Saturday, November 29, 2008
While he's at it, Rubin should admit that his whole project of deregulating the financial sector was a disaster. Rubin was one of the most important figures behind the really bad ideas of tearing down the walls between banks and brokerage houses and protecting the derivative market from regulation. He should just admit that he's wrong and move on.
But contrary to all the commentary I've seen, I don't think deregulation is the ultimate cause of the financial meltdown.
Instead, the underlying cause is the demand for constant "profit growth" on the part of CEO's, Boards of Directors, institutional stockholders, the stock market in general, and the business media.
Rubin was a player here as well.
The Journal notes that Mr. Rubin was “deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth.”"Flagging profit growth" is an interesting turn of phrase. A company can't just make profits, it has to continually increase its profits. The implication is that Citigroup was flagging because its profits were not increasing at as high a rate as those of its competitors. If companies are seeking continual profit growth, they will focus on new enterprises rather than mature enterprises where profits have levelled off. They'll take on more risk in their new enterprises because high levels of risk create opportunities for the high levels of profit demanded by the market. And they'll be more susceptible to initiatives that look like sure things but turn out to be gigantic Ponzi schemes.
Like all the financial instruments based on sub-prime mortgages.
We can flail Robert Rubin all we want, but financial constituencies have insisted on "profit growth" for well over a decade and the demand for more profits has had a distorting and ultimately extemely damaging impact on the American economy.
As a result, dialing down the demand for "profit growth" has to be an important element in restabilizing the economy.
But there's one problem.
There is no battle.
Obama's projected appointments of Hillary Clinton, Timothy Geithner, Eric Holder, and William Gates to cabinet posts has been met with some consternation in the liberal blogosphere.
But not all that much.
In fact, all of these figures now support progressive views on major policy questions. Hillary Clinton supports a schedule for withdrawing troops from Iraq. Holder strongly opposes torture and wants to close Guantanamo. Geithner seems to be on board with a $500-700 billion stimulus package that's almost big enough for Paul Krugman and Gates appears to be willing to tackle the defense contracting boondoggle.
Perhaps that's why Chris Bowers of Open Left is one of the few major liberal bloggers who is really dismayed by Obama's selections. Other like Josh Marshall and David Sirota are happy enough while Glenn Greenwald and Digby are unsurprised but not actually doing backflips.
What about me?
Count me among the happy campers. Like Sirota, I see Obama's appointments as putting political savvy behind a progressive agenda and I'm excited about the prospect of getting out of Iraq, closing Guantanamo, ending torture, and getting legislation passed to fight the recession, reform health care, and jump start energy policy.
That's the key thing--GETTING LEGISLATION PASSED!
But back to the lack of a battle.
There is no battle between center-right and center-left because there is no battle over Obama's core progressive policies.
Therein lies the story of the fall of Democratic neo-liberalism.
During the Clinton years and the early part of the Bush administration, the Democrats were dominated by a moderate "neo-liberal" faction that viewed liberals rather than Republicans as their primary opponents. Neo-liberals pushed NAFTA, welfare reform, and deregulation while toying with the idea of privatizing social security. They liked an aggressive foreign policy and were interested in experimenting with any kind of Republican idea that would stick it to organized labor, blacks, Hispanics, feminists, and liberals. Bill Clinton, Hillary Clinton, Lawrence Summers, and probably Rahm Emanuel have all been in the neo-liberal camp. So have most of the major "liberal" pundits like Joe Klein, Michael Kinsley, and David Broder.
That's the main reason why it was so difficult to find liberal perspectives on television news shows. Most of the designated liberals hated liberalism.
But one of the great ironies of contemporary politics is that the Bush administration killed neo-liberalism. After eight years of Bush, most of the neo-liberal agenda is in ruins. Liberals were right about everything while the Republicans have revealed themselves as narrow ideologues and blustering incompetents. Environmentalism and gay rights are close to becoming common sense while foreign policy aggression, economic deregulation, and social security privatization have all been delegitimated. Free trade is taking a lot of hits and the whole idea of governing through "market mechanisms" is yesterday's news.
Because of the collapse of neo-liberalism, Bill and Hillary Clinton are war opponents, Joe Klein was a leading critic of John McCain, and neo-liberal holdouts like Joe Lieberman and Mark Penn became outcasts. There are still scattered remains, but neo-liberalism has pretty much disappeared as a political force within the Democratic Party.
And that's why there's no "battle royale" between the center-right and the center-left in the Democratic Party.
