Wednesday, April 6, 2011

Democratist manifesto

Representative Paul Ryan's GOP budget proposal for 2012, titled "The Path to Prosperity," would impose spending cuts unprecedented in size. The plan is unlikely to be enacted wholesale because the Democrats still control the Senate, but it definitely sets a tone and a starting point for future negotiations. Admittedly, the nation's debt crisis is severe and reform is necessary, but the breadth of the proposed cuts are staggering. Five trillion dollars over the next decade would be slashed from the budget, much of it from Medicare and Medicaid in spite of the fact that in 2006 the U.S. ranked 39th in the world for infant mortality, 43rd for adult female mortality, 42nd for adult male mortality, and 36th for life expectancy. (The U.S. also ranked first in healthcare spending per capita according to the previously linked article, so we clearly have some efficiency issues. That is, prices may be too high, and spending per capita might be skewed upward by very high health care expenditures for the richest Americans, etc. Nevertheless, I don't think cutting spending for the poorest and most vulnerable of our citizens is going to achieve better results per healthcare dollar spent.)

Unfortunately, those rankings are probably going to get worse if funding for Medicare and Medicaid are cut significantly. And if this is where Republicans are starting from, on top of vowing to repeal "Obamacare," healthcare quality certainly isn't going to improve, no matter how much the Democrats chip away at the GOP plan. So we'll have to be content with the status quo, which, for example, features an infant mortality rate for non-whites in Mississippi of over 18 per 1,000 live births- about the same as Libya and Thailand. (The Kaiser Family Foundation data, which is from 2004-06, lists an even higher Mississippi infant mortality rate for blacks and Hispanics, of over 21 per 1000 live births.)

By GDP, the United States is far and away the world's richest country, almost three times as wealthy as second-ranked China and nearly as rich as the entire European Union (The U.S. ranked sixth in GDP per capita, using the IMF data). But we are also one of the most unequal countries in terms of income and wealth distribution, with a Gini coefficient ranking us among the most unequal of all developed countries (sort this linked chart by "UN Gini" in order to see the ranking). The U.S is the only industrialized nation without some form of universal health coverage for its citizens, which makes the country even more unequal: health is a good- one that many poor people can't afford, but wealthy people can. So much for the social contract.

Could we do something to reverse this slide into a Dickensian
dystopia assuming enough of us wanted to? I'm not sure. I'm not convinced that significant reform is actually just a matter of political will. Author and activist Noam Chomsky argues in his book "Understanding Power" (at page 62 if you have access to the book), that real power does not lie in the political system, it lies in the private economy. Chomsky contends that even if a vast majority of the populace elected a government that enacted sweeping reforms to benefit the populace at the expense of the very rich, the result would be a massive outflow of investment and the economy would grind to a halt- a process known as "capital flight" or "capital strike."

Capital flight might sound far-fetched, but there are many examples of its occurence, even in very developed countries like the United Kingdom. When Brazil elected left-leaning former union leader "Lula" da Silva as president in 2002, "fear of socialism spurred a flight of capital, which drove down the exchange rate and... Brazilian bonds found no buyers, credit ratings plunged, and it seemed the country might default on its huge foreign debt." It is worth noting that, according to the same article, Lula did not turn out to be quite the socialist he was made out to be; whether that was good or bad for the poor people of Brazil is probably an open question, worthy of its own blog post or even research paper. The point is simply that capital flight can be a very strong deterrent to government action that inflicts too much pain on businesses and the wealthy.

Chomsky hypothesizes (although it seems so apparent that it might as well be an observation) that if one of the states were to substantially increase business taxes, even if most of the population supported it, business would run a public relations campaign, saying truthfully, that if you soak the rich, capital will flow elsewhere and you're not going to have any jobs. The rich have to be happy first, and then the rest of us might get something.

