Born-Again Rubinomics | The Nation


Born-Again Rubinomics

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To my surprise, Rubin next recalls the work of John Kenneth Galbraith and his famous concept of "countervailing powers." Market-based capitalism, Rubin explains, is kept stable, broadly prosperous and equitable because its excesses are checked by labor unions, government and other institutions with countervailing power. "If you have a big company negotiate with its workers and the workers aren't organized, it isn't real negotiations," he says, adding, "If one side has no negotiating power, that isn't really a market-based system. It's an imposition of one on the other." This is a startling statement: The man from Citigroup has articulated the essential reasoning that makes the case for including labor rights in the global trading system.

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William Greider
William Greider
William Greider, a prominent political journalist and author, has been a reporter for more than 35 years for newspapers...

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That conversation has convinced me that outgunned reformers ought to make use of Rubin's musings. Knock on his door and try to initiate a dialogue. If the critics come forward and offer their ideas on a "conceptual framework" for reform, I ask, would the Hamilton Project be willing to discuss them? Rubin reiterates his doubts and reservations. "But the answer is yes," he says. "The answer is absolutely yes." Skeptical friends and kindred spirits will probably say to me, You have been conned. I would say back to them, What have you got to lose by talking to the man?

The Hamilton Project is a sophisticated example of what I call "deep lobbying"--developing well in advance of the 2008 presidential election an agenda that safely avoids critical challenges to the global system and defines the terms of debate in very limiting ways. Democratic hopefuls who sign on can gain the cover of Rubin's respectability. Long before voters even know who the candidates are, the party's debate might be over before it begins. Given this prospect for premature consensus, it might be a good idea to start the debate right now.

In some ways, Robert Rubin reminds me of the original Progressives of the early twentieth century, reformers drawn from the emerging middle class of managerial and professional people. They tried in various ways to reconcile the tumultuous conflicts between capital and labor but without getting blood on their hands. They were horrified by the greed and inhumanity of industrial capitalism but also wished to keep their distance from Socialists and the struggling labor movement.

Rubin is a "nice guy"--even adversaries say so--and I suspect he feels similar tensions. He sincerely would like to work things out--find some kind of reasonable balance--but without interrupting the creative destruction under way in the global system. The big difference separating him from the Progressives is that Rubin and his investment-banking colleagues are men of capital. At Goldman Sachs, Rubin was doing major deals in Mexico before he came to Washington to push NAFTA and balanced budgets. At Citigroup he travels to Beijing and Shanghai, promoting client interests. I don't question his sincerity. But as a reformer, he has competing demands on his loyalty.

My hunch is that Rubin won't succeed any more than the original Progressives in reconciling the competing forces (the New Deal eventually did). The tumult most likely will grow louder and possibly violent before reformers gain the political power to accomplish their serious goals. Meanwhile, if popular anger does erupt here and around the world, there won't be much space left for "nice guys" seeking a reasonable discussion.

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