Progressives have already won the battle.
Friday, November 28, 2008
SOME roles just don't suit Natalie Portman. At the junket for the film version of his "Doubt," playwright John Patrick Shanley was asked how Amy Adams won the role of an emotionally conflicted nun. "I'm trying to think of what the etiquette is on this," Shanley chuckled, blushing a bit. Urged on by a blogger for gossipsauce.com, he continued, "Well, we asked Natalie Portman, and Natalie was very interested but kept saying she had a problem. And we finally nailed down as to what the problem was. She basically said she didn't understand celibacy."John Patrick Shanley seems to have found this to be a serious limitation on Natalie Portman's part. But I'm with Natalie. I have no idea why somebody would be voluntarily celibate and no understanding of why anybody would embrace a life of celibacy as a Catholic priest or a nun.
Thursday, November 27, 2008
BUT THERE'S ALSO THE REAL WORLD. The problem is that the Obama administration has no interest in pursuing prosecutions for criminal behavior in the Bush administration. It's not too hard to see their point. Prosecuting Bush administration officials for war crimes would seem like a partisan witch hunt to the Republicans and would end any chance for bi-partisan cooperation on addressing the current financial meltdown, ending the war in Iraq, adopting a system of university health care insurance, and developing an energy policy. It should be added that the bitter antagonisms stimulated by such prosecutions would probably detract from Obama's overall efforts to get his policies enacted and create difficult political problems for the Obama administration. I doubt the United States is capable of putting Dick Cheney in jail and delivering on health care reform at the same time. Most people rightly think that health care reform and energy policy are more important and would look sceptically on the Obama administration if they pursued the prosecution of Bush figures at the expense of important domestic political initiatives. Prosecuting Bush political figures might ultimately make it more likely that a Republican would be elected president in 2012 or 2016 and bring the torturers back into office.
THE AL CAPONE PERSPECTIVE. Three alternatives for dealing with Bush administration crimes against humanity are in the air. Option No. 1 is to have the Justice Department prosecute those suspected of criminal acts. The Obama people have already let it be known that they are uninterested in this. Option No. 2. is set up a Truth and Reconciliation Commission along the South African model to bring all the information out into the public. The Obama people are interested in this option and I can agree with it if the Commission has an office of investigating agent with full legal powers. Option No. 3 is to hold Congressional hearings to undertake such investigations.
The reason I can support Options 2 and 3 is that these investigatory bodies become avenues for prosecutions if Bush administration officials either refuse to answer questions or fail to tell the truth to authorities. Personally, I'd like to see Patrick Fitzgerald (of prosecuting Scooter Libby fame) as the investigating agent for any Truth and Reconciliation Commission. If someone like Dick Cheney refused to testify or lied to the Commission, they could then be prosecuted and sentenced to prison for perjury or failure to cooperate. Various congressional committees could use their authority to have people prosecuted for "contempt of Congress" and perjury to the same effect.
Al Capone murdered lots of people but ended up going to jail for tax evasion. I'd like to see Bush administration officials go to jail for their crimes but wouldn't mind if Dick Cheney ended up in a prison jumpsuit for committing perjury either.
Wednesday, November 26, 2008
Parker's underlying idea is that people who flunk this kind of civics test aren't intelligent enough or well-informed enough to vote.
Out of 2,500 American quiz-takers, including college students, elected officials and other randomly selected citizens, nearly 1,800 flunked a 33-question test on basic civics. In fact, elected officials scored slightly lower than the general public with an average score of 44 percent compared to 49 percent.
Only 0.8 percent of all test-takers scored an "A."
America's report card may come as little surprise to fans of Jay Leno's man-on-the-street interviews, which reveal that most people don't know diddly about doohickey. Still, it's disheartening in the wake of a populist-driven election celebrating joes-of-all-trades to be reminded that the voting public is dumber than ever.
The multiple-choice ISI quiz wouldn't deepen the creases in most brains, but the questions do require a basic knowledge of how the U.S. government works. Think fast: In what document do the words "government of the people, by the people, for the people" appear? More than twice as many people (56 percent) knew that Paula Abdul was a judge on "American Idol" than knew that those words come from Lincoln's Gettysburg Address (21 percent).
That's just nonsense.
Knowing that the phrase "government of the people, by the people, for the people" comes from the Gettysburg address does not necessarily have anything to do with someone's "competence" to vote.
