Yanis Varoufakis: A New Deal for the 21st Century
*Outsiders are having a field day almost everywhere in the West — not necessarily in a manner that weakens the insiders, but neither also in a way that helps consolidate the insiders’ position. The result is a situation in which the political establishment’s once unassailable authority has died, but before any credible replacement has been born.
The cloud of uncertainty and volatility that envelops us today is the product of this gap.
For too long, the political establishment in the West saw no threat on the horizon to its political monopoly. Just as with asset markets, in which price stability begets instability by encouraging excessive risk-taking, so, too, in Western politics the insiders took absurd risks, convinced that outsiders were never a real threat.
One example of the establishment’s recklessness was releasing the financial sector from the restrictions that the New Deal and the postwar Bretton Woods agreement had imposed upon financiers to prevent them from repeating the damage seen with the crash of 1929 and the Great Depression. Another was building a system of world trade and credit that depended on the booming United States trade deficit to stabilize global aggregate demand. It is a measure of the sheer hubris of the Western establishment that it portrayed these steps as “riskless.”
When the ensuing financialization of Western economies led to the great financial crisis of 2007-8, leaders on both sides of the Atlantic showed no compunction about practicing welfare socialism for bankers. Meanwhile, more vulnerable citizens were abandoned to the mercy of unfettered markets, which saw them as too expensive to hire at a decent wage and too indebted to court otherwise.
When the insiders’ rescue schemes — including quantitative easing, the buying up of toxic assets, the eurozone’s bailouts and temporary nationalizations of banks — succeeded in refloating banks and asset prices, they also left whole regions in the United States, and whole countries on Europe’s periphery, stagnant. It was not rising inequality that provoked undying anger among these discarded people. It was the loss of dignity, of the dream of social mobility, as well as the experience of living in communities that were leveled down, so that a majority of people were increasingly equal but equally miserable. . .
So, what will it take to end this destructive dynamic of mutual reinforcement by the largely liberal establishment insiders and the regressive nationalist outsiders? The answer lies in ditching both globalism and isolationism in favor of an authentic internationalism. It lies neither in more deregulation nor in greater Keynesian stimulus, but in finding ways to put to useful purpose the global glut of savings. This would amount to an International New Deal, borrowing from Franklin D. Roosevelt’s plan the basic idea of mobilizing idle private money for public purposes. . .
Today’s false feud between globalization and nationalism is undermining the future of humanity, and spreading dread and loathing. It must end. A new internationalist spirit that would build institutions to serve the interests of the many is as pertinent today across the world as Roosevelt’s New Deal was for America in the 1930s.
https://www.nytimes.com/2017/07/06/opinion/yanis-varoufakis-a-new-deal-for-the-21st-century.html?
Anyone in the U.S. (or elsewhere) have other plans?