Joe Stiglitz is no fan of Washington consensus-style globalization. Read "The Globalizer Who Came In From The Cold," an interview with Stiglitz on the IMF, World Bank and WTO conducted by Gregory Palast.
Moving to exploit a shifting political landscape in the aftermath of the September 11 terrorist attacks on the World Trade Center and the Pentagon, President Bush's Congressional point man on free
At a time when the economy needs vast and purposeful help from the federal government, America faces a peculiar handicap: Neither political party really believes in liberal economic intervention or knows how to do it. Democrats are still not over their infatuation with Hooverite fiscal austerity--embracing budget surpluses, bemoaning deficit spending. Other than serving their wealthy friends, Republicans work at dismantling government's ability to steer and stimulate the private economy. Both parties are enthralled by the most conservative advisers, Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Robert Rubin (now at Citigroup), who counsel caution. Democratic Senate majority leader Tom Daschle expressed doubts about any stimulus program, fearful that next year's budget might go into deficit.
This reluctance to act boldly will have to change very quickly. The economy was already in contraction before September 11. It needs hundreds of billions in new federal spending--yes, deficit spending--to counteract the great shrinkage under way in consumption and business investment. No one knows the severity of what's unfolding, but false optimism will make things much worse. Acting too fast and spending too much have economic risks, but none compare to what can unfold if Washington is too timid.
Back to basics. As John Maynard Keynes and American originals like Marriner Eccles, FDR's Fed chairman, taught, when the economic engine starts to seize up, government is the only force capable of jump-starting it--pulling idle capital into real investment while bolstering the incomes and confidence households need to buy things. It does this by borrowing the money from private sources--running large federal deficits financed by Treasury bonds--and spending the money in ways that generate waves of collateral economic activity. Deficit spending is not an unfortunate side effect. It is the necessary cure. America is especially vulnerable now to a deepening contraction because Washington is flush while companies as well as households, particularly those in the bottom half, are mired in debt. An aggressive government stimulus program is essential to regenerate the wherewithal--and the motivation--for business and families to renew their spending. If we are truly at war, the government must also do this in ways that renew social trust and a sense of equity. Patriotism cannot endure if the reigning ethos continues to be "winner takes all."
The $15 billion bailout for the airlines is a disgraceful start. Washington couldn't avoid aiding these terribly mismanaged companies, but it demanded nothing in return for the taxpayers or the workers being laid off by the tens of thousands. When Congress bailed out Chrysler twenty years ago, Lee Iacocca volunteered to work for $1 a year, labor got a seat on the board and the government took warrants in exchange for its cash infusion, later redeemed in full. This time hapless Democratic Party leaders refuse even to demand that the CEOs stop ripping up union contracts. The insurance industry is next in line for a handout, and there will be others. If more bailouts follow the same pattern, America's newfound unity will swiftly curdle into bitter resentments.
The agenda must be of sufficient scale to make a difference--and pump out money quickly. Top-end tax cuts, the Republican answer to all questions, are particularly inappropriate; companies and capitalists aren't likely to invest when consumers are cutting back. Particularly laughable is the reflexive Republican call for a capital gains tax cut, as if investors need an incentive to sell stocks.
The government's $40 billion emergency appropriation for reconstruction and the military is only a hesitant start. Washington should immediately ship $40 billion or $60 billion (or more) in revenue sharing to state governments that are being forced by balanced budget requirements to cut spending or raise taxes. And rather than cut domestic spending to pay for the huge bundle just approved for the Pentagon, Congress should fully fund domestic programs--particularly those in education, nutrition, housing and health. Congress should also act immediately to aid those workers being laid off through no fault of their own. A sensible program would extend unemployment insurance to thirty-six weeks and raise the average benefit to $300 a week. Special provisions are needed for short-term, contract and part-time workers, who would otherwise not be eligible for assistance. The Economic Policy Institute estimates that a decent unemployment insurance program might cost $30 billion a year.
On a grander scale, America has huge unfilled public investment needs that can easily cost more than $1 trillion over the next five years. The money can buy things people and society want and need:
§ Education. School boards have a backlog of thousands of desperately needed school construction and repair proposals. A $40 billion school fund could generate construction jobs and contracts across the country in a matter of weeks.