In the 2008 election, people could be "informed about the issues" if they knew the essentials of Obama's and McCain's positions on taxes, the war in Iraq, health care, and energy. Knowing that James Madison was the author of Federalist 10 wouldn't have made them any better informed about this election.
Actually, civics can be a distraction from learning about contemporary politics. At my state university, we've hired several professors who have taught their introduction to U. S. government classes as civics classes. As a result, students weren't learning as much as they should about the contemporary functioning of Congress, the Presidency, the media, and the courts.
And the professors lost their jobs.
Not that people need to be informed about the issues to be competent to vote either.
As a political science professor and blogger, I'm well-informed on the issues but don't vote on the issues. In general elections, I've voted strictly on party identification since the election of Ronald Reagan in 1980 and have always voted for the Democratic Party. All I need to know about Republicans is that they are candidates of the party of aggressive militarism, supply-side economics, the religious right, and social bigotries of all kinds. That's enough for me to vote Democratic 95% of the time. If any particular Democrat is so odious that I can't vote for them in good conscience, I leave my ballot blank for that office.
Party identification is still the most important factor in voting and is very much a valid means for distinguishing between the more liberal party and the more conservative party. Let me illustrate this by a brief example. Assume that a conservative voter had been in a coma for the last two years, woke up on election day, and insisted on voting without having received any information from the media. That conservative voter would still have made an "informed vote" according to their principles if they had stepped into a ballot box and voted a straight Republican ticket.
People can vote on other principles besides issues as well. Voters can distinguish candidates on the basis of experience, morality, ability to stand up to pressure, how well they organize their campaigns, and other criteria. None of these criteria requires extensive knowledge of politics or issues, but they are all valid and are often more important than the issues in determining the right candidate.
The ultimate point is that voters in a democracy should be able to define their own criteria for what's important in evaluating candidates.
Tuesday, November 25, 2008
Hopefully, the Bush administration will prove just as wrong on this issue as they've proved on so many others.
The White House isn't inclined to grant sweeping pardons for former administration officials involved in harsh interrogations and detentions of terror suspects, according to people familiar with the situation.
Some Republicans have been pushing for President George W. Bush to grant pre-emptive clemency to officials who fear being investigated . . . . White House officials have countered that such pardons are unnecessary, these people say. The officials point to Justice Department legal opinions that supported the administration's methods of detaining and interrogating terror suspects.
Monday, November 24, 2008
And Marx was obviously wrong about that.
However, as William Kristol mentions in today's New York Times column, nobody really knows what to do about the current economic situation. Kristol suggests going back to Friedrich Hayek and Joseph Schumpeter.
Why not Marx?
THREE LEVELS OF ANALYSIS. One handy way to think about how Marx would look at the current economic crisis would be to identify three levels of analysis.
1. Stop the Destruction. Marx claimed that what characterized economic crisis in capitalism was the destruction of all kinds of assets. What brings on a crisis is the over-production of goods, services, and infrastructure. Thus, the crisis itself is a frenzy of destruction in which goods, services, and infrastructure are destroyed. In this context, resolving the crisis without returning back to some bare minimum would involve stopping the destructive process.
2. Questions Concerning Government. My reading of the "Communist Manifesto" indicates that there are two basic Marxist questions concerning the role of government in a crisis. This is pretty dicey because Marx himself did not anticipate the development of a government apparatus for preventing and resolving economic crisis. But there are a couple of questions that emerge from his general thinking?
a. The first question is the same as the question arising from a Keynesian perspective. That question concerns how government can best pinpoint where its assets can best be used to stop the pressure for a downward economic spiral. Should the government be buying up "troubled assets" as in Paulson's original plan, buying equity in troubled banks as in Paulson's second plan, making it easier for homeowners to pay mortages, engaging in the massive public works scheme that Obama seems to be moving toward, or some combination of all of these.
b. The second question is more specifically Marxist. That's the question of whether the government's resources are on a large enough scale to contain the destructive dynamic of the crisis. The Bush administration has already taken control over several companies (Fannie Mae, Freddie Mac, AIG, etc.), relentlessly reduced interest rates, and pumped $350 billion into the financial sector. But that hasn't worked to restore confidence. In fact, the government sector itself seems to be the only sector of the economy in which investors have confidence. Over the last weekend, the incoming Obama administration has floated a proposal for another 500 to 700 billion package for investing in public infrastructure. If that doesn't work, it may be the case that the American government just does not have enough resources to contain the downward economic dynamic in a $12 trillion economy.
3. More later.