I’ve been silent for a while. Meanwhile, Barack Hussein Obama became the president elect of the United States of America. This offers a big opportunity for this nation. But let me address the problems that are in the way of redeeming the promise of change that Obama made. Ultimately, as he has admitted, the reason why we voted him president is to actually implement change for us. So, let’s talk about the economy.
Paul Krugman’s column today, in the New York Times, is a good way to introduce the topic. Paul alludes to the ominous economic effects of the presidential transition. The credit markets are still frozen. We learn that Paulson’s Treasury has not yet effectively used its mandate to shore up the debacle of the financial system. Apparently, Paulson is leaving at least half of the $700 billion bailout fund for the next administration to deploy. Meanwhile, Detroit’s car makers — squeezed between the rock of low car sales and the hard place of low financial returns — come to Washington, hat in hand, to ask for public help.[*] The danger is, of course, the multiplied effects that their bankruptcies would generate, regionally, nationally, and (of much less concern to U.S. politicians) globally. No money is being offered to them yet. The economy is in a tailspin.
What would I do, if I were Obama?
Well, if I were Obama, I probably wouldn’t have been the president elect, because — aside from other flaws I may have had as a candidate — my agenda would have been substantively different. For example, I’d have committed myself to entirely scrapping our foreign policy and replacing it with a new one. Not just out of Iraq with a number of ifs and buts, but out of Iraq now, or for as long as it takes an obedient military to carry out the orders of their commander in chief. And not only a return to our old Clintonian foreign policy. No. I’d have offered to discard the very premises of our foreign policy since World War I or even before, because they have exhaustively proven to be contrary to the interest of regular, working- and middle-class Americans, not to mention contrary to the interest of the rest of the world.
My foreign policy would be based on the recognition of the obvious fact that the world is shrinking very rapidly, as a result of the decreasing costs of international communications and transportation. We all know that a truly global society and culture is emerging rapidly, and that the existing, fragmented, system of national states with a thin layer of international jurisprudence is the wrong tool for the new tasks the world must execute. Many serious problems today are truly global in scope. Of course, environmental problems like global warming and natural resource management, but also economic and social problems, let alone migration and crime. But stay with the economic problems, the current financial meltdown and the forces that created it (e.g. trade imbalances) are essentially global phenomena.
In the foreign policy front, I’d have proposed for our nation to try and lead a global democratic process aimed to setting up a global legal framework that would help us, citizens of the world, to collectively and properly deal with the global consequences that flow from our national lives. The particular ways in which this global democratic process would be implemented is — of course — key, but I’d leave that to each given nation to work out, in accordance with their own conditions, needs, and priorities. And, the U.S. being the leader of that process, I’d ensure that, while respectful of other nations, we set a high example for the rest of the world to follow. The essential thing is that the process is democratic — as in demos=people and cratos=power, i.e. the power of the people — so that the legal framework thus emerging enjoys true global legitimacy. If the emerging legal system doesn’t have global legitimacy, then it won’t work well in the long run, and we’ll be back to the drawing board, with worse problems, sooner rather than later.
I am convinced that the U.S. is in a good position to lead the globe in this process. But that requires an entirely new approach to foreign policy. The globe would have to see clearly, not by our words, but by the nature of our actions, that we are truly abandoning any and all imperialistic impulse. I know that is a tall order, given our history. But I have no doubt it is necessary for this nation and the world to move forward. In other words, we would have to prove unilaterally to the rest of the world that we are not using the instruments of our foreign policy (including our economic and military weight) as a means to advance the exclusive economic interest of a narrow sliver of the business class (e.g. oil companies, military contractors, etc.) at a terrible cost, in lives and other resources, to most Americans and to the rest of the world. Yet in other words, we would have to show the rest of the world that we are serious about global cooperation for the common good.
Perhaps the only upside of what happened to us in the last eight years (e.g. 9/11 and the fiasco in Iraq) is that, my foreign policy vision now appears more “realistic” to many more people than it would have 12 years ago (when I first shared it with a few friends and relatives). We have seen the hard limits of going-alone, of the richest and most armed nation in the world trying to impose its interest on other countries by force, of thinking of itself in narrowly nationalistic terms. And we have also witnessed why global markets are entirely inadequate to dealing with global externalities, that we really need global governance — democratic, because nondemocratic governance (e.g. a la IMF, World Bank, WTO, G7, or even G20) won’t cut it.
