I’m not sure if I’m the only one who found the juxtaposition on the news last night of discussion of global regulation at a meeting between Chinese and EU leaders and George W. Bush’s “free markets are great!” remarks rather odd. I suspect two things are at work here – first, the defensive reaction to loudly proclaim your ideological purity even at a time when your actions belie your words, and secondly, the related posturing of the Republicans doing their level best to damn Obama as a socialist (which is also rather strange as John McCain wants to spend $300 billion buying up mortgages). For what it’s worth, it doesn’t look like the red smear is working – unsurprisingly polls are finding that a large majority of US voters don’t mind the idea of higher taxes on those earning more than $250000 a year to fund a healthcare plan. Conjuring up these atavistic spectres (“communism!”, “socialised medicine!”) isn’t spooking too many people.
The GOP might also be a tad influenced by Alan Greenspan’s concession that his ideological predispositions led him into errors which contributed to the global financial crisis, which John Quiggin argues illustrates the bankruptcy of the “efficient markets hypothesis” and demonstrates that financial markets have a tendency towards creating instability, rather than the other way around.
So, I think there’s a bit of projection going on – amidst the ruins of their ideological landscape, the GOP are trying to cast the Democrats in the role of the enemies of market freedoms, whose benefits (in the form in which they existed) are looking quite illusory. This is consistent with what I have been arguing throughout the global financial crisis – that ideology plays much more of a political than a descriptive or analytical role, and that is most plain when it is shipwrecked on the shoal of facts. Still being ignored, though, by the powers that be (or the powers that have 85 days left in office at any rate) is the geopolitical dimension, which SocProf discussses at The Global Sociology Blog:
There is no doubt that China and the European Union are getting closer, while no one really pays attention to what Bush says anymore. If China and the EU push for stricter global financial regulation, there is little that the US can do to stop them. And Bush’s claims that “Free markets are TEH AWESUM” ring hollow to everyone else.
It also means that whoever becomes president in 2009 will not make much of a difference since the US is financially considerably weakened and Obama has not shown any real global economic leadership here either. So, the stage is set for China and the EU to take a more prominent role. In addition, if peripheral countries manage to increase their voting shares at multilateral institutions (as with the IMF, for instance), then the Us might find itself quite isolated.
A good summary of an interesting ideological and geopolitical conjuncture, Mark. The public has moved on from Reagonomics/ allegedly ‘small’ government and the old campaign tricks aint working.
Not that the Right have caught on: As Keating would have it: the dogs are still barking, but the circus has left town.
A higher degree of regulation will be expected now, it will be found good policy by the public, and a new range of govt interventions in the economy will be embraced.
Its a once in a generation shift. I dont think many commentators here have yet got their heads around it: this is the Berlin wall moment for deregulationist neoliberalism.
Its also, as you note, a significant moment in the decline in US power. Once EU, China and India start agreeing of forms of regulation wihtout necessary reference to Washington, the times are a changing.
Good post Mark. The MSM, including the ABC, has not yet caught on that the big story from the american election campaign is not Palin’s wardrobe, McCain’s age, or even Obama’s black skin: its the McCain/Palin scary story that Obama will “spread the wealth”. What an amazingly stupid campaign tactic in the middle of an economic meltdown when americans are beginning to look around for someone to blame for their disappearing pension programs, lack of health insurance, scungy public schools, etc. It looks like the “spread the wealth” boo-meme is morphing into a cheery positive at the grassroots level, and might well deliver Obama the biggest mandate of any american president yet. And then of course he will have to deliver….
good point Grace. In an era of demonstrable corporate greed leading directly to a recession, with Main St lived at Wall St, what EINSTEIN in the GOP decided that “spreading the wealth” was a negative?
Mark,
I didn’t really think anything of the juxtaposition of the news items. I did think it was GWB being his usual out of touch Imbecilic self.Clearly, whether one is a socialist or not some form of government regulation of the markets is essential, if only to stop this happening again.
I’m looking forward to the bunfight between Bush and the Rest (including Obama if he’s President-elect) in Washington in a few weeks.
Again, there does seem to be an odd conflation of phenomena in discussions of this crisis.
There are two faces to “deregulation” — the domestic and the cross-border faces.
Any discussion that the Chinese and Europeans may have about future arrangements would necessarily concern cross-border issues like trade and captial flows. Yet, these arenas have continued to operate smoothly during the current crisis. Certainly there is volatility in the forex market. This volatility has been coped with. Capital continues to flow to where investors want it to flow (mostly into US Treasurys for the time being).
