2009 is upon us, and making any predictions about it seems even more difficult than usual. The one event that is as certain as such things can be is that the disastrous Bush presidency will come to an end in a few weeks time. But how will Obama respond to the many and intertwined crises that he faces? Based on his own rhetoric and actions so far, and on the normal logic of politics, one would expect him to seek out the middle ground, which has shifted a long way to the right under Bush.
But these are not normal times. The logic of economic events has already pushed governments to take measures that would have seemed unthinkable only a few months ago. While bailouts and bank nationalisations have staved off total economic collapse, it’s clear that much more will need to be done, and that governments will have to do most of it.
At present, all of this is being treated as a temporary interruption to business as usual. The Rudd government, for example, having provided one massive stimulus to the economy and preparing for more, guaranteed bank deposits, bailed out childcare centres and so on, is still touting its credentials as “economically conservative”, a phrase that appears to entai a new search for possible cuts in public expenditure, and continued adherence to limits on the ratio of tax revenue to GDP. But (I’ll try to spell all this out more in later posts) the notion of economic conservatism, interpreted as strict adherence to the policy doctrines that have been generally accepted for the past twenty-five years or so, no longer makes any sense.
The picture is similarly cloudy in relation to foreign policy issues. While Obama has garnered immense goodwill simply for not being Bush, that will dissipate fast in the absence of concrete steps, many of which are likely to be resisted by the Foreign Policy Community. Starting with the closure of Guantanamo Bay and an unequivocal repudiation of torture, extraordinary rendition and so on, the US government needs to admit that it is not above both international law and the laws of the United States itself.[1] The increasing evidence that military victory in Afghanistan is unattainable implies the need to think about possible routes to a partial and negotiated peace – as one of the few participants in the conflict from anywhere near the region, Australia should be particularly concerned.
Last but not least, there’s climate change. The Rudd government has given a pretty clear demonstration of how not to adjust climate change policy in the light of a macroeconomic crisis. It remains to be seen whether Obama will do better, whether he can carry the US with him and whether the world as a whole can come to an agreement that has any chance of success.
fn1. All this will be complicated by the latest disastrous events in the Israel-Palestine conflict, as they develop over coming weeks. As this topic tends to hijack comments threads, while adding nothing to our understanding, I’m going to delete anything about it, except in the specific context of US policy.
John Quiggin 
Welcome back John,
I am looking forward – still – to your promised posts on “the policy doctrines that have been generally accepted for the past twenty-five years or so, [which] no longer makes any sense.” At the same time, let me request up front that you be careful to avoid largely meaningless Puseyesque pejoratives, such as “neoliberalism”, that you carefully source the contents of doctrines such as “the Washington consensus” to those who created and promoted them, rather than those who erected and then criticised straw men of the same name, and that you take care to differentiate between the pronouncements of politicians and commentators and the analyses of policy economists.
TN
PS: Any prizes for having the first comment on your blog of the new year?
One of the real delights of a new year is that it hasn’t been blighted by events and we can be hopeful even in the face of experience.
I too have pondered what the phrase “economic conservative” might mean, especially as it saw the light of day in comparison to the Howard years which were not particularly conservative; new taxes and charges were introduced along with more people becoming welfare recipients,industry supported by governments with few strings attached, and few initiatives to conserve the environment.
The title “economic conservative” seems to mean taking advice from the same public sector which is undergoing cuts (severe in some cases) and is therefore less able to provide sound advice. The churn in the Public Service in Canberra is reaching such a level that anyone in the same job for 6 months is long term. In this context it means that a public servant adopting an economically conservative response is someone who looks at precedents in the files and suggests the same policy responses that have been used in the past eg propping up the auto industry, reducing the public service (preferably in other departments), finding ways to limit the costs of popular and expensive promises through policy red tape and finely tuned eligibility criteria.
In the foreign policy area we can still hope that Obama takes better advice than George W Bush has. A negotiated peace in Afghanistan is a possibility. With winter on the way this is the time to be working on peace initiatives. The Afghanis are great traders and also tribal so these two factors should be key policy considerations. Instead of trying to wipe out the growing of opium which is used to finance the Taliban activities, buy it and supply goods other than weapons that can be purchased with the money raised. This would meet a number of necessary prerequisites for peace.
