Time of Hope?

As the odds shorten on an Obama victory, the undoubted enthusiasm for Obama is tempered by doubts that a new Democratic Administration, even backed up by strong majorities in both houses of Congress, will really change that much.

However, there’s a case for a much more optimistic view. Given a supermajority in the Senate, or even a win that’s near enough, with some RINO support to override Republican filibusters, some widely respected analysts are predicting marvellous things from Obama including:

* Medicare for all
* Serious financial reregulation
* Union rights
* Ending tax cuts for the rich
* A green ‘revolution’
* Voting rights for all, including DC

In the light of the lame record of the last congress, and of the Democratic Congresses in the 90s, this might seem unlikely. But an article I’ve just read points to a string of quite radical measures passed by the House in the last Congress and blocked only by the filibuster. Furthermore, as the writer observes the conversion of Southern Democrats into Republicans since the 90s means that most Democrats will hold the line on issues like health care.

All in all, it’s given me more cause for optimism than anything I’ve read for a while.

The catch is, of course, that it’s an editorial in the Wall Street Journal aimed at scaring Republican readers into going to the polls. But, for all that, the analysis seems plausible enough in the light of the complete ideological collapse we’ve observed in the past few weeks. If Bush and Paulson can nationalize the banks[1], surely single-payer health care and voting rights aren’t beyond an Obama Administration.

fn1. I know, I know, it isn’t really nationalisation, let alone socialism. But the injection of public equity capital is close enough that Paulson fought it to the bitter end, and everyone on his side recognised it as a massive defeat for their ideas.

28 thoughts on “Time of Hope?

  1. A closer look at the “nationalisation” of the banks suggests it is much more of a give away to Wall St than putting the banks under government control and ownership. I am a bit surprised by the triumphalism of the left in watching Wall St needing government assistance. The real ideology of the Republican/Big Business co-alition is whatever big business can get congress and the administration to do for them will be done. Yes there are alot of conservatives and Republicans that really believe in the free market etc etc but a close look at them shows that they are nothing but agit-prop cheer leaders. Hardly any of them are of more than average intelligence and its quite clear that the conservatives with real power (the ones that fund the conservative cheer leader think tanks) don’t take them seriously either.

    Wall St needed $700 billion dollars. Congress (Democrats and Republicans together) delivered it in ten days. Nothing more than business as usual with more zeroes. They may stop talking about the free market, but the serious conservatives knew that was never more than a convinient marketing point anyway.

  2. “some RINO support”

    aka Republican In Name Only, a term of abuse by right wing Republicans for moderate Republicans, such as the two Republican Senators from Maine.

    But how moderate are the RINOs? According to the Wikipedia entry on RINO, John McCain is a RINO.

    There’s a lot of talk from the WSJ crowd and others that this election heralds a vast swing to the left in American politics, the end of Nixonland (for it was Nixon who devised the Republican strategy to harvest the fundamentalist vote, which has served the party magnificently for 40 years), the beginning of the New New Deal, and so on.

    Obama is clearly very talented, but does he really have Roosevelt’s vision, Truman’s appeal to middle America and Kennedy’s youthful dynamism, rolled into one? He’s not going to need all those qualities to get through that agenda.

    We shall see.

  3. I’ll take the dot point about “green revolution” as a sign that energy issues and climate issues relate to this post. The big question is can Obama achieve in this arena?

    JQ, in another post you said, “As a string of economic studies have shown, we could reduce emissions greatly (60-90 per cent by 2050) at a cost of reducing total consumption by a few per cent.” Can you point to a good representative study that is on the internet and not pay walled?

    Also, do you mean reducing consumption by a few per cent off today’s world annual level or a few percent off the otherwise projected consumption level in 2050? I have severe doubts that the quads of energy we would need to do the former let alone the latter will ever be available. Where will these quads of energy come from? Do the studies address this issue?

    If I may quote from the Energy and Environment page at Lawrence Livermore National Laboratory; “World Energy Council (WEC) projects the world energy demand will exceed 700 quads by the year 2050. (1 quad=million billion [“quadrillion”] British thermal units [BtU].)â€?

    The EIA (Energy Information Administration) predicts the world’s requirements will rise from 462 Quads in 2005 to 695 quads in 2030; a considerably tougher ask than the WEC projections.

    All of these projections appear to be on a “business as usual� basis. That is, they appear to assume more or less uninterrupted population and economic growth. They also appear to assume that energy supply from liquids and natural gas can rise unimpeded to 2030 and beyond. Given that peak oil and peak gas are realities and have arrived right about now, where will these extra quads of energy come from? Alternatively, can we make large energy savings to make up most of the shortfall and then supplement that by renewables?

