The Ecological Poverty of Liberal Economics

For most of us, design is invisible. Until it fails.

– Bruce Mau, 2003[1]



Never underestimate the propensity of sharp progressive minds to dissociate from the leading issue of “our or any time”[2] – the ecological crisis. Look, for example, at liberal economist Josh Bivens’ well-crafted study Failure By Design: The Story of America’s Broken Economy (2011). Building on decades of research by the top-drawer liberal think tank The Economic Policy Institute (EPI), the EPI-affiliated Bivens deftly analyzes a wealth of economic data to diagnose what went wrong with the U.S. economy over the last thirty plus years.


Blaming Simple Fate Absolves Those in Power


His thesis is simple but compelling. Call it an argument for negative anthropogenic economic change. It holds that American economic growth since the late 1970s has been slow and unequally distributed thanks to a number of regressive policy choices that have served the rich and powerful at the expense of ordinary working people and nearly everyone else. The problem has not been that that “the economy” has been broken by the supposed invisible hand of the market or other forces allegedly beyond the species’ control. The real difficulty is that the “human-made” U.S. economic system has been working precisely as designed to distribute wealth and power upward. This outcome has been achieved with the visible political hand of policy. Bivens particularly blames the following interrelated and not-so “public” policies across the neoliberal era:


  • Letting the value of the minimum wage be eroded by inflation.
  • Slashing labor standards for overtime, safety, and health.
  • Tilting the laws governing union organizing and collective bargaining strongly in employers’ favor.
  • Weakening the social safety net.
  • Privatizing public services.
  • Accelerating the integration of the U.S. economy with the world economy without adequately protecting workers from global competition.
  • Shredding government oversight of international trade, currency, investment and lending.
  • Deregulating the financial sector and financial markets.
  • Privileging low inflation over full employment and abandoning the latter as a worthy goal of fiscal and economic policy.


These policies increased poverty and suppressed wages at the bottom and concentrated wealth at the top. They culminated in the Great Recession, sparked by the bursting of a housing bubble that resulted from the de-regulation of the financial sector and the reliance of millions of Americans on artificially inflated real estate values and soaring household debt to compensate for poor earnings. Thanks to flat wages and weak social expenditures, the tepid expansion of the early 2000s (the weakest upward business cycle on record)[3] depended on an unsustainable upward climb of home prices. The epic collapse that followed generated millions of foreclosures and devastated savings and net worth across the working and middle classes. It brought an official unemployment rate that reached 10 percent (real unemployment went considerably higher) and the longest recession since before World War II.


The crash was foreseen by many, including financial interests who failed to warn households on the dangers of taking out more debt to buy homes. It didn’t have to happen. As Bivens notes:


‘Policy makers found plenty of resources to throw at tax cuts aimed disproportionately at corporations and the very rich and at wars abroad. And when partisan politics demanded it, resources were also found to enhance Medicare coverage by adding a prescription drug benefit – but only when bundled with flagrant giveaways to pharmaceutical companies and other corporations. If even a fraction of these resources had found their way into well-targeted interventions to boost the job market, the decade could have been very different, with wage growth supporting living standards instead of debt….’


But faster wage growth would have “threatened the only economic indicators that performed above-trend in the 2000s: growth in corporate profits.” And that was unacceptable to the corporate and financial elites who dominate policy by virtue of their wildly disproportionate wealth and power.


The visible hand of neoliberal design still casts its shadow over the painfully slow, all-too jobless “recovery,” a reflection of the low demand that results from persistently flat wages and weak public expenditures. This is the long economic “rot” of regressive neoliberal policy – economic decay that caused and survived the Great Recession.


Consistent with his argument for human and political agency, Bivens notes that these problems were predictable and in fact predicted at the time the neoliberal package was introduced. Smart observers knew that stagnation and crisis would be the unsurprising results of an economy tilted by regressive policy. Their predictions went unheard, however, thanks in part to corporate advertising, public relations, and propaganda:


‘The economy that generated sub-par outcomes before the Great Recession and turned a housing bubble into an economic catastrophe was designed. It was designed, specifically, to guarantee that the powerful reaped a larger share of the rewards of overall economic growth…While it was designed to ensure that the already-rich claimed the lion’s share of future growth, it was marketed as guaranteeing a more efficient economy for all, so that even as the rich took a larger share, everybody would see rising living standards as economic growth accelerated.’[4]


To illustrate his thesis, Bivens makes an analogy between the false notion that the Great Recession was the inexorable product of inviolable economic or market forces and the equally incorrect notion that the disastrous results of Hurricane Katrina reflected natural forces alone:  


