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The Election, Economy, War, and Peace


The Election

 

The word that immediately rolled off of every tongue after the presidential election was “historic.” And rightly so. A Black family in the White House is truly a momentous event.

 

There were some surprises. One was that the election was not over after the Democratic convention. By usual indicators, the opposition party should have had a landslide victory during a severe economic crisis, after eight years of disastrous policies on all fronts including the worst record on job growth of any post-war president and a rare decline in median wealth, an incumbent so unpopular that his own party had to disavow him, and a dramatic collapse in US standing in world opinion. The Democrats did win, barely. If the financial crisis had been slightly delayed, they might not have.

 

A good question is why the margin of victory for the opposition party was so small, given the circumstances. One possibility is that neither party reflected public opinion at a time when 80% think the country is going in the wrong direction and that the government is run by “a few big interests looking out for themselves,” not for the people, and a stunning 94% object that government does not attend to public opinion. As many studies show, both parties are well to the right of the population on many major issues, domestic and international.

 

It could be argued that no party speaking for the public would be viable in a society that is business-run to an unusual extent. Evidence for that is substantial. At a very general level, evidence is provided by the predictive success of political economist Thomas Ferguson’s “investment theory” of politics, which holds that policies tend to reflect the wishes of the powerful blocs that invest every four years to control the state. More specific illustrations are numerous. To mention just one, for 60 years the US has failed to ratify the core principle of international labor law, which guarantees freedom of association. Legal analysts call it “the untouchable treaty in American politics,” and observe that there has never even been any debate about the matter. And many have noted Washington’s dismissal of conventions of the International Labor Organization as contrasted with the intense dedication to enforcement of monopoly pricing rights for corporations (“intellectual property rights”). There is much to explore here, but this is not the place.

 

The two candidates in the Democratic primary were a woman and an African-American. That too was historic. It would have been unimaginable forty years ago. The fact that the country has become civilized enough to accept this outcome is a considerable tribute to the activism of the 1960s and its aftermath.

 

In some ways the election followed familiar patterns.  The McCain campaign was honest enough to announce clearly that the election wouldn’t be about issues. Sarah Palin’s hairdresser received twice the salary of McCain’s foreign policy adviser, the Financial Times reported, probably an accurate reflection of significance for the campaign. Obama’s message of “hope” and “change” offered a blank slate on which supporters could write their wishes. One could search websites for position papers, but correlation of these to policies is hardly spectacular, and in any event, what enters into voters’ choices is what the campaign places front and center, as party managers know well.

 

The Obama campaign greatly impressed the public relations industry, which named Obama “Advertising Age’s marketer of the year for 2008,” easily beating out Apple. The industry’s prime task is to ensure that uninformed consumers make irrational choices, thus undermining market theories.  And it recognizes the benefits of undermining democracy the same way.

 

The Center for Responsive Politics reports that once again elections were bought: “The best-funded candidates won nine out of 10 contests, and all but a few members of Congress will be returning to Washington.” Before the conventions, the viable candidates with most funding from financial institutions were Obama and McCain, with 36% each. Preliminary results indicate that by the end, Obama’s campaign contributions, by industry, were concentrated among Law Firms (including lobbyists) and financial institutions. The investment theory of politics suggests some conclusions about the guiding policies of the new administration.

 

The power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, a root cause of the current economic malaise: the financial crisis, recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for 30 years, while benefits declined. The steward of this impressive record, Alan Greenspan, attributed his success to “growing worker insecurity,” which led to “atypical restraint on compensation increases” – and corresponding increases into the pockets of those who matter. His failure even to perceive the dramatic housing bubble, following the collapse of the earlier tech bubble that he oversaw, was the immediate cause of the current financial crisis, as he ruefully conceded.

 

Reactions to the election from across the spectrum commonly adopted the “soaring rhetoric” that was the hallmark of the Obama campaign. Veteran correspondent John Hughes wrote that “America has just shown the world an extraordinary example of democracy at work,” while to British historian-journalist Tristram Hunt, the election showed that America is a land “where miracles happen,” such as “the glorious epic of Barack Obama” (leftist French journalist Jean Daniel). “In no other country in the world is such an election possible,” said Catherine Durandin of the Institute for International and Strategic Relations in Paris. Many others were no less rapturous.

 

The rhetoric has some justification if we keep to the West, but elsewhere matters are different. Consider the world’s largest democracy, India. The chief minister of Uttar Pradesh, which is larger than all but a few countries of the world and is notorious for horrifying treatment of women, is not only a woman, but a Dalit (“untouchable”), at the lowest rung of India’s disgraceful caste system.