§ Health. One essential defense against terrorist attack with biological or chemical weapons is to rebuild our decayed public health infrastructure--laboratories, public hospitals and clinics, and properly staffed public health departments with modern computer and communications systems.
§ Transportation. To counter highway congestion and the nightmare of air travel, the country needs to develop alternatives like high-speed trains. This takes planning and time, but many projects are ready to go. For example, MAGLEV Inc., a Pittsburgh consortium, has been seeking federal funds to demonstrate a high-speed train that could get to Philadelphia in ninety minutes.
In addition, Congress can swiftly get money into the hands of those most likely to spend it. The next tax rebate can be targeted to low-wage workers who got nothing from the Bush tax cut; it would pump about $10 billion into the economy. The government could require all contractors to boost pay to a living-wage level. Aggressive new wage standards should be part of the government's quid pro quo for corporate bailouts. Indebted families need "stretched out" payment terms so they can keep spending.
After decades of conservative government, the list of needs and possibilities is long. Alert citizens must understand that it's time for Washington to act boldly, on a scale commensurate with the challenge. They must awaken Washington politicians from the stupor that suffocates imagination.
The facts about Bush's tax cuts are being kept from the public.
Finally, President Bush is "deeply worried" about the economy. Yep, in remarks last week, he even went so far as to observe that "the recovery is very slow in coming."
Nothing in modern times has symbolized the scourge of racism--and the potential for overcoming it--more than South Africa's recent history.
It should surprise no one that the European revolutionaries are not inspired by the American dream. Nobody, after all, expected the fighters for national liberation in the post-Napoleonic era to cherish the memory of Metternich, and the United States is now a much mightier pillar of the new Holy Alliance for the preservation of the status quo. It intervenes, directly or by proxy, wherever the social order is threatened, from Taiwan to Greece to Guatemala. Whenever they are under attack, profit and privilege can rely on the forces of "freedom." In Vietnam the American bombers spell out for the local population the bloody message "Better dead than red." The Green Berets are ready to jump in order to rescue the ruling oligarchies of the banana and other republics of Latin America (though the profits of US companies are now better insured by training local troops for the struggle against "subversion"). Like a black knight in nuclear armor the United States Navy patrols the seas, proclaiming that no more social revolutions will be allowed, that China's in 1949 was the last to be tolerated, while the Cuban affair was simply a misunderstanding. The Vietnamese resistance aroused enthusiasm far from Hanoi and Saigon because it challenged American presumption and proved that human courage still counted even in the world of nuclear balance. The Tet offensive in 1968 drove Western students to action because it revealed that the enemy was not invincible. Che Guevara, alive or dead, was hailed as a symbol of solidarity, of the international nature of the anti-imperialist struggle.
The salesmen of the American dream, and they are legion in Europe, prefer to bypass this role of international gendarme, or to justify it in terms of domestic achievement. They point to the democratic niceties, to the civil liberties the United States can still afford. They stress even more the economic achievement, the technological lead, the intellectual investment that vast accumulation has rendered possible, the level of research and management, the high productivity--in short, the superior wealth of the nation; and they turn to the young revolutionaries with the rhetorical question: Can you dismiss the American model in spite of all this? The answer is not in spite of it but because of it. The most frightening prospect, the American nightmare, is that with so much wealth man should not be able to build a different kind of society. In fact, the Europeans are merely echoing the indictment of America's New Left which, instead of being dazzled by the moon, points to the dark side of American society; its inequality and racism, its collective poverty and private plenty, its derelict health services, its belated discovery of pollution and urban chaos--and to the system responsible for it all.
To its admirers, the United States has discovered the secret of perpetual motion for capitalism. Advertising, as a new dynamic method of sales promotion, is a way of getting rid of industrial surpluses superior to that of coffee burning in agriculture. Above all, with military expenditures absorbing, even in official figures, about one-tenth of the national product, the state has a powerful lever to direct the rhythm of output. Advanced capitalism differs from its predecessor. The vagaries of the cycle are less pronounced, unemployment is relatively smaller, growth comparatively more regular. This is not the place to discuss whether this post-Keynesian equilibrium, resting on a militarization of the economy unprecedented in peacetime, is stable and lasting. The painful discovery of America's rulers is that even while the going is good, the system runs into new contradictions. American expansion meets resistance at home, as well as abroad. The outsiders rebel. The hitherto passive blacks refuse to continue being pariahs in the alleged land of plenty. The growing movement of protest among students and the radical part of the intelligentsia is a symptom of something deeper--the clash between the direction to which the expansion of productive forces is geared and the social needs of our age.
