John Buell

An Economic Crisis?

Is the deep, world-wide economic crisis undermining our representative government, our natural environment, even our confidence in the future? Surely one can make this case. Nonetheless, it may be more useful to view the crisis itself as a self-intensifying confluence of disturbing trends in several domains, no one of which holds the key to redemption.

Though there is no question that high and stagnant unemployment rates, increasing levels of poverty and job insecurity for many employed has created a context in which political authoritarianism of various forms grows, the crisis is not merely economic.

Race, ethnicity, and nationalism, and intensifying environmental disasters have colored the ways in which the economic crisis has been perceived and the policy response to that crisis. During the early days of the great financial meltdown, the National Review website carried a story attributing the collapse to loans to “illegal immigrants.” Though the story was soon repudiated and removed, it resonated for a time, just as nationalistic stereotypes today impede even minimal intervention in the European debt crisis.

Paul Krugman’s New York Times blog has consistently made invaluable contributions to our understanding of the limits of the reigning economic theory. Nonetheless, he has been limited in his political efficacy by a tendency to underplay the ways race, gender, ethnicity and nationalism subtly color debate over the economy and even help fuel voter suppression efforts. A stimulus program, especially one designated primarily as government job creation, implies to many the purported favoritism of affirmative action, the hiring of blacks and Hispanics.

A generation of Republican rhetoric on that subject, just as seventies stagflation and declining white working class fortunes set in, helped entrench such themes. Government is coded as “lazy, touchy-feely, inefficient, feminine, discriminatory, and exploitative.” It is the other in terms of which white masculinity and robust economies define themselves. Drill, baby, drill. Krugman is certainly sympathetic to immigrants, but he has suggested that divisions over immigration make it harder to press for economic redistribution. He also suggests more broadly that income is the primary determinant of whether one votes Republican or Democratic. However much this may explain broad trends, once we exclude votes of the poorest segment of the population, it fails to address small but important shifts in working class voting patterns. And even focusing merely on Republicans versus Democrats may obscure the ways in which many Democrats have become socially and even economically conservative in order to hold onto their support. The police who beat Wall Street demonstrators may well be victims of Wall Street imposed cuts in pensions and jobs yet many probably vote for “law and order” Republicans or their Democratic copy cats. 

Krugman has also argued that periods when rates of immigration were low were times when greater progress on economic issues could be achieved.

Though I disagree with his reading of this history, I would also argue that even if true for one period, such a connection is unlikely to stand today in a world of rapid population flows and instant communication. There is no substitute for building cross border and cross ethnicity alliances on greater receptivity to difference as an end in itself. Treating cultural stereotyping and discrimination as secondary or solvable through economic growth is neither just nor effective. 

How do we create a broad-based coalition to attack market utopianism, the faith in markets as autonomous perfectly self-regulating instruments of justice and economic growth?

One unifying theme that might resonate with wide sectors of the population is challenging another form of conventional US politics that has long helped sustain the faith in markets. Americans have displayed consistent opposition to redistributive measures based on the hope or dream that “I am going to become rich.” Though it is easy enough — and appropriate — to cite statistics on the relative lack of social mobility in highly inegalitarian societies like the US and Britain, merely advocating new taxes on the rich may gain temporary majorities, but is perhaps less effective than asking how the modern rich achieved that status in the first place. As Dean Baker has argued in The End of Loser Liberalism, many of them did not get rich “the old fashioned way.”

They did not earn it. Pharmaceutical interests were beneficiaries of monopoly patents, often based on NIH research that would have enraged Adam Smith. Natural resource companies received favorable leases, defense contractors no bid contracts, often based on personal connections.

So-called free trade treaties protect intellectual property but not the rights of workers.  In an earlier column, I pointed out how the Koch brothers, ardent apostles of market utopianism, have benefited from government favoritism in innumerable ways. Yet the practitioners of their art have been restored, replete with bonuses made possible by the taxpayer.

So much for market fundamentalists worries about moral hazard.

But beyond the obvious injustice, citizens need to be reminded that these activities not only cost taxpayer money but also in effect undermine the access to working capital ambitious entrepreneurs need to fulfill their dreams of riches.

John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email jbuell@acadia.net.

From The Progressive Populist, December 1, 2011