I was talking again last night with my ambivalently pro-Obama friend, who’s been urging me to listen to This American Life’s programs on the economic crisis and the bailout. He told me a lot of what was in the earlier one, and while it sounds very interesting and I know I should listen to it, I can’t figure out why he thinks that it would change my opinion of the Bush-Paulson-Obama-McCain bailout. The next time I talk to him I’m going to have to remember to ask him about this. But judging from what he’s said so far, and from what I’ve read by liberal supporters of Obama, I think he’s trying to convince me that there really is a crisis, and that some kind of government of action was a good idea.
I’ve been trying to figure out what I could have said that led him to suppose I thought there was no crisis, or that I oppose government action. He reminded me in our conversation that he’s somewhat to the right of me, but if I opposed any government intervention in the crisis, I’d be way to the right of him, out there with those who denounce Bush’s nationalization of the banks. But once again it appears that a well-meaning person has confused relative difference with absolute difference: that if I criticize the action taken by Bush, I must therefore oppose any action. Which doesn’t follow, either logically or politically.
Right after the 2001 attacks on New York and Washington, I had some more heated exchanges with other friends, who were convinced that I didn’t think Osama bin Laden was dangerous. (Similarly, I think only those Americans who believe that the Bush administration staged the September 11 attacks would think that bin Laden and his cohorts are not a threat. Since I’m not one of them …) One in particular argued that we had to do something, that I couldn’t possibly want the US to do nothing when we had to defend ourselves. In that case, I told him that doing nothing was preferable to the US killing innocent people, and that there were plenty of other things we could do instead. None of which the US did.
The current economic crisis is a much more complicated matter, and I wouldn’t presume to say exactly what the government should have done instead of what it did do. I don't know what would have happened if the government hadn't acted at all, though I suspect that stock prices would have bounced back up, as they always do, and the recent spikes upward are just the kind of blip one would expect; I suspect that credit would have begun to flow again as well, and I'm not competent to say for sure, but from what I hear it doesn't sound like the floodgates have opened -- more like the trickle that, again, I'd expect even if nothing had been done.
I think it’s safe to say, though, that the government should have attached some conditions and accountability to the use of the money it was throwing at Wall Street. My ambivalent friend was properly concerned about the failure of credit at the local level, the money flow that drives our economy every day. As I say, he was right to be concerned about that, but the Bush-Paulson-Obama-McCain bailout wasn’t aimed at that problem, nor has it had much effect on it. The banks are using the money for executive bonuses, for swallowing up more small banks, and for paying the fees of the consultants who are managing the bailout. (I was amused by The Economist's recommendation that "governments need to avoid populist gestures. Banning bonuses, for instance, would drive good people out of companies that badly need them", since the people who are taking their bonuses from the public trough are the people who ruined those companies to begin with.) It should be remembered that originally Paulson tried to demand no oversight of his own actions, let alone the banks’; he backed down, but the conditions that were added to the bailout were by all accounts more cosmetic than anything – recommendations and guidelines instead of real conditions. My friend told me proudly that Paulson had only just demanded that the banks begin using the money for loans; if he had listened to himself he might have wondered why such demands had not been made from the start.
There’s been a lot of hooting over former Federal Reserve Chairman Alan Greenspan’s acknowledgement that he’d erred by putting so much faith in deregulation and free markets. My ambivalent friend mentioned that Greenspan had also said that he’d never realized that big corporations would be so unconcerned about their own well-being, let alone the public’s. I had to do a bit of digging to find that remark – it’s not in the version of the article on the New York Times’ website, but is here:
"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms," Mr. Greenspan said.
I shouldn’t read too much into such a short statement, but it seems that Greenspan had ignored his own ideology, which (based on a famous passage in Adam Smith’s The Wealth of Nations) holds that the merchant looks only to his own interests – defined solely as making a profit – and that totally coincidentally, by doing so he contributes to the general good. As Noam Chomsky (and probably other leftists too, but he’s the one I remember now) has often pointed out, it’s unrealistic to expect corporate managers and executives to look at anything but the bottom line in the short term, probably no longer than the next quarterly or at most annual report. That’s their job, and they would rightly (by the working assumptions of corporations) be dismissed if they looked to moral or other long-term concerns. But we’re up against another “Nobody could have predicted …” defense: Nobody could have predicted that Iraqis would resist a U.S. invasion, nobody could have predicted that the levees would break, nobody could have predicted that the decade-long party of the housing boom would come crashing down, nobody could have predicted that deregulation might backfire. By “nobody” is meant “nobody real, nobody who matters, nobody we go to cocktail parties with”, of course; many competent, rational, and knowledgeable nobodies had predicted all those things. And in evaluating the bailout, I think I’ll do well to continue listening to those nobodies.
