Script change for neoliberalism

September 23, 2008

The same kind of radical measures the government is using to underwrite the rich should be used to underwrite the rest of us.

PEOPLE LIKE Alan Greenspan and Robert Rubin should be eating a whole lot of crow right now.

It turns out the medicine that these former financial officials forced down the throats of governments in Latin America, Asia and Africa--not to mention in the U.S.--wasn't good enough for the doctors.

"When the IMF [International Monetary Fund] pledged $20 billion to help South Korea survive the Asian financial crisis of the late 1990s, one of the conditions it imposed was that the Korean government allow ailing banks and other companies to collapse, rather than bail them out," the New York Times recently pointed out, referring to the reflections of a Korean economist, Yung Chul Park, who was involved in South Korea's negotiations with the IMF.

"Washington," Park observed, "is following a different script this time."

The dominant economic orthodoxy since the late 1970s--deregulation, "free-er" markets and privatization, all summed up under the term "neoliberalism"--is discredited, as even mainstream commentators admit.

And we shouldn't forget the other half of neoliberalism's "script." It was well-summarized by the phrase "personal responsibility." In every facet of life--work, health care, education, retirement--the neoliberalizers pushed for the destruction of public services and programs, to be replaced--you guessed it--by greater "personal" responsibility.

Instead of national single-payer health care, it's your personal responsibility to secure coverage. Instead of public education, it's your personal responsibility to try to get your kid admitted to the right charter or private school. They didn't get around to privatizing the Social Security retirement program, but Wall Street long drooled at the prospect.

THE DEMOCRATS and Republicans have been united around this neoliberal orthodoxy for a while. Jimmy Carter deregulated the airline industry, and Ronald Reagan railed against "welfare cheats" (really, a code word for Black women). Bill Clinton succeeded in actually ending welfare "as we knew it," and he played a big part in freeing the Wall Street profit hounds from their regulatory leashes.

John McCain has been drinking the neoliberal Kool-Aid for something like 26 years. He's in an awkward position at the moment, because he's been a leading voice for the deregulation of banking, brokerage houses and insurance companies, to name a few. McCain's Web site proudly advertises his view that the "free market" just needs to be pointed in the right direction, and it can fix the environment, too!

It's little wonder, then, that he could believe that the fundamentals of the American economy were "sound," even as they were exploding.

But what about Barack Obama?

For starters, we should keep in mind that Barack Obama isn't just the candidate of any party. He's the candidate of the Democratic Party--a party run by millionaires and billionaires, and up to its eyeballs in the current financial mess.

It's understandable that many progressives, frightened by the possibility of a McCain-Palin administration, are cheering for Obama. But we shouldn't forget his other cheering section: the super-wealthy--Wall Street included. His fundraising haul from August alone was $66 million--greater than any candidate in American history ever.

The Economist magazine noted that there were 144 corporate sponsors of the Democratic Party Convention, compared to 91 for the Republican Convention. "[B]ecause many corporations anticipate a victory for Mr. Obama," the magazine wrote, summarizing a Brookings Institute analysis, "they consider their gifts to Democrats an investment in their company's future. Among the top contributors are sectors with special interests, including banks, telecom companies and the health-care industry."

It shouldn't be surprising, therefore, to learn that Obama's inner circle includes people like former Treasury Secretary Robert Rubin and former Federal Reserve Chair Paul Volcker--who were among the architects of America's economic policy for the last several decades.

Despite these ties, Obama has a lot of room to talk tough about regulating Wall Street, in part because Wall Street wants a new regulatory regime to save it from itself. But to win the election, Obama realizes he must--at times--speak to some of the working-class anger that's simmering below the surface.

Interestingly, the strongest part of Obama's speech at the Democratic convention (in my view) was the part where he took issue with conservative idea that it's up to individuals to pull themselves out of poverty: "In Washington, they call this the Ownership Society. But what it really means is that you're on your own. Out of work? Tough luck, you're on your own. Born into poverty? Pull yourself up by your own bootstraps. Even if you don't have boots, you're on your own."

Much of the hysteria about "handouts" and "welfare cheats" was always really aimed at Black people, to make us scapegoats for social inequality. Since the backlash against the civil rights movement got off the ground, Blacks have been portrayed as angry, lazy whiners who are always asking for "special treatment."

But Obama isn't prepared to challenge that racist legacy squarely. No doubt this partially explains why he virtually never misses a chance to wag his finger at African-American fathers and call for greater "personal responsibility" when appearing before predominantly African-American audiences.

Hillary Clinton played directly into that same racist legacy when she insinuated that the "hard-working people" in America were, y'know, white people.

No doubt that legacy also explains why Michele Obama, as a Black woman, felt the need to go out of her way at the convention to praise people who, though they had lost their jobs, "weren't asking for a handout or a shortcut." She told the delegates that "[t]hey were ready to work, they wanted to contribute. They believed--like you and I believe--that America should be a place where you can make it if you try."

Now, we read in the headlines that President Bush and Treasury Secretary Henry Paulson are seeking $700 billion for a handout--er, sorry, I mean a "bailout" package.

THE HYPOCRISY here is not completely lost on mainstream commentators and even politicians. The Democrats are promising to tack on something for "Main Street" to Bush's proposal for bailing out Wall Street. Nancy Pelosi was quoted in the New York Times calling for increased spending on infrastructure to create jobs, for example.

Now that the U.S. government is directly responsible for millions of American mortgages, Rep. Barney Frank is reportedly even toying with the idea of letting bankruptcy judges modify the original terms. Obama is proposing a $50 billion emergency plan to "save 1 million jobs by rebuilding our infrastructure, repairing our schools, and helping our states and local governments avoid damaging budget cuts."

For those of us sick to death of the dominance of neoliberal dogma, all that sounds like a breath of fresh air. But honestly, these are timid proposals compared to the scale of the crisis.

For years, we've been told that the kind of longstanding social programs that Europeans enjoy--free national health care, free higher education--were too radical, impossibly expensive or, worse, a step towards "socialism" (oh, the horror!).

Who knew that there was $29 billion available for the Bear Stearns bailout? Or another $200 billion to seize the poisoned mortgage holdings of Freddie Mac and Fannie Mae? Who knew that there was $85 billion lying around to take over the insurance giant AIG?

But now that these "piecemeal" bailouts haven't staved off the crisis, Democrats and Republicans are rushing to push through a broad $700 billion bailout. Who knew such sums were available for new government programs? Who could have known, just a few weeks ago, that the U.S. government would undertake some of the largest nationalizations in world history.

Yes, they truly are using a different script this time. The old script isn't working, but the ink isn't yet dry on a new one, and may not be for a while.

We need to demand that the same kind of radical measures the government is using to underwrite the rich be used to underwrite the rest of us. Why not a moratorium on mortgage payments? Heck, why not pay some of our credit card or hospital bills flat out? Why not national health care, for that matter? Why not free college education?

We can't expect that kind of script from the Republicans or even from the Democrats. That's the kind of change we need, though, and now is the time to fight for it.

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