Marxism has become awfully unfashionable in the last four decades, and not without good reason. Its utopian experiments have failed, and even in academia, where it was very strong (though hardly dominant) when I entered graduate school in 1971, it has been overtaken by more trendy ideologies involving gender and race. The experience of countries like the Soviet Union and China suggest that its visions simply do not reflect human nature, although the Chinese experiment has shown, to the surprise of many, how surprisingly it can evolve. Yet ironically, it has occurred to me over the last couple of months, one could argue that at no time have advanced countries seemed closer to confirming certain critical Marxist-Leninist hypotheses than right now.
Let us get one thing on the table first: Marxism would never have become so influential had not Marx come up with some world-historical insights of great importance. Marx understood both the significance of the bourgeois and capitalist revolutions--which were actually only just beginning in Germany when he began studying these questions--and some of the consequences that they were destined to have. The failure of regimes based upon his thinking should not blind us to the genius of some of his thought--for instance, with respect to the relations between the newly capitalist West and the rest of the world. Here, in one of his most striking passages, is how he and Engels described that iteration in the Communist Manifesto, written in 1848.
The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.
The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.
One must keep in mind that when this passage was published in 1848, the whole gigantic process it describes had barely begun. That is evidence both of the genius and the flaws in Marxist theory: while on the one hand Marx could see where certain only embryonic developments would lead, he also committed himself to a vision of a world transformed by further processes--the proletarian revolution--that had not yet even begun. Had he stuck to analyzing bourgeois capitalism and its consequences his work might have been more enduring. As it was it provided a foundation for various political movements, the most important of which was led by V. I. Lenin.
In 1917, at the height of the First World War, Lenin published Imperialism, the Highest Stage of Capitalism., many of whose ideas were borrowed from a bourgeois English critic of imperialism, J. A. Hobson. There were, as I recall, three major parts of Lenin's argument.
First, finance, rather than industry, had become, Lenin argued, the leading sector of capitalist economies. Secondly, having exhausted opportunities for investment at home, capital was forced to seek new markets for investment abroad, most notably in Asia and Africa. And thirdly, because finance capital controlled governments, the World War had broken out because of the efforts of the leading industrial powers to control larger shares of those critical new markets in poorer countries of the world.
Like Marx's passage about the worldwide impact of capitalism, these arguments had more than a grain of truth. Tragically, although the European nations, the United States and Japan did not need to control third world countries, the desire to do so was indeed large part of the reason for the outbreak (and the persistence) of the First World War. The Second World War grew out of German and Japanese attempts to find a different solution to the problem of resources and markets, by conquering autarkic empires. The capitalists, however, learned from their mistakes. For the last 60 years the industrialized world has accepted the political and military pre-eminence of the United States and the economically privileged status of the dollar, largely, I would argue, to avoid the kind of political and economic competition that had such disastrous consequences in the first half of the last century. Competition among capitalists did not become hopeless.
At the same time, capital, and production, have been flowing steadily to the Third World for a long time now, chasing cheap labor, just as Marx and Lenin had predicted. Again some cooperative relationships have emerged: China wisely (in my opinion) takes the dollars it accumulates by producing for our needs and invests them in American securities. But this process has actually brought about something that Marx predicted for industrial economies: the gradual impoverishment of the proletariat. In the middle of the last century, shaken by Fascism and Communism, the western nations wisely promoted trade unions and a variety of benefits for ordinary people. Now, especially here in the United States, unions and the good jobs they protected have been in headlong retreat for more than thirty years. Indeed, the whole drama of our current political crisis, as I have already argued here, revolves around the issue of whether the Obama Administration will actually be able to give the American working class a better life, or whether enough of them will be moved by anger and resentments to return the Republican Party to power.
But the last and most troubling aspect of Marxist Leninism at the moment has to do with finance capital. Our economy remains a mess. The President made a serious mistake yesterday, in my opinion, to suggest that the economic news in any way suggested that we were emerging from the recession. Jobs are still down and unemployed Americans are still on the rise. The only reason the unemployment rate dropped last month was that the total of those employed and seeking work fell, as more people dropped out of the labor force. I plan to investigate this situation more thoroughly this week; suffice it to say for the moment that things are not, as yet, improving.
Yet despite this, Wall Street has been in the midst of an extraordinary rally for months, and is threatening the 10,000 barrier again. Finance capital--as embodied in the big banks, also showing renewed profits, and Wall Street--suddenly seems to me to be more or less completely disconnected from the actual productive sectors of the economy, and from the life of ordinary Americans. This is a staggering and obviously very important development. The stock market began as a place where business firms could raise money they would repay in profits, but it now seems to be something very different, a speculative futures market which will go up as long as there is money to fuel it. And that money, of which there has been more than enough for the last six months or so, is not coming from any increase in economic activity. I am afraid, in fact, that it is coming from the enormous infusions of cash the Federal Reserve Board is putting into securities markets, and I read one article from the Wall Street Journal some time ago that suggested it was coming from the stimulus. The apparent lack of much connection between the fortunes of our financial giants and the American people strikes me as worthy of more investigation. It is not reassuring.
Marxism and Leninism are not the answer to our current woes--but I do not think we know what the answer is. I am not sure anyone really understands our economy as it has evolved, or how to make it benefit the mass of Americans. I am sure we can make some progress, but only by admitting what we do not know.
Saturday, August 08, 2009
Saturday, August 01, 2009
The South, the poor South
Slavery was America's original sin, one which four centuries of history have failed to extirpate. To be sure, the northern states secured its formal abolition in the bloodiest war in our history 150 years ago, and although the Civil War constitutional amendments failed to secure the rights of citizens for the freed slaves, the great civil rights acts finally corrected that problem. That did not, of course, end discrimination against black people, but it has allowed for enormous progress, culminating in Barack Obama's election. Yet it seems to me that slavery's most enduring effects, ironically, have fallen upon the descendants of those who owned the slaves, rather than the slaves themselves--and those effects still are a terrible burden to the American South.
One of my deepest beliefs--one which I cannot scientifically demonstrate--holds that human beings have an innate sense of equality--that they understand that the recognition we all crave depends upon extending that same recognition to others. That understanding, to be sure, eternally conflicts with other equally primal human feelings, such as the desire to rule; but it is there all the same. Although no other critic ever seems to have realized it, that belief, I argued in my undergraduate senior thesis, was the key to George Orwell's particular contribution to western thought, precisely because he had been denied that essential recognition throughout his childhood and understood its consequences. The Declaration of Independence, our founding document, specifically affirmed this in the enduring phrase that "all men are created equal"--and my blood boils at recent scholarship, by Gary Wills and others, that argues that the slaveholder Jefferson could not actually have meant what he said. The Founding Fathers were effective politicians, as well as theorists, because they could deal with contradictions between the real and the ideal. The American failure actually to implement that phrase, well known to Jefferson, did not, to him, invalidate it--it simply left us with more work to be done.
Jefferson's whole generation of slaveholders was in fact quite ambivalent about the practice, and many, like himself, freed their slaves in their wills. In the early 1800s Virginia came very close to passing a plan for gradual emancipation, but it narrowly failed. Then came two revolutionary developments: the cotton gin, and the rise of a generation of Southern Transcendentalists, who, like all Prophet generations (including Boomers) preferred to see life in absolute moral terms. They turned slavery, in their eyes, from a necessary evil to a positive good. The Southern Baptist and Southern Methodist churches split off so as to proclaim that slavery was an expression of God's law, and southern fire-eaters plotted the annexation of Cuba and the rest of Mexico to give slavery more scope. The Civil War resulted.
