Penguin books hamish hamilton

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Elections 2008:

Hope Confronts the Real World

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. One might expect that the opposition party would have 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 postwar president and a rare decline in median wealth, with an incumbent so unpopular that his own party had to disavow him, and a dramatic collapse in U.S. 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 reflects public opinion at a time when 80 percent 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 percent 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.1

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 description 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, an analysis that gains more force from recent events, and is poised to become even more successful with the Supreme Court decision of January 21, 2010, already discussed. More specific illustrations are numerous. To select one enlightening example, for sixty years the United States 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.2 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”).

The weakness of social democratic (welfare state) programs in the United States as compared to Europe is often attributed to the “American character”: individualist, liberty-loving, antigovernment (but superpatriotic), firm in the belief that hard work reaps rewards and that those who fall by the wayside are somehow defective, etc. There may be some elements of truth to these common portrayals, but they are hard to square with the historical record, or even with studies of popular attitudes. We return to attitudes toward health care, often misrepresented. More generally, on welfare state measures, public support is quite high. Even among those who identify themselves as “antigovernment” in polls, overwhelming majorities support “maintaining or expanding spending on Social Security, child care, and aid to poor people” and other social welfare measures, though support in these groups “fell off significantly only when it came to aid to blacks and welfare recipients.” Half of the “staunchest conservatives believed that spending is too little [on] assistance to the poor.” In the population as a whole, according to the 2008 National Opinion Research Center’s General Social Survey, “71 percent of respondents thought the government was spending too little to improve and protect the nation’s health, 58 percent said spending on Social Security was too little, 58 percent thought we should spend more to deal with drug addiction, and 55 percent thought spending to be too little on programs to assist people to secure child care”—though again, there were exceptions on aid for Blacks and welfare recipients.3

The persistence of generally social democratic attitudes is noteworthy in the face of huge propaganda campaigns to efface any such ideas, a prominent feature of a society dominated to an unusual extent by a highly class-conscious business community, dedicated to winning what they call “the everlasting battle for the minds of men” and to beating back threats of “political power of the masses,” a serious “hazard to industrialists” and more recently to the increasingly dominant financial institutions. Over the years the campaigns have had two primary enemies: unions (naturally) and government. The antigovernment campaigns have to be nuanced and sophisticated, because the “architects of policy” understand very well the need for a powerful state that intervenes massively in the economy and abroad to ensure that their own interests are “most peculiarly attended to.” The goal of sophisticated business propaganda is to engender fear and hatred of government among the population, so that they are not seduced by subversive notions of democracy and social welfare, while maintaining support for the powerful nanny state for the rich—a difficult course, but one that has been maneuvered with considerable skill.4

There is much to explore here, but this is not the place.

The two candidates in the 2008 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, an observation with lessons for the future.

In some ways the election followed familiar patterns. The McCain campaign was honest enough to announce clearly that they would skirt issues. Sarah Palin’s hairdresser received twice the salary of McCain’s foreign policy adviser, probably an accurate reflection of significance for the campaign.5 Obama’s message of “hope” and “change” offered a virtual 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 computers.6 A good predictor of the election a few weeks later. The industry’s regular task is to create uninformed consumers who will make irrational choices, thus undermining markets as they are conceptualized in economic theory, but benefiting the masters of the economy. And it recognizes the benefits of undermining democracy in much the same way, creating uninformed voters who make often irrational choices between the factions of the business party that amass sufficient support from concentrated private capital to enter the electoral arena, then to dominate campaign propaganda.

