tell them it was no disgrace in Tennessee to belong to Col. Anderson. Many darkies would have been proud, as I used to was, to call you master. Now, if you will write and say what wages you will give me, I will be better able to decide whether it would be to my advantage to move back again.

  As to my freedom, which you say I can have, there is nothing to be gained on that score, as I got my free papers in 1864 from the Provost Marshal General of the Department of Nashville. Mandy says she would be afraid to go back without some proof that you are sincerely disposed to treat us justly and kindly–and we have concluded to test your sincerity by asking you to send us our wages for the time we served you. This will make us forget and forgive old scores, and rely on your justice and friendship in the future.

  I served you faithfully for thirty-two years and Mandy twenty years. At $25 a month for me, and $2 a week for Mandy, our earnings would amount to $11,680. Add to this the interest for the time our wages has been kept back and deduct what you paid for our clothing and three doctor’s visits to me, and pulling a tooth for Mandy, and the balance will show what we are in justice entitled to. Please send the money by Adams Express, in care of V. Winters, esq, Dayton, Ohio. If you fail to pay us for faithful labors in the past we can have little faith in your promises in the future. We trust the good Maker has opened your eyes to the wrongs which you and your fathers have done to me and my fathers, in making us toil for you for generations without recompense. Here I draw my wages every Saturday night, but in Tennessee there was never any pay day for the Negroes any more than for the horses and cows. Surely there will be a day of reckoning for those who defraud the laborer of his hire.

  In answering this letter please state if there would be any safety for my Milly and Jane, who are now grown up and both good-looking girls. You know how it was with Matilda and Catherine. I would rather stay here and starve–and die if it comes to that–than have my girls brought to shame by the violence and wickedness of their young masters. You will also please state if there has been any schools opened for the colored children in your neighborhood. The great desire of my life now is to give my children an education, and have them form virtuous habits.

  Say howdy to George Carter, and thank him for taking the pistol from you when you were shooting at me.

  From your old servant,

  Jourdon Anderson

  The letter was reprinted by Lydia Maria Child in her anthology, The Freedmen’s Book. Jourdon Anderson’s body now rests in the Woodland Cemetary, in Dayton, Ohio, so it seems that his old captor never accepted his offer. For reference, the back wages he demanded — $11,680 in 1865, before adding interest — would be worth about $162,452 in 2008 dollars.

  Discovered thanks to stuff white people do (2009-04-28)

• The invasion begins tomorrow: SubRosa community space (2009-05-02): First Ever Santa Cruz Anarchist Convergence! May 7-11. The Santa Cruz Anarchist Convergence is coming to town! Yes, here, between the forest and the ocean, among the students and the yuppies, where Santa Cruz anarchists have fostered a close-knit community dedicated to destruction of this world and the creation of another. Santa Cruz is a hub of anarchist culture and resistance, with a long history of radical struggle and active anarchist projects spanning decades. Santa Cruz is proud to host the Santa Cruz Anarchist Convergence, a four-day anarchist event for building community and resistance and sharing radical ideas.

• More one-way mirror transparency (+): Jesse Walker, Hit & Run (2009-04-23): In Bailouts End Responsibilities.

• On crony-statism, state capitalism, and living in a bubble: Sheldon Richman, The Goal Is Freedom (2009-05-01): Of, by, and for the elite

• Libertarianism or Barrbarism? Roderick Long, Austro-Athenian Empire (2009-05-04): More Crap from the Libertarian Party (with a hat tip to Soviet Onion in the comments back here). In which the Libertarian Party sends out a press release urging the United States government to control the border, escalate the use of police-state checkpoints against immigrants, and consider all would-be immigrants diseased until proven healthy.

  I’d be pissed if I weren’t beyond caring about anything the LP says or does. Individual party members are often perfectly good people, and well worth talking to, and well worth inviting to something new and better; but the party, as an organization, is worth taking notice of only as an enemy, to be shoved out of the way along with the rest of the belligerent busybody Know-Nothing creeps.