Economic conservatism means a lack of ability to look at old problems in new ways. It means social conservatism informs economic decisions which in turn creates the unsound political decisions.
One of the factors of conservatives is that they rarely understand the psychology of those they are dealing with and assume that others are either irrational or think like them. Hopefully, Obama will not label himself as a conservative because if he does the hope that comes with a new year and a new presidency will be lost.
Happy New Year to all.
I think the policy doctrines that have not made any sense for the past twenty five years is over reliance on monetary policy, monetarist and basically conservative doctrines that operate and (have continued to operate) on the premise that markets are competitive. This is an absolute furphy. The small business sector may be competitive but the large business sector is anything but and has become increasingly uncompetitive with significant ability to control their prices. The large business sector remains relatively immune to interest rate manipulations (precisely because they have the strength to rely on earnings and dont need to borrow as muchy as the small business sector). As well they can continue with significant excess capacity without adjusting the price by generating unemployment which they are now all doing. Have your insurance or bank fees or supermarket costs gone down lately? What about oil? The price mechanism in these markets does not function according to the conservative doctrine of freer markets. In a similar fashion executive wages are not created by a competitive market. They are created by those in management who appoint directors most likely to approve their excessive salary increased and it is a closed shop that self perpetuates obscene salaries for no equivalent effort. If they were granted half as much or a quarter as much people wouild still compete to get to the top in organisations. Its one thing to want to contain wages growth at the end of the labour market that cannot defend itself (eg workchoices); yet it requires a stronger government (collective) will to restrain excess and uncompetitiveness (lets call a spade a spade – outright greed) at the top of the labour market. Until this happens the cycle of increasing inequality and speculative excess will just begin anew.
“possible routes to a partial and negotiated peace”
Any suggestions? It seems to me that the most likely outcome is that the Taliban will go back to where they were before the intervention.
Pusey made sense to me. I think the general thrust of his argument in “Economic Rationalism in Canberra” has been vindicated. The running of society according to right wing fundamentalism (political and economic) has foundered pretty much as Pusey predicted it would.
Neologisms are sometimes necessary and “neoliberal” is a perfectly good neologism. In fact, it’s not so new. It’s quite an established term I would say.
I am not surprised that Pusey made sense to you, Ike, but then you have just committed a Puseyism yourself by implying that society has been run according to right-wing fundamentalism.
If Obama does not do better than Rudd with respect to climate change then we are all sunk and the rest hardly matters?
Still, if Juan Cole is to be believed the clouds have lifted somewhat in our immediate neighbourhood. He notes:
Jill
“I too have pondered what the phrase “economic conservative” might mean…. specially as it saw the light of day in comparison to the Howard years which were not particularly conservative; new taxes and charges were introduced along with more people becoming welfare recipients,industry supported by governments with few strings attached, and few initiatives to conserve the environment.”
I see conservative economics as the whole raft of followers and offspring of followers of Milton Friedman. Their view of the world is one where the market is seen as fundamentally competitive and I dont think they ever bothered to distinguish between the very different forms of competition (if there is any at all in some sectors) between larger businesses and small businesses. Having become so attached to monetary policy, which falls disproportionately on small business, and other policies designed to remove regulation what we now see is an alarming concentration in many of our industries and growth of the larger less competitive business form (at the expense of the protection of genuine competition). The irony of such worship of the unfettered free market is that it is likely to dmninish the single thing so admired by Professor Friedman – the freedom of to choose. As noted by the clever Elizabeth Farrelly yesterday – man is born free but everywhere he is in chain stores.
Something most people arent thinking about in this whole financial crisis is the effect it is going to have on agriculture, and the knock on effects that has for everybody.
It is already effecting the dairy industry, with at least two of the big players cutting farm gate milk prices by at least 10% and it is likely that the price will drop a further 15% by mid year. This represents the farmers entire profit.
Add to this the 4 fold increase in fertilizer costs in the last few years, the much higher cost of the diesel required to run tractors and irrigation and the current economic crisis is making credit hard to get, so many farmers are now unable to use a line of credit for the daily costs of running their buisness.
