European Tribune - Community, Politics & Progress.

The politics of the market crash

by Jerome a Paris
Sat Aug 18th, 2007 at 03:40:10 AM EST

I wrote a bit on this in my diary yesterday on the now universally acknowledged busting of the financial bubble, but I think it is worth revisiting.

The current financial crisis literally begs for the left to reclaim the political initiative and say out loud some hard truths about the devastating economic policies of the past 25 years inflicted upon the world by Reagan and Thatcher with the support of the neo-libs and the rightwing noise machine.

Unless these points are made, the wrong lessons will be drawn from this crash. Because make no mistake about it, the sole cause of this bubble and its consequences is the feudalist economic ideology of the right.

Blaming rating agencies and computer models, as is being done, or focusing on the bits of data that still look fine (the meaningless unemployment rate, the wealthy-confiscated average growth, the absolute level of the Dow Jones), are just a way to avoid the real debates, the ideological ones:

that over the supposed superiority of the "efficient markets" to drive economic behavior,
that over the insistence that things be valued in dollars (discounted cash flow) or be worthless,
that over the idea that greed is good and leads to socially acceptable outcomes.

The core of the Reagan-Thatcher revolution is that greed (especially that of financiers capturing future cash flows of the real world for their personal, immediate profit) spontaneously improves the common good (because it generates apparent GDP out of thin air, and that GDP could be shared) and that all regulations and taxes that limit it should be dismantled.

Well, we're about to see the price of that grand collective delusion. But we should not mistake our target. Bankers and financiers should be made to pay for their follies but that is only a small part of it. The big thing is to blame it on the failed, and utterly dangerous, ideology of the efficient-markets/society-doesn't-exist/government-is-the-problem crowd.

Otherwise it will start again - and not only that, but their proposed remedy WILL be lower wages, fewer worker rights, lower taxes and the other usual "reforms."

As I argued in yesterday's diary, the fact that a bubble is now publicly acknowledged ensures that there will be a major economic correction, irrespective of whether there is a full financial meltdown or not. There will be pain. There will be calls for bailouts. There will be further pressure on the lower and middle classes to bear the brunt of the price. Unless we have a coherent alternative economic discourse on the crisis - that of strict regulation of the financial world (real regulation, not the busybody but pretend kind like we have right now), financiers and their paymasters, the wealthy, will continue to capture wealth, even as the pie shrinks.

This is what needs to be blamed, again:

the ideology of greed (this is the core of the conservative talking point: the idea that being selfish is somehow good for others as it creates more wealth, and thus that unregulated markets are good for society);
the idea that only financial valuations give worth to anything (again, the cult of the dollar, and the underlying notion that trying to get rich is a good thing for society);
the notion that wage inflation is bad but not asset price inflation (money going to the poor is bad, money going to the rich is good);
the shockingly lax monetary policy of the past decade (when markets go up, fuelled by what is essentially easy public money, it's capitalism at work; when markets go down, because of poor investments by the rich, it's a systemic crisis and the rich need to be bailed out or else);
the cheerleading by politicians of finance as the new engine of growth and wealth creation (industry, balanced budgets, communities are so yesterday and downright communist and evil);
the unraveling of existing regulations (like Glass-Steagall) in the name of market efficiency, and the corresponding death of those old engineering concepts, resiliency, safety margins, redundancies, and of old old ethical ideas: reputation, community, duty to future generations.

This suggests a very simple political discourse; fighting these above trends with positive messages.

Wealth is not defined by how the richest fare, and should not be counted via how much they accumulate, but only by how the poorest amongst us are doing.

Society is not doing well when the rich get richer, but when communities care for their members, leave no one behind, and do not focus exclusively on how much money one has to rank and judge members. Richer does not mean better. Together is better.

Things built to last are the most valuable, even if they create no profit today. Infrastructure, education, careful nurturing of rare resources are investments that pay for all in the long run and can be handed over to future generations. Many government tasks are investments, not costs.

The financial crisis, if properly described, provides (together with the Iraq mess, the recent bridge collapse and other tales of Republican corruption) an unbeatable opportunity to make these points loud and clear - and to carry a positive message, not just the "we are not Bush" one.