No, the crisis has strictly domestic origins. Domestic markets in various national markets have experienced asset bubbles. Now, the consequences of the bursting of these bubbles is causing financial crisis worldwide.
It may well be argued that these crises could be quarantined by abolishing in some way forex markets and seamless cross-border transfer of capital. This policy would result in a return to something approaching the Bretton Woods system. Yet it is impossible to imagine how such a cloure of markets might be achieved without creating a financial crisis which makes the present one seem extremely mild by comparison.
My word of caution is to define as carefully as possible what the Europeans and the Chinese are interested in influencing, what they are competent to influence, and what might be unwise for them to attempt to influence.
What I think is under contemplation is a standardisation of regulatory requirements across different markets, Katz, and bringing unregulated markets into the fold. That doesn’t necessarily imply controls on capital movements – but it does imply that capital wouldn’t have an incentive to move to markets where regulation is laxer. Some of all this resulted from both laxer regulation in the UK as well as the US (a deliberate choice of Gordon Brown’s to make the City of London more attractive as an entrepot as well as a clearing house).
Whether it extends to looking at stabilisation of currencies is another matter.
It’s also worth noting that Fannie and Freddie were underwritten – in effect – to the tune of about half a trillion by Chinese capital.
But that was the choice of the Chinese.
The Chinese may have had either commercial motives, geopolitical motives or some mixture of the two of them to buy bonds in F and F. These folks are consenting adults. Half a trillion dollars should buy a tremendous amount of due diligence.
What is the basis of the assumption that capital is attracted to markets with laxer regulation? If lax regulation stimulated capital, then I imagine that there are several small African republics that should be capital magnets.
In reality, I suspect that the Chinese and Europeans are talking with each other to attempt to evolve a way of weaning hte world off the US dollar as the reserve currency.
Robert Newman’s performance gives a succint and entertaining overview http://video.google.com/videoplay?docid=-5267640865741878159
enjoy
Katz: “If lax regulation stimulated capital, then I imagine that there are several small African republics that should be capital magnets.”
Oh but there are Katz. Don’t their citizens bombard you with email prospecti, concerning the odd $5 million lying around, just needing your bank account to be parked in? Their streets are paved with gold. Their banks are bursting. Their authors of emails are keen, so keen.
Unsurprisingly because people love getting stuff for free, and having other people pay for it sure seems like free.
Perhaps if the question had been framed as “do you approve of a doubling in unemployment to fund a healthcare plan?” there might have been a different response.
I think he’s being a bit harsh on Obama with that line, while true, it underestimates the enormity of what Obama is trying to achieve at home, yes, you can walk and chew gum at the same time but I’d say the dude is a bit distracted ATM doing just that domestically and is up to his arse in Republican alligators who will do and say anything to prevent him from taking the reins.
That said I also think Obama looks like the ideal candidate to transition through to a world where America is much less influential, it’s not that he’s weak it’s that his demeanour suggests a willingness to work with people not a belligerence toward them and this will be a net positive for America and the world, because gawd knows we need an American president who carries a bit of humility around with him at all times if we’re gonna properly deal with this transition to a post single superpower world.
Personal update to this comment, there’s more here on this.
CraigMc: “Perhaps if the question had been framed as “do you approve of a doubling in unemployment to fund a healthcare plan?” there might have been a different response.”
That … would not be an accurate question. It doesn’t make any sense to make this sort of comment. One presumes you’re not suggesting, for example, Australian unemployment would only be 2.05% if we abolished Medicare. So why would you expect the US rate to go to 12.2% if universal health care was introduced?
Given that, for the majority of today’s University undergrads, communism is an historical curiosity I wonder how long this red scare stuff can go on and be effective.
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The Chinese along with the Russian practice different forms of capitalism. That is capitalism sans democracy or liberal society. I think that Mr Bush and his circle think this attractive.
Alister: Well, “double” isn’t an estimate, rather that the question used in the poll was a magic pudding one. Would it double? Who knows? Would it increase? Without a doubt.
As to why universal healthcare in the US might increase unemployment? Well, because it depends (as it has been presented) on taxing the employer class. In the zero-sum game of taxation, every dollar an employer spends in tax, is not spent on employment. They spends your money and takes your choice. Some of that will go into increased healthcare employment, most will dissipate in higher costs.
