Wednesday, December 12, 2012

How Big Finance Won the American Revolution – David V. Johnson Interviews William Hogeland

In his latest book, Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation, William Hogeland argues that America was born less from the fight between founding fathers and the British Crown, which we’ve all heard about, than from the fight between the founding fathers and American economic populists, which we haven’t heard enough about. The much-ballyhooed conflicts among John Adams, Thomas Jefferson, James Madison, and Alexander Hamilton over the federalist project belie their unity against pro-democratic financial and economic measures that would benefit the indebted masses at the expense of financial elites allied with the founders. That we still fight today over similar issues shows how central they are to our national identity. BR Web Editor David Johnson asked Hogeland about who Herman Husband was, why Robert Morris would feel at home working for Citigroup, and how George Washington would greet the Occupy and Tea Party movements.
Boston Review
How Big Finance Won the American Revolution
An Interview with William Hogeland
David V. Johnson


3 comments:

Erik Jochem said...

quote from the interview: "On the one hand, it seems obvious that the states shouldn’t have their own money, but that all came about in an economic context that I describe in the book, in which states’ ability to print money and make paper currencies legal tender was devaluing the assets of the elite investing class." Could someone explain to which extent this same antogonism still exists today between full blown MMT politics and devaluation (fears ?) of the investing class ?

Tom Hickey said...

Investors and creditors look at money chiefly as a store of value since they are savers and lenders and "debasement" affects both of these adversely. They prefer either price stability or a slightly disinflationary environment, and they think that "fiat money" will result in the opposite due increased policy space and political opportunism. They see a swelling monetary base and think "debasement."

This is essentially that the present kerfuffle is about. Investors and creditors see loose fiscal policy leading to slow growth and inflation, and higher taxes on the upper brackets, and they blame it on expenditure going to social hand-outs to win votes from the rabble.

Tom Hickey said...

JUst as important in this thinking at top is the view that capitalism is about growing capital and the nations that do this best will be most wealthy and most powerful. Thus, the chief aim of government economic policy should be to enhance capital formation, which translates to "make the wealthy wealthier." Anything that doesn't contribute to this is superfluous and government should shy away from undertaking it. Of course, anything that might detract from capital formation should be assiduously avoided.

So low taxes on income, rent, profits, and assets is desirable from this POV, as well as absence of regulation and other government intervention. On the other hand, subsidies that lead to greater capital formation and saving, on the notion that saving leads to investment, is to be pursued as a political aim.

Does this sound familiar? According to Hogeland, this is our heritage from the Founding Fathers. I haven't read Founding Finance yet, but I have followed his posts and reported on them here.