"Because clearly TARP and the stimulus package have worked."
— MSNBC’s Stephanie Miller this morning on her Democratic Party line radio program, which some consider ‘progressive’.
A two-party media/political system sucks. No, Steph, TARP hasn’t worked, and the stimulus package haven’t worked. Except for its finance sector, the U.S. is in tremendously deep shit. All the states are broke, and in-power politicians are simply, desperately trying to delay the storm till after the November elections. I don’t follow all the details, but one small example: in Illinois current plans (by our Democratic Party governor and legislature) are to impose 40-student class sizes on Chicago’s public elementary schools. And, again, these huge local and state government cutbacks are rapidly going to be overwhelming economic anti-stimulus, and countering that? Well, Obama’s our nation’s leading ‘deficit hawk’ . . .
So, no, things are not working out but, hey, if things are fine in Manhattan, NY, or Georgetown, DC, how are you supposed to know what’s going on in the rest of the country? Or the rest of the world.
And two-party media/politics offers nothing neoliberal economics. (Well, not as bad as Britain, where three-party media/politics offered only neoliberalism.)
As usual in the U.S. and Europe, we still need citizen-oriented economics and are not getting it. That economics is in the person of Michael Hudson. I sure hope _everybody_ read this:
May 11, 2010
Greece Today, US Tomorrow
The People v. the Bankers
By MICHAEL HUDSON
Financial lobbyists here in the U.S. are using the Greek crisis as an object lesson to warn about the need to cut back public spending on Social Security and Medicare. This is the opposite of what the Greek demonstrators are demanding: to reverse the global tax shift off property and finance onto labor, and to give labor’s financial claims for retirement pensions priority over claims by the banks to get fully paid on hundreds of billions of dollars of recklessly bad loans recently reduced to junk status.
Let’s call the “Greek bailout” what it is: a TARP for German and other European bankers and global currency speculators. The money is being provided by other governments (mainly the German Treasury, cutting back its domestic spending) into a kind of escrow account for the Greek government to pay foreign bondholders who bought up these securities at plunging prices over the past few weeks. They will make a killing, as will buyers of hundreds of billions of dollars of credit-default swaps on the Greek government bonds, speculators in euro-swaps and other casino-capitalist gamblers. (Parties on the losing side of these swaps now will need to be bailed out as well, and so on ad infinitum.)
This windfall is to be paid by taxpayers – ultimately those of Greece (in effect labor, because the wealthy have been untaxed) – to reimburse Euro-governments, the IMF and even the U.S. Treasury for its commitment to predatory finance. The payment to bondholders is to be used as an excuse to slash Greek public services, pensions and other government spending. It will be a model for other countries to impose similar economic austerity as governments run up budget deficits in the face of falling tax collections from the financial sector being enriched by the translation of junk economics into international policy. So the bankers for their part will have little trouble meeting their bonus forecasts this year. And by the time the whole system collapses, they will have spent the money on hard assets of their own.
Bank lobbyists know that the financial game is over. They are playing for the short run. The financial sector’s aim is to take as much bailout money as it can and run, with large enough annual bonuses to lord it over the rest of society after the Clean Slate finally arrives. Less public spending on social programs will leave more bailout money to pay the banks for their exponentially rising bad debts that cannot possibly be paid in the end. It is inevitable that loans and bonds will default in the usual convulsion of bankruptcy.
Even more outstanding is the following PDF article by Hudson, outlining the shift to, really, far-right economics by the Democrats in the States and social democratic parties in Europe:
The Counter-Enlightenment, its Economic Program – and the Classical Alternative
By Michael Hudson
February 5, 2010
The last few years have seen demoralized Social Democratic and Labour parties fall into disarray throughout the world. Retreating from the economic program that powered their takeoff a century ago, they have lost their traditional constituencies. Their golden age was an outgrowth of classical political economy from Adam Smith via John Stuart Mill to Progressive Era reformers advocating progressive taxation of land and other wealth, public infrastructure investment at subsidized prices, price regulation of monopolies, and public banking reforms to socialize the financial system.
Industrial protectionists, nationalists and neocolonialists – the parties of heavy industry and military power – also endorsed a strong role for government. Across the political spectrum the wave of the future appeared to be a rising role for public oversight of markets, subsidies for capital formation and education, public health, social welfare and infrastructure spending. This program was most successful in the United States, Germany and Central Europe.
The guiding assumption of democratic political reform was that voters – with the working class most numerous – would act in their own interest to legislate tax and regulatory reforms aimed at raising productivity and living standards while making their economies more competitive in world markets. Banks and other financial institutions were expected to play a key role, in conjunction with government policy (and indeed, a military industrial buildup).
The question of who would be the major beneficiaries of pro-industrial economic reforms depended on who would control the government to administer tax policy and subsidies, tariff policy, social spending and infrastructure investment. The two main contenders were labor and industrial capital, and there were many areas ofoverlapping interest. The main loser was expected to be the landed aristocracy as the lower house of Parliament (or Congress) gained power relative to the upper House of Lords (or Senate). Finance was viewed as ancillary to industrial capital, not as an independent player except internationally. Public banking was the liberal alternative to finance capital’s proclivity for trust building and similar manipulations.
Today, the parties of the left and even the centre have reversed the reform agenda advocated a century ago in the Progressive Era. They have endorsed a tax shift off property and finance onto labor and consumers; privatization of public infrastructure and enterprises; and deregulation of monopolies, above all that of banking and high finance. The result is an almost universal anti-government (and indeed, pro-rentier) model that leaves resource allocation and planning centralized in the hands of a financial sector that is being deregulated rather than steered along the social lines anticipated a century ago.
Why did this happen? It wasn’t an intellectual process, of course. What has happened is a long-term political effort to turn economics departments, law schools, politicians and media heavies toward an orthodoxy that would encompass left, right and middle. Hudson and a few others (Dean Baker) are the remainder of what was once the dominant ‘neo-Keynesian’ economics of roughly 1935 to 1975. They were and are still right, but you _still_ don’t hear them on either side (here in the States) of the Democratic/Republican media.