Saturday, September 25, 2010

Today another copy of The New York Review of Books arrived, including the second part of an article by Paul Krugman and Robin Wells on the state of the economy and what to do about it. While they mention a few new steps the Federal Reserve might take to ease credit further, they really have no hope of any rapid improvement in the economy. A new and larger stimulus is obviously impossible even now and will become far less possible, it seems, after November's elections. Citing Japan's experience in the 1990s, Krugman insists that it proved that large deficits remain the cure, not danger, in an era of prolonged deflation. He might have added, however, that deficits alone will not do the trick: we need an organized effort, in FDR's words, to put people to work, and we have none on the horizon. We are failing at several different levels at once: intellectually, politically, in among our leadership. The election will for the time being make at least two of these trends worse. Why, just two years after Obama's election aroused so many hopes--not least right here--are we once again on the verge of a new series of catastrophes that will turn the United States into a second-rate power for the next few decades?

I spent last week discussing one key aspect of the problem: Republican obstructionism. This has paid remarkable medium-dividends, it seems, and they will deadlock the government for another two years; but I am afraid that, as in Germany from 1930 to 1933 (just eighty years ago!), the failure is on the left as much as on the right. To deal with the economic crisis Obama--a product of an Ivy League education--turned to today's equivalent of the best and brightest, and they have most assuredly let him down. A flood of cheap money and a single large stimulus bill was not enough to arrest the secular decline in unemployment--especially good semi-skilled employment--that has been going on since the age of Reagan. We can fault the Administration not so much for failing to implement radical solutions--that might well have been impossible--but rather for failing to propose them. The country needs a dose of genuine socialism, just as it did in the 1930s when FDR started the TVA, the Civilian Conservation Corps, and the PWA and WPA, and the Democratic Party could have been laying the political basis for it and given itself something positive to run on over the last two years. It did not. It spent all its political capital on the stimulus and on health care, a reform which has not yet had any meaningful impact and which is likely to fail anyway because it did not attack the root of the problem, the profit incentives that run our health care system. Ironically, White House spokesman Robert Gibbs attacked liberals who won't be satisfied "until we have Canadian health care" a few weeks ago--ignoring the possibility that we might actually need it in order to afford health care for all at all. Larry Summers has now announced that he is on his way back to Cambridge, where his leadership was even worse, and some pundits suggest that Obama will pick a prominent businessman to replace him, rather than someone like Joseph Stiglitz. That will doom any hope of innovation. The Administration has also failed to do anything meaningful to stem the foreclosure crisis, another area where the New Deal was more successful.

The country seems to care less and less about foreign affairs these days, and to judge from the Republicans' new manifesto, their focus groups don't show much interest in them among voters. Yet there, Obama has been if anything even more mainstream than he has been on the economy. I am looking forward to reporting to you all on Bob Woodward's forthcoming book, but the teases and reviews that are leaking out suggest that in this case, the President allowed the weight of the military and national security establishment to override his own better instincts. I happen to know (although I was not there) that a group of historians invited to dinner at the White House in the spring of 2009 warned the President that foreign adventures had doomed previous liberal Presidents. Obama seems to have wanted to limit the size and duration of the Afghanistan commitment, and it seems that there has been more frank talk about the real source of the problem--the Pakistani government--in the White House than anyone has ever let on; but he did not re-evaluate the fundamental assumptions upon which the adventure was based. General Petraeus is quoted as saying that we will leave the wars in Afghanistan and Iraq to our children, and if we do not re-evaluate our objectives, we will. I think we shall have to within a few years, but because Obama chose escalation in Afghanistan he will not get any credit for doing so when the time comes.

The entire intellectual elite, I am convinced, must also share much of the blame. We are now at a turning point in western civilization--or at least American civilization--as one of our two political parties tries to put an end to effective national government for some decades to come. This should not surprise us. At least since the 1860s powerful interests have sought, with varying degrees of success, to buy the government and restrict its fiscal demands, and the only thing distinguishing Boehner and company is their complete disregard not only for facts, but for theory. (Their new manifesto does not make the slightest attempt to suggest how we are going to get out of our present economic mess.) But meanwhile, on the other side of the political fence, my generation of academics lost interest in the great political struggles of the first two-thirds of the century several decades ago. For many years they have dismissed the whole power structure as a stronghold of racial and gender oppression, ignoring the critical point that while white males did indeed rule the west for many centuries, some white males did so very differently from others. (My generation, as the rosters of the last two Administrations shows, has admitted women and minorities to the highest reaches of power, but without having much of any effect on the generally conservative trend.)