The South lost the war and the Emancipation Proclamation and the 13th Amendment abolished slavery, but white southerners, driven perhaps by a very bad conscience as well as by economic interest, held to their beliefs on race and re-established white supremacy through insurgency and terror. With agriculture at the beginning of a long-term decline, the South already led the nation in poverty and trailed in every basic public service by 1900. It was by then pursuing a new regional economic strategy, using cheap labor (including not only blacks, but poor white children) to build a textile industry. Meanwhile, Birmingham, Alabama became an industrial center and Atlanta a commercial center--but the United States remained two nations.
The years 1933-65 now seem to me to embody a second great southern tragedy. Roosevelt's New Deal aimed to helping the poorest Americans, and many of them lived in the South. The Agricultural Adjustment Act, federal relief, and public works projects literally saved millions from possible starvation. The Rural Electrification Administration (whose work is lovingly described in the first volume of Robert Caro's biography of Lyndon Johnson) brought electric light to the South; the TVA developed a whole region. Such enormous works inevitably created a liberal white Southern constituency. Politicians like Lister Hill and Hugo Black of Alabama, Claude Pepper of Florida, Sam Rayburn and Lyndon Johnson from Texas, and quite a few more, were New Deal stalwarts. They won a number of important victories over more traditional Democrats, who saw both the New Deal and the slowly emerging civil rights movement as Communist attempts to mongrelize and destroy America--and a second generation followed. By the mid-1950s the two Senators from Tennessee, Estes Kefauver and Al Gore, Sr., were both liberal Democrats. Alabama had a Governor, Jim Folsom, who publicly championed the interests of blacks, arguing that as long as they were held down, poor whites would be held down with them. And even some of the more conservative Southern politicians of the mid-century era, such as Richard Russell of Georgia and Sam Ervin of South Carolina, were men of formidable intellect, quite capable of making real contributions to other areas of national life despite their hostility to civil rights. All this, however, did not stop the steady migration of black (and some poor white) southerners into northern industrial eras, especially during the two world wars. And on one critical point the South remained aloof--it was resolutely, implacably hostile to organized labor. According to a contemporary source, the main point of the Landrum-Griffin Act of 1959 was to make it impossible for the AFL-CIO to organize the South. It succeeded.
The civil rights acts of 1964 and 1965, sadly, turned out to have tragic consequences for the South--perhaps because too much of the white South was still not ready for them. White southerners in border and middle south states had been slowly moving towards the Republican party during the 1950s, and the civil rights movement and the legislation it secured accelerated that process. Hubert Humphrey won only one former Confederate or border state, Texas, in 1968, beginning a trend that dominated the next forty years. More importantly, "government" and "government programs" apparently became hopelessly associated in white southern minds with help for black Americans. Essentially the Reagan years spread a trend that had already begun in the south--a trend towards smaller government a lower taxes--to the country as a whole. Meanwhile, cheap labor and pro-business practices moved more and more enterprise southward, until the whole American textile and clothing industry operated below the Mason-Dixon line. That, too, is where foreign automakers began building non-union auto plants. With the decline of the rust belt, the migration trend of 1914-65 was reversed, and the South (and the Southwest) gained population and political influence. The only Democrats elected to the White House between 1964 and 2008 were southerners who could carry southern states.
In the last ten years all this has culminated in a new catastrophe--the de-industrialization of the South, thanks to NAFTA and the general movement of industry overseas. Regions that live by cheap labor, it turns out, die by cheap labor, because there is always somewhere where labor will be cheaper still. The election of 2008 drew a clear line around the deep South. Virginia and North Carolina, both of whom include substantial new urban and educated areas, voted narrowly for Obama, as did Florida, which is only partly a southern state at all. But the rest of the old Confederacy voted overwhelmingly for McCain, based on the same sad resentments that have controlled much of the poor white vote for most of the last 150 years. Republicans control all the Senator seats and the majority of the House seats from those regions--and there are no Richard Russells or Sam Ervins in this crop. The Sotomayor hearings displayed several of them before the nation, and they were of appallingly limited intellectual ability. That the Deep South now lives largely in a different mental universe is confirmed by a new poll on the question of whether Barack Obama was born in the U.S.A.--broken down by region.
Where all this has led can be seen in a front page story in today's New York Times, on the financial crisis in Jefferson County, Alabama, which may have to lay off 2/3 of its work force in the next few days. I did not recognize "Jefferson County" (as I would have recognized Fulton County, Georgia, or Plaquemines Parish, Louisiana) when I saw the headline and expected it to be depopulated and rural--but no, it includes Birmingham, and ranks as the wealthiest county in the state!. Several factors have contributed to its unprecedented crisis. The recession, of course, has hit every area of the country, but Jefferson County also lost enormous sums on a complicated financial deal designed to finance a sewer project--one that sounds a bit like Harvard's notorious interest-rate swap. In addition, the county has lost the right to levy a kind of income tax, upon which it relied beginning in the 1990s. The reporter's comments on that tax must be quoted:
"The tax that was ruled illegal, known as the occupational tax, is essentially a 0.5 percent tax on income, but the phrase “income tax” does not sit well with Alabamians. One of its peculiarities is that it exempts a long list of professionals like doctors and lawyers, as well as phrenologists, circus managers and crystal gazers. In 1999, state lawmakers from Jefferson County, who are allowed by legislative tradition to control the county’s ability to levy taxes, tried to earmark part of the money for their own projects, and the county balked.
"In response, the lawmakers voted to repeal the tax. But the county, buoyed by court rulings in its favor, continued to collect it, bringing in about $75 million last year — more than 25 percent of the county’s general fund."
Now the court has reversed itself and it is not clear that the legislature will restore it. The reporter discreetly left race out of her story almost completely, but I would assume that Jefferson County has a large black population which a Republican state legislature is not likely to want to help. What was once one of the most advanced economically (as well as the most bigoted racially) areas of the South has now been reduced, by long-standing southern political trends, to near anarchy. I suspect it will not be the last.
Crisis, in medical terms, leads either to death or to recovery, and this may be the last chance for the deep South to join the modern world. Parts seemed like they might do so during the New Deal, but sadly, racial prejudice wiped out that progress in much (though not all) of the region. Now, it seems to me, the old Confederacy faces another problem: most of its smarter folk, both black and white, have migrated away. There must somewhere be an opportunity in all this, however. If the Obama Administration can actually improve the lives of average white Southerners, it could deal a death blow to retrograde politics for a long time. If it can't, however, the possibility of a Republican resurgence remains--and that will mean that the rest of the country will move closer to the South once again, rather than the other way around.
One of my deepest beliefs--one which I cannot scientifically demonstrate--holds that human beings have an innate sense of equality--that they understand that the recognition we all crave depends upon extending that same recognition to others. That understanding, to be sure, eternally conflicts with other equally primal human feelings, such as the desire to rule; but it is there all the same. Although no other critic ever seems to have realized it, that belief, I argued in my undergraduate senior thesis, was the key to George Orwell's particular contribution to western thought, precisely because he had been denied that essential recognition throughout his childhood and understood its consequences. The Declaration of Independence, our founding document, specifically affirmed this in the enduring phrase that "all men are created equal"--and my blood boils at recent scholarship, by Gary Wills and others, that argues that the slaveholder Jefferson could not actually have meant what he said. The Founding Fathers were effective politicians, as well as theorists, because they could deal with contradictions between the real and the ideal. The American failure actually to implement that phrase, well known to Jefferson, did not, to him, invalidate it--it simply left us with more work to be done.
Jefferson's whole generation of slaveholders was in fact quite ambivalent about the practice, and many, like himself, freed their slaves in their wills. In the early 1800s Virginia came very close to passing a plan for gradual emancipation, but it narrowly failed. Then came two revolutionary developments: the cotton gin, and the rise of a generation of Southern Transcendentalists, who, like all Prophet generations (including Boomers) preferred to see life in absolute moral terms. They turned slavery, in their eyes, from a necessary evil to a positive good. The Southern Baptist and Southern Methodist churches split off so as to proclaim that slavery was an expression of God's law, and southern fire-eaters plotted the annexation of Cuba and the rest of Mexico to give slavery more scope. The Civil War resulted.