Even at the current price of about 38c a litre, some farmers in my district (lower sth east SA) are finding they cannot afford to run their pivots regularly, and are using less fertilizer than they should simply because they cannot afford to. I have heard several people, including a guy i work for, say they will walk away from their farms and decalare themselves bankrupt the day that the price drops by the threatened 25%
The effects of this will be felt by all of us. Dairy UHT and powdered products are a big export industry for Australia, many jobs in rural areas rely on the dairy industry from managment to farm hands, and all the contractors, suppliers and consultants.
Obviously as farmers walk off their farms, or at least cut staff/costs to maintain their farms, the local economy will suffer as workers move away, land prices fall, less shopping gets done etc.
Their are a lot of other issues here such as peak oil and peak phosphorous and their effects on the economics of factory farming and industrial agriculture, but i dont want to bore anyone (too late?!)
Perhaps the banished right of centre should run the ruler over the new left of centre enthusiasm for their newly flavoured govt. The warning signs are there as the easy criticism and sometimes muddle-headed stance of Opposition gives way to the hard yards of Govt and the inevitable tradeoffs as the soft rubber of ideology hits the hard electoral road.
On the economy, the Rudd Govt has eagerly pulled out the Keynesian chequebook and Howard has signalled the clear and poignant warning that deficit spending is like going down in the lift while returning to surplus is like climbing the stairs. It’s clear much past surplus was really funny money stuff given the Reserve’s oversight of credit creation like central banks everywhere.(so much for conservative monetary policy) Nevertheless Costello left Swan in an enviable position as Treasurer, vis a vis other world economies, particularly after the black hole Costello inherited. Swan can use the savings over the cycle but the $64000 question now is how long is the cycle? As for needing Fuelwatch and Grocerywatch to keep big players competitive, the umpteenth ACCC enquiry into petrol prices confirmed what we already knew at the servos and corporate profits are echoing global competition, albeit if you think banks are odd man out on fees, then perhaps Govt shouldn’t guarantee their deposits and profitability. It remains to be seen whether Govts can make and sell cars more profitably than those at present.
There are storm clouds on the horizon for security. On border security the people smugglers have tested the waters and the Rudd Govt wisely resorted to Xmas Island again, knowing full well the cyclone season has offers a short reprieve before their resolve is seriously tested. If Hicks and Habib were not exactly guests of honour at the 2020 happening, Obama’s Gitmo innocents are going to be a lot harder to roll out the welcome mat for and the chances of welcoming them secretly are nil. The new Govt has easily ditched their ‘bad war’ for their ‘good war’, but the irony of their predicament now is obvious. The ‘war on terror’ won’t go away as easily as some might like to drop the terminology. Israel is reminding them by ramping up the term again with their war on terrorist organisation Hamas. The Palestinian’s current two state solution is not exactly what the Rudd Govt may have had in mind.
On GW the Rudd Govt clearly squibbed the big talk in Opposition and with all the free permits was not prepared to offshore major industry. Of course we were always a bit player and Obama’s stance is the relevant one. Not sure how that will play out and that has ramifications for the Rudd Govt’s stance. Now Obama was an initial board member of the CCX so he might be swayed to go the C&T road for his Chicago base and a chastened finance sector drooling at the prospect. However there’s increasing resentment of China’s economic strength and being beholden to Arab oil, so there’s some mounting pressure for straight taxing of carbon and hitting the ball back in China’s court to do likewise. If he does, the Opposition here will have a brand new policy stick to beat the Rudd Govt with.
Then there’s always the unexpected not of your making.
“land prices fall”
How does that impact negatively on the local economy?
Sorry, Typo. I meant ‘house prices fall’ not ‘land prices fall’
However, what you say raises the point that when rural land prices fall, the borrowing power that a farmer has is significantly reduced, making it harder for him to expand, improve his buisness or invest in new equipment.
And as for how house prices falling effects local economy badly there are some good examples in the US at the moment, with so many people abandoning their homes (as the value drops below the amount of the loan) that there are streets and neigbourhoods full of empty houses. Local traders go out of buisness, chain stores close, people have to travel further to go to the shops and get their kids to school. Sounds pretty bad for the economy to me.