Let me repeat that my analogy with Germany in the late Weimar era does not portend totalitarianism here in the US. While Fox News and Karl Rove could certainly have given propaganda lessons to Joseph Goebbels, they do not share similar aims. The Tea Party is a conglomeration of old rich white folks who want to get older and richer; they do not march in uniforms and aren't interested in building a network of expensive concentration camps, nor do they seem to have any foreign policy ambitions. We should keep in mind that Hitler won the allegiance of a majority of the German people in many of the same ways that FDR did: by stimulating the economy, first with huge public works programs and then with rearmament. A Republican Congressional majority or a new Republican President clearly will not attempt to do the same. The biggest casualty of this crisis will probably be our faith in our democracy. This morning's New York Times leads with a story on fraud in the Afghan legislative elections and quotes one American official as saying, "It's not necessarily the pro-Karzai bloc that has done so well, it's that the Parliament will be more dependent on big power brokers. He added that "they would be more likely to make deals with Mr. Karzai that did not necessarily serve the Afghan people." I find it hard to believe that I could have been the only reader to notice how well his comment seemed to describe the situation right here at home.


Gerald Meaders said...


Great capsule of where we are, and the useful analogy to Germany of 1930.

I agree with virtually every point.

I (also) do not think that the current parties will bring on a Hitlerian regime, toward which I think you too may see they are unwittingly tending.

That will come later, but not as late as 30 years. Things are moving much faster now. 1930 to 1939 was a lot less than 30 years.

I think that the lack of emphasis on the international dimension, and the extent of weaknesses and risks faced from there, more critical I believe even than in Hitler's time, will accelerate the trend toward a national socialist (not Italian fascist) 'solution', by international crisis, rather than reasoned reform or even political crisis from within. Who will the new scapegoats be, for this new regime? A critical question, in so diverse a society as ours.

all the best,

Anonymous said...

It appears to me that the best move the Obama adminstration could do is not to hold up FDR as their Champion but rather Eisenhower . Starting public service announcements showing Ike's various warning about military spending and how such spending impinges on needed services such as basic health care . He needs to use previous GOP statements to justify the USA's withdrawal from Iraq and hopefully earliest withdrawal from Afghanistan .
Walter James McIntosh
The Lighthouse
Bluff, New Zealand

Anonymous said...

I find it interesting that, because people and politicians don't share you view of the solution, they are obstructionists. Frankly, I ma glad some of these Republican obstructionists are blocking us from a complete irresponsible course of action. Your blog fails to present any facts that massive government spending clearly fuels recovery. There are analyses that show, in fact, that FDR's new deal delayed the recovery.

Anonymous said...

The intelligensia, as you are, surprise me daily. Hitler and FDR failed miserably in many aspects such as monetary policy and their great deals. The tea party is made up of old rich white folks...spoken like a true member of our intelligent society. Before you label them go see for yourself that you are wrong. I agree with your analogy of our present circumstance, loved it. THanks.

Anonymous said...

During his campaign Obama made it pretty clear that he wasn't much of a leftist. Anybody who bought the "Hope & Change" advertising pitch had to be willfully blind after Clinton, Biden, Summers and Geithner got their appointments. And there were lots of other indications that Obama wasn't interested in anything other than a status quo, imagination-free term.

But I voted for him anyway. Or more precisely, I voted against a war with Iran, which McCain seemed perfectly delighted to pursue.

So I can't really claim that Obama's disappointed me -- even though his policies have been more warmed-over Republicanism than even I expected. But I am mordantly amused by the Dems sudden interest in wooing their left wing. Only weeks ago Obama's senior hacks were saying that people like me, left-wingers, supposedly part of the Dem base, are delusional and in need of "drug testing". I'm inclined to believe that all their recent conciliatory words are just that, words. And they're plainly such master strategists that I guess they don't need me to show up and pull the lever for them, knock on doors for them, any of that. So I'm going to honor their obvious intent, and sit this one out.

I just can't give a damn if Dems win, lose or draw. When they could have opposed Republican lunacy, they were useless, and now they're no better at governing.
-- sglover