The South lost the war and the Emancipation Proclamation and the 13th Amendment abolished slavery, but white southerners, driven perhaps by a very bad conscience as well as by economic interest, held to their beliefs on race and re-established white supremacy through insurgency and terror. With agriculture at the beginning of a long-term decline, the South already led the nation in poverty and trailed in every basic public service by 1900. It was by then pursuing a new regional economic strategy, using cheap labor (including not only blacks, but poor white children) to build a textile industry. Meanwhile, Birmingham, Alabama became an industrial center and Atlanta a commercial center--but the United States remained two nations.
The years 1933-65 now seem to me to embody a second great southern tragedy. Roosevelt's New Deal aimed to helping the poorest Americans, and many of them lived in the South. The Agricultural Adjustment Act, federal relief, and public works projects literally saved millions from possible starvation. The Rural Electrification Administration (whose work is lovingly described in the first volume of Robert Caro's biography of Lyndon Johnson) brought electric light to the South; the TVA developed a whole region. Such enormous works inevitably created a liberal white Southern constituency. Politicians like Lister Hill and Hugo Black of Alabama, Claude Pepper of Florida, Sam Rayburn and Lyndon Johnson from Texas, and quite a few more, were New Deal stalwarts. They won a number of important victories over more traditional Democrats, who saw both the New Deal and the slowly emerging civil rights movement as Communist attempts to mongrelize and destroy America--and a second generation followed. By the mid-1950s the two Senators from Tennessee, Estes Kefauver and Al Gore, Sr., were both liberal Democrats. Alabama had a Governor, Jim Folsom, who publicly championed the interests of blacks, arguing that as long as they were held down, poor whites would be held down with them. And even some of the more conservative Southern politicians of the mid-century era, such as Richard Russell of Georgia and Sam Ervin of South Carolina, were men of formidable intellect, quite capable of making real contributions to other areas of national life despite their hostility to civil rights. All this, however, did not stop the steady migration of black (and some poor white) southerners into northern industrial eras, especially during the two world wars. And on one critical point the South remained aloof--it was resolutely, implacably hostile to organized labor. According to a contemporary source, the main point of the Landrum-Griffin Act of 1959 was to make it impossible for the AFL-CIO to organize the South. It succeeded.
The civil rights acts of 1964 and 1965, sadly, turned out to have tragic consequences for the South--perhaps because too much of the white South was still not ready for them. White southerners in border and middle south states had been slowly moving towards the Republican party during the 1950s, and the civil rights movement and the legislation it secured accelerated that process. Hubert Humphrey won only one former Confederate or border state, Texas, in 1968, beginning a trend that dominated the next forty years. More importantly, "government" and "government programs" apparently became hopelessly associated in white southern minds with help for black Americans. Essentially the Reagan years spread a trend that had already begun in the south--a trend towards smaller government a lower taxes--to the country as a whole. Meanwhile, cheap labor and pro-business practices moved more and more enterprise southward, until the whole American textile and clothing industry operated below the Mason-Dixon line. That, too, is where foreign automakers began building non-union auto plants. With the decline of the rust belt, the migration trend of 1914-65 was reversed, and the South (and the Southwest) gained population and political influence. The only Democrats elected to the White House between 1964 and 2008 were southerners who could carry southern states.
In the last ten years all this has culminated in a new catastrophe--the de-industrialization of the South, thanks to NAFTA and the general movement of industry overseas. Regions that live by cheap labor, it turns out, die by cheap labor, because there is always somewhere where labor will be cheaper still. The election of 2008 drew a clear line around the deep South. Virginia and North Carolina, both of whom include substantial new urban and educated areas, voted narrowly for Obama, as did Florida, which is only partly a southern state at all. But the rest of the old Confederacy voted overwhelmingly for McCain, based on the same sad resentments that have controlled much of the poor white vote for most of the last 150 years. Republicans control all the Senator seats and the majority of the House seats from those regions--and there are no Richard Russells or Sam Ervins in this crop. The Sotomayor hearings displayed several of them before the nation, and they were of appallingly limited intellectual ability. That the Deep South now lives largely in a different mental universe is confirmed by a new poll on the question of whether Barack Obama was born in the U.S.A.--broken down by region.
Where all this has led can be seen in a front page story in today's New York Times, on the financial crisis in Jefferson County, Alabama, which may have to lay off 2/3 of its work force in the next few days. I did not recognize "Jefferson County" (as I would have recognized Fulton County, Georgia, or Plaquemines Parish, Louisiana) when I saw the headline and expected it to be depopulated and rural--but no, it includes Birmingham, and ranks as the wealthiest county in the state!. Several factors have contributed to its unprecedented crisis. The recession, of course, has hit every area of the country, but Jefferson County also lost enormous sums on a complicated financial deal designed to finance a sewer project--one that sounds a bit like Harvard's notorious interest-rate swap. In addition, the county has lost the right to levy a kind of income tax, upon which it relied beginning in the 1990s. The reporter's comments on that tax must be quoted:
"The tax that was ruled illegal, known as the occupational tax, is essentially a 0.5 percent tax on income, but the phrase “income tax” does not sit well with Alabamians. One of its peculiarities is that it exempts a long list of professionals like doctors and lawyers, as well as phrenologists, circus managers and crystal gazers. In 1999, state lawmakers from Jefferson County, who are allowed by legislative tradition to control the county’s ability to levy taxes, tried to earmark part of the money for their own projects, and the county balked.
"In response, the lawmakers voted to repeal the tax. But the county, buoyed by court rulings in its favor, continued to collect it, bringing in about $75 million last year — more than 25 percent of the county’s general fund."
Now the court has reversed itself and it is not clear that the legislature will restore it. The reporter discreetly left race out of her story almost completely, but I would assume that Jefferson County has a large black population which a Republican state legislature is not likely to want to help. What was once one of the most advanced economically (as well as the most bigoted racially) areas of the South has now been reduced, by long-standing southern political trends, to near anarchy. I suspect it will not be the last.
Crisis, in medical terms, leads either to death or to recovery, and this may be the last chance for the deep South to join the modern world. Parts seemed like they might do so during the New Deal, but sadly, racial prejudice wiped out that progress in much (though not all) of the region. Now, it seems to me, the old Confederacy faces another problem: most of its smarter folk, both black and white, have migrated away. There must somewhere be an opportunity in all this, however. If the Obama Administration can actually improve the lives of average white Southerners, it could deal a death blow to retrograde politics for a long time. If it can't, however, the possibility of a Republican resurgence remains--and that will mean that the rest of the country will move closer to the South once again, rather than the other way around.
Sunday, July 26, 2009
Can reason beat emotion?
The struggle over health care will, alas, take quite a while to have a significant effect on American lives no matter how it turns out--a political liability in an age of instant gratification. It represents both an attempt to begin to bring the United States closer to other major industrialized countries (and perhaps to keep the United States an industrial country at all), and an effort to restore a critical American political tradition that has been steadily eroding since the Great Society. The outcome remains extremely uncertain--and the passage of legislation this year will be only the beginning in any event--but as I watch the debate unfold, it seems clearer and clearer that our democracy's capacity to function is being tested by this remarkable struggle.