Buyt if the left does not make that case, I am certain that the current mindset will continue to prevail and the dominant economic ideology will stay, to the detriment of the vast, but empoverishing middle class.

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The politics of the market crash | 26 comments (26 topical, 0 editorial, 0 hidden)

Crossposted from DailyKos (4.00 / 10)

http://www.dailykos.com/story/2007/8/17/82546/5111
It's over there that this needs to be heard as loudly as possible. Your help in that much appreciated.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Aug 17th, 2007 at 08:58:17 AM EST

Oh, in case anybody's wondering (4.00 / 3)

I'm just back from my first ever attempt at waterskiing. It was fun. Now going to enjoy the sunset over the pool.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Fri Aug 17th, 2007 at 08:59:13 AM EST
[ Parent ]

Re: Oh, in case anybody's wondering (4.00 / 4)

Is your laptop waterproof?

Skennah Kowa

by Crazy Horse on Fri Aug 17th, 2007 at 09:08:14 AM EST
[ Parent ]

Re: Oh, in case anybody's wondering (none / 1)

So. How did it go?

I usually sail out the town in Minnesota called Lake City that claims to be the "birthplace" of waterskiing in 1896.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Fri Aug 17th, 2007 at 05:47:26 PM EST
[ Parent ]

Re: Oh, in case anybody's wondering (4.00 / 2)

After you get your feet under you on two skis, try a slalom ski. That's one ski. Then you can dart about and have a lot more sense of freedom and adventure. You can lean over (if the boat's going fast enough) to where your shoulder almost touches the water. Then you zing across the wake, go airborne, hit the water hopefully still standing, ski to the end of the arc, and reverse it. Don't worry about falling. Crashes are spectacular, and part of the fun.

-----

The best argument against democracy is a five minute conversation with the average voter.
W. Churchill

by US expat Ukraine on Fri Aug 17th, 2007 at 11:16:09 PM EST
[ Parent ]

Re: Oh, in case anybody's wondering (none / 1)

I guess your ankle is all better.

Glad for the re-visit. The diary got real staying power in Orange this time.

by vicki on Sat Aug 18th, 2007 at 08:42:15 AM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 8)

Obviously I agree with you on the evils of the libertarian, greed driven, economic philosophy that has been the guiding force over the past 40+ years, I even wrote a dairy about it a few days ago (http://www.eurotrib.com/story/2007/8/12/16458/6389 ). But...

As I said in my diary I don't see the prospects for much change beyond some tweaking of the marginal tax rates. This will defuse any strong populist movement before it actually gains any momentum.

As we have discussed many times it is the premise of our current economic system that is in need of change. We need to get away from a focus on consumption and growth and redirect our aims towards sustainable activity. At the same time we need to improve the lives of those at the bottom and do something about population growth.

I've been spending a fair amount of time on both liberal and libertarian sites run by economists and neither group will discuss anything besides a market-based economic system. They only differ in how big a role government should have in regulating the markets.

This is not a hopeful sign. Apparently the human race is not yet able to forestall disaster even when the risks are obvious. Just today there is a NY Times article on New Orleans. After about $1 billion in repairs much of the city still can't withstand another strong hurricane. If we can't even get civil engineering right, how are we supposed to manage social engineering?

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Aug 17th, 2007 at 09:35:54 AM EST

Re: The politics of the market crash (4.00 / 6)

and neither group will discuss anything besides a market-based economic system.

Then give them a market: but make it a "not for loss" market without "rentiers" who make money from money.

It is perfectly possible to configure markets so that service providers work together with service users with finance provided by stakeholders.

There is no "profit" and no "loss" in a partnership.

by ChrisCook (cojockathotmaildotcom) on Fri Aug 17th, 2007 at 11:13:22 AM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 6)

The difficulty is that, when you talk of call to a "left" in america that might resist the siren calls of "business as usual" and "greed is good", to quote a phrase, there is no there there.

There is no significant, even minorly influential left that is not bought and paid for 100 times over by Corporate, K & Wall St interests. The leading democratic challenger thinks that lobbyists represent the will of the American people fer chrissakes.