From a rural perspective, it is also pretty obvious that if farmers go out of buisness the workers they employ become unemployed and stop spending money, causing problems for the entire local economy (service and retail particularly)
I can’t imagine anyone suggesting that having high unemployment, low house prices, and a flat retail and service sector would be good for the local economy!
JQ Before addressing why ‘economic conservatism'(as defined) “no longer makes any sense” I would be interested in precisely what policy doctrines you suggest have been generally accepted for the last 25 years and have been subjected to strict adherence.
Typically such broad generalities are not necessarily wrong but often become meaningless when subjected to any real scrutiny.
Regarding Mr Rudd’s self-description as a ‘economic conservative’ – this is obviously meant to be nothing more than a political protective device in a Howard/Costello created economic world. Essentially Rudd is simply non-ideological – issues are subject to orderly ‘processing’. No guidance from a deeply held world view is to be found here! At least in the case ofdomestic politics.
JQ’s disappointment re climate change is surprising – his expectations were almost (Greenishly) far too high. Given Rudds timidity and general lack of political courage the CPRS targets were always going to be very limited.
I would add that the strategy underlying the White Paper was patently sound – the mistake was in the modesty of the targets!
Jill Rush: Do you really believe that conservatives have a monopoly on “not understanding the psychology of those they are dealing with..”?
John, I just would like to add that any nation who commits a war crime by targeting civilians cannot claim to be acting ‘in defence of freedom’.
Ennui
“Given Rudds timidity and general lack of political courage”
Despite the more conservative approach (than I would have preferred) to climate change initiatives I dont think Rudd has displayed a general lack of political courage and I have been impressed at his fiscal initiatives and expenditure programs in response to the GFC. Many had become disillusioned by Howards accummulation of such a large budget surplus (with increasing costs being shoved downwards to state and local government levels and increasing user pays) when so many important areas of public infrastructure were clearly in need of greater spending and left to go without. Howards solution to public spending was to throw a lot of money at people and organisations who never really needed it in the first place (back to the belief that conservatives have that individuals make the best choices concerning the allocation of income), whilst essentially minimising ollective public social capital expenditure. Eventually we all rely on public infrastructure and an impartial (as possible) planning and organisation structure for the market itself. To leave this planning to the market itself, is simply to open the door and invite a grand mess (which we now have). That is the singular fault of the conservative approach over the past twenty five years – the belief that Governments could and should take their hands off the wheel as much as possible.
Don’t mention the war, Micheal. I mentioned it once but I think I got away with it.
Alanna
In a post Howard/Costello economic environment being ‘timid and lacking in political courage’ is not a significant problem – in fact a cautious PM is exactly the right note to sing if building the necessary momentum for at least two terms.
With the RBA’s tight monetary policy leading to reduced growth and its flip side higher unemployment (ie correcting Costello’s poor economic management) Rudd was facing the possibility of being a one termer. The GFC has changed all that: “Don’t blame me for any economic problems, blame the GFC!!” Rudd is now off the hook. (a hook which, I might add, was not of his making but the electorate does not concern itself with such niceties!) Certainly the Gov’t response in the form of a large fiscal stimulous was both timely and ‘decisive’- with only a few blemishes.
I think Rudd has had a good first year – but he is not a reformer. He is an ‘economic conservative’ – not to be confused with ‘economic rationalist’ which I suspect JQ is doing in a broad sense.
I assume what JQ is taking aim at is the so-called “conservative economic project”. Commencing as the Reagan/Thatcher agenda viz reducing government intervention and freeing-up market operations, became the third way for pragmatic social democrats in many rich countries. The Hawke/Keating governments were no exception to this and proved to be progressive economic reformers. On the other hand, the Howard/Costello years, particularly the second half, were years of slothful economic drift and wasted opportunities.