The battle between emotion and reason has been a recurring theme of these posts for years, all the more so since we have replaced a President who proudly relied almost completely upon emotion--his "instincts"--with one who turns more instinctively towards logic and reason than any President since John F. Kennedy. Indeed, the battle between the Democrats and Republicans has become largely a battle of reason against emotion, which is why the Republicans remain the strongest in the least educated parts of the country, and rely so heavily on the most primal emotions, including greed, the desire to kill (gun rights), and the fear of sex. While I remain hopeful that reason can still hold the balance in western civilization, I also believe that its triumph can never be complete. Indeed, the greatest and most destructive wars in history, the two world wars, took place at the climax of the age of reason in the first half of the twentieth century, and the combatants, as I pointed out in Politics and War, claimed, and believed themselves, that they were fighting for rational goals. The almost complete eclipse of reason in our political discourse, however, is at least as great a cause for concern--and that is what President Obama, coolly and persistently, is trying to fight. So far it looks like an uphill struggle.
The Democrats are in effect fighting with their emotional tied behind their back, because forty years of unremitting Republican propaganda have effectively discredited the emotional appeals upon which they used to rely. The experience of the last saeculum (1868-1945) was very different. Beginning in 1896 and continuing through the First World War, the distribution of wealth was a major issue of American politics, and reformers, while only intermittently successful, did not feel on the defensive. They went into an eight-year eclipse beginning in 1920, but came back stronger than ever in the midst of the depression. And so it was that Franklin Roosevelt, in the midst of his re-election campaign in 1936, had no compunction about rousing the feelings of the average American against the plutocrats who had turned against him. I quote:
"We have not come this far without a struggle and I assure you we cannot go further without a struggle.
"For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.
"For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.
"We had to struggle with the old enemies of peace‹business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
"They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
"Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me--and I welcome their hatred.
"I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master."
Now Roosevelt, as I have pointed out here, actually enjoyed more bipartisan support of which Barack Obama could not even dream during his first term. The Tennessee Valley Authority, to take one example--a huge an unprecedented undertaking designed to put the government into the middle of the economic development of an impoverished region--was actually the brainchild of a great Republican Progressive, George Norris of Nebraska. Perhaps that liberated him to go after the irreconcilables among the Republicans in such emotional terms--and the electorate in 1936 rewarded him with the votes of 48 out of 50 states. Such rhetoric, however, has successfully been demonized by the Republican Party and its media propaganda arms as "class warfare," "socialism," "European-style", and so on, to such an extent that not one Democrat that I can see is speaking boldly and firmly for economic justice. Under Roosevelt marginal tax rates on the richest Americans reached 91%; now Nancy Pelosi is trying to sneak 50% rates on incomes of one million or more into the health bill, a proposal to which the President declares himself "open." The single-payer option, the real solution to our health care crisis, has been defined out of the debate as "too radical" from the beginning. Democrats seem to rely rhetorically on "reform," broader coverage, and cost-cutting (which is most certainly necessary), because true social and economic democracy has become the third rail of American politics. We have had one or two indications that high marginal tax rates might return, most notably at the time of the AIG bonuses earlier this year. If the nation is faced once again with a prolonged period of depression for the mass of the population, combined with the enrichment of the few, higher marginal rates could return. But we are nowhere near that point yet thanks to the long-term success of anti-government Republican rhetoric.
In fact, emotion lies at the heart of the health care debate in another way as well. Health care is one of the stronger sectors of our economy--most, if not all of which, I regret to say, are based upon the exploitation of the most primitive emotions. In the case of health care, the industry, backed by the resources both of the government (Medicare and Medicaid) and generous private health plans, exploits fear--the fear of pain (which gave us Vioxx, an almost completely unnecessary drug), of death (which leads to unnecessary screenings and surgeries for, for instance, prostate cancer), and even of not enough sex (which is fueling the multi-billion dollar "erectile dysfunction" industry which I encounter every time I watch a live American sports event.) The financial sector has grown by devising various forms of financial alchemy, including subprime mortgages and derivatives, both of which for a time turned lead into gold, and are now, in other ways, at work again. The defense industry fuels the fear of war (although that fear, interestingly enough, finally seems to be ebbing as a political force, as suggested by the defeat of the F-22 program.) And the food industry--about which I learned a great deal of depressing information in the film, Food, Inc.,, which I highly recommend--lives off our craving for salt, sugar, and fat. Agriculture and diet based upon health, or even genuine enjoyment of food, would look entirely different from what we have now. Meanwhile, large segments of another growth industry, academia--including the humanities such as literary criticism and history--have explicitly rejected reason in favor of emotional approaches based upon the emotional issues of the late twentieth century. The academy thrives, ironically, not because of what it teaches, but because it remains the gateway to highly paid professions.
Against this background, can President Obama succeed? He has, to be sure, critical emotional assets of his own, most notably his rhetorical skills, his own and his wife's personal charisma and his appeal to the under-30 generation, who are indeed far less emotional than their parents, who still dominate the media. And should he eventually be driven--as I think he will--to abandon bipartisanship by the unremitting hostility of the Republican Party, he will do so with a clear conscience and a good record of having tried.
Turning to other news of the week, President Obama also showed a charming ability to admit error when he substantially repudiated his initial comments about the arrest of Professor Henry Louis Gates. Refusing once again to duck a difficult issue, may I say that I think the President's second, more even-handed comment was very much in order. Most commentators are missing a critical issue in this particular episode. Professor Gates may have been a victim of racial profiling, but not by the police. The police did not initiate the incident--the young woman who saw the Professor and his chauffeur trying to force open the front door did. They were simply responding, as duty requires them to do, to a call. And to be quite frank, the manner in which Professor Gates greeted them did him no credit. The police have become far more aggressive towards everyone during my adult life, and I would suggest that anyone, regardless of race, age, or gender, who speaks to a police officer today in the way that he did is behaving very foolishly indeed. His attempt to dismiss the officers by showing them his Harvard ID, rather than his driver's license, was also unfortunate. Yes, the officer made a bad situation worse by allowing his own emotions to carry him away and putting on the handcuffs, and it would have been better if he had not. But it will indeed be fitting--and further testimony to our President's remarkable political skills--if the whole affair does indeed end with the officer, the professor and the President meeting in the White House for a beer or two. The question of how to translate such an event into the beginning of the reform of the American health care system, however, remains open.
The battle between emotion and reason has been a recurring theme of these posts for years, all the more so since we have replaced a President who proudly relied almost completely upon emotion--his "instincts"--with one who turns more instinctively towards logic and reason than any President since John F. Kennedy. Indeed, the battle between the Democrats and Republicans has become largely a battle of reason against emotion, which is why the Republicans remain the strongest in the least educated parts of the country, and rely so heavily on the most primal emotions, including greed, the desire to kill (gun rights), and the fear of sex. While I remain hopeful that reason can still hold the balance in western civilization, I also believe that its triumph can never be complete. Indeed, the greatest and most destructive wars in history, the two world wars, took place at the climax of the age of reason in the first half of the twentieth century, and the combatants, as I pointed out in Politics and War, claimed, and believed themselves, that they were fighting for rational goals. The almost complete eclipse of reason in our political discourse, however, is at least as great a cause for concern--and that is what President Obama, coolly and persistently, is trying to fight. So far it looks like an uphill struggle.
The Democrats are in effect fighting with their emotional tied behind their back, because forty years of unremitting Republican propaganda have effectively discredited the emotional appeals upon which they used to rely. The experience of the last saeculum (1868-1945) was very different. Beginning in 1896 and continuing through the First World War, the distribution of wealth was a major issue of American politics, and reformers, while only intermittently successful, did not feel on the defensive. They went into an eight-year eclipse beginning in 1920, but came back stronger than ever in the midst of the depression. And so it was that Franklin Roosevelt, in the midst of his re-election campaign in 1936, had no compunction about rousing the feelings of the average American against the plutocrats who had turned against him. I quote:
"We have not come this far without a struggle and I assure you we cannot go further without a struggle.
"For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.
"For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.
"We had to struggle with the old enemies of peace‹business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
"They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
"Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me--and I welcome their hatred.
"I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master."