As to why any effect would be worse than in Australia? Because healthcare costs so much more in the USA – the tort system being one of the main culprits. And which party represents tort lawyers best? That’s a rhetorical question – we already know the answer, which means that any universal healthcare system will enshrine litigation rights as they stand now – and the costs they bring, and the enormous taxation to required pay for them.
Think. If it takes 1.75% of every tax payer’s income (to drastically underfund a much cheaper system) here, how is a more expensive system going to be funded by taxing fewer than 5% of the population?
Phil – I also think Obama looks like the ideal candidate to transition through to a world where America is much less influential, it’s not that he’s weak it’s that his demeanour suggests a willingness to work with people not a belligerence toward them and this will be a net positive for America and the world, because gawd knows we need an American president who carries a bit of humility around with him at all times if we’re gonna properly deal with this transition to a post single superpower world.
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It’s worth remembering two things. First states do not give up their influence without a fight – ever. Secondly the origins of the current Iraq War lie not with Dubya but with Jimmy Carter. It was Carter who asserted American willingness to interfere in the Persian Gulf by any means necessary. Now this is telling. Carter was the most dovelike of post-War presidents. And yet he’s the one who started World War IV.
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Why?
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Because the United States had come to be dependent on Gulf oil and the Iranian revolution in addition to the Sov invasion of Afghanistan made access to this oil precarious. Without oil America is simply a huge collection of overweight sitting ducks. Carter had no choice.
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Obama’s choices will be likewise limited.
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Bush may have excelled in the role of the Ugly American. His administration’s chauvinism has certainly created a lot of bad will. However we should recognize that history plays a greater role than Dubya ever will. Obama’s presidency will be beset by the same realpolitik contingencies. One of which is that if the US were to willingly become less influential someone else would fill the resultant vacuum.
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That someone else is likely to be a lot less palatable. Try, for example, protesting against Chinese involvement with Sudan on behalf of the people of Darfur. See how far it gets you.
Craig, I’m not sure that mainstream economics supports the premise that “every dollar an employer spends in tax, is not spent on employment.” It’s not a dollar the employer spends on employment, but it is not automatically unspent.
You’ll note, of course, that employers are paying for health care in the US now – or, at least, some of them do. Employer-provided health care through a privatised health system is one of the more inefficient mechanisms for proving health care you could possibly find. You could probably work out a more inefficient system, but it’d take some consideration. The BMJ is your friend. Note the countries that are blue (representing scores in the efficient end of the system). Note the countries that are green (representing less efficient countries).
Your comments about the legal implications are not entirely sensible either. Without conceding your point about the tort system (because I suspect it’s rubbish but don’t have evidence at hand) one of the ready understood difference in the cost of health care is in medication. US patients generally pay a lot more for medication than Australian ones. The PBS has something to do with this.
Craig Mc, since the privatized US healthcare system is reportedly the most expensive in the world and yet fails to deliver any health care at all to around 20% of the population, I would imagine that they probably have little to lose by taxing the better off.
Don’t disagree Adrian, but I’d suggest it goes back a lot further than Carter.
The job does come with a hammer that sees everything as a nail and certain types of action governed by their military industrial complex and historical world view, that said I stand by my original contention that his observed (mine) behaviour suggests a certain intellectual flexibility that can entertain a different America that measures influence and power using different metrics.
You can see this in the article I linked to, already many Americans are thinking along the same lines.
This transition was made by England over many decades and it still maintains an influential small power presence in many areas, hopefully America can make a similar transition without too many people getting hurt along the way.
Gawd don’t tell him that, I flicked over to watch Faux news and the have Barrak”Karl Marx”Obama,I mean how crazy are these people on Faux news,I watched the start of some idiot called Hannity raving on about OBAMA friend of the Terrorists referring to Bill Ayers.
I thought it was as funny as hell, so sat down and sent him an e mail telling him I though he was a bit silly and should get out more,and he might find out that most of Faux News would not know a left winger if they fell over one on a dark night doubt if I will get a reply
Phil – I’m afraid the mass of the American people are lucky if they can find their own buttocks with a GPS system.
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There’s very little appreciation in America of the connection between their lifestyle levels and the exercise of American foreign policy. This policy is of course scattered amongst various institutions and is mostly managed by a technocratic elite who do their best to exclude the general public from their deliberations.