The Financial Times reported the enthusiasm of the PR industry over the marketing of “brand Obama.” Particularly impressed were those who “helped pioneer the packaging of candidates as consumer brands 30 years ago,” when they designed the Reagan campaign. Obama, some felt, is likely to “have more influence on boardrooms than any president since Ronald Reagan, [who] redefined what it was to be a CEO” by teaching the lesson that “you had to give them a vision.” Reagan’s visionary performance led to “the 1980s and 1990s reign of the imperial CEO,” an office that registered such towering successes as destroying the financial system and exporting much of the real economy while amassing huge personal fortunes based largely on ability to choose the boards that determine salary and bonuses, thanks to regulations established by the nanny state for the rich.7

Obama himself had expressed his admiration for Reagan as a “transformative figure.” Obama was not referring to the rivers of blood that that Reagan spilled from Central America to southern Africa and beyond. Nor was he referring to Reagan’s great effectiveness in helping transform Pakistan into a nuclear-armed state with powerful radical Islamic forces, with consequences that Obama regards as the major foreign challenge to his administration. So, yes, Reagan was a transformative figure abroad, though not in Obama’s sense of the term.

And at home as well, though Obama was not referring to Reagan’s crucial role in transforming the United States from the world’s leading creditor to the world’s leading debtor, or converting it from an industrial society rather resembling Europe to one in which real wages for the majority stagnate and social indicators decline while a few who are favored by government policy gain fabulous wealth, among other forms of social malaise.

Rather, Obama was referring to the colossus whose “spirit seems to stride the country, watching us like a warm and friendly ghost,” the semi-divinity constructed by a remarkable PR campaign, which anointed Reagan as the high priest of free markets and small government, culminating in a reverential commemoration of the Great Man that was reminiscent of the veneration of Kim Il-Sung, one of the more embarrassing moments of the modern history of Western political culture.

The imagery is untainted by Reagan’s breaking modern records in government intervention in the economy, while also somewhat increasing the size of government. Just to mention a few highlights, he was by far the most protectionist president in postwar American history, virtually doubling protectionist barriers in order to try to save the U.S. economy from takeover by more efficient Japanese producers; he carried out the first “too big to fail” bailout (Continental Illinois) while setting the stage for the huge Savings & Loan financial crisis; his “star wars” fantasies were sold to the business world as a huge taxpayer-funded bonanza to high-tech industry; his “out-of-control spending binge is burying our children and grandchildren under a mountain of unsustainable debt,” to quote House Republican leader John Boehner—referring, however, to the evil Obama, and omitting to mention, as did the press reporting him, that the projected interest burdens for Reagan and Obama are virtually identical as a proportion of GDP. And on, and on.8

Reagan’s “vision,” like most heralded “visions,” is entirely independent of his deeds. The vision that was constructed by the doctrinal institutions is one of dedication to unfettered free markets and “democracy promotion.” In the light of the facts, the creation of the “vision” was indeed a marketing triumph, of which those who “helped pioneer the packaging of candidates as consumer brands 30 years ago” should be proud, as they celebrate their greatest triumph yet in 2008.

The Center for Responsive Politics (CRP), which monitors campaign contributions, 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.” Obama outspent McCain by almost 2 to 1. The executive director of the CRP observed that “The 2008 election will go down in U.S. history as an election of firsts, but this was far from the first time that money was overwhelmingly victorious on Election Day.”9

Before the conventions, the viable candidates with most funding from financial institutions were Obama and McCain. Preliminary results suggest that by the end, Obama’s campaign contributions, by industry, were concentrated among financial institutions and law firms (including lobbyists), favoring him by a considerable margin. The investment theory of politics suggests some conclusions about guiding policies of the new administration, and they were soon verified—with interesting consequences, to which we return, when Obama veered slightly from the path laid out by his sponsors.

As discussed earlier, the power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, one of the root causes of the greatest economic crisis since the Great Depression: the financial collapse of 2007–8, deep and ongoing recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for thirty years, while benefits and social indicators declined. The steward of this impressive record, Alan Greenspan—“Saint Alan” as he was sometimes called during his glory years—attributed his success to “greater worker insecurity,” which led to “atypical restraint on compensation increases,” and corresponding increases into the pockets of those who matter.10 Greenspan’s failure even to perceive the $8 trillion 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. But he was not alone in that among the economic profession and regulators.

