Although the authors were focused on analyzing the developing world, it struck me that our economy in general — and this Congress in particular — has become increasingly "extractive." Income disparity in the United States has been rising steadily, and in the last few years, dramatically. Steadfast refusals to raise taxes even on the willing Warren Buffets of this country can only exacerbate the problem. Attacks on Medicare, Social Security, and other programs designed to benefit the poor, the middle-class and the elderly are one way to increase the relative status of the "haves." Voter suppression initiatives and anti-union measures are supported in Congress even though many of these efforts are occurring in newly "extractive" state legislatures (Wisconsin, Michigan and Ohio to name a few). Finally, the Citizens United decision, which essentially put a "for-sale" sign on every American election, is likely to ensure that the next Congress will be even less "inclusive" than this one.
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To top it all off, the Washington Post recently reported that during the ugliest days of the of the financial crisis, 34 members of Congress on both sides of the aisle had reworked their own financial portfolios after having interacted with Hank Paulson, Ben Bernanke, or Timothy Geithner. As you might imagine, those legislators managed to catch an earlier "flight to safety" than most of us. It would be hard to imagine anything more "extractive" than that, wouldn't it?
Despite these individual acts of self-interest, it has been Congress' collective failing that is most notable. Dodd-Frank is a vast and essentially earnest attempt to reign in a financial system run amok, but in a number of respects it has been sufficiently watered down to leave many of the banking system's most serious systematic vulnerabilities intact. Congress' total inability to effectively regulate our financial system puts all of us at risk.
The downgrades in the credit ratings of those major banks mean very little to the average consumer, but the downgrade in the credibility of Congress and the mess we have made of our financial regulatory structure that at least in part fomented the ratings agencies' analyses should give us all pause.
This is not an easy fix to be sure. Our economy has become so complex many would argue that it can't be effectively regulated. Let's hope they're wrong and that our representatives will have an epiphany that lifts them from the tar pit of partisanship, election year or not, and makes them leaders, not slaves to ideology or Grover Norquist inspired oaths. They must screw up the courage to get this thing right. If they fail, once again, the consequences are far worse than winning or losing an election. Because if we don't fix this problem — how shall I put this delicately? — we're screwed.
I'll have a Pina Colada, please.
Adam Levin is chairman and cofounder of Credit.com. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.