If there is going to be any challenge to the Reagan-thatcher axis of weevils eating out the heart of our future, then it must come from Continental Europe where, until Sarkozy/Merkel, there was a broad agreement along the lines you advocate. This was old europe; yet it lost confidence, not because it failed, but because the greedy & corrupted such as Blair and Barrosso worked within to undermine it. We don't need to invent anew, we need to re-assert with confidence that communitarian values work, co-operation is good. That a society is is made of all the peoples within it and it is societies and the values they hold that are strong, not the wealth of any specific individuals within. We used to know that, time to remember again.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Fri Aug 17th, 2007 at 10:15:59 AM EST

Re: The politics of the market crash (3.90 / 10)

The old "the movement doesn't exist now, therefore it will not in the future" is a pretty poor analysis and defeatist to boot. Remember the system only functions while everyone agrees to its rules, actively or passively. When the middle class is truly gutted, the anger is going to be physically expressed, and the masses need messages like the one Jerome is giving here. If, as Europeans, you automatically assume the worst of how that behavior will play out, then you're part of the problem, or worse, desire to see it. Leftist politics all around the world have had an all-consuming lack of long term perspective or long term goals for decades. Things looked just as bad for the right in the late 60's, yet with patience and perseverance, they beat back us peasant hordes.

until Sarkozy/Merkel

They didn't emerge out of thin air. They're as much a sign of the times as Bush is. Propaganda and control of information works on Europeans too, as all humans have their emotional weak points. The science of systematically exploiting them was derived early last century, and the public has not developed a powerful counter-measure since.

We used to know that, time to remember again.

My grandparents, from Milwaukee, used to read communist newspapers back in the early 20th century. The US has the same legacy. Please, please, please let go of these nationalist narratives.

By now, the potential of the internet for promoting mass interests should be plainly visible with what daily kos has done. Doesn't that give you some hope?

you are the media you consume.

by MillMan (millguy at gmail) on Fri Aug 17th, 2007 at 05:25:04 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 7)

Well said. We need to put the word out, if we don't, there is no hope of progress. Yes, "some seed will fall on stony ground," but if we don't try, what are we?

by Metatone (metatone [a|t] gmail (dot) com) on Fri Aug 17th, 2007 at 05:37:42 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 8)

This is all true, but we need a vision that's more substantial and inspiring than Rich People Suck.

The Left's enduring problem is positioning itself as being against something.

It needs to be for something to be successful. And that something has to be simple with a near-religious quality to it - something that's so 'obvious' that it appears self-evident and doesn't need to be parsed rationally or explained with lists, references and footnotes.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Aug 17th, 2007 at 09:01:56 PM EST
[ Parent ]

The Foundation (4.00 / 4)

Think deeply about the words sustainable and renewable, and how wide a net they can cast into so many fundamental aspects of our potential social future. Upon these rocks is the new world built.

Oh, and dancing all night.

Skennah Kowa

by Crazy Horse on Sat Aug 18th, 2007 at 04:45:58 AM EST
[ Parent ]

Re: The Foundation: Dancing All Night (none / 0)

Dancing all night is good.

-----

The best argument against democracy is a five minute conversation with the average voter.
W. Churchill

by US expat Ukraine on Sun Aug 19th, 2007 at 10:28:32 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 5)

I think Helen caught that 'something' with the single phrase 'communitarian values'. In many ways the distinction between left and right --in particular in the U.S. -- breaks down along the same lines as individual vs. social. The reason for such a strong right wing tilt I suspect is the bias towards individualism in the American psyche that might in large part be driven by the excessive amount of physical space fate alloted to us over 200 years ago
( compared to the relatively cramped quarters a typical continental European must learn to live with). In the US, no such adjustments were necessary and we're paying the price.

Intellectually, as a culture we've bought into an underlying individualistic/libertarian 'philosophy' built on certain insane ideas about individualism that are reflected in everything from our infrastructure( we're still building suburban sprawl and living in cities like LA with "no there there") to our ideas about taxes (from a social perspective most reasonable individuals understand the necessity of taxes; except, of course, in the U.S. where reasonable talk about taxes went out the window about the same time that Reagan came into office ) to the constant denigration of any mandated 'social' programs or nanny state regulations that we try to reduce and eliminate as rapidly as possible. The fact that disasters --both physical and cultural--are the end result of this so called 'philosophy' is just now beginning to be understood (I hope).