The central point of this is simply that JQ has set himself an almost impossible task. The conservative economic project was a program of selected actions, differing between countries, introduced in dribs an drabs, subject to refinements, installed in different environments etc. And of course there remains the need to distinguish between rhetoric and reality. eg under Reagan’s Presidency (“Government is not the solution to problem; government is the problem”) a significant blow-out in goverment expenditure took place!
Repudiating “generally accepted policy doctrines strictly adhered to for 25 years”?
This will be interesting!
Well Ennui,
What I really would have liked to have seen implemented at least twenty five years ago was a co-ordinated response to prices and incomes restraint. That includes prices and incomes restraint at the higher end as well as the lower end. Executive salaries should have been restrained to X times the average weekly earnings. Period and full stop. There has been no attempt by governments in the mad rush to de regulate markets since the politics of Reagan and Thatcher. I remind all here of Thatchers famous quote – “there is no such thing as society”. As for de regulation of Australia’s markets – Keating is still out there bleating that his ideas were great ideas – yet all he did was follow the same mantra of the unchained market – Costa continued in the same vein – despite one failed privatisation after the other. It starts to look like empty rhetoric to me and all the while the ABS is having its budgets cut and its staff busying themselves with user pays invoicing (to busy to do the important analysis).
Yes, Ennui – I agree whilst generally accepted doctrines that were pushed by conservative politicians and the hired media mouthpieces could differ to actual spending – generally these differences were only political for the purpose of attracting votes (money to private schools – welfare for the upper middle classes???). I call that vote buying and Howard excelled at that. Think about Costellos massive incentives for pouring extra money into super in 2008. That was really well timed wasnt it ?- incentives for the already rich. There is at least a poetic justice in the GFC.
Im happy Rudd is in. Its a step in the right direction.
Alanna #8 I read the Elizabeth Farrelly article and was intrigued by her assessment. The impediments put in the way of establishing cooperative ventures was a surprise to me.
Ennui #13. I didn’t say or suggest that.
However the far more important question is how will the world’s leadership handle the still far from finished financial crisis which will leave people poorer in real terms? This is a short to medium term problem facing governments compounded by war in the middle east that has no end.
Every solution devised by the leaders needs to have environmental matters addressed because this is the major long term problem which cannot be ignored. We need the money from a sound economy to redress many of the poor environmental decisions, taken in the past, which degraded the land and water. This requires a different and more coherent economic structure. Good leadership starts with the support of the people. Obama and Rudd start with great advantage.
People have hopes around Obama’s leadership. This provides a great opportunity. Hope still rides on Rudd to make sound decisions too. As for economic conservative or not it is far to early to make that judgement for Rudd or Obama.
Alanna says “Many had become disillusioned by Howards accummulation of such a large budget surplus (with increasing costs being shoved downwards to state and local government levels and increasing user pays) when so many important areas of public infrastructure were clearly in need of greater spending and left to go without.”
The main reason why the federal government has been running a stronger budget surplus than most of the state governments in recent years has more to do with the different revenue bases of state and federal governments. State governments derive a large amount of their revenue from the GST. The federal government derives more revenue from things like income tax and company tax. Because the GST is a flat tax on most of the economy, GST revenues don’t rise as sharply in good economic times. But income tax is a progressive tax, so revenues rises more sharply as the economy grows and more people are in higher income tax brackets. Company tax receipts are also more volatile in the economic cycle. When the economy is growing and business profits are high, company tax receipts grow more sharply. But they also fall more sharply when the economy slows and business profits fall.
In addition, the federal government performs more social insurance functions (which should decline in strong economic times and grow during economic downturns).
All this means that federal budgets tend to be more volatile during different stages of the economic cycle. Indeed, given the fact that much of the federal budget surplus was being driven by (temporary) windfall tax revenues from the resource-led boom, and given the likely future drag on government budgets from things like an aging population, there is a good argument to be made that the Howard government should have been running an even bigger budget surplus over their last few years in office. Politically, it would of course be hard to defend a surplus of (say) $30 or $40 billion when you’ve got all sorts of groups clammering for funds. But in the years to come, worsening financial problems may lead people to question the wisdom of frittering away the bulk of that windfall.
Jill
You did say at #2 “One of the factors of conservatives is that they rarely understand the psychology of those they are dealing with ..”
