Bird that Sings

I was thinking about going down to DC for the inaugural last month, but decided it was too cold to sell my “I was there for the Fall of Capitalism but all I got was this lousy T-shirt.”

So I stayed home which was probably a good thing, as I don’t think it was the right crowd for my product. Even now, my impression is that people don’t really get it: that despite the great gifts of Obama, the first political-economic initiatives of his Administration suffer from a “systemic cognitive deficit.”

Then too, as a friend of mine says, “Barack didn’t put in for this.”

Obama’s 2008 campaign was like a good pop movie, but it wasn’t a populist campaign, nor a campaign that challenged the underlying assumptions of the system: it was a Public Relations campaign with Obama as “the brand” representing Hope& Change.

It was a great campaign for the end of Reagan era, but God willing, Barack was not only the best of the “branded” candidates, but the last.

Not only is the Reagan era, the Conservative era over, but so is the era of Finance Capitalism, though we are not yet ready to absorb that, nor are we ready for what comes next.
So let’s just call these, “The Years of Agonizing Reappraisal.”

Specifically, the big problem that Obama and the rest of us face is that the answers to the twin dilemmas of excess debt and falling demand plaguing the world economy are diametrically opposed.

The stimulus aims to “jump start” the economy by recreating the missing “Demand” that our missing jobs, vanished savings and mounting personal bankruptcies have led to.

But of course the way we created all that Demand in the first place was by over consuming; by running up lunatic levels of personal debt—often perforce—that mirrored what Wall Street and Big Business were doing on an enormous scale with leveraged debt in the Macro Financial economy.

In the economy of the 90’s and the aught’s, there was an explicit trade-off for your willingness to go deeply into debt. You were now empowered to buy more than you could ever reasonably afford to buy—say for example a house whose price had been artificially pumped up, in turn, by the speculative logic of the debt system.

You were rewarded by the system for being an irresponsible Super-consumer who would never ever be able to get out debt again for the rest of your (miserable) life.

The neo-cons even came up with a suitably Orwellian name for this system: they called it “The Ownership Society.”

In all, it was an evil system riding for a fall and now, like Humpty Dumpty it has.
Now we can’t recreate that missing Demand, we can’t “jump start” the economy, no matter how big the financial stimulus; we can’t put Humpty Dumpty back together again even if we wanted to.

We are in a cycle of falling demand because no one can give us credit anymore to keep up our over consumption. We are in a cycle of falling demand because the System itself has failed.

Of late though, I’ve been wondering why the mainstream economists either don’t see or don’t want talk about this, and find myself thinking back to a long ago conversation with a friend who later became an oft quoted institutional economist in the 90’s.

I ran into him at the crossroads of campus late one afternoon as he was coming out of a Hegel seminar, taught by a well known dissident Communist political philosopher. The seminar was invitation only—my friend was a nominally Marxist Phd candidate—and I was curious to know what the hell was going on in there. He told me only that it was pretty heavy going, and when I replied that at least it would help him in his future academic career he just shook his head sadly.
No, he said, it wasn’t going to help at all.

“Larry,” he explained, speaking carefully—as one would speak to a small child—“what people in the Economics department call Macro-economics is not what people like you or me call Macro-economics. In the Department they’re not interested in philosophy, they don’t see the connections and they’re not particularly interested in making them. It’s mechanical, it’s about equations and modeling out how the elements of the real economy work together, and they’re pretty good at it. But that’s all they’re interested in.”

In the classic book 1972 book “Reinventing Anthropology,” Dell Hymes points out a similar dynamic in his own discipline. “How much of what goes in departments is for the sake of mankind’s self-knowledge (let alone liberation) and how much for the sake of perpetuating, extending and propagating departments? . . . ”
“ . . . By virtue of its subject matter, the study of man, Anthropology, is unavoidably a political and ethical discipline, not merely an empirical specialty. It is founded in a personal commitment that has inescapably a reflective philosophical dimension.”

Substitute the word “Anthropology” with the name of any of the other Social Sciences: Sociology, History, Political Science, even Economics and you get the idea.

Right now, Larry Summers and Tim Geitner clearly have the upper hand in Obama Administration councils, by virtue of being economics professionals. The problem with Summers and Geitner however, judging by the solutions so far proposed, particularly their half assed bank bailout scheme, is they’re wearing ideological blinders.

To Summers, Geitner and Fed Chairman Bernanke, there is no alternative to the “free market” and apparently even short term nationalization of the banks is off the table. Instead, we have the Fed and Treasury socializing the losses of Companies that are too big to fail like Citigroup, AIG, and soon Bank of America, to avoid “spooking investors.”

