So I try not to get into specific political personalities here at Real Economics. Even so, the plunge of a "progressive community organizer" like Obama into the utterly depraved depths of neoliberalism has me in a near state of shock—and I didn't even vote for the man.
Game Plan for a Flat Tax, Social Security Cutbacks and Austerity
Obama's Sellout on Taxes
By MICHAEL HUDSON
I almost feel naïve for being so angry at President Obama’s betrayal of his campaign promises regarding taxes. I had never harbored much hope that he actually intended to enact the reforms that his supporters expected – not after he appointed the most right-wing of the Clintonomics gang, Larry Summers, then Tim Geithner, Ben Bernanke and other Bush neoliberals.
But there is something so unfair and wrong that I could not prevent myself from waking up early Tuesday morning to think through the consequences of President Obama’s sellout in the years to come. Contrary to his pretense of saving the economy, his action will intensify debt deflation and financial depression, paving the way for a long-term tax shift off wealth onto labor.
In achieving a giveaway that Democrats never would have let George Bush or other Republicans enact, Obama has laid himself open to the campaign slogan that brought down British Prime Minister Tony Blair: “You can’t believe a word he says.” He has lost support not only personally, but also – as the Republicans anticipate – for much of his party in 2012.
Yet Obama has only done what politicians do: He has delivered up his constituency to his campaign backers – the same Wall Street donors who back the Republicans. What’s the point of having a constituency, after all, if you can’t sell it?
The problem is that it’s not going to stop here. Monday’s deal to re-instate the Bush era tax cuts for two more years sets up a 1-2-3 punch. First, many former Democratic and independent voters will “vote with their backsides” and simply stay home (or perhaps be tempted by a third-party candidate), enabling the Republicans to come in legislate the cuts in perpetuity in 2012 – an estimated $4 trillion to the rich over time. moreSo there IS an argument that Obama is some combination of evil and cowardly, but I never thought such positions explained much. The battle for what passes as Obama's soul has been fought and won on a much deeper level.
The main reason I didn't vote for Obama is that I have just stopped supporting historical illiterates. And here is the perfect example why this is important. If you were to tell Uncle Barry that his economic policies were going to doom him in the history books as another Herbert Hoover, I am pretty sure he would not understand what you were talking about. From the July 2009 Harper's this prescient piece.
Barack Hoover Obama:
The best and the brightest blow it again
By Kevin Baker
Three months into his presidency, Barack Obama has proven to be every bit as charismatic and intelligent as his most ardent supporters could have hoped. At home or abroad, he invariably appears to be the only adult in the room, the first American president in at least forty years to convey any gravitas. Even the most liberal of voters are finding it hard to believe they managed to elect this man to be their president.
It is impossible not to wish desperately for his success as he tries to grapple with all that confronts him: a worldwide depression, catastrophic climate change, an unjust and inadequate health-care system, wars in Afghanistan and Iraq, the ongoing disgrace of Guant·namo, a floundering education system.
Obama’s failure would be unthinkable. And yet the best indications now are that hewill fail, because he will be unable—indeed he will refuse—to seize the radical moment at hand.
Every instinct the president has honed, every voice he hears in Washington, every inclination of our political culture urges incrementalism, urges deliberation, if any significant change is to be brought about. The trouble is that we are at one of those rare moments in history when the radical becomes pragmatic, when deliberation and compromise foster disaster. The question is not what can be done but what must be done. moreAnd because Obama never bothered to learn this history of the Great Depression, he must rely on the advice of folks who claim they did--like Ben Bernanke. But this leads him further into the swamps of ignorance. There are some UGLY examples of historical revisionism out there and a LOT of them have to do with the economics of the 1930s. If you are a person who reads a lot of history books, pretty soon you understand there are easily recognizable biases in the way they are written. No problem, just read enough books on the subject until you sort of corral a well-illuminated version of the events.
I understand that running for president is a very stressful and exhausting job--at least until W. Bush came along and demonstrated how to do it--slacker style. Even so, considering that Obama was elected president during the greatest economic catastrophe since the Great Depression, one would think that he just MIGHT have been interested enough in the debates that were going to define his time in office to have gotten some background in the subject.
Nah, background investigations are the work of some paid courtier. Of course, if you do not do some of the background work yourself, you don't have the ability to ask meaningful questions.
This problem is especially critical when the subject is economics. The meltdown of 2007-8 was predicted by less than 1% of the "profession" because it has become an intellectual monoculture. When it came to gathering economic advice, Obama was going to hear mostly the same thing no matter who he talked to--the neoliberal bench is VERY deep! His ONLY defense against such organized ignorance was to observe that the advice he was hearing was eerily similar to the stuff that came out of the mouth of Herbert Hoover. With just a LITTLE historical awareness of the Great Depression, a VERY large alarm bell would have gone off.
So because Obama was too damn lazy to read a few history books, his presidency is destroyed. Those who refuse to learn history are doomed to repeat it...
Sigh! Anyway, here is some history Obama should have learned by an economist who DID get it right--mostly because he exists outside of the neoliberal economic monoculture. In fact, Hudson calls himself an Institutionalist which is defined as a heterodox economist--someone who opposes monocultures on intellectual grounds.
NeoLiberalism and the Counter-Enlightenment
By Michael Hudson May 27, 2010
The Counter-Enlightenment, its Economic Program – and the Classical Alternative
Based on a talk given to Prosper Australia on Friday October 16th, 2009.
First published in Progress Magazine – Autumn 2010. Download Progress #1096 here.
The last few years have seen Social Democratic and Labour parties fall into disarray throughout the world. Retreating from the economic program that powered their electoral 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 of overlapping 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 class or economic dynamic. Finance capital’s proclivity for trust building and similar predatory behavior was seen as bolstering the increasingly monopolistic “rent-extracting” trend within industrial capitalism. more