Now Roosevelt, as I have pointed out here, actually enjoyed more bipartisan support of which Barack Obama could not even dream during his first term. The Tennessee Valley Authority, to take one example--a huge an unprecedented undertaking designed to put the government into the middle of the economic development of an impoverished region--was actually the brainchild of a great Republican Progressive, George Norris of Nebraska. Perhaps that liberated him to go after the irreconcilables among the Republicans in such emotional terms--and the electorate in 1936 rewarded him with the votes of 48 out of 50 states. Such rhetoric, however, has successfully been demonized by the Republican Party and its media propaganda arms as "class warfare," "socialism," "European-style", and so on, to such an extent that not one Democrat that I can see is speaking boldly and firmly for economic justice. Under Roosevelt marginal tax rates on the richest Americans reached 91%; now Nancy Pelosi is trying to sneak 50% rates on incomes of one million or more into the health bill, a proposal to which the President declares himself "open." The single-payer option, the real solution to our health care crisis, has been defined out of the debate as "too radical" from the beginning. Democrats seem to rely rhetorically on "reform," broader coverage, and cost-cutting (which is most certainly necessary), because true social and economic democracy has become the third rail of American politics. We have had one or two indications that high marginal tax rates might return, most notably at the time of the AIG bonuses earlier this year. If the nation is faced once again with a prolonged period of depression for the mass of the population, combined with the enrichment of the few, higher marginal rates could return. But we are nowhere near that point yet thanks to the long-term success of anti-government Republican rhetoric.
In fact, emotion lies at the heart of the health care debate in another way as well. Health care is one of the stronger sectors of our economy--most, if not all of which, I regret to say, are based upon the exploitation of the most primitive emotions. In the case of health care, the industry, backed by the resources both of the government (Medicare and Medicaid) and generous private health plans, exploits fear--the fear of pain (which gave us Vioxx, an almost completely unnecessary drug), of death (which leads to unnecessary screenings and surgeries for, for instance, prostate cancer), and even of not enough sex (which is fueling the multi-billion dollar "erectile dysfunction" industry which I encounter every time I watch a live American sports event.) The financial sector has grown by devising various forms of financial alchemy, including subprime mortgages and derivatives, both of which for a time turned lead into gold, and are now, in other ways, at work again. The defense industry fuels the fear of war (although that fear, interestingly enough, finally seems to be ebbing as a political force, as suggested by the defeat of the F-22 program.) And the food industry--about which I learned a great deal of depressing information in the film, Food, Inc.,, which I highly recommend--lives off our craving for salt, sugar, and fat. Agriculture and diet based upon health, or even genuine enjoyment of food, would look entirely different from what we have now. Meanwhile, large segments of another growth industry, academia--including the humanities such as literary criticism and history--have explicitly rejected reason in favor of emotional approaches based upon the emotional issues of the late twentieth century. The academy thrives, ironically, not because of what it teaches, but because it remains the gateway to highly paid professions.
Against this background, can President Obama succeed? He has, to be sure, critical emotional assets of his own, most notably his rhetorical skills, his own and his wife's personal charisma and his appeal to the under-30 generation, who are indeed far less emotional than their parents, who still dominate the media. And should he eventually be driven--as I think he will--to abandon bipartisanship by the unremitting hostility of the Republican Party, he will do so with a clear conscience and a good record of having tried.
Turning to other news of the week, President Obama also showed a charming ability to admit error when he substantially repudiated his initial comments about the arrest of Professor Henry Louis Gates. Refusing once again to duck a difficult issue, may I say that I think the President's second, more even-handed comment was very much in order. Most commentators are missing a critical issue in this particular episode. Professor Gates may have been a victim of racial profiling, but not by the police. The police did not initiate the incident--the young woman who saw the Professor and his chauffeur trying to force open the front door did. They were simply responding, as duty requires them to do, to a call. And to be quite frank, the manner in which Professor Gates greeted them did him no credit. The police have become far more aggressive towards everyone during my adult life, and I would suggest that anyone, regardless of race, age, or gender, who speaks to a police officer today in the way that he did is behaving very foolishly indeed. His attempt to dismiss the officers by showing them his Harvard ID, rather than his driver's license, was also unfortunate. Yes, the officer made a bad situation worse by allowing his own emotions to carry him away and putting on the handcuffs, and it would have been better if he had not. But it will indeed be fitting--and further testimony to our President's remarkable political skills--if the whole affair does indeed end with the officer, the professor and the President meeting in the White House for a beer or two. The question of how to translate such an event into the beginning of the reform of the American health care system, however, remains open.
Saturday, July 18, 2009
Bad News, Good News
[Although the virulence of the infection is declining, it is still necessary to inform new visitors that if they have been drawn here by an email circulating under my name comparing President Obama to Adolf Hitler--an email which generated three phone calls to my home this past week--they should know that I did not write that email, nor do I agree with it. For more information on its origins they should visit this link.
American forces are pulling back in Iraq--not a moment too soon, in my opinion--and the essential impossibility of our objectives there are finally being revealed to the entire world. Several stories last week cited the increasingly tense situation beteween the Kurdish areas--independent in all but name--and the Iraqi government, which involves key disputed territory and has nearly led to armed conflict on several recent occasions. More importantly, today's Washington Post includes a remarkable article on the consequences of the implementation of the new status of forces agreement that has mandated the withdrawal of American troops from Iraqi cities. Two years or so ago, while that agreement was being negotiated, I am reliably informed that a senior military commander dismissed problems in the talks as a matter of "Iraqi domestic politics," as if Prime Minister Maliki simply had to make a good showing of independence to satisfy his voters. Indeed it was a matter of Iraqi domestic politics, but of a more serious nature. The Iraqis for some time have wanted to reassert real control over their own affairs. The agreement now confines Americans to their bases, forbids them from moving except at night, and forbids them from patrolling except with Iraqi permission. The Post story is based largely on an angry email from an American major general, from which I quote:
The Iraqi order runs "contrary to the spirit and practice of our last several months of operations," Maj. Gen. Daniel P. Bolger, commander of the Baghdad division, wrote in an e-mail obtained by The Washington Post.
"Maybe something was 'lost in translation,' " Bolger wrote. "We are not going to hide our support role in the city. I'm sorry the Iraqi politicians lied/dissembled/spun, but we are not invisible nor should we be." He said U.S. troops intend to engage in combat operations in urban areas to avert or respond to threats, with or without help from the Iraqis.
"This is a broad right and it demands that we patrol, raid and secure routes as necessary to keep our forces safe," he wrote. "We'll do that, preferably partnered. . . .Our [Iraqi] partners burn our fuel, drive roads cleared by our Engineers, live in bases built with our money, operate vehicles fixed with our parts, eat food paid for by our contracts, watch our [surveillance] video feeds, serve citizens with our [funds], and benefit from our air cover." Some months ago, if I am not mistaken, I posted a link here to a youtube video of an American adviser--a senior enlisted man--screaming at a platoon of Iraqi policemen whom he thought were doing their job with inadequate courage and enthusiasm. I couldn't help thinking, as he called them "women" and "pussies" (words faithfully translated, I was able to verify, by his Iraqi interpreter), that many of them might have been tempted to reply that no one had asked him and his countrymen to come to Iraq. In fact many American soldiers do not agree with the spirit of the general's email, and think that we have already done everything that we can usefully do. In any case, claiming that we are owed gratitude for what we have done to Iraq--which will take a long time to recover from the last seven years--is not going to do us any good. Fortunately, as with Vietnam, our unpleasant experiences in Iraq and Afghanistan will probably sour the American public (and the American leadership) on any similar adventures for some time to come.
