First!

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.

34 thoughts on “First!

  1. 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.

  2. 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.

  3. 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.

  4. 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:

    California has the most dysfunctional politics in the country. The Golden State has one of the highest unemployment rates in America, at 9.3%, thanks to its high taxes, its unions, its anti-business climate and its gigantic housing bubble. Some 100,000 people have fled the state each year since the early 2000s.

    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.

  5. 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).

  6. 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.

  7. paul walter Says:
    March 12th, 2009 at 3:38 am

    Gee, Jack, to call California “left wing” is a bit of a stretch of the imagination.

    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:

    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.

    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.

  8. 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.

  9. # paul walter Says: March 12th, 2009 at 11:57 am

    you did yourself no credit with the Obama comment. A blemish on an otherwise interesting post.

    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:

    As for Boxer and Feinstein, et al, they are only fronts for Defence and Zionist lobby antics.

    They can chew “military-industrial” and “zionist” gum whilst doing the “celebrate diversity” walk at the same time.

    Paul Walter says:

    I would welcome clarification as to your somewhat open-ended comment re, “legalising the behaviour of the US security forces”, tho.

    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.

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