• He’s wasn’t using it, anyway: Mike Gogulski (2009-05-03): Steal this number: 595-12-5274

• More on decentalism and localism: A couple of comments from Darian Worden following up on the recent monster thread here: DarianWorden.com (2009-04-27): Individualist International and DarianWorden.com (2009-04-30): Stick It To Your Kind. Whether or not I agree with Darian about multiculturalism depends on what the word’s being used to mean (there’s a lot of different things called multiculturalism, some of them descriptive theories about American history; some of them normative theories; some of them overtly relativistic; others universalistic; etc.). Otherwise, twinkles.

• On the production of knowledge in a peer-to-peer society: Michel Bauwens, P2P Foundation (2009-04-27): Ryan Lanham: dissolving universities?. I think that the discussion underestimates the importance of architecture and physical space in creating scholarly community; I think it also underestimates what I think would be the most noticeable effect of less businesslike, more mutualistic universities, without the distorting effects of state funding and state-imposed accreditation systems — that they would be smaller, more numerous, and less oriented towards churning out professional degrees in subjects that would be better taught completely outside of the university setting, if not for the political-economic distortions that shove them into institutional structures where they don’t belong. I also protest the notion that there’s something wrong with esoteric subject-matters or that best-selling authors, just as such, somehow have a better grip on what’s relevant than scholars working intensely on a tightly-focused subject. (Surely they have a better grip on what’s relevant to people outside the University. But that’s not necessarily the kind of relevance that a University ought to be concerned with.) But I agree that Universities are set for a radical change, in an increasingly peer-to-peer world, and that the change will involve less institutional aping of business, a more mutualistic orientation, and hopefully less credentialism. It’s an important discussion and this is a good start.

• I’ll never finish the Internet: Dare Obasanjo, (2009-05-05): RSS readers modeled after email clients are fundamentally broken. Actually, I’m inclined to say that presently-existing e-mail clients are also fundamentally broken, although they call for a different sort of fix.

• Shameless Self-Promotion opportunities: Jeremy Trombley is now running a regular What Are You Up To? Wednesday feature.

(Quote thanks to Sheldon Richman 2009-04-10: Bad Regulation Drives Out Good.)

Here is Senator Charles Schumer (D-NY) — who informs us that in conflicts between Wall Street and Main Street, he sides with Main Street and always has — expounding on the governing party’s new notion of transparency in hyperregulatory bailout capitalism:

We are working on major financial reform…. You're gonna find a different system of regulation. The real problem—and this is government's fault ...—when the financial world changed, the system of regulation didn't.... That will change. There will be a strong, quiet, hopefully more unified federal regulator.... And he's gonna be tough–or she. But they're gonna be quiet. So like when Bear Stearns began to run into trouble, they're gonna call the heads of Bear Stearns in and say, All right fellas, you're getting rid of those two hedge funds; you're gonna raise more capital—even if means you have lower profitability. We're not gonna tell anyone you're doing this, but you do it or we're gonna take sanctions against you. ... You don’t need a lot of voices, yelling, because that just weakens the institution. You need a tough, strong regulator, unified—no holes in the system— ... who ... sees the problem ahead of time, so they have complete transparency, they know exactly what's going on ... and they come in and say straighten up even if your ... profitability is lower and your stock has to go down.

— Senator Charles Schumer (D-NY), Morning Joe (2009-04-06), MSNBC. Transcript available.

Normally, in politics, transparency is used to refer to norms and processes that allow ordinary people to find out what government or other large institutions are doing with their money or how those institutions are making the decisions that affect their lives. For Charles Schumer, transparency in government regulatory agencies apparently means that government regulators will have complete access to information about everybody else’s business — and will call in the heads of large financial institutions to a secret meeting, behind closed doors, where they will make secret decisions, behind closed doors, which they will force on institutions whose decisions affect millions of people, which will be forced to comply with special requirements and subsidized with special government deals, which both the government and those institutions will deliberately conceal from the public, with the explicit purpose of preserving the economic status quo, and frustrating any effort by ordinary folks to find out what the hell the government is doing on their dime and supposedly in their names. Under Schumerian transparency, government regulators will know everything about what’s going on, and they will conspire with big bankers to make sure that you know nothing.

For Schumer, transparency is a one-way mirror — like the kind you see on TV cop shows. Guess which side the prisoner is on.

See also:

• GT 2008-09-14: Omerta