‘…the scale of damage done by Katrina was not really about weather but rather the neglect of public goods and social institutions. The rain and wind didn’t manage to flood the city [of New Orleans] – the collapse of the levees protecting it did. The weather in the days before the storm didn’t prevent residents from evacuating – many people simply lacked the means or social networks that would have allowed them to leave as easily as those who could pay for a hotel room or call friends outside the city with extra rooms in their house….This mirrors important aspects of the Great Recession. Economic shocks happen – that will never change and is indeed ‘like the weather.’ But what determines how much suffering these shocks leave in their wake is driven by social and political choices about how the economy is managed…When policy makers failed to rein in a financial sector that was making bets on ever-rising [home] prices, it proved ruinous for the larger economy: poor policy choices amplified what should have been only short-lived over-exuberance among home-buyers and sellers into a full-blown economic crisis. In short, a key lesson to be taken from the aftermath of Katrina and the Great Recession is that blaming simple fate for what has happened absolves those in power far too easily. The scale of casualties of both disasters [was] determined largely by political choices, not by immutable acts of nature (emphasis added).’ [5]


Naturally enough, Bivens concludes with a call for progressive policy remedies to reverse the regressive drift, “provide faster growth in the living standards of typical American families,” and “provide a more stable economy that is less prone to spectacular crack-ups like the Great Recession.” He advocates an appropriately updated, inflation-adjusted minimum wage, union-friendly labor law reform, guaranteed pensions and health care, globalization protections, re-regulation of the financial sector, ambitious infrastructural investments, the re-enshrining of full employment as a legitimate policy goal, and public action to shrink “troubling racial gaps in employment, wages, and net worth.” [6]


State Policy for Whom? The Anti-Government Myth


If human-made economic policy can be designed and implemented to serve the Few, it can also be designed and implemented to serve the Many. This might seem an elementary assertion, but it is a remarkably difficult point to advance through the fog of neoliberalism’s grip on economic discourse. Over the last generation, the dominant U.S. economic ideology has set up a fantasy struggle between the allegedly evil and capricious state on one hand and the supposedly virtuous and inexorable “free market” on the other. At the radical extremes, the ideology’s proponents have proclaimed a desire to “starve the [government] beast” and “cut government down to the size where we can drown it in the bathtub” (Grover Norquist). Then the “invisible hand” of the market is free do its ultimately welcome and benevolent work, the theory goes.


But neoliberalism’s bourgeois advocates have never really wished to free themselves or others from state policy. Beneath quasi-libertarian discourse about an epic conflict between “stultifying government” and the “free market,” neoliberalism’s corporate sponsors and beneficiaries have always sought to wield and profit from government policy of a particular sort. Reflecting their investment in a profits system that has always relied heavily on government protection and assistance, they have only targeted some parts of the public sector for malnourishment. They wish to de-fund and de-legitimize what the French sociologist Pierre Bourdieu called “the left hand of the state”: programs and services won by past popular struggles and movements for social justice, equality, and inclusion. They do not wish to axe the “right hand of the state”: the parts that provide service and subsidy (corporate welfare) to concentrated wealth and dole out punishment (including rampant mass incarceration and felony-marking) and repression to the poor and to anyone else among the rest who dares to resist. They do not wish to dismantle America’s military-industrial and imperial complex, a form of giant public transfer to the high-tech “private sector.” [7]


Neoliberalism’s “anti-government” rhetoric has worked to hide the actual core policy question. During the last three and a half decades as through all of American history, the real issue is NOT whether government can or should “work.” It is rather the question of who government policy should work for: the public and the common good or the nation’s leading centers of wealth and power.


Global Warming No Longer a Future or Distant Threat


Speaking of human agency, politics, policy, “the weather,” and “acts of nature,” and predictability, we are struck by how neatly Bevins’ thesis fits the environmental crisis that lags far behind “the economy” as an American public and election-year concern. There should be no doubting the urgency of the crisis: catastrophic climate change and a related broader environmental apocalypse that threatens a decent livable future for human and other sentient beings. According to new research released last June by the science journal Nature, humanity is now facing an imminent threat of extinction – a threat caused by its reckless exploitation of the natural environment. The report reveals that our planet's biosphere is steadily and ever more rapidly approaching a “tipping point,” meaning that all of the planet’s ecosystems are nearing sudden and irreversible change that will not be conducive to human life. "The data suggests that there will be a reduction in biodiversity and severe impacts on much of what we depend on to sustain our quality of life, including… fisheries, agriculture, forest products and clean water. This could happen within just a few generations,” wrote lead author Anthony Barnosky, a professor of integrative biology at the University of California-Berkeley. “My colleagues who study climate-induced changes through the Earth's history are more than pretty worried,” co-researcher Arne Mooers, a professor of biodiversity at Simon Fraser University in British Columbia, said in a statement. “In fact, some are terrified.”[8]


The leading though hardly the sole ecological threat is climate change. Behind record-setting heat levels over recent years – we write in the hottest year yet amidst yet another hottest summer ever, after yet another of the warmest springs and warmest winters on record – the great northern ice sheet is withering ominously. The melting of Arctic ice replaces a shiny white mirror that reflects the sun’s rays back to space “with a dull blue ocean that absorbs most of those rays.” Inland glaciers and snow-packs in the Himalayas, Andes, Sierras, and Rockies are retreating, threatening local and global water and food supplies. They are “melting very fast,” the ecological writer and activist Bill McKibben noted two years ago in his chilling book Eaarth: Making Life on a Tough New Planet, “and within decades the supply of water to the billions of people living downstream may dwindle” [9] The thawing out of artic tundra and icy ocean clathrates releases massive quantities of methane, a major heat-trapping and climate warning gas. Melting northern peat moss releases carbon in large amounts. Scientists have recently reported that northern marshes and ponds are staying unfrozen over the winter because methane is gurgling up from below.