    My attitude is “show me the energy�. Everything depends on us finding the energy and not wrecking the environment in the process.

  4. Ikonoklast, I do mean “reducing consumption by a few percent off the otherwise projected consumption level in 2050?”

    The crucial point is that words like “need” and “requirement” in relation to energy are sufficient evidence that the analysis in which they appear is valueless. Anything we do can be done in ways that use a lot of energy or in ways that use much less. For example, even without moving away from private motor cars, and without any new technology, a journey to work shared by two people in a car requiring 5l/100km uses 16 per cent of the energy that would be needed for the two to travel separately in vehicles requiring 15l/100km. One of these might be a little more convenient than the other, but the notion that we “need” to use the higher level of energy is just wrong. Given the right prices and other incentives, we will soon adjust our idea of “needs”.

    Coming to your request, the Stern Review (easy to find online) gives a cost of 1 per cent of income (relative to business as usual) for reductions of 50-60 per cent. I haven’t seen a costing for 80-90, but it’s easy to show it can’t be too large. I think Stern is a bit overoptimistic, but even pessimists like Nordhaus agree on the order of magnitude – the big disagreement is on the costs of doing nothing.

  5. Quote of the day via that other Aussie blogger (whatsisname):

    ‘I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.’

    Thomas Jefferson 1802.

  6. I don’t think cynicism was ever justified unless you took, uncritically, the Congressional makeup of years gone past as your basis for future performance. Also Clinton, for all his smarts, never had the courage of his convictions as much as Obama – he was a DLC-style Republican enabler who gained for himself but not his party. He also wasted political capital in his first term.

    Fact is, there are more truly liberal Democrats in play here, fewer Blue Dogs, (pro-top: that’s the new term), and those that are can be amenable to many aspects of the progressive agenda. At best we’ll see Libertarian concessions, such as pay-as-you-go budget implemented, which will simply be a balancing act.

    In terms of all the things that really matter, they’ll be deliver, such as the next three Supreme Court appointments, health care reform, a a return to a multilateralism, a treaty-accession agenda, genuine U.N. reform and engagement, coherent foreign policy, etc.

    I’ve got no time for nominally progressives who equivocate about Democrats as if that helps. That kind of attitude brought up Bush over Gore, based on self-indulgent Nadar voters and apathetic youngsters.

  7. Oh, I realise my list wasn’t very far exhaustive, so here’s a few more:

    -rollback of FISA and the paranoid national security agenda.
    -Depoliticisation of Justice and the OLC, and a return of the career lawyers who were replaced under Bush.
    -Depoliticisation of the public service more broadly.
    -The appointment of a swathe of justices to the Federal Courts.
    -Explicit repudiation of the Bush NSS; a return to international norms of proportionality, and working constructively with the collective security regime.
    -Repudiation of the Unitary Executive theory.
    -Full respect for CAT and jus cogen obligations against torture (McCain supports the CIA hacing full reign for enhanced interrogation and rendition).
    -Closing GTMO
    -Exiting Iraq.
    -Financial regulation agenda.

    And many, many other intangible tone-setting effects that go with the bullypulpit of the presidency. Obama will be able to help shift discourse away from right-side peak Laffer-curvism, supply-side myopia, jurisprudential tropes on the right, etc.

    These will be, in many ways, just as important as the legislative agenda.

  8. Did you add re writing history to excuse themselves out of blame for setting up the financial nuclear detonator at Fannie and Freddie.

    Better crank up those printing machines, the bill looks a big ONE, and the Krug has endorsed the immoral act of sending your taxes to the unborn generation,its full steam ahead.

    From big government statist conservatism to Super sized government statist leftism (no they are not Liberals, Americans don’t know the meaning of the word) The decline of the West is speeding up, no wonder the world votes Obama.

    ..And where will all this lead? (after all its pretty well accepted that FDRs new deal made things worse)? A land called PROTECTIONISM via the port of Inflation seems a good guide.

    Because that is what happens when the money press rolls, why borrow cash to business when you can lend it to governments?

    And NO just because I think “the One” is a twit does not make the other side any better, you get what you deserve in life, I will be buying more Gold, more quickly, the “one” true currency, only stopping off to buy into the artificial boom generated by the printing press in the run up to coming elections.

    What kind of a philosophy is it that deals with your problems by charging it the the future? what was it Keynes said about ever increasing budget deficits, “in the end we are all dead” ?

    Mind you he was bisexual so he did not have any children to worry about, but he was a true liberal and agreed with moral arguments of Hayek if not his principles.

