Op-Ed: Credit Crisis More Damaging Than Sept. 11 Author David Rothkopf explains why he believes the current financial crisis may have "greater and more lasting ramifications" than the terrorist attacks on Sept. 11. His op-ed, "9/11 Was Big. This Is Bigger," appeared Sunday in The Washington Post.
NPR logo

Op-Ed: Credit Crisis More Damaging Than Sept. 11

  • Download
  • <iframe src="https://www.npr.org/player/embed/95432617/95437102" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Op-Ed: Credit Crisis More Damaging Than Sept. 11

Op-Ed: Credit Crisis More Damaging Than Sept. 11

  • Download
  • <iframe src="https://www.npr.org/player/embed/95432617/95437102" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


Now the Opinion Page. The Dow dropped below 10,000 for the first time in four years today. We've seen Congress pass the giant bailout plan. Last month, employers cut more than 150,000 jobs. Obviously, this economic crisis is big, but how big?

In an op-ed in Sunday's Washington Post, David Rothkopf argues that the current financial crisis may well have far greater and more lasting ramifications than the terrorist attacks on 9/11. We have a link to that piece on our blog, npr.org/blogofthenation. David Rothkopf is currently a visiting scholar at the Carnegie Endowment for International Peace, and he's with us here in Studio 3A. Thanks so much for coming in.

Mr. DAVID ROTHKOPF (Author, "Superclass: The Global Power Elite and the World They Are Making"): It's a pleasure to be here.

NEARY: Let's start out with that comparison because people may find that a surprising comparison to look at this economic downturn and think, well, how do you even began to compare it to this terrible tragedy that occurred on 9/11 with the thousands of people who were killed?

Mr. ROTHKOPF: Well, of course, you know, the human toll of 9/11 was grievous and in no way by making a comparison does one want to minimize it. The reason to make comparison is to show how big and significant the events that are happening now really are. 9/11 was what many of us thought would be the sort of signal historical event of this presidency and perhaps of this decade. But here we are seven years later, and it's clear that something is happening in the global economy that is not only going to touch the lives of billions of people, have human toll itself as the economy goes under recession and particularly the poorest are hurt, but may actually change politics in America, the way the system works in America, and the way the system works in the world in ways that far outstrip that associated with 9/11.

I mean, after all, we were in a war on terror for decades before that. In fact, George W. Bush was not the first Bush put in charge of the war on terror. George H.W. Bush, when he was vice president under Reagan, was put in charge of a war on terror. That was not even the first attack on the World Trade Center. That had occurred eight years earlier. So that's been an ongoing thing.

I think what we're at here is the end of an era. In the United States and in the West you might call it the end of Reagan faturism(ph), the end of leave it to the markets, the end of, you know, it's always better if government does less. And it's akin to - you know, when Reagan started we were at the end of the run of the new deal. You know, it seems like ...

NEARY: And really, you really see it as that much of an era-changing moment?

Mr. ROTHKOPF: I absolutely do. I think, you know, the new deal ran 35 or 40 years. The Reagan era ran 30 plus years. And I think we're onto something or we will be onto something new here.

NEARY: Now, you write that this is the end of American-style capitalism and American supremacy. Let me ask you first about that American....

Mr. ROTHKOPF: Well, I didn't write that.

NEARY: Something to that effect.

Mr. ROTHKOPF: I said some people are asserting it's the end of American-style capitalism and American supremacy, and they're not just our enemies. They're, you know, allies in Europe, people who are within the financial system, so we need to take this warning very seriously.

NEARY: If it is the end of American-style capitalism, are we - what will replace it? Where are we going from here?

Mr. ROTHKOPF: I think American-style capitalism has come to be viewed as this kind of ideal where we adopt neo-liberal policies in which the government plays as little a role as possible, in which the kind of the Darwinist aspect of the market works. And you know, the strong survive and we go through, you know, creative destruction, and we let all of that happen, and we rely on the market to sort of determine what kind of a society we'll be and who will benefit.

And we say, look, we provide you with opportunity. If you seize that opportunity, that's enough. And what we've seen is, particularly in this era in which financial leaders have said we want to be self-regulating, which sort of took this to the ultimate extreme, is that when you rely on the market, the market overshoots, greed takes a toll, and the meltdowns can have dire consequences for millions and billions of people who are innocent bystanders.

And so government has a role to play. Government must step in. Government must balance it out. It must not only enforce laws that are on the books but we need to tackle with the real problems of how do you regulate global markets that are beyond the reach of national governments, that are full financial instruments that no one understands? I mean, it's hard to laugh but look what's happening today in the markets following this bailout. What is absolutely clear is no one in Washington and very few people on Wall Street actually understand what's happening right now.