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The general public of course do their best to be completely ignorant as well. Who wants to know, for example, that their mobile phones indirectly fuck people over in Congo? Can you say: columbo-tantalite? No of course you can’t. No-one can. Just get me my flash new Nokia. I don’t give a fuck about death squads in a place I never heard of.
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It’s the same only more so with oil. Yes it goes back before Carter. In ’45 the US prez and the head of the House Saud had a heart to heart on the USS Quincy. It goes back further. It goes back to the first human monkey who said to his friend: Hey Thag that mob over their are shithouse fighters and they’ve got heaps good fruit trees, let’s go dong ‘em on the head.
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Nowadays, like eating meat, the bulk of the human race keeps the grim truth from itself. And one of the consequences is that the grim truth is even grimmer.
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Obama is facing an economic meltdown in a country that badly needs updated infrastructure, and a reversal of erosion of the scientific excellence that made the country what it is and myriad other domestic problems. These are hard enough to deal with. Tackling the apparatus of the US MIC in such a way as to sustain the living standards of Americans whilst maintaining influence (that is not letting the Russians or the Chinese take up the slack) is probably beyond his or any other individuals’ purview.
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What Obama can do however is change the energy economy. Wean the US off oil or start down that path. That will extricate the US from the Middle-East. I’m not certain that will make life better for the folks their however. We might in fact have to deal with a series of wars between Jihadist and old fashioned Autocratic governments.
This transition was made by England over many decades and it still maintains an influential small power presence in many areas, hopefully America can make a similar transition without too many people getting hurt along the way.
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Yes. That’s almost inevitable. Brzezinski’s last book has a chart somewhere that shows that empires have a much shorter shelf life these days than once they did. Mr Brzezinski, of course, was Carter’s NSA and helped create the Taliban. He also seemed to’ve supported Neocon notions to a certain extent but’s gone back on ‘em lately. He supports Obama as the multilateral candidate.
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In any event it would be nice for the dreamers of Empire to realize that it’s not much viable anymore.
“It also means that whoever becomes president in 2009 will not make much of a difference since the US is financially considerably weakened ..”
No doubt about that. The place is basically bankrupt. It’s been living on Chinese credit for well-over a decade and now the jig is up. The massive Bush deficits, run-up to pay for tax cuts for the uber-rich, a bloated defence budget and idiotic foreign wars haven’t helped, either.
They’re stuffed. And deservedly so.
Given the lengths to which they’ve gone with the “spread the wealth around” scare, I wonder whether the Republicans will make something of the fact that Obama’s campaign manager, David Axelrod, has the same family name as one of the founders of Russia’s first Marxist organisation, Emancipation of Labour.
Every work trip I’ve had over there (1-2 / year) has seen a discussion of universal healthcare between myself and a US citizen
who thought it very “socialist”
Even one doctor whose children are doctors (and thinking of moving over here) was quite skeptical of the premise that a universal system could work – she did agree that tying health to employer was a dangerous thing (lose your job – lose your healthcare – get sick and you won’t get a job!). When I mentioned our staff shortage and the pay/benefits they could earn in the public system here she was most surprised (“no it isn’t charity work”). Hopefully her kids do come out, I can think of more than one country town where they’re needed (and will get the free car/house package).
In the USA the idea of a government having anything to do with health (even vaccinations) was viewed as a bit “reds-under-the-beds”. It was quite noticable, given how well educated the people I deal with are, and seemed to run the full spectrum from Left to Right…
Oops, re-reading the above…argument-from-anecdote (again!).
And all this time I was thinking of this guy
. I may have to pull out Songs of Experience tonight.
That someone else is likely to be a lot less palatable. Try, for example, protesting against Chinese involvement with Sudan on behalf of the people of Darfur. See how far it gets you.
For those who become victims to US intervention, the result is seldom pretty. The only good thing about the US is they are our ‘bully’ and as part of their special gang, we are spared the more brutal aspects of US coercion. But then again with a succession of sycophantic Govts, who needs coercion? We can still kid ourselves that we are ‘valued and respected’ allies.
Alister: I think I glean your point, but I covered that. Some would go into employment in healthcare at the cost of other sectors, with much of it evaporating in inflated healthcare costs, not to mention the economy is better off with that money where it was earned in the first place. This article highlights one possible trade-off of a new system.
Now, do you think they’ll put that possibility into a poll question on healthcare?