  9. ..AND another thing, since when did all the left become monetarists? it is not as if zero interest rates re floated the Japanese economy in the last decade? and ultra low US interest rates don’t seem to be having much of an impact now? apart from not making things worse. Maybe folks need some incentives hey?

    And as for the Stern review Mr Q, as Lovelock pointed out the other day, there is no evidence that reducing CO2 will bring temps down, if that is what you are hoping to do. Yours and Stern figures are HOPELESSLY useless, and in other news medieval scholars argue about the number of angels that can dance on a pinhead.

    The Bam presidency, a presidency of experts, this is sure to be a big laugh unless you are crying.

  10. Ikonoclast: a non-firewalled report by McKinsey & Co. the well-known management consulting agency, finds that:

    “The United States could reduce GHG emissions in 2030 by 3.0 to 4.5 gigatons of CO2e using tested approaches and high-potential emerging technologies. These reductions would involve pursuing a wide array of abatement options with marginal costs less than $50 per ton, with the average net cost to the economy being far lower if the nation can capture sizable gains from energy efficiency. Achieving these reductions at the lowest cost to the economy, however, will require strong, coordinated, economy-wide action that begins in the near future… These reductions from reference case projections would bring US emissions down 7 to 28 percent below 2005 levels… while maintaining comparable levels of consumer utility.”


    Notably, this report doesn’t assume lifestyle changes of the kind JQ mentions (car pooling, etc) which would probably knock off a lot more.

  11. I have little confidence in Obama.

    a Democratic congress will go overboard just as the Republicans did and Obama will prove as impotent as Bush at curtailing it.

    The only positive points is that Obama does not panic as Clinton and then McCain did when confronting a poor environment and he has a good administrative record.

  12. hope for what?

    the structure of society determines it’s possibilities. obama will negotiate and make trivial changes where possible, but the economy of the usa is centered around the mic, the demand for cheap oil won’t go away tomorrow, and renouncing empire isn’t going to happen.

    he will re-regulate, but what one pollie does, is undone by the next. you can’t get credit for chastising wall street if the regulation is permanent. the utility of citizen initiated legislation is evident to those not blinded by culture. unfortunately, “the emperor’s new clothes” is a children’s story, not a lesson in high school social studies.

    besides, in oz mothers conclude: ‘so you see, if you stick your head up, it will be cut off.’ they are right to do so, because in oz the little boy is not admired and praised, as my mother told me the story- in oz he is shunned, as the carrier of a virulent and communicable disease, the dreaded ‘whisleblower plague’.

  13. One thing I’m yet to get my head around is that we are told repeatedly that a large increase in the price of electricity will cause the economy to tank. In 2001 through to 2008 the spot and peak price of power in Victoria on the NEMMCO market has close to doubled. We’ve not seen the Victorian economy go down the toilet; indeed they’re growing better than many of the states, and maybe best of all but for the minerals boom in WA and QLD.

  14. Assuming that Obama wins and the Democrats consolidate their control on Congress, it is true that American politics will lean a lot further to the left than they have for some time.

    On previous occasions where the Democrats have controlled both the Congress and the Presidency, the Presidents (Jimmy Carter and Bill Clinton) have been southern Democrats representing the more conservative wing of the party. In addition, there have been enough conservative Democrats (mainly from the south) to rein in the more ambitious plans of liberal Democrats.

    This will be the first time in a very long while that there will be such a solidly liberal President and Congress in the US (considering that Obama and Joe Biden have some of the most left-leaning voting records in the current Senate). This is a major realignment, and I doubt whether the American people have actually shifted that far to the left that they are ready for this.

    The other thing is that if the Democrats win a larger majority in Congress it will be hard for Republicans to overturn it in the near future. In 2010, the Republicans will be defending more Senate seats (as 2004 was a Republican year). In addition, not many House seats usually change hands without a big swing. Especially when redistricting is in the hands of the state legislatures, where Democrats will have an advantage.

  15. Terje,
    At least Obama will be able to blame Bush for the collapse of US employment – even if it is his policies that do it.
    Pity we cannot short US firms at the moment.

  16. I think Obama’s endorsement of “clean” coal is just like Rudd’s – it’s code for unequivocal support for the ongoing, unrestricted use of coal. I don’t expect any significant changes from BAU (maximising the growth potential of a profitable product called coal) from any US president – or Australian Prime Minister. Getting a real handle on climate change is probably going to be dependent on renewables not just being on price parity with high coal prices, but with coal priced to retain it’s market in the face of such competition. Clearly coal mining is profitable at much lower coal prices than we’ve seen recently. The real problem is that even here amongst people who acknowledge AGW as real, there is a reluctance to promote any policies that are seen as hard, giving me the impression that even here most people really don’t see this as that serious or urgent. It’s like this is still an issue that can be put off for another decade or two.