 

Turning to the Western hemisphere, consider its two poorest countries: Haiti and Bolivia. In Haiti’s first democratic election in 1990, grass-roots movements organized in the slums and hills, and though without resources, elected their own candidate, the populist priest Jean-Bertrand Aristide. The results astonished observers who expected an easy victory for the candidate of the elite and the US, a former World Bank official.

 

True, the victory for democracy was soon overturned by a military coup, followed by years of terror and suffering to the present, with crucial participation of the two traditional torturers of Haiti, France and the US (contrary to self-serving illusions). But the victory itself was a far more “extraordinary example of democracy at work” than the miracle of 2008.

 

The same is true of the 2005 election in Bolivia. The indigenous majority, the most oppressed population in the hemisphere (those who survived), elected a candidate from their own ranks, a poor peasant, Evo Morales. The electoral victory was not based on soaring rhetoric about hope and change, or body language and fluttering of eyelashes, but on crucial issues, very well known to the voters: control over resources, cultural rights, and so on. Furthermore, the election went far beyond pushing a lever or even efforts to get out the vote. It was a stage in long and intense popular struggles in the face of severe repression, which had won major victories, such as defeating the efforts to deprive poor people of water through privatization.

 

These popular movements did not simply take instructions from party leaders. Rather, they formulated the policies that their candidates were chosen to implement. That is quite different from the Western model of democracy, as we see clearly in the reactions to Obama’s victory.

 

In the liberal Boston Globe, the headline of the lead story observed that Obama’s “grass-roots strategy leaves few debts to interest groups”: labor unions, women, minorities, or other “traditional Democratic constituencies.” That is only partially right, because massive funding by concentrated sectors of capital is ignored. But leaving that detail aside, the report is correct in saying that Obama’s hands are not tied, because his only debt is to “a grass-roots army of millions” – who took instructions, but contributed essentially nothing to formulating his program.

 

At the other end of the doctrinal spectrum, a headline in the Wall Street Journal reads “Grass-Roots Army Is Still at the Ready” – namely, ready to follow instructions to “push his agenda,” whatever it may be.

 

Obama’s organizers regard the network they constructed “as a mass movement with unprecedented potential to influence voters,” the Los Angeles Times reported. The movement, organized around the “Obama brand” can pressure Congress to “hew to the Obama agenda.” But they are not to develop ideas and programs and call on their representatives to implement them. These would be among the “old ways of doing politics” from which the new “idealists” are “breaking free.”

 

It is instructive to compare this picture to the workings of a functioning democracy such as Bolivia. The popular movements of the third world do not conform to the favored Western doctrine that the “function” of the “ignorant and meddlesome outsiders” – the population — is to be “spectators of action” but not “participants” (Walter Lippmann, articulating a standard progressive view).

 

Perhaps there might even be some substance to fashionable slogans about “clash of civilizations.”

 

In earlier periods of American history, the public refused to keep to its assigned “function.” Popular activism has repeatedly been the force that led to substantial gains for freedom and justice. The authentic hope of the Obama campaign is that the “grass roots army” organized to take instructions from the leader might “break free” and return to “old ways of doing politics,” by direct participation in action.

 

 

 

Latin America

 

In Bolivia, as in Haiti, efforts to promote democracy, social justice, and cultural rights, and to bring about desperately needed structural and institutional changes are, naturally, bitterly opposed by the traditional rulers, the Europeanized mostly white elite in the Eastern provinces, the site of most of the natural resources currently desired by the West. Also naturally, their quasi-secessionist movement is supported by Washington, which once again scarcely conceals its distaste for democracy when it does not conform to strategic and economic interests. The generalization is a staple of serious scholarship, but does not make its way to commentary about the revered “freedom agenda.”

 

To punish Bolivians for showing “the world an extraordinary example of democracy at work,” the Bush administration cancelled trade preferences, threatening tens of thousands of jobs, on the pretext that Bolivia was not cooperating with US counter-narcotic efforts. In the real world, the UN estimates that Bolivia’s coca crop increased 5 percent in 2007, as compared with a 26 percent increase in Colombia, the terror state that is Washington’s closest regional ally and the recipient of enormous military aid. AP reports that “Cocaine seizures by Bolivian police working with DEA agents had also increased dramatically during the Morales administration.”

 

“Drug wars” have regularly been used as a pretext for repression, violence, and state crimes, at home as well.