Although much better in his approach to foreign policy than Bush, I don’t think Obama is anywhere near what I envision, which — I believe — is entirely feasible, “realistic,” and — just as important — absolutely urgent. I understand though that the okay is not necessarily the enemy of the good. So, I appreciate what Obama represents in terms of social progress, but I believe we won’t get more than symbolic progress if we don’t keep pushing.
As far as domestic policy, I would have committed myself as a candidate to a more vigorous fight for the economic security and interest of the majority of Americans — including publicly-funded, single-payer universal health care. This is simply another way to say that I’d have committed myself to taking decisive steps to eliminate poverty in the U.S. and drastically reduce the inequality of opportunities that plagues our social life, particularly the forms of inequality unrelated (i.e. most of them) to individual merit. I understand that this vows would put me at odds with the interest of big money, which would have made my candidacy less likely to prevail. But that’s because the interest of big money, on the one hand, and the interest of regular people in the U.S. and in the world, on the other hand, are at odds.
Facing the current financial meltdown, I’d have no hesitation about the need to nationalize the troubled banks, and to use them directly to expand credit (rather than just begging the banks to please pretty please loan their resources). I’d be set to unleash public spending (no bridges to nowhere, but tightly managed investment projects with a clear, positive social return), rebuild and in many cases replace the existing infrastructure with a greener, more socially-inclusive one (yes, Virginia, social inclusion, social cohesion, etc. are also essential goods, essential public goods that markets undersupply), and rehab public education. And that’s, not because I don’t understand that public institutions fail (just like markets fail), but because I understand that there are conditions under which the social costs of government failure (e.g. corruption, waste, etc.) are much less than the social costs of market failure (e.g. waste, corruption, unemployment, etc.).
Where would the resources for so much public spending come from? From whomever may have them, e.g. the rich and foreigners. Plus (large) efficiencies that would result from these very changes. To get resources from the rich here, I’d use fiscal policy. If the rich truly value the benefits of living in a workable society, they would have to cough up more in taxes. In order to induce foreigners to support our economy in a manner consistent with what I wrote above, we’d have to show them how they would also benefit from our prosperity. We’d go global Keynesian, to put it in those terms. We’d have to reconfigure the international monetary and financial system accordingly. But I’ll leave that topic to another day.
Again, I understand that with such an agenda, Obama would have stood little chance as a candidate. A campaign cannot change overnight centuries of ideological brainwashing of Americans, by media, think tanks, and academia, which in turn owe themselves to big money.
So, if I were Obama… and I had to face the current transitional paralysis, likely to leave a bigger economic mess for me to handle in January, what would I do?
I would continue to talk softly, calling everybody to unite around my agenda (obviously the best for the country, as per the nation’s own vote), but I’d also be sharpening my knives. Perhaps not me personally, but I’d be telling my chief of staff and other lieutenants, my enforcers, the muscle behind my policy push, to sharpen theirs.
Most definitely, and hopefully without having to spell it out publicly, I would make the Republicans and a few Democrats offers they could not refuse. As subtly as I could manage, I would make clear to everybody currently in power that I am committed to using the full legal power of the U.S. to sternly prosecute any serious wrongdoing (and wrongdoing is the way of life of the political class), specially if they exhibit negligence or obstructionism in dealing with the current economic emergency.
People with large vested interests to defend, especially those who have built up their wealth and privilege with due contempt for others not as fortunate — i.e. most of them — are not really moved by the Kumbaya approach. We, regular people, may be, but they are not. For them, it’s not personal. It’s business. And so should be for Obama. So far okay, but let’s hope that he has the heart in the right place, and that he also has it in him whatever it takes to win these battles for the good of the nation and the world.
[*] Doug Henwood recently reminded us on his listserv (LBO-Talk) that Detroit’s car makers had managed to survive this far in spite of lousy car sales, thanks to their financial dealings, mainly sales financing. Their financial wings were effectively operating as banks. While banking was good business, they were able to offset loses in sales. The credit freeze is the second whammy.