Some crisis links (12.1 to 12.2.2008)

The always insightful Steve Fraser questions the use of the New Deal as a model for the Obama administration. Why question this comparison? First of all, after claiming that Obama's election truly does express the promise of a new era, Fraser then points to Obama's Clinton "fetish" as evidence indicating one impediment baring a return to New Deal activism, a commitment to responsible government and a concern for the plight of the common man and woman. His Cabinet choices reveal this obstacle because the Clinton administration shared a market fundamentalist bias with its GOP predecessors and successor. According to Fraser, "recycled Clintonism is recycled neo-liberalism." Therefore, a return to Bill Clinton's policies will not put an end to the "beggar thy neighbor" class politics that has defined America during the era of conservative dominance. Rather, a reimplementation of Clintonomics would entail more of the same fantastic thinking since Clintonomics can and ought to be considered a member of the neoliberal family, which also includes the economic programs of the Reagan and Bush presidencies. Adventurous Obama is not, as Fraser rightly asserts.

Second, despite having endured decades of market fundamentalist indoctrination and practice, Americans cannot claim to be innocent of governmental intervention in the economy as they were before FDR took office. The New Deal existed and endured. It left a legacy. So also the Great Depression. One aspect of that heritage is the responsibility Americans now place on their government for ensuring a viable and growing market economy. Any administration, no matter what ideological commitments it has made in the past, will attempt to manipulate the economy when it confronts an economic crisis. As Fraser states, "inaction has ceased to be a viable option for Washington." A government will act because the electorate if not also factions of the elite will hold it accountable for the mere presence of the crisis. Resolving the crisis is thus a political encumbrance a government must sometimes confront, one that is an intrinsic feature of a modern economy, especially an economy systematically linked to a democratic polity. A prudent government surely would make a good faith effort to resolve the crisis.

Third and accordingly, the Bush administration certainly has sought to manage the current economic crisis. Unfortunately but unsurprisingly, the Bush-Paulson crisis management program (.pdf) that eventually made it through Congress now appears to be but another instance of the GOP using the American state as a wealth extraction mechanism. By intent and, perhaps, by habit, the use of this mechanism in the resolution of this crisis only serves to benefit a fraction of America's finance capital. Nearly every other American, including those yet to be born, must contribute in to securing the health and welfare of this 'lucky' sector of the economy. Even modern propaganda techniques feeding a practically unlimited number of media outlets failed to obscure the kleptocratic features of the Bush-Paulson program, a failure which completely destroyed the inept McCain campaign. Moreover, it is not wholly obvious what the Bush administration could have done to resolve the crisis given its ideological commitments and often-demonstrated incompetence. Engorging itself and feeding its close friends while the common person pays the check is about all the GOP does well.

It is within this context, one defined by danger and greed, that Fraser asks: "How do we get beyond the bailout state?"

In Fraser's estimation, we are living through the moment when America can and ought to break with its market fundamentalist past. "A new era beckons," he writes. To enter this new era Americans should reject neoliberal thinking and practice, replacing these threadbare ideologies with a political economy consistent with democratic institutions and human well-being. Solidarity and a commitment to the commons, not rent-seeking selfishness, should inform the policy of this new era.

Yet, Fraser does not end his essay on a purely hopeful note. Who among the emerging Obama administration would advocate taking this path? He asks the question because it now looks obvious that no one among the Clintonistas would ever speak on behalf of this novel future.

Jeremy Scahill compiled a list of right-wingers who applauded Barack Obama's Cabinet nominees.

Governor Arnold Schwarzenegger declared (see this and this) a fiscal emergency on Monday (via Naked Capitalism).

After considering the significance of the recent Mumbai terrorist attack, Deepak Tripathi wrote:

The president-elect of the United States, Barack Obama, had made the economy his number one priority upon taking office on January 20, 2009. With the recent events in India, he faces another big challenge. Claims of improvement in Iraq are no longer enough to reduce America's engagement in the Middle East, to concentrate on the Afghan theater and rebuilding the US economy.

The truth is that the web of crises spans from Palestine through Iraq, Afghanistan and Pakistan to India and further east. The combination of extreme remedies applied as part of the 'war on terror' and neglect of the real issue in the Middle East — the Palestinian crisis — by the outgoing Bush administration have added fuel to the fire. The mistakes have alienated many decent ordinary people. The same old condemnations of 'uncivilized terrorists' and perfunctory support for their victims seem increasingly meaningless.

Indeed, the problem is political in nature, not military, as Tripathi recognizes:

A strong sense of alienation, humiliation and injustice pervades the Middle East and South Asia. When the situation is so volatile, local crises feed each other until they become a catastrophe….

The time has come to exercise a restraining influence on the Israelis. The president-elect says he is willing to negotiate with Iran — a country which has a nuclear program. In Afghanistan and Pakistan, the United States already conducts discreet negotiations with the Taliban. Israel does the same with Syria. In the light of these overtures, the refusal to hold talks with Hamas does not make sense.

Sarah Anderson and John Cavanaugh provide this sobering thought [see also this (.pdf)]:

The financial crisis is only one of multiple crises that will affect every country, rich and poor alike.

There's also the global poverty crisis. Tens of millions of people across the developing world are expected to fall into extreme poverty and joblessness as a result of an economic mess originating in the United States. This is bad news for workers everywhere, as it means even more brutal competition in the globalized labor pool.

And then there's the climate crisis. If we don't do something about that one, we could find out what a real meltdown feels like.

Yet the richest nations in the world appear fixated almost entirely on the financial crisis, and specifically, on propping up their own financial firms.

A new report by our organization, the Institute for Policy Studies, finds that the approximately $4.1 trillion that the United States and European governments have committed to rescue financial firms is 40 times the money they're spending to fight climate and poverty crises in the developing world.

And as officials head to two upcoming global summits, there's strong reason for concern that rich country governments may backtrack even further on their aid and climate finance commitments.

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