One point of view that’s been expressed about the financial markets crisis can be summed up by something I read at Crooks & Liars today:
Have you noticed that every person suddenly knows everything there is to know about how the economy works? Wow, it’s all so simple.
Maybe there’s a point there, but not the one John Amato thinks he’s making. I’ve consistently been of the view that the economy should be a subject for civic and political discussion, and that we shouldn’t hold back because of the “not an economist!” cries that sometimes echo around the place. If one of the continuing problems with the US financial sector is the lack of transparency which is causing the crisis of solvency - because no one still knows where all the securitised bodies are buried - so too a bit of transparency in demystifying the fiscal arcana whose complexity was part of the reason for this mess should be welcomed.
So, with that in mind, I wanted to share some links (from econobloggers and non-economists both) I’ve found particularly insightful and interesting over the last few days.
First, Tyler Cowan’s take at Marginal Revolution is succinct and informative.
Secondly there’s no lack of alternative proposals to the TARP bailout around in the blogosphere. I haven’t reviewed all of these carefully, and there are a lot more out there, but there are some samples at Crooks & Liars and Boztopia. It’s good to see some policy thinking going on among online activists as well as political pointscoring. That leads me to my next theme - which is exemplified in this post from Ian Welsh at Firedoglake - the indictment of the neoliberal consensus for what’s gone down and a call for a new New Deal. FDR’s getting more than a few hat tips at the moment, and Barack Obama has certainly made the first part of the case, and it may not be entirely wishful thinking to expect an Obama administration - it one eventuates - to make a genuine attempt to reshape the governing structures and logics of the American economy. The enormous bill that’s being presented to the taxpayers may provide the political opening.
Publius at Obsidian Wings also argues for the possibility of a “Progressive Moment”.
Of course, it’s also possible that an Obama administration would be Clintonomics as usual. We’ll see, but the discussion itself will hopefully build some momentum.
It’s hard to see how the immiseration of the American middle class can be permitted to continue (I don’t expect any real action from the Democratic Party on actual poverty) for another four years, if the culture wars card fails to trump economics.
On a somewhat more theoretical note, it’s also pleasing to see attention being paid to the work of Karl Polanyi and his work back in the 1940s on the constructedness of markets. At the same site, Saskia Sassen joins the new New Deal chorus and calls for a refocusing of policy on the real economy.
Any new ‘new deal’ imho is preferable to the death rattles of Austrian economics aka neoliberalism. However and this is a huge if - lest we forget - any state big enough to satisfy all our wants is also big enough to smother us all to death.
And so…in spite of some manifest risk due to oblivious unpreparedness, rawness and juvenile spittle…I would argue strongly for the ‘quantum leap’ into 150 yo libertarian - socialism. This is a net-based paradigm shift to open-source anarchism called forth by the failure of, not only the obvious neo-conservative tools, but also, sadly the democratic-socialists who were supposed to oppose the parasites. The Hobsons choice of either vulture-capitalism OR the Nanny-state is a false choice.
It should not be proffered by any sentient being acting in good-faith imho.
There is a proved and tested alternative and that is libertarian-socialism.
The killer question waiting to be asked any minute now.
“Do you think TARP is a positive step towards restoring some short term stability and confidence in our financial system, Governor Palin?”
“Our economy and putting it back on the right reasons and serving for the other party. Trying to get caught up in this nation at this time. It is for no more politics as usual and somebody’s big, fat resume maybe that shows decades and decades in that Washington establishment, where, yeah, they’ve had opportunities to meet heads of state. You know, it’s going and where it’s not. But in the war. You can’t blink. So, I didn’t blink then even, when asked to run as his running mate. We got to get a more democratic nation with democratic ideals.That’s why we have got to make sure that those abuses stop.”
Mark, you said ….
You have hit the nail right on the head there.
If there had been more open discussion of economics by the whole public then the taxpayers would not have been left shouldering, for example, all the financial and social costs as a result of Predatory Lending …. nor of using equity in one’s dwelling to finance luxurious and unnecessary consumption …. nor of so-called Debt Consolidation …. nor of any of the other clever swindles.
If there had been more open discussion, such dodgy activities might have been legislated as Felonies ….and thereby saved a lot of grief and and saved a lot of revenue too..
There’s a neat little Ogden Nash poem written in the 1940s that says a lot about what FDR’s New Deal politics must have seemed like at the time:
One From One Leaves Two
Higgledy piggledy, my black hen,
She lays eggs for gentlemen.
Gentlemen come every day
To count what my black hen doth lay.
If perchance she lays too many,
They fine my hen a pretty penny;
If perchance she fails to lay,
The gentlemen a bonus pay.
Mumbledy pumbledy, my red cow,
She’s cooperating now.
At first she didn’t understand
That milk production must be planned;
She didn’t understand at first
She either had to plan or burst,
But now the government reports
She’s giving pints instead of quarts.
Fiddle de dee, my next-door neighbors,
They are giggling at their labors.
First they plant the tiny seed,
Then they water, then they weed,
Then they hoe and prune and lop,
They they raise a record crop,
Then they laugh their sides asunder,
And plow the whole caboodle under.
Abracadabra, thus we learn
The more you create, the less you earn.
The less you earn, the more you’re given,
The less you lead, the more you’re driven,
The more destroyed, the more they feed,
The more you pay, the more they need,
The more you earn, the less you keep,
And now I lay me down to sleep.
I pray the Lord my soul to take
If the tax-collector hasn’t got it before I wake.
I’d like to add Jonathan Weil’s contribution that clarifies so well the human and political motivations that lie behind opaque and deliberately murky aspects of the TARP.
To summarise, Weil argues that Paulson:
No. 1: is [delaying US] national reckoning until after the presidential election.
No. 2: [knows] reckoning will be worse than you can imagine.
No. 3: [is] helping his friends.
No. 4: [is leaving it to] someone else to figure out the costs another day.
Thanks for the link, Katz. It does very much look like the US empire has imported the governance of the peripheral satrapies like the Phillipines and Colombia right into Pennsylvania Avenue, n’est-ce pas?
TimT, Ogden Nash’s poetic stylings might be some sort of evidence, but four election victories for FDR might also be.
Katz [5]:
Thanks too for the link to J. Weil’s article.
That’s what does frighten me. Far too much has been swept under the carpet …. and when the bailiff’s men sieze the carpet along with the rest of the chattels, all that will come to light. …. but far too late for anyone to do anything about it by then.
If BailOut II goes through, I do not think the United States can avoid collapsing as a coherent sovereign nation …. and when that happens, we in Australia and New Zealand will be in a dire position …. as the old Chinese proverb goes: Chun Wang Chi Han [When the lips are gone, the teeth get very cold].
It strikes me that one really simple solution to the present crisis would be to arrest the 400 Americans who collectively own 80% of the US wealth; incarcerate them in Gitmo and let them out when they assign all their assets to the American people. That should work. The bonus would be that any lawyer who stepped up to defend them could be slung into the cells next door. Think Bill Gates et all would look good in orange jump suits.
Huggy.
Huggybunny [9]:
Brilliant. Simple. It would get the American economy unbogged and going full steam ahead as never before. Illegal too …. but hang on, after trampling all over laws and coventions. it would be so nice to see the culprits foist on their own petard.
Pity it can’t happen.