Dealing with a Rigged System

Bill Clinton may have stolen the show at the Democratic convention, but it was the speaker preceding him who had the more powerful message.

Declaring that “the system is rigged,” Elizabeth Warren delivered perhaps the most candid statement ever made at a mainstream U.S. political event about corporate domination of American life.

While both speeches were meant to make the case for the reelection of Barack Obama, they took two starkly different approaches that highlighted a tension within the Democratic Party as intense as the one between it and the Republicans.

Clinton, basking in the nostalgia many people feel for the relative prosperity of the 1990s, did a good job in contrasting the GOP’s ideology of “you’re on your own” to a Democratic philosophy of “we’re in this together.” His call for a shared prosperity was based on a vision of “business and government actually working together to promote growth.” He insisted that “advancing equal opportunity and economic empowerment is both morally right and good economics.”

While Clinton derided the Republican narrative that every successful person is completely self-made as an “alternative universe,” he is living in a fantasy world of his own. That’s one in which corporations that have pursued self-interested policies that put the economy on the brink of disaster and ravished the living standards of most of the population are suddenly going to get religion about economic justice.

Clinton captured the absurdity of the Republican argument against Obama’s re-election: “We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in.” Yet the “we” in that statement actually includes more than George W. Bush and Republican members of Congress. The mess was caused primarily by the big banks, whose orgy of speculation was ushered in by the bipartisan financial deregulation of the Clinton era.

A more accurate rebuttal of the GOP’s bogus rugged individualism was provided by Warren: “Republicans say they don’t believe in government. Sure they do. They believe in government to help themselves and their powerful friends.” The Massachusetts senatorial candidate, refusing to kowtow to the sector that many Democrats turn to for campaign contributions, added: “Wall Street CEOs—the same ones who wrecked our economy and destroyed millions of jobs—still strut around Congress, no shame, demanding favors, and acting like we should thank them.”

Unlike Clinton, Warren acknowledged that contemporary big business is rife with corruption. She repeatedly depicted the economic system as being “rigged” and referred to the “rip-offs” perpetrated by the big banks. And in a rare linkage between conventional and corporate crime, she called for a society in which “no one can steal your purse on Main Street or your pension on Wall Street.”

This gets to the dilemma for Democrats. Do they ignore corporate crime, as Clinton chose to do, and make the far-fetched claim that government partnership with business will suddenly result in broad-based prosperity rather than widening inequality? If instead they follow Warren’s lead and highlight the venality of corporations, what kind of solution can they offer?

The Consumer Financial Protection Bureau championed by Warren is a good start. As Warren noted in her speech (without naming the culprit), the CFPB recently brought an enforcement action, the agency’s first, against Capital One for deceptive marketing of credit cards.

Yet the Obama Administration overall has shown little stomach for taking tough action against corporate criminals. Obama does not hesitate to talk about how bad things were when he took office, yet his Justice Department has done little to prosecute the banksters who created the crisis.

“President Obama believes in a level playing field,” Warren dutifully declared. “He believes in a country where everyone is held accountable.” But belief is not enough. If he is reelected, Obama will have to take on corporate misconduct and stonewalling on job creation in a much more aggressive way.

After Clinton finished his speech at the convention, Obama came out on stage to embrace him and share in the enthusiastic response of the audience. Yet in a second Obama term, he would do better to align himself with Warren’s call to show that “we don’t run this country for corporations, we run it for people.”