Yes, the attempt to creat an informal American empire in the Middle East is failing; but this, as I have been reminded all week, is a relatively minor catastrophe in the context of the last 100 years. Since Monday I have been working in the National Archives at College Park once again, investigating American military planning in the most critical 18 months of the twentieth century, the period from May 1940 through December of 1941. For the second time in thirty years, the world's most advanced countries were plunged into total war. As one of several remarkably prescient memorandums by field-grade officers noted as the Germans drove through France, we were threatened with the complete collapse of the British, French, Dutch, and Belgian empires--including the conquest of the United Kingdom itself--and by the worldwide chaos that would result. American observers were also convinced, and with good reason, that a German victory in Europe (undoubtedly coupled with new Japanese advances in the Far East) and the very probable entry of Spain, as well as Italy, into the war, would promote Fascism in Latin America as well. The possible loss of both the French and British fleets to Germany would face the US with an unprecedented threat that we were in no condition to meet. The consensus of opinion--which I now believe Franklin Roosevelt shared--was that we could not afford to commit our destiny to the survival of the British and had to focus on preparing to defend the Western Hemisphere. That, indeed, remained the focus of our military planning for most of the next eighteen months.
That the worst did not happen owed a great deal to factors beyond our control. Hitler certainly could have imposed harsher terms on France and sent troops into Spain, seizing first Gibraltar (which would be untenable with German air power nearby, as I have now discovered), and then positions in North and West Africa. He might easily have won victories against the British all over the Mediterranean, driven Churchill from power, and made peace with a new British government, even if (which was hardly certain) an actual invasion of Britain was beyond his capabilities. But fortunately, Hitler regarded the whole war in the west as an unfortuante diversion from his main goal, the invasion of the Soviet Union. His military advisers advocated most of the steps I listed above, but he insisted on postponing them until after the Soviets had been defeated. That, more than anything else, allowed Britain to survive and allowed the United States time to prepare.
Two subsequent developments have made our world, for all its problems, a relatively safe one. First, the Allied victory and the American decision to create an alliance of all the major capitalist powers put an end to the kind of warfare that had devastated the world in the first half of the century. That alliance persists, and indeed, since the collapse of Communism and the evolution of China, it now enjoys perfectly adequate relations with all the world's leading nations. Secondly, beginning with the war in Vietnam, a striking trend towards demilitarization took root in nearly every advanced country. We all know that the United States has overwhelmingly the most powerful military in the world today, but how many of us realize that our military, as a percentage of our population, is only slightly larger than it was in 1940, a moment when we think of the United States as almost completely disarmed? The rest of the world has followed suit. The only countries whose militaries represent a large portion of their population by historical standards are the two Koreas, Israel, Syria, and Iran--mostly small countries in unusually tense situations. Things may go wrong, but they simply cannot go as wrong as they did in the early part of the twentieth century. Planning for large-scale nuclear exchanges also seems to have lapsed.
How this has happened is a subject for another day. It reflects a loosening of the bonds between states and their citizenry, a trend which in the economic sphere has brought the United States within sight of new catastrophes, but which in the military sphere can only, I think, be regarded as a good thing. Much of the area that comprised the European empires that seemed in 1940 to be on the verge of collapse is now in one way or another "up for grabs"--but not up for grabs by military expansion of industrial powers. That is real progress, and keeping our problems in perspective an only help us deal with them.
American forces are pulling back in Iraq--not a moment too soon, in my opinion--and the essential impossibility of our objectives there are finally being revealed to the entire world. Several stories last week cited the increasingly tense situation beteween the Kurdish areas--independent in all but name--and the Iraqi government, which involves key disputed territory and has nearly led to armed conflict on several recent occasions. More importantly, today's Washington Post includes a remarkable article on the consequences of the implementation of the new status of forces agreement that has mandated the withdrawal of American troops from Iraqi cities. Two years or so ago, while that agreement was being negotiated, I am reliably informed that a senior military commander dismissed problems in the talks as a matter of "Iraqi domestic politics," as if Prime Minister Maliki simply had to make a good showing of independence to satisfy his voters. Indeed it was a matter of Iraqi domestic politics, but of a more serious nature. The Iraqis for some time have wanted to reassert real control over their own affairs. The agreement now confines Americans to their bases, forbids them from moving except at night, and forbids them from patrolling except with Iraqi permission. The Post story is based largely on an angry email from an American major general, from which I quote:
The Iraqi order runs "contrary to the spirit and practice of our last several months of operations," Maj. Gen. Daniel P. Bolger, commander of the Baghdad division, wrote in an e-mail obtained by The Washington Post.
"Maybe something was 'lost in translation,' " Bolger wrote. "We are not going to hide our support role in the city. I'm sorry the Iraqi politicians lied/dissembled/spun, but we are not invisible nor should we be." He said U.S. troops intend to engage in combat operations in urban areas to avert or respond to threats, with or without help from the Iraqis.
"This is a broad right and it demands that we patrol, raid and secure routes as necessary to keep our forces safe," he wrote. "We'll do that, preferably partnered. . . .Our [Iraqi] partners burn our fuel, drive roads cleared by our Engineers, live in bases built with our money, operate vehicles fixed with our parts, eat food paid for by our contracts, watch our [surveillance] video feeds, serve citizens with our [funds], and benefit from our air cover." Some months ago, if I am not mistaken, I posted a link here to a youtube video of an American adviser--a senior enlisted man--screaming at a platoon of Iraqi policemen whom he thought were doing their job with inadequate courage and enthusiasm. I couldn't help thinking, as he called them "women" and "pussies" (words faithfully translated, I was able to verify, by his Iraqi interpreter), that many of them might have been tempted to reply that no one had asked him and his countrymen to come to Iraq. In fact many American soldiers do not agree with the spirit of the general's email, and think that we have already done everything that we can usefully do. In any case, claiming that we are owed gratitude for what we have done to Iraq--which will take a long time to recover from the last seven years--is not going to do us any good. Fortunately, as with Vietnam, our unpleasant experiences in Iraq and Afghanistan will probably sour the American public (and the American leadership) on any similar adventures for some time to come.
Yes, the attempt to creat an informal American empire in the Middle East is failing; but this, as I have been reminded all week, is a relatively minor catastrophe in the context of the last 100 years. Since Monday I have been working in the National Archives at College Park once again, investigating American military planning in the most critical 18 months of the twentieth century, the period from May 1940 through December of 1941. For the second time in thirty years, the world's most advanced countries were plunged into total war. As one of several remarkably prescient memorandums by field-grade officers noted as the Germans drove through France, we were threatened with the complete collapse of the British, French, Dutch, and Belgian empires--including the conquest of the United Kingdom itself--and by the worldwide chaos that would result. American observers were also convinced, and with good reason, that a German victory in Europe (undoubtedly coupled with new Japanese advances in the Far East) and the very probable entry of Spain, as well as Italy, into the war, would promote Fascism in Latin America as well. The possible loss of both the French and British fleets to Germany would face the US with an unprecedented threat that we were in no condition to meet. The consensus of opinion--which I now believe Franklin Roosevelt shared--was that we could not afford to commit our destiny to the survival of the British and had to focus on preparing to defend the Western Hemisphere. That, indeed, remained the focus of our military planning for most of the next eighteen months.
That the worst did not happen owed a great deal to factors beyond our control. Hitler certainly could have imposed harsher terms on France and sent troops into Spain, seizing first Gibraltar (which would be untenable with German air power nearby, as I have now discovered), and then positions in North and West Africa. He might easily have won victories against the British all over the Mediterranean, driven Churchill from power, and made peace with a new British government, even if (which was hardly certain) an actual invasion of Britain was beyond his capabilities. But fortunately, Hitler regarded the whole war in the west as an unfortuante diversion from his main goal, the invasion of the Soviet Union. His military advisers advocated most of the steps I listed above, but he insisted on postponing them until after the Soviets had been defeated. That, more than anything else, allowed Britain to survive and allowed the United States time to prepare.