That very P.R. campaign mentioned in Chomsky's hypothetical is currently being waged full force against President Obama to eliminate even the possibility of his support for populist policies. The president is no socialist radical reformer by any means.
Obama has lowered taxes, not raised them, in spite of what people believe. Obama's healthcare reforms, vilified as as a socialist nightmare, are actually pretty weak. He left Ben Bernanke and Tim Geithner in their positions at the Federal Reserve even though they helped precipitate the recent financial crisis by allowing investment banks and mortgage brokers to operate virtually unregulated. (Please see the movie "Inside Job" if you have time, it's a really compelling explanation of the financial crisis.) Obama has also remained silent while Elizabeth Warren, the Harvard law professor he hired to put together the new Consumer Financial Protection Bureau up and running, was demonized by Republicans on Capitol Hill. Obama is not even going to push for tighter regulation of the big banks in spite of the havoc they have wreaked, much less turn the country into a socialist state, or create death panels, or repeal the Second Amendment, etcetera, etcetera, etcetera.

But that's not the description of Obama that you hear. T
he rhetoric from the right, including Republican elected officials and candidates, is as extreme as it gets. Aside from presidential "candidate" Donald Trump's birther claims (apparently he has hired investigators in Hawaii), Rep. Michelle Bachmann stated that "we have seen President Obama usher in socialism under his watch for the last two years," and "Obamacare is the crown jewel of socialism." Business lobbyists, in spite of huge gains in profits, spread fear that Obama is creating an "anti-business" climate (a pro-business climate is just code for lower taxes). Fox News, in the run-up to the 2008 election, linked Obama to socialism at least 35 times according to the website Media Matters. And here's some stuff Glenn Beck said. It's no wonder that more than half of likely voters think that the word 'socialist' describes Obama accurately. The P.R. scare campaign is definitely on, and whether they make it explicit or not, the plutocrats, through their media and Washington mouthpieces, are sending a message: Do not f**k with us.

Our options for fighting back may be limited. We can support the less reactionary of the two business parties, a.k.a. the Democrats, and hope to pass reforms that may not be revolutionary, but at least provide more support for our tired, our poor, and our huddled masses than they currently receive. Franklin Delano Roosevelt and the Democrats enacted the New Deal reforms, for example, which significantly improved circumstances for the poor and unemployed of the time in spite of the fact that it angered some powerful people so much that they tried, but thankfully failed, to overthrow FDR in a coup d'etat. The New Deal illustrates that successes within our form of government are certainly achievable. And the Europeans have enacted a wide range of populist social policies within capitalist frameworks, although government plays a more dominant role in the control of capital in Europe than in America.

Unfortunately, I'm not sure another New Deal is possible here today. In the 1930's, capital could not flow as freely as it does now in deregulated financial markets, so the threat of capital flight is a very potent weapon. The rich don't need to plot coups anymore either- the sophistication and scope of the modern media facilitate unrelenting attacks on any politician who dares lean too far to the left. Anti-communism is the national religion, and the political consequences of failing to kneel before the altar are severe. So, even if reform is possible, it will always be limited to just how benevolent the possessors of economic power choose to be.

But maybe one day (although I don't know how), if we gain popular control of what is produced in this country, with workers and communities in control of industry, and extend the democratic system to economic power- then we would have true democracy. We could enact policies that put the people first,without being effectively vetoed by capital strike. Ironically, worker control of industry- what we call communism- is not antithetical to democracy, but essential to it. Viva la Revolucion.


Scott Walters said...

I struggle with this. I think you analysis is accurate and insightful -- almost inescapable. But it is also national (and international) in scope. So my question is: what happens on a smaller scale? For instance, can the push for local economies restore some sanity and economic justice to the equation?

RH said...

That's a really good question. I'm not sure I have a good answer, but I do think that you're correct in that there needs to be local focus. In fact, the odds of the federal government nationalizing private assets are probably zero. The changes would have to begin small, with local businesses and industries being built up from scratch under worker control. The US Federation of Worker Cooperatives is working on this movement:
I think they have the right idea.