NEARY: Yeah. I'd like to invite our listeners to join us. We want to know, do you agree that the long-term effects of the economic crisis will be greater than the aftermath of 9/11? So give us a call at 800-989-8255. And you can also send us an email, and that address is talk@npr.org. And again, my guest is David Rothkopf. He is a visiting scholar at the Carnegie Endowment for International Peace, and we are discussing his op-ed piece which appeared in the Washington Post on Sunday.

Is there any way, to go back to what you were saying earlier, which is that - I said you wrote it but you were quoting people saying that American-style capitalism, American supremacy may be at the end. One person, I think, who you mentioned, was the president of France, Sarkozy. I mean, is there any way to interpret those kind of comments, not that that's a direct quote but those kinds of inferences as being just anti-Americanism, a sort of moment of Europeans relishing a moment of America being in decline?

Mr. ROTHKOPF: You certainly can. And I think I've seen more headlines using the word "schadenfreude" in the past week, which speaks to their relishing the decline than I have in a long, long time. Having said that, you've got the president of France, you've got the German finance minister, you've got political leaders in the United Kingdom, you've got leaders on Wall Street, George Soros, talking about market fundamentalism having gone too far. You've got the Chinese, you've got the Japanese. You know, every place you look in the world, people are seeing cracks in the armor. Here was the system that was going to deliver wealth to everyone in the world. All you have to do was sit back, and in fact, if you were in government, the less you did the better the system was going to work.

And what has happened? Inequality has grown. The top thousand people in the world today have assets that are greater than that of the bottom 2.5 billion people in the world today. The markets themselves have turned into a casino. The meltdown is something that is now beyond the capability of government to control, and it looks like we are going to have to prepare ourselves for a downturn that will certainly be a recession, could be worse than that, could extend beyond the United States, and where the government is going to have to play a big role in helping people back to their feet.

NEARY: All right, let's take a call from Sean(ph) who's calling from Corvallis, Oregon. Hi, Sean.

SEAN (Caller): Hi. I'm glad to join you guys here. So I completely agree with your speaker there in that the effects of the financial crisis today will be much greater than the effects of the World Trade bombing. And the basis of my reasoning on that is that the World Trade bombing, crisis or whatever, we had a clear and defiant, definite enemy, you know, it was the terror-loving terrorists, and we could go after them.

And the response for economic was everyone should consume, which I think probably had a little to do with where we're at now because we have such a huge savings versus spending discrepancy in the whole nation - just as everyone, not just the government or anything but people in general - whereas today we have an economic crisis that no one knows a clear way to get out of. You know, we have these solutions being proposed but they're not concise and - I mean, they are concise, maybe, but they don't have any guarantee of working.

NEARY: Let me ask you something, Sean. I'm curious. After 9/11 I remember very clearly that there was a lot of talk about when are things ever going to be normal again. Do you have that sense right now that your sense of normalcy is being shaken up considerably?

SEAN: I think that the media has been a horrible driving factor, and it's such a media-rich environment we live in. It's driving down consumer confidence by just - the economy is driven by consumer confidence, and without consumer confidence being there and with everything for the last year has been about recession or economic downturn, whatever you want to call it, driving down consumer confidence - yeah, I'm not sure, I lost my thought there.

NEARY: Well, as we've been saying, it's a period of great uncertainty and many people are feeling like perhaps it's going to take a long time before we all feel like we've reached a sense of normalcy again like the time after 9/11. Thanks so much for your call, Sean.

SEAN: Thank you.

NEARY: Let me ask you, David. It sounds like you're saying we are at point where we have to create a whole - well, we can't create a whole new economic system, but what kind of global economy are we going to see and who is going to be in the forefront of creating it?

Mr. ROTHKOPF: Well, it remains to be seen who's going to be at the forefront of creating it. I mean, I was listening to you read the news and we have both candidates talking about absurd trivia in terms of each other's past while the stock market is down 700 points and last week's big story of the bailout doesn't seem to be working. So, you know, we do need to find leadership, and that's going to be a big issue.

But I think we need to recognize, first of all, that markets have a lot of value. They are vital to our success but markets have always needed to be regulated, and we need to find a proper balance between markets and government, recognizing that we're in a global economy. That means we need global governance mechanisms. Well, we may well need a global monetary authority that brings together all the leading governments of the world. I think we're going to really need to revamp, in fact, the entire system of global governance we've got.