The positive thing you want is the assertion--almost completely ignored or devalued in the US--that a 'we' transcends an 'I', that what makes the community stronger and better able to cope with crisis is also a benefit to the individual; and conversely, what makes the individual able to become strong and rooted is a strong sense of responsibility to the community and vis versa.

I'll probably get in trouble for saying this, but I suspect years from now the kind of resource wasting, community destroying 'individualism' that's worshipped in the U.S. today will be looked upon with the same kind of anthropological awe that we feel when we gaze at the ancient Mayans who occasionally pierced their penises with threads and practiced ritual sacrifice to obscure gods with strange habits and names; an amazing culture, really, but, in many ways, gross and ultimately, self-defeating.

by delicatemonster (delicatemons@delicatemonster.com) on Sat Aug 18th, 2007 at 12:04:12 PM EST
[ Parent ]

Very well said (none / 0)

A clear insight and I hope with you/us.

Our knowledge has surpassed our wisdom. --Charu Saxena.

by metavision on Sat Aug 18th, 2007 at 04:18:53 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 2)

It would be a more valid criticism if Jerome's appeal hadn't been phrased in the present tense. To which I'd ask, "Where is this "left" that you're addressing ?".

You are entirely correct to hopee, as I do, that the internet democratisation project of which DailyKos is a significant part will inevitably bring about the creation of a genuine left, hopefully a liberal rather than marxist one, but a left nevertheless. I fondly imagine that Eurotrib may beome part of a similar process within the EU, although that is a longer project.

I usually describe the failure of left politics across the world in terms of the corrosive & distracting effect of Marxism rather than on short-termism, but we all have our opinions. I'm yours is at least as good as mine.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sat Aug 18th, 2007 at 05:45:23 AM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 3)

Continental Europe where, until Sarkozy/Merkel, there was a broad agreement along the lines you advocate.

I don't think so. in the mid-1990's the "third way" phenomenon swept the European Socialists. Blair had his Continental counterpart in Gerhard Schroeder. There has been no "there" there for at least 15 years. What made Blair and Schroeder so exciting 10 years ago was that they appeared to re-energise the left.

Can the last politician to go out the revolving door please turn the lights off?

by Migeru (migeru at eurotrib dot com) on Mon Aug 27th, 2007 at 01:28:32 PM EST
[ Parent ]

A New Econ Paradigm (4.00 / 3)

(Cross-posted on dKos)

This was discussed at some length over on EuroTrib -- what was it, eighteen months ago?

The concepts were laid out about a decade ago. See people-centered economic development, which argues exactly what is being argued in this diary/essay.

But it's not just concepts and ideas any more. Here and here is an example of exactly how it works -- a blueprint. Best of all, guess who's about to pony up at least $750 million to move things along? The U.S.

Nice to see you on board, Jerome.

-----

The best argument against democracy is a five minute conversation with the average voter.
W. Churchill

by US expat Ukraine on Fri Aug 17th, 2007 at 10:56:34 PM EST

Summarizing (4.00 / 5)

Communitarian values
Cooperation
Sustainable
Renewable
We are all Responsible
Social good/Common good works
We are stronger/better together
We are all in this together
For the long term
We are all one community/We are I

Our knowledge has surpassed our wisdom. --Charu Saxena.

by metavision on Sat Aug 18th, 2007 at 04:17:26 PM EST

Re: Summarizing (none / 1)

I think that's the meme we've been needing. Succinct enough even for a sig (okay, a longish sig, but still.)