Of course this bit of economic legerdemain fools no one, let alone investors. Except for the terrified political professionals in the White House, it seems pretty obvious to everyone else that Treasury is not only risking the dollars of taxpayers, but the whirlwind of their coming political wrath.

Looked at empirically, it’s possible to see exactly where the world economy is headed: toward what economists call stagnation, in this case, medium or long-term stagnation. Obama clearly has a lot on his platter, and it would be a shame if his initiatives on Health Care Reform, the Environment, Labor and potentially even the Middle East were all overwhelmed by his administration’s failure to deal honestly and effectively with this ongoing crisis.

President Obama now has a choice that will define his Presidency: go along with Summers, Geitner and Bernanke, or begin to develop new lines of thinking about the economy; particularly, about the efficacy and sanctity of the so-called free market.

In the meantime I’m going down the basement to set up the silk screen for a new T-shirt I’m printing up to sell along with the first. It’ll read, “The truth is a commodity too.”

Yes the time has come to talk of final things, and no I don’t mean the end of the Mayan Calendar. I’m talking about Nationalizing Chrysler.

According to Nouriel Roubini’s Global Economic Monitor, the Democratic Congressional plan to save the Big 3 would  “ Allow automakers to tap $25billion under the $700 billion TARP program as a 7-10 year loan at 5-9% interest rate. Loans will be conditional upon placing restrictions on bonuses, executive-compensation, golden parachutes, improving fuel efficiency with rigorous independent oversight and changes in the management. Gov’t would get stock warrants and no stock dividends would be paid during the loan period.”

While one hopes the Democratic Congressional Auto rescue plan gets passed soon, the truth, as we all know, is that it will solve neither the obvious nor underlying economic problems of the auto industry. For that, we’re going to need a more fundamental approach.

The Democratic Congressional proposal should be broadened to allow a government bailout of both GM and Ford that sees the US Treasury permanently assuming the health care and “Legacy” costs of the two companies. In exchange, we the people will receive a minority equity—and voting— stake in the companies, as well as significant public and union representation on their Boards.

Chrysler meanwhile, would be bought from Cerberus Capital Management—like immediately. As it happens, Cerberus is, at this writing, desperately trying to unload Chrysler, which they bought for almost nothing from the German Auto Company, Daimler in the summer of 2007. For Daimler, the key part of the deal was getting someone to take on Chrysler’s legacy costs. The US Treasury can now return the favor and save Chrysler from being completely run into the ground by Cerberus, which was woefully miscast as an auto holding company in the first place.

The new company could be renamed “US/Chrysler,” and in the course of a year or two transformed into a dedicated green car company whose chief line would be a new, stripped down, low cost  (ie., compact, GPS less, no Satellite radio) hybrid. The car would go for approximately seven to eight thousand dollars and low cost auto loans to make the car affordable for every American family could be financed through a new US/Chrysler Bank.

The point of the car would be first, to make cheap hybrids that got 100 miles to the gallon ubiquitous in America. Second, the existence of such a vehicle should scare GM and Ford into coming up with something that could compete. Third, the transformation of the US auto industry would either rout the Japanese, German and Korean Car companies or force them to come up with something even greener.

What we’re talking about is no longer a race to the bottom, but a race to the top.
Of course that’s not going to please everybody.

There has been a laissez fairest argument advanced on the Right over the past several weeks about the power of  “creative destruction” in Capitalism. Through this prism, the free market is seen as an elemental force of nature that cannot, nor should not, be dammed up.

Briefly, this argument is a steaming pile of shit. Creative Destruction may work in the early phases of Capitalism, as part of the bloody business of primitive (Capital) accumulation, but in Late Capitalism, “creative destruction” is a euphemism for “race to the bottom.”

What the “creative destruction” argument really means to the neo-liberals and neo-cons who advance it, is that Detroit must be allowed to fail because it’s no longer viable. But have no fear they tell us. Through bankruptcy GM for one, can dump its outdated labor contracts; restructure its labor costs, close unprofitable plants, and drop their onerous pensions and health care plans.

These economies will then supposedly make post-bankruptcy Detroit competitive again in world markets against leaner, meaner Japanese, and Korean companies that don’t have Detroit’s legacy or union labor costs hanging like a millstone around their necks.

This argument conveniently forgets that it was not the “free market” that created what we call the American Way of life. What created the post War economic boom that characterized “the American Century” was an Industrial working class that was paid well enough, for the first time in history, to actually consume the products they were producing.