Reactions to the election from across the spectrum commonly adopted the “soaring rhetoric” 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.11

The rhetoric may have 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, grassroots movements were 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 United States, a former World Bank official.

True, this 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 United States. 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, elected a candidate from their own ranks, a poor peasant, Evo Morales. The electoral campaign did not feature soaring rhetoric about hope and change, or body language and fluttering of eyelashes, but was focused on crucial issues, very well known to the voters: control over resources, cultural rights, questions of justice in a complex multiethnic society, and so on. Furthermore, the election went far beyond pushing a lever on election day or even efforts to get out the vote. It was just one 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 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 quite 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 financial capital is ignored, perhaps not considered an “interest group.” 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 might turn out to be.12

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,”13 preferring the model of obedience to the maximal leader.

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 accept the 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).

In earlier periods of American history, the public refused to keep to its assigned “function.” Popular activism has repeatedly brought about substantial gains in 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.”

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 reflexive distaste for democracy when outcomes do not conform to strategic and economic interests.

To punish Bolivians for showing “the world [a truly] extraordinary example of democracy at work,” the Bush administration canceled trade preferences, threatening tens of thousands of jobs, on the pretext that Bolivia was not cooperating with U.S. 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.”14

As discussed earlier, “drug wars” are curious affairs. The same is true of condemnation (and decertification) for alleged noncompliance with U.S. demands on counter-narcotic efforts. One interesting case is Mexico, probably the leading narco-state in the world after U.S. ally Colombia. In part that seems to be a consequence of NAFTA, which undermined much of the economy and also led to flight of peasants from land that now, according to Mexican journalists, is planted in poppy and guarded by narco-guerrillas and the army. They also say that investigation and reporting on the narcotrafficking industry is so hazardous that little of what they discover appears in print. Some does, however: for example, that over two hundred thousand peasant women work for narcotraffickers because it is the only option for survival under the new liberalized economy. Also published was the report by the respected analyst Edgardo Buscaglia, a UN specialist and professor of law and economy, that the “war on drugs” of U.S. ally Felipe Calderón is a “caricature,” which has left untouched the major private economic powers that participate massively in the racket.15

Bolivia was “decertified” by the Bush administration, then by Obama, for alleged lack of cooperation with U.S. antidrug efforts. Mexican president Calderón, in contrast, is highly praised. And Mexico is certified, though over the very strong objections of the National Narcotic Officers Association Coalition, which testified to Congress on the failure of Mexico to take even elementary steps to control the plague, which has now penetrated the southwest United States as well. Priorities and criteria are, again, clearly illuminated.16

Turning to the future, what could we realistically have expected of the Obama administration as it took office? We have two sources of information: actions and rhetoric.

The most important actions prior to taking office are selection of staff and advisers. The first selection was for vice president: Joe Biden, one of the strongest supporters of the Iraq invasion among Senate Democrats, a longtime Washington insider, who consistently votes with his fellow Democrats—though not always, as when he brought cheer to financial institutions by supporting a measure to make it harder for individuals to erase debt by declaring bankruptcy.17

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 that 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 was to oversee Obama’s approach to the worst financial crisis since the 1930s, for which his and Obama’s funders share ample responsibility.18

In an interview with an editor of the Wall Street Journal, Emanuel was asked what the incoming 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 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.19

Labor journalist and lawyer Steve Early wrote that “while running for office, Obama said he strongly backed the Employee Free Choice Act, a long-overdue labor law reform measure that should be part of his promised economic stimulus plan.” However, when Obama introduced his top economic advisers on taking office “and talked about steps to ‘jolt’ the economy…the Act was not part of the package,” and Chief of Staff Emanuel “declined to say whether the White House will support the Employee Free Choice Act.… [Workers] will be watching closely to see whether their plight merits the same helping hand so quickly extended to Wall Street.”20

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