You may not have meant it but you nevertheless said it. Such ill-considered throw-away lines can be troublesome and occasionally, as in this case, nonsensical.
Anyway, you too have a Happy New Year!
Nick k
A good post – very succinct.
I would add that overlaying the electoral cycle on the economic cycle illustrates the importance of timing in the political process.
eg both Reagan and Clinton in the US, Howard in Oz got elected at “right” stage of the business cycle. Rudd may well have been bailed out by the GFC!
Jill #”I read the Elizabeth Farrelly article and was intrigued by her assessment. The impediments put in the way of establishing cooperative ventures was a surprise to me”.
This was also a surprise to me as well Jill. I recall last year or so, a collective staff childminding arrangement that had been operating successfully for many years in facilities at Macquarie campus with parent contributions for labour was closed down and tendered out – I dont really know the outcome (I do know there were some very disappointed mothers) but now I wonder whether ABC learning was the successful tenderer?
Nick K # 20 “there is a good argument to be made that the Howard government should have been running an even bigger budget surplus over their last few years in office”.
Of course there is an argument for that when the economy is near full employment but you must remind me what that is when unemployment has been much higher than the 1% in the post WW2 decades. There was also the dramatci rise in casual employment and underemployment such that the unemployment rate is understated anyway. There is the additional problem of Australia’s vertical fiscal imbalance that has remained largely uncorrected by a series of governments. What point is there to the hoarding of a large Commonwealth surplus when the aggregate of all state and local governments were in deficit?
I am tempted to say full employment? at capacity? my eye!! (or only for the big miners)!
#21 Ennui, I didn’t say that I rejected my statement. A lack of insight into others is one of the main reasons why a conservative may not be able to envisage a solution to the current economic situation leading to a positive result.
Oh the joys of ‘neo-liberalism’.
Anyone remember: “monetary targetting”, “twin deficit theory” ? Plus a lot of other rubbish along the way.
Example: sell off CSL, great idea, except that a privitised CSL had zero interest in anti-venom (research, creating, etc). So the Federal Govt paid them to create anti-venoms .. and has to date paid much more than they got for selling the company.
Me? I put the whole ‘neo-liberal’ idiotology down to, greed, stupidity and of course corruption.
Greed in that: Private wealth could see so much money to be made in (1) borrowing huge amounts of money to buy a public asset at a rediculously cheap price*, (2) strip away any social good or redundancy** (3) get huge tax breaks doing it, (4) if they got a monopoly crank prices into the stratosphere.
Stupidity: the ‘great unwashed’, sometimes called the electorate, went along with this scam. If I had just one dollar for all those ‘studies’ that showed how: ‘productivity’, ‘efficiency’, ‘tariff cuts’, etc, increases, would add billions to the economy … and I’d be rich … surprise surprise it never happened. Oh some people got rich all right. Just not you or me.
Corruption: the sheer cost of being elected and reelected means that any person or party is always on the hunt for cash, serious cash. There are 2 types of corruption in politics, the “Queensland version”, paper bags of cash.
The other is “systemic corruption”, where whole parties and systems are corrupt (e.g UK Labour or the US Democrats or Republicans). Simple evolution, if you can’t deliver money to a potential contributer, then that money will go elsewhere .. and they will be elected.
Why is that the case? refer to (2).
* Refer to corruptiion.
** Redundancy, run down things to the absolute limit, until there is no spare capacity at all .. add a crisis, an odd event, suddenly increased demand, etc … system collapses.
Recent ref: Katrina and New Orleans.
Jill R, I think that Howard was pretty conservative in some ways. JQ’s comment about bialouts and Rudd’s stimulous led me to ponder what bailouts Howard had actioned in his time. Conservative wuld be the word here. There was his brother’s pig farm. He turned a bailout of Ansett’s worker’s lost entitlements into a very handy departure tax which he found very hard to part with. He bailed out drought stricken farmers and country businesses with relief funding that had so many strings attached that few took up the offer…….And now I’m struggling to think of more….Oh yes, he gave succor to Patrick’s assault on its union. I’m sure that there were some other examples, but generally I would call him conservative in this regard.