The creative destruction argument also conveniently skirts the ethical and moral issues raised by cutting people’s pensions, retirement benefits and health care after they have spent their lives working, in good faith, to accrue them. If this is the kind of good faith that “free market capitalism” now represents, then nobody should get too upset if and when a dispossessed working class decides that maybe potential future capitalists should be thrown into the river at birth.

Finally, it was the abandonment of American manufacturing in the 70’s that led directly to the rise of the Financial Service economy in the 80’s. The finance economy of the last twenty-five years created enormous new pools of wealth for the US and the world, but was based on consumer and leveraged corporate debt rather than actually making things. Surprising nearly everyone, this enormous slagheap of debt— rising up by the side of the glittering new pools of financial wealth— turned out to be more than just an aesthetic problem. Now the man made mountain of toxic debt has collapsed and it’s going take us a long time to dig out from under it.

However, as is often the case in life, the way of out of this crisis is precisely the same as the way in. It’s time to put our collective national creativity to work, not by destroying the last vestige of our industrial base, but— by all means necessary— beginning to make American manufacturing viable again.

The success of California proposition 8, banning Gay marriage in the state should be a wake up call for a Democratic Party, fairly and righteously hung over after the Obama victory celebration.

While Paul Krugman is correct to hail the “end of the Monster Years” of Right wing dominance over the national discourse, the Right did not crash and burn in this election.

The Republicans are however, on the defensive, and if the National Democratic Party has any sense they will spend the next year keeping the Right on the run. The best way to do that is to “flip the script” and take away their issues.

With the failure of so called free market economics—or “Market fundamentalism”— along with the disasters in Iraq and Afghanistan, the Republicans have only the “social issues” left in their quiver. Of these, Gay marriage is perhaps the most potent arrow of all.

Clearly the Democrats don’t want to reenact Bill Clinton’s incredible political blunder in making “Gays in the military” the first thing he addressed as President. But sometime in the first year of the Obama Presidency, Democrats should introduce a National Domestic Partners Act, as well as strengthening and passing Barney Frank’s landmark “Employment non-Discrimination Act” (HR3685).

In point of fact Comrade Joe Lieberman (aka “the people’s man”) has already introduced comprehensive Domestic Partners legislation for Federal employees (S2521) and it shouldn’t be but so difficult to extend this same protection to everyone in the country, gay and straight.

While many Americans feel quite content in contesting the “Gay Agenda,” far fewer consider themselves out and out bigots willing to deny other people basic Human Rights. Domestic Partnership and Gay Civil Rights are, on balance, political winners that the Democrats should pass and sign into law in Obama’s first year in office.

The other political no brainer for Democrats in Congress—while President Obama stands above politics of course— are the creation of Financial Crimes and War Crimes tribunals.

The weakness of candidate Obama all through the primary season was that he didn’t connect with working class white or Hispanic voters. In the general election this problem was neutralized by the financial crisis, after which, all Obama had to do was talk like a Democrat to gain instant populist street credibility.

However already, the President elect is running into trouble on this front. The recent economic summit showed incredible—and uncharacteristic—political tone deafness on the part of the Obama people. The absence of Labor—or even Labor economists—at the summit, signaled the continued hegemony of the failed financial elites over economic decision making in the new administration.

While even these elite economists will, no doubt, propose a massive stimulus plan as an ameliorative for the coming economic “nuclear winter,” the negative symbolism of Labor’s absence at the summit is important.

The pain of the recession is likely to erode good feeling for Obama among the people who will be hit the hardest, and they are the Democratic political base.

It will therefore be important for the Democrats in Congress to establish who is responsible for the collapse of the financial system and to hold those parties accountable. If poor and working class Americans are going to suffer through this economic collapse, then the perpetrators of the disaster—and especially those who directly profited from it— should have to suffer more. And while the elite economists will no doubt mutter about politicians behaving as if this were a “banana republic,” establishing responsibility for crimes against society is the way politics is supposed to work in a democracy.

Similarly, when War Crimes have been committed by the previous administration, this is not a time to let bygones be bygones.

These were not, are not, victimless crimes. Hundreds of thousands have died, been maimed or had their lives destroyed as a result of the lies that got us into Iraq. It does not seem much to ask that the actual liars should have to bear, at the very least, the legal responsibility for their actions.

And then of course, there was the torture: not isolated instances of torture, but a systematic policy of torture set at the highest levels of our government. In order for America to regain at least a measure of her previous standing in the world, these crimes against humanity have to be addressed.

The Word from California is . . . to begin with, Justice.