The Source of the Economic Crisis: A Chicago State of Mind

Dissident Voice – Maidhc Ó Cathai
Worried about the global economic crisis? It’s all in your head, says a leading financial expert.

And that’s the problem, according to Jeff Gates, author of the highly-regarded Democracy at Risk: Rescuing Main Street from Wall Street, a sequel to The Ownership Solution: Toward a Shared Capitalism for the 21st Century. The latter book was described by one reviewer as “the best book on economics for a generation,”¹ and praised by Ralph Nader as “a Capitalist Manifesto, a blueprint for spreading the benefits of capitalism more equitably.”

Gates, a former counsel to the U.S. Senate Committee on Finance (1980-87), identifies the source of the current economic crisis as a “shared mindset” into which we have been induced to put our faith, to the grave detriment of the majority but to the immense benefit of a very few.

While the events of September 2008 on Wall Street may have come as a shock to many – not least those who suddenly found themselves out of work or on the streets – they were “perfectly predictable” to a close-knit group of “financial sophisticates,” Jeff Gates maintains.

........What exactly does he mean by the “Chicago model”?
“At the core of this worldview lies a premise whose purpose is easily stated: ‘maximize financial returns and – trust us – all else will be fine.’ Faith in that perspective ensured today’s results,” Gates explains.

“As this ‘Chicago’ frame of mind gained the force of law through the ‘law and economics’ movement, the result became a globalized operating system best described as ‘money-on-autopilot.’ There lies the blame for this collapse – in that narrow ‘consensus’ perspective.”

The “law and economics” movement referred to by Gates also traces its origins to the University of Chicago. As key opponents of financial regulation, this movement was heavily funded by the same Olin Foundation that also supported neoconservatism through its funding of neocon think tanks such as the American Enterprise Institute. 

.....“The results of this purpose-driven ‘operating system’ were guaranteed to concentrate wealth and income and thereby undermine both democracies and markets. By equating personal freedom with financial freedom, we were induced to freely embrace the very forces that now jeopardize freedom,” Gates says.

“Nowhere in this operating system is there any provision for the values essential to the long-term health of communities: fiscal foresight, civil cohesion and environmental sustainability. Money is the only value granted a voice.”

Jeff Gates’ latest book, Guilt By Association: How Deception and Self-Deceit Took America to War, traces the corruption that plagues American politics to a network who “share an ideological bias sympathetic to Israel.” It should be read by concerned citizens everywhere, but especially in the United States, where the “Chicago” mindset has been most deeply embedded in its economic and foreign policy-making.

Endorsed by former U.S. Ambassador Edward Peck and Illinois Congressman Paul Findley (1961–1983),² Guilt By Association identifies those who have promoted aggressive economic and foreign policies that have been “ruinous” not only to America’s reputation but also to “moderate and secular Jews.” The latter, Gates points out, are often unfairly portrayed as “guilty by association” with the behaviour of these “elites and extremists.”

Who are these “elites and extremists,” and how do they make America appear “guilty by association”?
“When waging unconventional warfare, Defense Secretary Robert Gates points to the perilous role of ‘the people in between.’ Thus, for instance, while pro-Israelis induced the U.S. to wage war in Iraq with false and flawed intelligence, ‘the people in between’ created, promoted and reported intelligence ‘fixed’ around that pre-determined goal,” Gates explains.

“In the financial domain, ‘the people in between’ are securities bundlers, rating agencies and, most fundamentally, those who induce “the mark” (the public) to put their faith in the financial premise that enables this ongoing fraud.

........Perhaps not coincidentally, the intellectual roots of neoconservatism can also be traced to Chicago, where University of Chicago Professor Albert Wohlstetter’s cadre of students included Richard Perle and Paul Wolfowitz. Wohlstetter himself had been a protégé of another University of Chicago Professor, Leo Strauss. Considered to be the “intellectual godfather” of the neocons, Strauss significantly advocated a “philosophy of deception.”³

......“Lawmakers seek to solve a systemic problem well downstream of its source. By piling on more interest-bearing debt without addressing the underlying problem, they are unleashing long-term financial forces destined to make a bad situation worse – at a staggering cost,” he says.

“We can anticipate stagnation and inflation while ‘the people in between’ continue to amass more assets (at distressed prices) and collect more interest on more taxpayer-secured debt. The pace is poised to quicken in this policy-enabled redistribution of wealth – from the bottom to the top.” Full story