One such person is Naomi Klein, who warns in this week’s Nation that the bailout is “Bush’s Final Pillage”:
In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. "How much of it do you think may be actually spent by January 20 or so?" Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout. …
How else to make sense of the bizarre decisions that have governed the allocation of the bailout money? When the Bush administration announced it would be injecting $250 billion into America's banks in exchange for equity, the plan was widely referred to as "partial nationalization"--a radical measure required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings...) and the government is reduced to pleading that they use a portion of it for loans.
There’s also a good article on the bailout at Counterpunch this weekend:
the current bailout scam follows the failed model of Herbert Hoover of the early 1930s. In the face of the Great Depression, Hoover created the Reconstruction Finance Corporation that showered the bankers with public money in an effort to bail them out. All it did, however, was to buy him a few months (perhaps that is also the goal of the current Bush administration, as it will soon be leaving the crime scene), but eventually led to the failure of almost all the banks within two years.
Meanwhile, I found this interview with Michael Moore at Democracy Now! Pressed by Amy Goodman on how he could support Obama in light of Obama’s support for the bailout (which Moore calls “a robbery … I can’t believe they’ve gotten away with it so far”), Moore responds like a true believer:
Oh, yeah. Yep. Well, I have a couple feelings about that, or a couple thoughts or theories, and it has to do not just with Obama’s vote on the bailout, but also some of his other campaign positions. But I’m hoping that he was figuring, well, look, we’re just a few weeks away from the election; I’m not going to do anything to rock the boat at this moment, but come November 5th, and certainly January 20th, I’m going to undo the damage that’s been done here. So I’m going to just put a little pin in that hope and tack it up on the board for right now.
I’m also hoping that Senator Obama is, you know, like all politicians: you know, they don’t always keep their campaign promises, right? I mean, it’s not unusual. It’s certainly not unexpected. They just don’t always keep their campaign promises. So, somehow I’ve told myself that those campaign promises that he will not keep are expanding the war in Afghanistan, pushing a healthcare plan that leaves the profit-making health insurance companies in charge of the plan, and, you know, a number of other things that I think a lot of us are concerned about, but—because, obviously, you’re not ever going to agree 100 percent with any candidate on any particular thing. But I’m just—I’m just convinced that these are the campaign promises that perhaps might, you know, not get made—or kept, I should say. So, I don’t know. We’ll see.
The chances that Obama (who isn't Bush!) will move in the direction Moore hopes for are mighty slim, as he must know – he’s old enough to recall some other politicians who bitterly disappointed their liberal followers after they took office. But let me make some predictions, tack up some anti-hopes as it were: If Obama (did I mention that he isn't Bush?) wins the election, no matter how decisively, the Republicans will cry fraud and accuse him of stealing it, just as they did the last time a Democrat won the Presidency. The corporate media will urge him to dignify the charges by reaching across the aisle to appease the Republicans; since bipartisan appeasement is Obama's preferred method (but he's not Bush), he'll do exactly that, with much fine talk about healing the wounds of the election campaign. He will do nothing, at least nothing positive, about the economy. In order to show his toughness on foreign policy, he'll attack some other much smaller nation -- Pakistan, Syria, Iran, it doesn't matter. His apologists will claim that the time isn't right for him to show the real Obama, it's too soon after the wounds of the election, he's a uniter not a divider, but he'll solidify his position now and after the mid-term elections he'll deliver what he promised during his campaign. He may try to privatize Social Security, and he may succeed, just as Bill Clinton (who wasn't Bush either) was able to "reform" welfare. Appeasing the Republicans will be his main agenda (but you have to remember, Obama isn't Bush), for the Republicans are the opposition party when they're not in power while the Democrats are the collaboration party even when they are.
I was talking to a student at work the other day, rubbing his nose in Obama’s actual positions, and he finally said something to the effect that he needed to have hope, and if he couldn’t have faith in Obama he might as well not vote at all. I may or may not vote for Obama on Tuesday – since “We really don’t have much of a choice” as Kos says in this video clip, I might as well throw my vote away on the Saint; it won’t stop me from criticizing him harshly. But “hope”? I’m beginning to understand why the philosopher Walter Kaufmann called hope a great evil, the last evil to come from Pandora’s box.