Alanna at 18,
“a co-ordinated response to prices and incomes restraint”
The only example of this idea applied that I have experienced was fully implemented by Robert Muldoon in NZ in the last years of his Prime Ministership. This was followed by a “Labour” Lange government (did you hear about Rogernomics) which completely obliterated any understanding of what is “left” and what is “right”, in NZ at least. I have completely mixed feelings about which regime was better.
One overlooked facet of Obama’s victory (by me at least) is how it augurs the regional shift in political power that the US is currently undergoing. That is, from the largely white majority Right-wing South/Mid-West to the colored minority Left-wing West Coast.
The psephological shift is mostly driven by ethnological factors. California’s “minorities” ratio is incresing and they tend to automatically vote DEM. The Economist calls this “Californication” of US politics, which is kind of funny on a number of levels.
This is not altogether auspicious tendency for the rest of the US. California’s govt is currently verging on bankruptcy. The Economist gives some gory detail:
Of course the housing bubble was the work of Bush and Greenspan, two non-Californian Right-wingers. But lets not forget the millions of Hispanics they tried to buy off with sub-prime loans. How did that work out?
They mostly came from California. And Obama will have to pander to them to cement his grip on ower.
As California goes, so does the rest of the nation. Scary thought.
Jack – actually – probably a large part of the dem vote has been underground in teh most recent decade = they had Bush and Bush. Too disenchanted to vote because they never thought they would get a look in (blacks). There has been a lot of voting apathy in the U.S. , people who thought the system would never deliver them anything, the disenfrachised. I bet they came out in full force for Obama and maybe its about time. One person, one vote, it counts.
They may have tried to buy out the Hispanics with subprime loans but that was deregulation of the financial sector that allowed it to happen. The cheap vote buying government just tried to cash in on what was poor economic fundamental policies. They actually believed their own spin. It was such a benevolent kindly wealthy world we lived in just recently and the pollies thought they had found the holy grail while ever the boom continued and patted themselves on the back for all to applaud “their sound economic policies” (and couldnt see it was a hair raising precipice of speculative share investing mania – some sort of extreme of MD – until the bell tolled and the D started to exceed the M).
Gee, Jack, to call California “left wing” is a bit of a stretch of the imagination.
At worst there is a decontextualisation here; demonstrated not least in the loaded terminology and contradictory conclusions emanating from the source you provide.
Bubbles come from excessive (and leveraged) wealth poorly employed- hardly a sign of a lumpen populace taxed back to grinding poverty by reactionary feudalists.
Although, it is tue that much of this wealth has been employed for the MIC and for leveraged speculation by sharks, now turned to debt for the burdened rest there,so in that sense it is actually very right wing.
The only question that arises imho from all the turmoil at present is, would America and the world have done better under a Gore presidency. That is, that the more extreme and unconsidered casino capitalist tendencies and actions of Texas Dubya’s administration and its sponsors and allies have been reined in during a more sober and circumspect sort of administration.
One supposes not necessarily, given the hold the Wall St cowboys have had on all US politics for way too long, but I don’t think Gore could have done worse than Cheney and his shop front Bush.
But the thesis that the current troubles can be attributed to a mythological left is as specious as a parallel claim abroad in these burst bubble times, of “big government” being exclusively responsible for all the problems.
As I’ve suggested elsewhere, more likely no or weak government in those sectors where most needed and over-government where undesirable, eg civil society.
paul walter Says:
March 12th, 2009 at 3:38 am
Really? Does the phrase “Hollywood liberal” ring any bells? Schwarzenegger, a nominal REP, is a closet version of such.
The senior Congressional legislators, Pelosi and Boxer, are both Californian. California was the first state to express all the classic symptoms of Left-liberal misgovernance and civil disorder:
– race riots (periodic)
– higher taxes, poor public service delivery
– social dysfunction drugs, broken families etc
It was also the first state to experience the classic symptoms of Right-“corporal” reaction to misgovernance and disorder. Being the home state of Richard Nixon and Ronald Reagan.