Global warming “is no longer a philosophical threat, no longer a future threat, no longer a threat at all. It’s our reality…already wrecking thousands of lives daily.”[10] The 20th century's last two decades were the hottest in 400 years and likely the warmest for several millennia. Twelve of the last 13 years are among the 13 warmest since 1850. The American State Department’s chief scientist has projected famines related to climate change serious enough to affect a billion people in coming decades.


The worst consequences are being felt with special pain in the “developing” world, where masses of people are most vulnerable to escalating disease, food shortages, flooding, extreme weather, and other environmental disasters. But the costs of climate-related eco-trastrophe and the related exhaustion of global fossil fuel resources have already been heavily felt in the rich world, contributing to human disasters like Hurricane Katrina (2005) and a 2003 heat wave that killed hundreds in Europe and forcing vastly expensive infrastructure investments (e.g. giant dike improvements and other upgrades in the Netherlands and Venice) and other costs in the wealthy nations. Climate-related brush and forest fires have displaced many thousands of homeowners and apartment dwellers and killed hundreds across the rich world. New York City is already spending millions in anticipation of rising ocean levels. According to a study commissioned from the Harvard’s Center for Health and the Global Environment by Swiss Re (the world’s biggest insurance firm) seven years ago, likely near-term climate change will create an increasing number of storms and other disturbances that will, in McKibben’s words in 2010, “overwhelm the adaptive capacities of even developed nations; large areas and sectors [will] become uninsurable; major investments [will] crash; and markets [will] crash….In effect, parts of the developed world would experience developing nation conditions for prolonged periods as a result of the natural catastrophes and increased vulnerability due to the abbreviated return times of extreme events.”[11]


The evidence of change and peril has only deepened in the last two years. We have experienced record-setting summer heat waves in 2011 and 2012, record snowfalls in 2010 and 2011, epic droughts (Oklahoma and Texas in 2011 and the entire Midwest and much of the nation in 2012), increased numbers and intensity of tornadoes, a remarkable straight line windstorm (a “derecho”) that wreaked havoc from Illinois to the eastern seaboard and an epidemic and drought- and heat-related western wildfires this summer. No less 222,356 daily high temperature records were set across the country by early July, when New York Times columnist Timothy Egan wrote the following in an essay titled “The Fires This Time”:

‘The pines flame and hiss, shooting sparks on the house next door, a fortress no more. The oaks tumble and crush roofs. Almost 350 homes burn to the ground, and nearly 5 million people lose all electricity in sweltering heat….So it went the first 10 days of summer, another extraordinary chapter in a weather year of living dangerously. At one point, 113 million Americans were under an extreme heat advisory. It was 109 degrees in Nashville, 104 in Washington, D.C., and much of the West was aflame…In the West…the fire danger will only grow, as 40 million acres of ghost forests — standing trees killed by an epidemic of bark beetles that metastasize in warmer winters — are ready to burn…Summer is barely two weeks old and two-thirds of the country is in the grip of a severe drought. More crops will die. More forests will burn….It sounds biblical…’[12]

Given the dramatically altered weather and the spate of climate- and extreme weather-related disasters in the U.S. over recent years, it is unsurprising that a rising majority of Americans see global warming as a reality, as the reason for “the crazy weather,” and as a relevant negative factor in their own lives – not just something “about polar bears or maybe Bangladesh.”[13] As sociologist Eric Klinenberg recently noted in the Times, “Americans, long cynical about global warming, are confronting the facts.” Klinenberg cites a July 2012 University of Texas survey showing that 70 percent of Americans now think the climate is changing, up 5 points from last March. More than half (53 percent) of Republicans now agree, as do 87 percent of Democrats and 72 percent of Independents.[14]


A Predicted Result of Human Hands


Why is climate change happening? The propaganda and public relations arms of the corporate carbon industrial complex has long insisted that global warming is a reflection of unalterable natural forces that operate independently of human control. But the preponderant majority of the climate-sentient world agrees with the overwhelming consensus finding of contemporary earth scientists that global warming is anthropogenic (“human made”) – that it reflects the visible hand of human practice, politics, and policy. It knows that the story of the world’s broken ecology is about the human release of greenhouse gases resultin

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