Two subsequent developments have made our world, for all its problems, a relatively safe one. First, the Allied victory and the American decision to create an alliance of all the major capitalist powers put an end to the kind of warfare that had devastated the world in the first half of the century. That alliance persists, and indeed, since the collapse of Communism and the evolution of China, it now enjoys perfectly adequate relations with all the world's leading nations. Secondly, beginning with the war in Vietnam, a striking trend towards demilitarization took root in nearly every advanced country. We all know that the United States has overwhelmingly the most powerful military in the world today, but how many of us realize that our military, as a percentage of our population, is only slightly larger than it was in 1940, a moment when we think of the United States as almost completely disarmed? The rest of the world has followed suit. The only countries whose militaries represent a large portion of their population by historical standards are the two Koreas, Israel, Syria, and Iran--mostly small countries in unusually tense situations. Things may go wrong, but they simply cannot go as wrong as they did in the early part of the twentieth century. Planning for large-scale nuclear exchanges also seems to have lapsed.
How this has happened is a subject for another day. It reflects a loosening of the bonds between states and their citizenry, a trend which in the economic sphere has brought the United States within sight of new catastrophes, but which in the military sphere can only, I think, be regarded as a good thing. Much of the area that comprised the European empires that seemed in 1940 to be on the verge of collapse is now in one way or another "up for grabs"--but not up for grabs by military expansion of industrial powers. That is real progress, and keeping our problems in perspective an only help us deal with them.
Saturday, July 11, 2009
How the Crisis might turn out
That the United States is now in the midst of the third great crisis in our national life no longer seems in doubt. President Obama faces problems on the same scale as Abraham Lincoln and Franklin D. Roosevelt, and the political stakes for which we are now playing--the future, and possibly even the survival, of the United States as we know it--are just as high. His own approach to the crisis--which I would characterize as far more Lincolnesque than Rooseveltian--is also becoming clear. The question of whether it will work remains open, and probably will be for at least another three years, until he stands for re-election. All we can do now is to speculate about scenarios and assess probabilities.
As in every great crisis, the problems we face are not merely ones of mood, or national disunity--they are real problems requiring real solutions. The two that stand out, clearly, are our collapsing economy and our need to live at peace with the Muslim world, while maintaining the solidarity of the industrialized world that has now lasted for more than sixty years. Simultaneously we face a serious political problem at home: the total alienation of at least a third of the population--by and large, the least educated and affluent white portion of the population--from the Administration. The solution of the political problem, in my opinion, depends on the solution of the first two. The solution of the first two depends--once again, in my opinion--in abandoning business as usual, and that is where the Administration, to date, is not inspiring as much confidence as it might.
For the past thirty years, and especially during the past sixteen or so, the financial sector has fueled our economy. By making what turned out to be irresponsible loans--to consumers holding credit cards, to mortgagees, and, through derivatives and credit-default swaps, to each other--they generated the new wealth that spread demand through the economy. Because we were in the meantime de-industrializing more than any other major economic power, much of that demand fueled the economic growth of other nations, especially in Asia, more or less forcing Asian nations to lend the money back to us and finance our trade and budget deficits. When the impossibility of making good on trillions of dollars of those loans became apparent about 18 months ago, the economic crisis began. Unfortunately--in my view, at least--President Obama picked a mainstream economic team, led by Larry Summers and Timothy Geithner, who were heavily implicated in the policies of the last 18 years. As far as I can tell, their economic prescriptions have not yet attempted to undo any of the fundamental causes of our predicament. When they get around to proposing the restoration of something like the Glass-Steagall Act, which separated investment banking and commercial banking, I will be convinced that some one has grasped the nature of the problem: to put the awesome, inevitably destructive power to create new assets at will back within prett severe limits.
The equally important issue that has not been faced, to put it bluntly, is whether we need a largely new economy. Even as unemployment threatens to pass the 10% figure nationwide, and even as much of the American auto industry goes under for all time, the Administration, from the President on down, grasps at straws, arguing for instance that a decline in the acceleration of unemployment means that we are in some sense on our way to recovery. Such claims are, actually, only marginally more sophisticated than the arguments we heard in the 1990s that the Dow was destined to continue increasing steadily until it reached at least 36,000. It suddenly occurred to me last week exactly what they mean, mathematically: that employment could be expressed as a quadratic equation, with t (time) as the only independent variable. (Less mathematical readers can skip the rest of this paragraph.) Such an equation might postulate that in any given year t from here on out (the 1st year, the second, the third, etc.), the delta, or change in the unemployment rate(let's call it DE, since I don't know how to insert a delta into html), would look something like this:
DE = t2 - 3*t
Resurrecting my high school calculus, the slope of this line, over time, would be the derivative of the equation, which would be 2t - 3 . In the first year(next year, until July 2010), the change in the rate would be -2--an additional two per cent unemployment. At the end of the following year (year 2), DE, measured from this moment, would be -4 -- the rate would not have changed. But by the third year unemployment would at last be steady (32 - 9 = 0), and in the fourth year employment would increase 4%, and so on. At any point in time the slope of the curve representing the change in unemployment would be 2t - 3--starting at -3 right now, it would fall to -1 in a year (the exact kind of decline in new unemployment claims upon which everyone is eagerly pouncing on now), and finally get over 0 -- that is, to a point of rising unemployment--in two years.
The problem is that we really don't have the slightest idea whether current increases in unemployment reflect such an incredibly simple equation--there is every reason to believe that they do not. During the Great Depression the unemployment rate did not increase and decrease smoothly. The increases in unemployment accelerated from 1930 to 1931 and again in 1932, before coming to a sudden halt in 1933, whereupon employment began to rise again. Both Paul Krugman and Bob Herbert of the New York Times have consistently argued that the stimulus wasn't big enough and that it would be necessary to ask for a lot more. It will also be necessary, in my opinion, to sell the next stimulus as, if you will, a defensive rather than an offensive measure--a way to prevent the loss of further jobs, particularly in state and local government, rather than to create entirely new ones. Meanwhile, the Administration will have to be able to make a credible case--certainly by 2012, if not by 2010--that new sectors of the economy, such as green energy projects and infrastructure, are providing hundreds of thousands of genuinely new jobs and can provide millions more. That is what Roosevelt managed to do by 1936, leading to his massive re-election. Roosevelt experimented with planning the economy during his first two years, but put a huge emphasis on public works. Not until 1935-6 did he pass the most enduring reforms of his Administration, the SEC, the Wagner Act (legalizing unions), and Social Security. Obama is beginning with his major long-term reform, health care. We do not know whether this sequencing will work--although the way in which the Democratic majorities in Congress are pushing health care along is an encouraging sign.
On the foreign scene, things will, I am afraid, get somewhat worse in the Middle East. Iraq will lapse into a more or or less violent civil war. No surge, no amount of American help, and no decline in violence (a trend that owed a lot to the completion of ethnic cleansing in much of Baghdad), has managed to undo the basic fact that Iraq is at least two, if not three, nations. The Kurds are moving more rapidly towards Independence and asserting claims to disputed territory and oil. There is good reason to believe that the Sunnis will be violently reasserting themselves within a year. I am not optimistic, as I made clear last week, about the results of the surge in Afghanistan. Iran is going to hold resolutely to its course, although I suspect that Iran, like Israel, will not actually test a nuclear weapon. A US-Israeli deadlock over settlements seems likely. That will enrage certain elements in the media and the foreign policy establishment, but I am not sure that it will have much importance politically. The public seems as sick of our Middle Eastern adventure today as the it was of the Vietnam war by 1973 or so. The real political danger is at home.