  17. Ken I agree we should be going pretty hard on carbon abatement now (the chance to do it more gradually and cheaply has been lost through denial and delay). True, that might be better done with a swingeing carbon tax or ETS but it’s not gonna happen, least of all in the US.

    But surely that strengthens the case for putting a lot of money into R&D for clean energy, including clean coal. If clean coal works it could save us a lot of pain, so we’d best find out quickly if it works.

  18. JQ, I’m going to be a bit of a pedant here so humour me please. I will come to the point.

    In post #4 , you say;

    ‘The crucial point is that words like “needâ€? and “requirementâ€? in relation to energy are sufficient evidence that the analysis in which they appear is valueless.’

    I take your point that such wording often contains a presupposition that grossly wasteful energy use is a “need” and a “right”. However, I think your statement is a little strong. If I say modern industrial society needs energy to survive then I am making an accurate statement.

    The key issue is how much energy it needs as a minimum. Modern automobiles are so energy wasteful that they must and will disappear in large part to be replaced by walking, pushbiking and mass transit systems. I think we can agree on that.

    However, there are many energy requirements of modern industrial and urban life which will remain essential. These would include the energy inputs to;

    essential movement of people and goods;
    provision of all essential services*.

    * We would probably want to include a fully functioning power grid along with all other necessary infrastructures in this statement.

    Maintaining a modern city will continue to require significant amounts of energy even if we reduce almost to zero the many frivolous and wasteful uses of energy. My question is simply, will we have enough energy even for this “urban-industrial civilizational minimum” in the mid to long term? I don’t know the answer.

    The Odums, Meadows, Pimentals and Heinbergs of this world seem very pessimistic on this very issue. The JQs of this world still seem optimistic.

    It would be an interesting exercise to take Australia’s total current energy use, subtract the energy amount calculated to be savable by stringent avoidance of all waste, then add the energy amount calculated necessary to “boot-strap” us from a carbon economy to a renewables economy and see if current carbon energy resource reserves can bootstrap us through the transition. (And furthermore without burning them all.)

    I’ve probably expressed that very badly (framed the problem poorly) and I would not know how to approach the problem. I hope however I have made clear the dilemma I am concerned about.

    I just worry JQ that your dismissal of this issue is a little too premptory and smacks slightly of that style of economic thinking which dismisses physical constraints and realities. That is the kind of economist which I don’t believe you to be.

  19. Pr Q says:

    As the odds shorten on an Obama victory, the undoubted enthusiasm for Obama is tempered by doubts that a new Democratic Administration, even backed up by strong majorities in both houses of Congress, will really change that much.

    However, there’s a case for a much more optimistic view. Given a supermajority in the Senate, or even a win that’s near enough, with some RINO support to override Republican filibusters, some widely respected analysts are predicting marvellous things from Obama

    Its probably not a good sign for a respected political commentator like Pr Q to start taking his cues from un-reconstruced hacks at the WSJ.

    Pr Q, not unlike his WSJ tormentors, always suffers tremendous mood swings prior to critical elections. Remember back in 2007 when he dreamed of a Ruddslide, thought that the policy revolution was nigh and touted “the last Liberal“?

    Those days seem but a distant memory now, given the ALP’s moderate federal victory margin, party convergence on substantial (rather than symbolic) policy matters and the LP comeback in the states. All of which I predicted, rotten psephological killjoy that I am

    Obama will almost certainly win this election with a landslide margin (53%+ according to my reckoning in May 08). But most of the victory is explicable in cyclical terms (political incumbency, economic stagnation). This somewhat weakens the “realignment” potential of a strong vote.

    More importantly Obama will have his hands full with reconstruction rather than transformation. The US polity is in a shambles after a decade of REP iniquity and incompetence. Banks ruined, Army shot to pieces, borders leaking like sieves.

    FOr the first term at least, Obama will be more janitor than Messiah.

    No doubt much of the reconstruction will have to be Leftist, but dictated by common sense as much as ideology (NTTAWWT):

    – higher in taxes on the rich to repay debt,
    – retrenchment of foreign military bases
    – strict regulation/ownership of finance sector

    But I would be surprised if the Obama govt in its first term committed itself to more than token moves towards grand ideological committments such as universal healthcare and a green revolution. For one thing Obama has not really run on a Big Target mandate.

    FOr another thing, Obama’s landslide victory will be a rejection of Bush supporters capitalist militarism. Not necessarily an embrace of Obama’s statist pacifism. The rejection of Bush will take much of the ideological steam out of the partisan conflict.