Paul Walter says:
The problems with the US social system go beyond ideological policies of the parties. They are founded in its peculiar system of economic stratification and ethnic segregation. Nowhere more evident than California. So, although I for one would like to be one of the first welcome our mulatto overlord, I remain skeptical of his messianic powers on the domestic front.
I dont blame just “the Left”. I blame post-seventies “new liberalism”. The US housing bubble is a product of Right- and Left-wing liberalism. Specifically the conjugation of:
– New Right financial liberalism aimed at establishing the (largely white) uber-class. Epitomized, but not limited to, policies such as the repeal of Glass-Steagall Act (by Clinton admin)
– New Left cultural liberalism, aimed at empowering the (largely colored) unter-class. Epitomized, but not limited to, policies such as the CRA (again ramped up by Clinton)
In the US, during the past decade or so, these political tendencies came to a head in California. The Golden Gate state was the epicentre of both the US govts chronic attempt to balance Right-liberal economic class privileging with Left-liberal ethnic clan pandering.
Greenspan’s post-Asia crisis “put” gave financial validation to Wall Streets financial shenanigans esp internet IPOs, securitisation and derivative trading. Combine this with BUsh’s post-911 attempt to buy the Hispanic vote through encouraging No-Deposit-No-Income-No-Asset loans to “aspirational” minorities or whites leasing investment homes to minorities. And you get the housing bubble, sub-prime crisis and seeds of a GFC.
It is possible, maybe probable, that a GFC would have occurred in the absence of the “Californication” of the US politico-economic system. Certainly the financial policies of countries like Iceland, Ireland and Baltic States looks unsound.
But it is worth noting that the US housing bubble, in terms of house prices and overall private debt levels, was on the lower bound relative to comparable countries. What made the US bubble bad was the organic connection of a mass of poor credit risks with the top level of the Universe-Mastering New York financial system. Turning a national housing bubble bust into a GFC.
All because policy makers ignored traditional conservative wisdom on financial prudence. Dont live beyond your means as a nation and dont lend money to bad credit risks. Does this sound like the kind of policy contemporary Californians would embrace?
And the epicentre of the financial solvency and cultural identity problem remains in California. Whose legislators rule the national roost and give little evidence of having grasped the fundamental causes of the problem.
I also note that Obama has shown great reluctance to attack the bastions of majority class privilege and or resist the temptation to indulge in minority clan pandering. He should nationalise the ailing parts of the wealthfare state, a policy solution which is both effective and equitable. He has also been throwing gazillions of money at the bloated welfare state.
Still, he is making good moves in foreign policy as regards legalising the behaviour of the US security forces and negotiating a settlement with the moderate wing of the Taliban.
Jack, thanks for considered reply; you’ve gone half way. Maybe we don’t disagree quite so much as to some aspects of diagnosis as onlookers might have felt inclined to beleive. And at least you say what you feel, although you did yourself no credit with the Obama comment. A blemish on an otherwise interesting post.
As for Boxer and Feinstein, et al, they are only fronts for Defence and Zionist lobby antics.
I would welcome clarification as to your somewhat open-ended comment re, “legalising the behaviour of the US security forces”, tho.
# paul walter Says: March 12th, 2009 at 11:57 am
C’mon, just injecting a little risque humour into an area otherwise monstered with a grotesque cult of personality. To reductio this absurdum:
The correct characterisation of Obama’s ethnicity = mulatto.
His mulatto origin is exotic = alien.
Alien President = Obey Obama Giant
Mock Jack Strocchi = first to welcome same.
Does this not sound like the kind of reception that Obama has received amongst his adoring syncophants in the opinion making class? Another bubble that eventually will burst.
Obama himself, to his credit, does a nice line in self-deprecation. Which roughly brings him down from god to demi-god status.
Paul Walter says:
They can chew “military-industrial” and “zionist” gum whilst doing the “celebrate diversity” walk at the same time.
Paul Walter says:
Obama is set to close Gitmo, stop extraordinary rendition and ban torture as an interrogation technique. This is “legalising the behaviour or US security forces” in my book. Although personally I dont think Gitmo was anywhere near as bad as it was made out to be by liberals. But it sure looks bad, which I guess is what counts as far as the press is concerned.