The "consumer society" is a misnomer suggesting that at least, as regards consumption, the average citizen is the uncrowned King. Though his material conditions have in many ways improved beyond recognition, modern man is still an alienated producer and a highly conditioned buyer of goods, a dissatisfied purchaser of leisure and pleasure with very little control over his environment. A producer society, guided by industrial and commercial profit, would be a much more accurate description. That problems such as pollution and urban decay are tackled only when they become unbearable is in the logic of things. Modern capitalism has changed enough in method and manner to face up to the unprofitable when it is under pressure. But it has preserved its essence. Profit remains its ultimate driving force, and it is intrinsically unable to confront the collective or individual problems of our society from any other angle. Consciously or unconsciously, this is what the protest is really about.
The similarity of some of its manifestations on both sides of the Atlantic is quite natural. The Englishman, the Frenchman or the German traveling in the United States is less struck by contrasts than by resemblances. He has the strange impression of making a journey through his own country's more or less distant future. For the most political among them, however impressed they may be by the technological progress, it is a journey to night's end. They know that this is their inevitable prospect unless Europe can forge a different kind of society. The bitter controversies between "Europeans" and "anti-Europeans" are really irrelevant in this context. The conflict that has begun cuts across continental as well as national frontiers. The European protesters who look ahead are joining hands with America's New Left. In Western Europe the real division is between those who seek socialism and those who opt for the American model. "Et tout le reste est littérature." It was no accident if during the French May crisis the United States authorities trembled for the fate of Gaullism. They sensed, quite rightly, that the forces then launching the assault against Gaullism are the same that are waging the struggle against Europe's American future.
The conflict is now intercontinental, and so is the solidarity. Revolutionary "grouplets" across Western Europe used to look exclusively to the Third World, to the Vietnamese or the Latin American guerrillas fighting against imperialism from without. They are now also looking to America's young radicals, who are beginning to carry on the same struggle from within. By the same token, they have discovered their own independent and intermediate role.
In mood at least, there are some parallels between the present period and the middle of the 19th century in Europe. Then, too, solidarity was the order of the day, and during the so-called "Spring of the People," fighters for national liberation journeyed from country to country battling "for your freedom and ours." Now, whatever policemen may think, direct intervention is still rare. The community of purpose and struggle is nevertheless growing. Europe's young students and workers salute their fellows across the Atlantic with the new message: "Against your present and our future."
West wind, east wind.... There is nothing new in the violent reaction of Europe's radicals against American interventionism nor in their hostile rejection of the American model. The real novelty is that the Soviet Union has practically vanished as a counter-attraction. During the French crisis there were many references to the Bolshevik October, but none, apart from contemptuous dissociation, to the bureaucratic rule of Stalin's heirs. This antagonism or indifference to the Soviet model--revisionist for some, Stalinist for others, irrelevant for most--characteristic of the May movement, was one of the reasons why orthodox Communists viewed it from the start with deep mistrust. Yet even the orthodox in the West are by now highly discreet about citing the Soviet Union as an example. They are particularly reticent about dwelling on the prospects of the Soviet bloc since the invasion of Czechoslovakia.
Spring in 1968 flourished in unison in Paris and Prague, but hopes faded separately. The French crisis was over, at least temporarily, by the time the Russian tanks rolled into Prague on August 21, and their invasion marked the beginning of the end of the unique experiment of Czech students and workers. The epilogue in Prague came after the French act, and thus could not affect it. But it has affected the European horizon. The Czech tragedy throws a new light on the problem of the dismantlement of Stalinism in Eastern Europe. It makes it necessary to reassess the hope of a Socialist revival within the Soviet bloc and, by the same token, the chances that inspiration in Europe may once again come from the East.
Daniel Patrick Moynihan is a disappointment to those who counted on him to uphold the banner
of ethical social change.
Mexico's Zapatista community is protesting the commercial exploitation of the country's ecological riches.
Treasury Secretary Paul O'Neill is turning out to be a dangerous crank.