Monday, August 09, 2010

Today in neolilberalism

Paul Krugman continues his Cassandra act of raising unconventionally sound alarms over the state of the economy while those who were conventionally and respectably wrong about the state of the economy leading up to the Great Recession blather on about the terrible, hideous threat of federal spending. In America Goes Dark New York Times 08/08/2010, he writes:

... a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.

The antigovernment campaign has always been phrased in terms of opposition to waste and fraud — to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we're seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.

So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere. [my emphasis]
Despite the literary flourish in that last sentence, Krugman is pointing to a real problem. The brand of neoliberal, "Washington Consensus" economic ideology that became the dominant ideology of both parties over the last 30 years has produced a severe disparity in the distribution of income and wealth, creating a situation where the economic elites and their most visible advocates worry less and less about the general state of the public good, as long as their own prosperity - and the maldistribution of income and wealth - continues.

What we see today is the situation as it evolved over the last two decades that the late great John Kenneth Galbraith described so well in his brilliant and under-appreciated book, The Culture of Contentment (1992). He describes the situation in which the voting public in the US is relatively content with the direction of the country, then in its second decade of major deregulation, rapidly rising economic inequality, privatization and the post-Vietnam idolization of the military and its glorious generals. Given the factual exclusion of the less-contented portions of the population from direct influence on political decisions, the US is left with what in this passage from the conclusion Galbraith calls "a democracy of those with the least sense of urgency to correct what is wrong."

Books of this genre are expected to have a happy ending. With awareness of what is wrong, the corrective forces of democracy are set in motion. And perhaps they would be now were they in a full democracy — one that embraced the interests and votes of all the citizens. Those now outside the contented majority would rally, or, more precisely, could be rallied, to their own interest and therewith to the larger and safer public interest. Alas, however, we speak here of a democracy of those with the least sense of urgency to correct what is wrong, the best insulation through short-run comfort from what could go wrong.

There is special occasion here for sadness — for a sad ending — for what is needed to save and protect, to ensure against suffering and further unpleasant consequence, is not in any way obscure. Nor would the resulting action be disagreeable. There would be a challenge to the present mood of contentment with its angry resentment of any intrusion, but, in the longer run, the general feeling of security in well-being would be deepened. [my emphasis]
What he described there is a spiral that, with short-term reversals, has continued to spiral downward since then.

On the one hand, I have little use for cynicism about politics. Things need to be fixed. But if reality presents pessimistic prospects, it's also important to understand that situation clearly, as well. I'm not making an argument for Blue Dog politics. On the contrary, the Blue Dog Democratic approach is manifestly a failure in breaking down the political "culture of contentment" or in addressing the vital needs of the real (if not voting) majority of the public.

But the events of the last 20 years have largely been consistent with Galbraith's thoughtful pessimism. He was pointing out that there were major social and public-policy problems that needed to be addressed to maintain the long-term health and quality of life in the United States. As a result of largely having passed that opportunity by, we have experienced several of the very kinds of events Galbraith noted then might bring enough of a shock to the Culture of Contentment to set more fundamental changes in motion.

We've had two major domestic terrorist attacks in 1995 (Oklahoma City) and 2001 (the 9/11 attacks). While not a major attack in itself, the still-unsolved anthrax attack of 2001 played a critical role in shaping public and (especially) elite attitudes toward terrorism, coming as it did soon after the Al Qa'ida attacks on the Twin Towers and the Pentagon. We've had a series of wars, leading us to the point that we have two unpopular wars (Iraq and Afghanistan) in progress, with no actual end yet in sight, though the prospects look better for a foreseeable exit from Iraq. As Andrew Bacevich points out in his important new book published last week, Washington Rules: America's Path to Permanent War, we are now in a mode where the Pentagon, the corporate media and political elites of both parties have largely accepted the notion of continual shooting war as a norm for US foreign policy. And, of course, there is the Great Recession that officially began in December 2007, which is likely to have been the beginning of what Krugman calls the Third Depression (the first starting with the Crisis of 1873, the second with the Crash of 1929). And we've had a massive oil disaster in the Gulf of Mexico which lays bare for the moment the dangerous nature of excessive "partnership" between the people's government and private corporations.

The question at this point is whether popular mobilization in some form can respond effectively to the deteriorating situations and the major shocks to the Culture of Contentment in a way that will unseat the dominant neoliberal ideology, policies and "narrative." It's certainly reasonable to see the vote for Barack Obama in 2008 as a move in that direction. And Obama's record of real accomplishment is also an illustration of the increased public insistence on addressing some major problems.

But it's way too soon to say that there has been a decisive turn away from neoliberalism. And every reason to believe that Obama and his administration are opposed to such a turn. A key moment in that ongoing conflict will be the report of the Catfood Commission (Deficit Commission) this December. If Obama and/or a substantial portion of the Democratic leadership embraces the concept of phasing out Social Security and Medicare - which would like come in the initial form of raising the retirement age and slashing benefits - it's hard to picture what the political fallout from that would be. At the very minimum, one would hope that it would energize progressive challenges to Democratic incumbents who support the Catfood Commission's anti-Social Security and anti-Medicare recommendations.

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