-----

The best argument against democracy is a five minute conversation with the average voter.
W. Churchill

by US expat Ukraine on Sun Aug 19th, 2007 at 08:08:15 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 5)

Jerome is, as often, both correct in his analysis and amazingly articulate in English for a French citizen. (We may have found the new Trotsky or Tom Paine in terms of effective propaganda.) His companion piece on Daily Kos has a very full "tip jar", plus the first comments are basically all "right on, Jerome". I find that very encouraging, because I expected that the palace guard would immediately jump in and make statements concerning the purpose of their blog is to elect Democrats, plain and simple. (I don't mean to sound too critical, as I am a dues-paying Democrat who participates at the local level. And I will add that my experience in the party says that the local activists are more left-radical than the state organizations, and the state organizations are left of the national party.)

OK - the table is set. Yes, we need a critique of the system; yes, we need an alternative vision. I have no argument with the slogans and ideals expressed above. Communitarian - absolutely; universal health care - of course; social capitalism - OK for the Ukraine, at least.

But these are not sufficient - at some point a vision has to become concrete and steel, or titanium and cadmium telluride, if you prefer. An example - universal health care is a goal, but what is the method, what is the structure, how do we finance it? We don't need to design every detail, but it has to look like something more structured than a phrase. As we used to say in the early 80s, you can't change a plan, unless you have a plan.

I must add, then, that I think that we need to develop specific, programmatic elements of a political scheme. A few of the Democratic Party's presidential candidates have promulgated some programs: Edwards' health care proposal is an example; Kucinich has a number of proposals that can be called programmatic. And, of course, there are myriad political organizations that have very specific programs to offer. What can we add to the mix?

Something(s) are lacking in the catalogue. And the cure for that condition is, I think, the essential point of Jerome's diary: participatory democracy. Many of the leftist organizations and proto-organizations have espoused (and do espouse) this ideal. The internet, and, thereby the blogs, seem to have created the material condition for such a development. Hooray, as far as I'm concerned.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Sat Aug 18th, 2007 at 11:03:53 PM EST

Re: The politics of the market crash (4.00 / 2)

(I don't mean to sound too critical, as I am a dues-paying Democrat who participates at the local level. And I will add that my experience in the party says that the local activists are more left-radical than the state organizations, and the state organizations are left of the national party.)

And most Kossacks to the left of Kos. Or at least that is my impression. There was a diary here and at DailyKos with colorcoded paranoia, that was both great fun and rather revealing. Can not find the link now (forgotten name and writer). It showed what I suspected, namely the kossacks in general (at least those who voted) are way more paranoid (and by the diarys definition paranoia = left) then the sites editorial line.

by A swedish kind of death on Sun Aug 19th, 2007 at 04:46:01 PM EST
[ Parent ]

Re: The politics of the market crash (none / 0)

You're referring to the diaries by leftymathprof.

Can the last politician to go out the revolving door please turn the lights off?

by Migeru (migeru at eurotrib dot com) on Mon Aug 27th, 2007 at 01:31:11 PM EST
[ Parent ]

Re: The politics of the market crash (4.00 / 2)

Paul (et al),
Regarding "social capitalism" -- an apt phrase, to be sure -- I suggest "social enterprise."

Social capitalism sounds like a transvestite hermaphrodite, borrowing from the late, great K. Vonnegut Jr. (his characterization of a semi-colon; in prose.) Social enterprise on the other hand is the more commonly used phrase.

Then, study and ponder this April '06 explication by Kim Alter, which was derived mostly from Latin American case studies. That is, closer to home on the U.S. side, where we really have been trying to figure out what the hell to do despite DC and all that goes with it.

There really IS an emerging social and economic paradigm. This is the early transition phase, wherein IF we manage to survive, then this is where things will inevitably go and are going to already. Why now? For exactly the same reason dogs can lick their own balls.

Because we can.

-----

The best argument against democracy is a five minute conversation with the average voter.
W. Churchill

by US expat Ukraine on Sun Aug 19th, 2007 at 09:47:39 PM EST
[ Parent ]

Re: The politics of the market crash (none / 1)

My leading economic indicator is a noticable lack of shoppers at home improvement chains, malls and even discount volume stores like Costco and BJs.

by Lasthorseman (Lasthorseman@comcast.net) on Sun Aug 19th, 2007 at 05:37:56 PM EST

The politics of the market crash | 26 comments (26 topical, 0 editorial, 0 hidden)

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