    It is more likely that Obama will try and husband his political resources in the first term to build a robust political consensus for more positive change in the second term. He will have to convince the largely conservative US public to go along with major Leftist changes (such as universal health care and carbon cutting) on their own merits (which are considerable.)

    Most likely Obama will dedicate his first term to paying off his ethnological debts (to black Americans) and performing a few ideological stunts (the kind of “stuff that white [liberal] people like”).

  20. I think there is a really possibility that Obama will move to set up a national cap and trade system within his first term.

    1. Given the lead-time, it’s unlikely that such a system will be in place before the next Presidential election, allowing him to claim credit for the program without worrying too much about the costs;

    2. Large parts of the US economy (California and New England plus New York and New Jersey) have already set up their own cap and trade systems. There will probably be some market efficient gains from combining the two markets so the net additional economic cost of such a program may not be too great.

    3. It presents him an opportunity to wedge the Republicans by playing up the division on climate policy between McCain and other leading moderates such as Crist and Schwartzenegger and the conservatives such as Palin.

  21. Obama comes accross to me as a canny centrist populist politician. Pretty much Bill Clinton without the sleaze. Undoubtedly he will swing the US polity to the Left. But he will also remember that the US polity has a fairly large mass of (temporarily submerged) Right-wing ballast. CLinton discovered this to his dismay in 1994.

    On universal health care I remain skeptical of Obama’s messianic pretentions. I go with Krugman who compared Obama unfavourably with Clinton on this issue:

    If you combine the economic analysis with these political realities, here’s what I think it says: If Mrs. Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we’ll get universal health care in the next administration. If Mr. Obama gets the nomination, it just won’t happen.

    Also, on financial regulation my gut feeling is that Obama will go soft on the Big End of Town. The financial industry supports the DEMs with alot of money and kudos. A WaPo article shows that Obama got a large hunk of money from the very same guys who are responsible for the US’s kleptocratic financial regime:

    Democratic presidential candidate Barack Obama ran ahead of New York Sen. Hillary Rodham Clinton (D) and former New York mayor Rudolph W. Giuliani (R) on their home turf in the first quarter, raising cash from the biggest investment banks on Wall Street.

    The figures reflect giving from the employees of Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch and Morgan Stanley, as well as Goldman and UBS. Goldman employees gave about 50 percent more to presidential hopefuls than the next-highest set of givers, at Citigroup.

    I dont see a canny political tightrope walker like Obama rocking that boat too much.

    On cap-and-trade I was pleasantly surprised to see that Obama is more or less in lock step with Stern, going by this WaPo report:

    Obama’s plan calls for a cap and trade system for reducing greenhouse gases that aims to slash carbon emissions to 1990 levels by 2020 and to 80 percent below 1990 levels by the year 2050, the target many scientists say is necessary to slow warming, and one that has also been endorsed by Clinton and John Edwards. Under his plan, the government would establish an overall limit for carbon emissions, auction off emissions permits among companies and industries to stay within that limit, and allow companies to buy and sell permits based on which of them produce more or fewer emissions as time goes on.

    This probably counts as “green revolution” in US terms. SO if he makes real progress towards it in his first term I will be the first to gladly say “I was wrong”.

  22. # 27 jquiggin Says: November 2nd, 2008 at 5:35 pm

    #24 Obviously, I should have put the irony alerts on.

    Not so fast with the faux-idealism. The political signs for the Left are auspicious. Just not as auspicious as the WSJ or the Obama-tronic drones think they are.

    I have expected a DEM presidential landslide since 2007, as soon as it became obvious that the bubble was on the eve of busting. Heck the 2006 congressional elections were in landslide territory in any case.

    And lets not forget that the 2000 elections were pretty successful for the USA Left. They got 50%+ of the vote.

    Since the end of the Cold War the REPs have ridden on the back of their perceived validity in Class War, Culture War and Civilizational Clash. None of that is working for them now.

    The Right is now considered the Bad Guys after the kleptocratic tendencies of the Masters of the Universe have been exposed. Much of the heat has gone out of the Culture War, given that so many problem people are behind bars. And the Civilizational Clash has pretty much exhausted itself, at least politically.

    I am guessing that the USA polity is on the verge of returning to its default trend perhaps pre-Reagan/pre-Gingrich. This will not make it a clone of a standard USE state. Thats not possible with 30% minority population.

    But it will shift the USA back to a more rational and moderate political development trend. Sort of Canada with Coloured People.

    That means its probable that the Left will engineer a successful move of the USA polity to the Clintonian Centre. And the Bush Rightists (including fearful WSJ editorialists) will be more or less consigned to the DoH.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s