 

After Morales’s victory in a recall referendum in August 2008, with a sharp increase in support over his 2005 success, rightist opposition turned violent, leading to assassination of many peasants supporting the government. After the massacre, a summit meeting of UNASUR, the newly-formed Union of South American Republics, was convened in Santiago Chile. The summit issued a strong statement of support for the elected Morales government, read by Chilean President Michelle Bachelet. The statement declared “their full and firm support for the constitutional government of President Evo Morales, whose mandate was ratified by a big majority” — referring to his overwhelming victory in the referendum a month earlier. Morales thanked UNASUR for its support, observing that “For the first time in South America’s history, the countries of our region are deciding how to resolve our problems, without the presence of the United States.”

 

A matter of no slight significance, not reported in the US.

 

 

 

The Administration

 

Turning to the future, what can we realistically expect of an Obama administration? We have two sources of information: actions and rhetoric.

 

The most important actions to date are selection of staff. The first selection was for vice-President: Joe Biden, one of the strongest supporters of the Iraq invasion among Senate Democrats, a long-time Washington insider, who consistently votes with his fellow Democrats but not always, as when he supported a measure to make it harder for individuals to erase debt by declaring bankruptcy.

 

The first post-election appointment was for the crucial position of chief of staff: Rahm Emanuel, one of the strongest supporters of the Iraq invasion among House Democrats and like Biden, a long-term Washington insider.  Emanuel is also one of the biggest recipients of Wall Street campaign contributions, the Center for Responsive Politics reports.  He “was the top House recipient in the 2008 election cycle of contributions from hedge funds, private equity firms and the larger securities/investment industry.” Since being elected to Congress in 2002, he “has received more money from individuals and PACs in the securities and investment business than any other industry”; these are also among Obama’s top donors. His task is to oversee Obama’s approach to the worst financial crisis since the 1930s, for which his and Obama’s funders share ample responsibility.

 

In an interview with an editor of the Wall Street Journal, Emanuel was asked what the Obama administration would do about “the Democratic congressional leadership, which is brimming with left-wing barons who have their own agenda,” such as slashing defense spending (in accord with the will of the majority of the population) and “angling for steep energy taxes to combat global warming,” not to speak of the outright lunatics in Congress who toy with slavery reparations and even sympathize with Europeans who want to indict Bush administration war criminals for war crimes. "Barack Obama can stand up to them," Emanuel assured the editor. The administration will be “pragmatic,” fending off left extremists.

 

Obama’s transition team is headed by John Podesta, Clinton’s chief of staff. The leading figures in his economic team are Robert Rubin and Lawrence Summers, both enthusiasts for the deregulation that was a major factor in the current financial crisis. As Treasury Secretary, Rubin worked hard to abolish the Glass-Steagall act, which had separated commercial banks from financial institutions that incur high risks. Economist Tim Canova comments that Rubin had “a personal interest in the demise of Glass-Steagall.” Soon after leaving his position as Treasury Secretary, he became “chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary… the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act.”

 

Rubin was replaced as Treasury Secretary by Summers, who presided over legislation barring federal regulation of derivatives, the “weapons of mass destruction” (Warren Buffett) that helped plunge financial markets to disaster. He ranks as “one of the main villains in the current economic crisis,” according to Dean Baker, one of the few economists to have warned accurately of the impending crisis. Placing financial policy in the hands of Rubin and Summers is “a bit like turning to Osama Bin Laden for aid in the war on terrorism,” Baker adds.

 

The business press reviewed the records of Obama’s Transition Economic Advisory Board, which met on November 7 to determine how to deal with the financial crisis. In Bloomberg News, Jonathan Weil concluded that “Many of them should be getting subpoenas as material witnesses right about now, not places in Obama’s inner circle.” About half “have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both.” Is it really plausible that “they won’t mistake the nation’s needs for their own corporate interests?” He also pointed out that chief of staff Emanuel “was a director at Freddie Mac in 2000 and 2001 while it was committing accounting fraud.”

 

Those are the actions, at the time of writing.  The rhetoric is "change" and "hope."

 

 

 

Health Care

 

The primary concern for the administration will be to arrest the financial crisis and the simultaneous recession in the real economy. But there is also a monster in the closet: the notoriously inefficient privatized health care system, which threatens to overwhelm the federal budget if current tendencies persist. A majority of the public has long favored a national health care system, which should be far less expensive and more effective, comparative evidence indicates (along with many studies). As recently as 2004, any government intervention in the health care system was described in the press as &l

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