Obama, like Lincoln, is moving slowly at home--as rapidly as the political traffic would bear. Just as Lincoln spoke in to the South in terms of friendship right up until Fort Sumter, he began hoping for Republican cooperation. He has compromised on many issues already--including climate change--without getting any. Perhaps the situation at home will have to become more desperate, like the Union military situation in 1862, before he can move more decisively on various domestic fronts. But in any case there is only so much that he can do alone. Lincoln won the conventional conflict that the South chose to wage, but after his death the will was lacking to do more than enshrine legal black equality in the Constitution while allowing white supremacy to return in the South. After three decades of free market consensus, we may not have the intellectual capital to do what needs to be done for the economy, either. But it is still, as the British would say, early days. On this day in 1861 the first Battle of Bull Run was still more than a week away. This will be a long struggle--and that, perhaps, is the rhetorical change I would recommend most strongly to the President. We have been on the wrong track for a long time, and it will take ten to twenty years to rebuild a more just America. The Democrats, sadly, may have lost their only chance to repeal the 22nd Amendment during the George W. Bush Administration--which means that Obama's successors will have to carry on the work to complete it. Meanwhile, let us not, like the northern abolitionists in 1861, despair of a leader who probably has a better sense of what is and is not possible just now than we do.
As in every great crisis, the problems we face are not merely ones of mood, or national disunity--they are real problems requiring real solutions. The two that stand out, clearly, are our collapsing economy and our need to live at peace with the Muslim world, while maintaining the solidarity of the industrialized world that has now lasted for more than sixty years. Simultaneously we face a serious political problem at home: the total alienation of at least a third of the population--by and large, the least educated and affluent white portion of the population--from the Administration. The solution of the political problem, in my opinion, depends on the solution of the first two. The solution of the first two depends--once again, in my opinion--in abandoning business as usual, and that is where the Administration, to date, is not inspiring as much confidence as it might.
For the past thirty years, and especially during the past sixteen or so, the financial sector has fueled our economy. By making what turned out to be irresponsible loans--to consumers holding credit cards, to mortgagees, and, through derivatives and credit-default swaps, to each other--they generated the new wealth that spread demand through the economy. Because we were in the meantime de-industrializing more than any other major economic power, much of that demand fueled the economic growth of other nations, especially in Asia, more or less forcing Asian nations to lend the money back to us and finance our trade and budget deficits. When the impossibility of making good on trillions of dollars of those loans became apparent about 18 months ago, the economic crisis began. Unfortunately--in my view, at least--President Obama picked a mainstream economic team, led by Larry Summers and Timothy Geithner, who were heavily implicated in the policies of the last 18 years. As far as I can tell, their economic prescriptions have not yet attempted to undo any of the fundamental causes of our predicament. When they get around to proposing the restoration of something like the Glass-Steagall Act, which separated investment banking and commercial banking, I will be convinced that some one has grasped the nature of the problem: to put the awesome, inevitably destructive power to create new assets at will back within prett severe limits.
The equally important issue that has not been faced, to put it bluntly, is whether we need a largely new economy. Even as unemployment threatens to pass the 10% figure nationwide, and even as much of the American auto industry goes under for all time, the Administration, from the President on down, grasps at straws, arguing for instance that a decline in the acceleration of unemployment means that we are in some sense on our way to recovery. Such claims are, actually, only marginally more sophisticated than the arguments we heard in the 1990s that the Dow was destined to continue increasing steadily until it reached at least 36,000. It suddenly occurred to me last week exactly what they mean, mathematically: that employment could be expressed as a quadratic equation, with t (time) as the only independent variable. (Less mathematical readers can skip the rest of this paragraph.) Such an equation might postulate that in any given year t from here on out (the 1st year, the second, the third, etc.), the delta, or change in the unemployment rate(let's call it DE, since I don't know how to insert a delta into html), would look something like this:
DE = t2 - 3*t
Resurrecting my high school calculus, the slope of this line, over time, would be the derivative of the equation, which would be 2t - 3 . In the first year(next year, until July 2010), the change in the rate would be -2--an additional two per cent unemployment. At the end of the following year (year 2), DE, measured from this moment, would be -4 -- the rate would not have changed. But by the third year unemployment would at last be steady (32 - 9 = 0), and in the fourth year employment would increase 4%, and so on. At any point in time the slope of the curve representing the change in unemployment would be 2t - 3--starting at -3 right now, it would fall to -1 in a year (the exact kind of decline in new unemployment claims upon which everyone is eagerly pouncing on now), and finally get over 0 -- that is, to a point of rising unemployment--in two years.
The problem is that we really don't have the slightest idea whether current increases in unemployment reflect such an incredibly simple equation--there is every reason to believe that they do not. During the Great Depression the unemployment rate did not increase and decrease smoothly. The increases in unemployment accelerated from 1930 to 1931 and again in 1932, before coming to a sudden halt in 1933, whereupon employment began to rise again. Both Paul Krugman and Bob Herbert of the New York Times have consistently argued that the stimulus wasn't big enough and that it would be necessary to ask for a lot more. It will also be necessary, in my opinion, to sell the next stimulus as, if you will, a defensive rather than an offensive measure--a way to prevent the loss of further jobs, particularly in state and local government, rather than to create entirely new ones. Meanwhile, the Administration will have to be able to make a credible case--certainly by 2012, if not by 2010--that new sectors of the economy, such as green energy projects and infrastructure, are providing hundreds of thousands of genuinely new jobs and can provide millions more. That is what Roosevelt managed to do by 1936, leading to his massive re-election. Roosevelt experimented with planning the economy during his first two years, but put a huge emphasis on public works. Not until 1935-6 did he pass the most enduring reforms of his Administration, the SEC, the Wagner Act (legalizing unions), and Social Security. Obama is beginning with his major long-term reform, health care. We do not know whether this sequencing will work--although the way in which the Democratic majorities in Congress are pushing health care along is an encouraging sign.
On the foreign scene, things will, I am afraid, get somewhat worse in the Middle East. Iraq will lapse into a more or or less violent civil war. No surge, no amount of American help, and no decline in violence (a trend that owed a lot to the completion of ethnic cleansing in much of Baghdad), has managed to undo the basic fact that Iraq is at least two, if not three, nations. The Kurds are moving more rapidly towards Independence and asserting claims to disputed territory and oil. There is good reason to believe that the Sunnis will be violently reasserting themselves within a year. I am not optimistic, as I made clear last week, about the results of the surge in Afghanistan. Iran is going to hold resolutely to its course, although I suspect that Iran, like Israel, will not actually test a nuclear weapon. A US-Israeli deadlock over settlements seems likely. That will enrage certain elements in the media and the foreign policy establishment, but I am not sure that it will have much importance politically. The public seems as sick of our Middle Eastern adventure today as the it was of the Vietnam war by 1973 or so. The real political danger is at home.
Obama, like Lincoln, is moving slowly at home--as rapidly as the political traffic would bear. Just as Lincoln spoke in to the South in terms of friendship right up until Fort Sumter, he began hoping for Republican cooperation. He has compromised on many issues already--including climate change--without getting any. Perhaps the situation at home will have to become more desperate, like the Union military situation in 1862, before he can move more decisively on various domestic fronts. But in any case there is only so much that he can do alone. Lincoln won the conventional conflict that the South chose to wage, but after his death the will was lacking to do more than enshrine legal black equality in the Constitution while allowing white supremacy to return in the South. After three decades of free market consensus, we may not have the intellectual capital to do what needs to be done for the economy, either. But it is still, as the British would say, early days. On this day in 1861 the first Battle of Bull Run was still more than a week away. This will be a long struggle--and that, perhaps, is the rhetorical change I would recommend most strongly to the President. We have been on the wrong track for a long time, and it will take ten to twenty years to rebuild a more just America. The Democrats, sadly, may have lost their only chance to repeal the 22nd Amendment during the George W. Bush Administration--which means that Obama's successors will have to carry on the work to complete it. Meanwhile, let us not, like the northern abolitionists in 1861, despair of a leader who probably has a better sense of what is and is not possible just now than we do.
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