We're going to need new regulations in the United States. We're going to need to use technology to make the financial system, which is impossibly complex right now, much more transparent not only to investors but also to regulators. We really need to rethink government from the bottom up, to find a better balance and to ensure that government can play its traditional role of regulator and also of promoting growth in the right places in an economy and supporting those that markets leave behind. Because as we've seen, markets don't have consciences, and if it were up to markets, the weak, the elderly, the sick, the people left bankrupted by the events like this, they would be left behind because that's the way of the market.

And we need to say, well, markets can do good but governments also have a role to play, and it's a copout to say, just let's leave them at the side of the road. We need to do government as efficiently and as effectively as we would expect businesses to operate, and that requires creative leadership and right now, you know, Congress has the lowest approval rating in its history, and I'm not 100 percent sure where that's going to come from.

NEARY: All right. Let's take another call now from Larry. He's calling from Chico, California. Hi, Larry.

LARRY (Caller): Yes. Thank you. Your question is, I guess, our opinion, is the 9/11 thing worse or better than what happened with the World Trade Center and this debacle that's going on right now in Wall Street? In my own thinking and my opinion is that hell, yes. This here is worse than the 9/11 thing because - well, yes, as awful as it was, well, they lost about 3,000 people - this here is going to kill a hell of a lot of people.

NEARY: Well, it's going to be tough on a lot of people, I think, yes. I think that's the point.

LARRY: Yeah, it depends on what your opinion or what your interpretation of "kill" is as opposed to going to totally bankrupt and being in a gutter or living out of a cardboard house.

NEARY: All right, Larry. Thanks so much for your call. I'm going to ask our guest to respond to your comment. And I just want to remind our audience that you are listening to Talk of the Nation from NPR News.

I don't think that you can talk, really, in terms of fatalities with regard to the current crisis. That's not exactly the point, I think, you were trying to make.

Mr. ROTHKOPF: Well, I'm certainly not. Although I do think that if we go from a U.S. recession to a global recession, inevitably, those kinds of downturns actually impact those who live in absolute poverty the most. And you know, we already have 35 or 40,000 children who die every day from lack of access to food, medicine or clean water, and those numbers will go up in a global economic downturn. Countries will be able to give less to help them. There will be less to go around. So there certainly will be fatalities out of this.

But it's not just that. It's not just saying the economic cost of this or the human cost is X or Y. It's whether we're really at a historical turning point. Whether in 50 years, people will look at this and say, this was much as the Depression was and that it changed our attitudes towards capitalism and towards democracy and towards the various countries in the world and what their leadership role is. And I think that it's quite clear that yes, it is. This is on the same scale.

NEARY: There is an email here from Derek from Wisconsin, and he says, based on the continuing work of Brad Setser(ph), Neurial Rubini(ph) - I'm not sure if I'm pronouncing that right - and others, we are at the same stages England was after World War I when confidence was lost in the pound sterling. We cannot imagine that we will not be in the center of the financial world but we very much will be pushed to the periphery over the coming decades as other countries establish trading relationships and other mechanisms to handle transactions.

Mr. ROTHKOPF: Well, look. This is a legitimate issue. Guys like Neurial Rubini have been predicting this was going to happen for some time, and it's a real concern. You know, when Fannie Mae and Freddie Mac were on the ropes, the Treasury Department got a call from the Chinese, our creditors, and they said, look, if you don't solve this problem, we are not going to continue to buy your debt. Well, if they don't buy our debt, if they don't buy treasury bonds, we don't get to do the things that we take for granted in the United States anymore.

We've just upped our debt ceiling to $11 trillion and yet we've got two candidates running for president saying, I wouldn't cut back, I wouldn't cut back in my programs. Well, that's ludicrous. It's ludicrous. Not only will those programs not be things that we can afford, but we're going to start to have conversations that you can't even talk about in polite society in Washington anymore.

NEARY: Much less if you're campaigning for presidency.

(Soundbite of laughter)

Mr. ROTHKOPF: Right. But the defense budget of the United States will be cut substantially in the next eight years because we can't afford it. And if we don't start to get our house in order, people are going stop buying our debt. They're going to stop using the dollar as the reserve currency and we will find ourselves like Britain on the sidelines. The point is we have a choice now. And the question is whether we'll seize that opportunity to make the right choices.

NEARY: David Rothkopf is the author of "Superclass: The Global Power Elite and the World They Are Making." He's currently a visiting scholar at the Carnegie Endowment for International Peace. Thanks for being with us today.

Mr. ROTHKOPF: My pleasure.

NEARY: This is Talk of the Nation from NPR News. I'm Lynn Neary in Washington.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.