FDR and The Pursuit of Happiness.

The Royal commission into Australian banks and other financial institutions has already revealed a deep seam of corruption running through the top echelons of our largely unregulated Australian money industry. 

No doubt much more corruption and outright daylight robbery will be revealed as the Royal Commission continues probing. It is ordinary citizens who suffer most from the extravagances and unlawful activities of unregulated financial institutions.

The dangers to the ordinary citizens of unregulated financial institutions was foreseen nearly seventy five years ago by President Franklin Roosevelt. Unfortunately, Roosevelt’s great Human Rights plan of 1944 to provide economic security for all, died with him in 1945.

What has happened in Australian banking is the same as the situation in the USA, where a largely unregulated financial system caused the global financial crisis of 2008. The banks of Wall Street virtually control the US legislature and have always firmly resisted any attempts at regulation. They claim that government interference in the banking system smacks of Socialism which is anathema to free enterprise and the free operation of market forces.

Well, in August 2008 we all saw how that ended up. Greed and avarice in the Sub Prime Mortgage markets led to the collapse of Goldman Sachs, Lehmann Brothers, Freddy Mac and the Fanny Mae banks. The crisis quickly escalated to other US banks, eventually sending a tidal wave of financial destruction around the world. The whole world isre still recovering from the effects of that great Global Financial Crisis.

When the crisis of 2008 came, what did those great anti-Socialist protagonists of Free Enterprise, all strongly opposed to any government interference, do?  When all their banking walls came tumbling down, why, of course, they rushed to the government demanding help.

And what a lot of help they called for? $700 billion dollars’ worth of help. It was a classic case of what free marketeers are so prone to do. They capitalise their profits and then, when hard times hit, they get the government to socialise their losses.

When the Bill went to congress to give $700 000 000 000 to the banks, the American people railed and rallied against it. They flooded their congressmen’s offices with protest letters and the bill failed. Undeterred, the powerful bankers went to work on those congressmen, mainly Democrats, who had voted against the bill. Sweeteners were offered and eventually the $700 000 000 000 bill was passed…with no requirements for accountability as to how the money was to be spent. It was an unregulated gift to the banks of $700 000 000 000.

So, it was not surprising that many CEOs and board members of these failed banks awarded themselves payouts of $12 000 000 or so each. Lesser ranked bankers also got large payouts for presiding over the destruction of their own banks.

Many of these bankers made themselves out to be the poor victims of the whole financial mess which they themselves had created. Nobel economist, Joseph Stiglitz, commented at the time, “Indeed, some American financiers were especially harshly criticized for seeming to take the position that they, too, were victims … and it seemed particularly galling that they were continuing to hold a gun to the heads of governments, demanding massive bailouts and threatening economic collapse otherwise. Money was flowing to those who had caused the problem, rather than to the victims.

Worse still, much of the money flowing into the banks to recapitalize them so that they could resume lending, has been flowing out in the form of bonus payments and dividends.

Joseph Stiglitz, Fear and loathing in Davos, The Guardian, February 6, 2009.

Someone who was not afraid to strengthen the role of government in regulating banks and other industries was Franklin Delano Roosevelt, the 32^nd President of the United States of America. Roosevelt had witnessed the terrible ravages caused by the Wall Street stock market crash of 1929 and the misery of the Great Depression of the 1930s. When he came to power in 1933 he successfully introduced his New Deal, which placed government action central to expediting public works and welfare programmes to overcome rampant unemployment and poverty.

Unlike many modern politicians, who never look further than the next election for a quick, cosmetic fix to any problems, Roosevelt was a statesman who thought and acted for the long term greater good of society. In 1944, Roosevelt was burdened down, waging all-out war against Germany, Italy and Japan. However, even amid that great human upheaval, he cast his mind to the problems that would face Americans when the war was over.

In a radio speech to the American people on January 11, 1944, six months before the D-Day landings, Roosevelt delivered what became know as his “Bill of Human Rights” speech. It was a speech that said that the US Constitution guaranteed all citizens the rights to Life, Liberty and the Pursuit of Happiness. He said that the US Bill of Rights gave individuals certain rights of free speech, free press, trial by jury, etc., which provided for Life and Liberty, but that the citizens’ Pursuit of Happiness was constrained by their lack of economic security.

“It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.
This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights—among them the right of free speech, free press, free worship, trial by jury, freedom from unreasonable searches and seizures. They were our rights to life and liberty.
As our nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness.
We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. "Necessitous men are not free men." People who are hungry and out of a job are the stuff of which dictatorships are made.
In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.
Among these are:

• The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
• The right to earn enough to provide adequate food and clothing and recreation;
• The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
• The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
• The right of every family to a decent home;
• The right to adequate medical care and the opportunity to achieve and enjoy good health;
• The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
• The right to a good education.

All these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.
America's own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for all our citizens. For unless there is security here at home there cannot be lasting peace in the world.

Roosevelt died in 1945, before the war was won. His second Bill of Rights was never introduced to the Congress. The rights he wanted enshrined to provide protection for Americans against economic forces obstructing their Pursuit of Happiness were never enacted. The financial institutions continued to influence Congress and, in their unregulated way, to curtail the rights of the American citizens to economic security.

Ironically, America’s World War 2 enemies, Germany, Italy, Japan, all finished up with constitutions that upheld Roosevelt’s Human Rights manifesto. The United States, in nobly assisting these defeated enemy nations to form stable governments in peacetime after 1945, ensured that the citizens of those countries would have the economic security to live their lives in the pursuit of happiness. As did the citizens of the Scandinavian countries, which also modelled their governments according to Roosevelt’s Human rights principles.  The United Nations incorporated Roosevelt’s plan into its Charter of Human Rights in 1948.

Meanwhile, since 1945, the US Economic-Industrial complex has argued strenuously against any government regulation. It continued to promote the theory that trickle down economic was good for everyone. This theory holds that if the rich are making money and profits, wealth will trickle down to the rest of society.  Of course, “trickle down” proved especially good for the rich but there is no evidence of wealth trickling down to the poor.

Sadly, these days, our political leaders are far, far below the stature and lack the political vision of Franklin Delano Roosevelt. What a world tragedy that has proved to be. Roosevelt knew the way to economic security for all. The US example and now our own banking  Royal Commission show just how far unregulated financial institutions have led us astray.