Jay W. Richards - Infiltrated: How to Stop the Insiders and Activists Who Are Exploiting the Financial Crisis to Control Our Lives and Our Fortunes

Copyright 2013 by Jay W. Richards. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-181696-0
MHID: 0-07-181696-8

The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-181695-3, MHID: 0-07-181695-X

E-Book conversion by CodeMantra
Version 2.0

All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.

McGraw-Hill Education books are available at special quantity discounts to use as premiums and sales promotions or for use in corporate training programs. To contact a representative, please visit the Contact Us page at www.mhprofessional.com.

TERMS OF USE

This is a copyrighted work and McGraw-Hill Education and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hill Educations prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms.

THE WORK IS PROVIDED AS IS. McGRAW-HILL EDUCATION AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill Education and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill Education nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGraw-Hill Education has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill Education and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.

To my parents, Rusty Richards and To Richards

E ven if you havent been paying close attention for the last five years, you know that the 2008 financial crisis led to the worst recession since the Great Depression, swelled the ranks of the unemployed, and saw multibilliondollar companies disappear overnight and millions of people either lose their homes or walk away from their mortgage contracts. You likely have heard that the meltdown nearly crippled banks and other financial industries worldwide. You also hope that the new regulatory bodies and governmental bureaus created under the DoddFrank Wall Street Reform and Consumer Protection Act will help prevent a recurrence.

What actually caused the meltdown? This has been the subject of much speculation. Weve all been told that it was largely the fault of greedy Wall Street bankers who got rich while impoverishing ordinary people and leaving the economy in a shambles. From the earliest days of the crisis, this was the seemingly unanimous conclusion of the media and commentators, and it stuck. But even the 10 members of the official government commission formed to study the crisis couldnt agree on its causes. How likely is it then that the politicians in Congress at the time of the crisis, or reporters for Time, Newsweek, and CNN, truly understood it? And if they did not understand it, how likely is it that the politicians and reporters favored remedies will actually cure the disease?

If youve studied the crisis beyond the firstblush impressions, you may be aware that a myriad of issues play a role in this story. But you probably dont know the intriguing details of how Washington insiders, joined by activists and philanthropists in the private sector, laid the foundation for the crisis that broke into full public view in the autumn of 2008. Or that they did so through a cluster of political efforts and policy decisions originally designed to help the poor and disenfranchised. Those policies ultimately had the curious effect not only of hurting the poor but also of lowering many middleclass Americans into the ranks of the poorwhile further empowering both the special interest groups who pushed for the policies and the political class who enacted them.

Even less well known, and perhaps even more important to understand, is that many of the same insiders and activists responsible for creating the financial crisis are now claiming to have the solutionand using the crisis to infiltrate and seize control of large swaths of the American economy. To do so, they are using the apparatus of reform to make permanent the very causes of the meltdown. Aspects of this story have leaked out in dribs and drabs, but many important and disturbing elements of this tale are revealed here for the first time. Understanding them is the first step in recognizing what we can do to prevent a far more serious financial and political disaster.

How I came to tell this story requires a little autobiographical background, since its not obvious why a philosopher with an interest in economics would write about the financial industry. You see, I recognize many of the insiders, activists, and philanthropists I discuss in these pages because I thought just like them not so long ago. If you were to travel back to 1985, to a small liberal arts college near Austin, Texas, youd find there an enthusiastic freshman listening with rapt attention to all the standard arguments against capitalism. The college was welcoming and stately, its buildings constructed with a white stone indigenous to South Texas. The school was in the process of shedding its religious roots in favor of a social gospel similar in origin, if not in presentation, to that of the Reverend Jeremiah Wright, President Obamas longtime pastor in Chicago. It was a liberal setting, encouraging political activism and appealing to bright young minds eager to absorb enough knowledge and wisdom to change the world.

During my freshman year, my political science professor assigned The Communist Manifesto, by Karl Marx and Friedrich Engels, along with a book by American socialist Michael Parenti called Democracy for the Few. I read voraciously, and it wasnt long until I was convinced that if I cared about the poor, if I cared about justice, I needed to oppose capitalism and to champion aggressive wealth redistribution schemes. I adopted these ideas in a scholastic setting imbued with Protestant Liberalism, with a belief that human beings, using their own intellects and abilities, can perfect themselves and society. In this atmosphere, I found it easy to soften the violent and atheistic edges of Marxist philosophy and repackage it in a more idealistic form that I imagined would elevate the poor.