AlterNet: Wall Street and Washington Are Failing Spectacularly -- Where Do We Go?

[marmar]

Wall Street and Washington Are Failing Spectacularly -- Where Do We Go?

By Joe Costello, AlterNet. Posted April 15, 2008.

The U.S. political and economic systems are not equipped to deal with the looming problems of the 21st century.




I was 19 in October 1979, when I first stepped into a campaign office. It was the Draft Kennedy (Teddy) for President office, located directly east across the Daley Plaza from Chicago's City Hall. I would work on that campaign across the country for ten months, and it would instill in me an interest in politics, more accurately an interest in the politics of self-government that has lasted 30 years. It was a time when economics dominated political discourse from the nightly news to the kitchen table. Unfortunately, little did I understand, two months before I walked into that campaign office in 1979, President Jimmy Carter had appointed Paul Volcker head of the Federal Reserve, an event that would change American politics for the next three decades. Almost everything I learned on the Kennedy campaign about how American politics worked collapsed over the course of the next ten years. A new political regime, people, institutions, thinking, and culture replaced what had been the dominance of New Deal politics. Monetarism, Reaganomics or Neoliberlism, call it what you may, would totally dominate the American political landscape until today.

This new political regime's greatest accomplishment was actually something quite extraordinary, they basically removed economics, or at least any meaningful discussion of it, from politics. Various terms like "free markets" and "free trade" became mantras repeated without end and thus believed by most adherents to have a meaning negating any need for further debate. Economics became removed from political discussion to an extent unprecedented in American history. Yet today, the Reagan Revolution seems similar to its New Deal predecessor in 1979, a cultural, ideological and political spent force, not up to meeting the challenges being asked of it in the first decade of the 21st century. Looking a little deeper, it would seem this quaking of Neoliberal politics portends not simply the passing of another regime of our two-centuries-old industrial economics, to which the New Deal also belonged, but a more fundamental revaluation of political economy. A necessary revaluation of economics that will move us beyond the "dismal science."

Looking back at the politics of 1979, what in hindsight can be seen as the end of the New Deal, it is an era seemingly belonging to a different world. The late 1970s and early 1980s were the greatest economic troubles the United States experienced since the Depression and there has been nothing as significant since. Unemployment was high, inflation was high, and the economy was barely growing, a configuration of symptoms economists up to that time didn't think possible, thus a new name was born, stagflation, and of course in that peculiarly human trait, the naming of something gave the wrongful notion that it was also understood.

Fundamental forces were moving the American economy in the late 1970s, including debt from the Vietnam War, the acceleration of deindustrialization, the slow but continuing deterioration of American post-war global economic dominance, and finally a spike in the price of oil brought about by the U.S. domestic oil production peak in 1973. New Deal politics, which owed a great deal to the thinking of John Maynard Keynes seemed powerless in meeting these challenges. Much of Keynes economic thinking was developed in the Depression and dealt with falling prices, creating demand, and putting to use underutilized capital, while the problems of the 1970s seemed exactly the opposite, rising prices and too much demand. This created an open public dialogue, and thus the 1980 campaigns were all centered around economic ideas. The Kennedy campaign, unbeknown to all involved, became the last stand for New Deal economics, though its corpse would be dragged around by Walter Mondale four years later. ......(more)

The complete piece is at: http://www.alternet.org/democracy/82339/

[Perry Logan]

1. So much for the free market. Solving these problems will involve doing everything the Right hates.

If we ever crawl out of this mess, it will be because of government regulation, a planned economy, massive public works projects, and lots of international cooperation. Even wingers can sense this, and it's driving them nuts, even as they fade into irrelevance.

[fasttense]

2. Free traders and neoliberal economics encourages specialized national industries.

Take the US, for example. We have transferred to foreign countries most of our factory jobs, our computer jobs, and our textile and packaging industries. What does that leave us? Mostly service jobs and financial jobs (the financial jobs are disappearing as well but not because we sent them out of the US).

The problem with this very small area of abundant jobs is it only provides work for some people. A nation is made up of millions of different types of people. Some people are very good a service jobs, they are outgoing and enjoy the constant movement and service to others. But some of us are not outgoing and prefer to use our minds. Constantly dealing with different people grates on our nerves. The constant shift from one boring task to another is irritating but it is what is required to be successful in the service industry. Can you force athletes to be a waiters? Is it the best use of their skills? What about powerful and brave soldiers? Would they fit in running the cash register? The same can be said for running a private business. Some people love to accumulate money and organize a business. Some of us would prefer to spend our time just crunching the numbers in a dusty back room. But even accounting jobs are now moving to India.

We need to insure numerous and varied abundant jobs throughout the country in order to keep the people employed happily. Do you really want to be the one who tells the decorated and successful soldier that he has to work as a sales clerk? He is likely to revolt against such restrictions.