One of the scariest aspects of the current economic crisis is that its perpetrators have been by far its chief beneficiaries. Their barbaric neoliberal policies, disastrous financial practices, and subservient governments, far from being discredited, are being rewarded -- both financially and politically.
Only a relatively small amount of the bailout money being shovelled out of public treasuries to mitigate the crisis is going to help its victims. While workers lose their jobs, householders their homes, and retirees their pensions, trillions of taxpayers’ dollars are being lavished on the bankers and speculators whose greedy financial gambling addiction caused the meltdown.
In the United States, for example, President Obama’s bailout of Wall Street has already soared beyond $2 trillion and could eventually reach the stratospheric level of $12 trillion or more, according to some reliable projections. In sharp contrast, his $787 billion economic stimulus package (designed to create or save jobs), while certainly not an insignificant sum, amounts to less than 8% of the enormous projected bank bailout. It’s a horrendously expensive rescue operation that, if successful, will only restore and perpetuate the pernicious system that precipitated the crisis. The trillions are being spent, in effect, not to solve the economic problem, but to make sure it won’t be solved.
In Canada, the Harper government’s response has been similarly skewed. It has committed a hefty $200 billion in support for the banks, but has confined its economic stimulus package to a purported $62 billion over two years for measures that amount to an anaemic 0.7% of GDP, barely one-third of what the IMF has called on world governments to provide. CCPA analysts say the Conservative package is so badly designed that it will probably deliver less than one-third of the stimulus the Tories claim. Worst of all, with so many Canadians losing their jobs, Harper refuses to improve our deeply flawed unemployment insurance system which denies benefits to 60% of the jobless.
The political ramifications of the crisis are even more distressing. As the recession continues to deepen, many “left-leaning” activists and their organizations had hoped — even expected – that the apparent crash of free-market capitalism would bolster the appeal of socialism. Instead, capitalism’s political arm, neoliberalism, seems not only to be surviving, but thriving, and actually gaining in popularity in many countries.
In the recent European Union elections, which stretched from Ireland to Bulgaria, democratic socialist governments and parties took a terrible beating. At a time when voters were thought to be disillusioned with conservatism because of the global recession and thus more inclined to move left, most of those who voted in the European elections in June swung decisively to the right instead. The socialists, whether in government or in opposition, lost a lot of support. Even in their traditional strongholds of Sweden, Denmark and Finland, they suffered major setbacks.
Most of the mainstream media analysts, of course, are gloating over this victory of political conservatism – and by extension capitalism -- citing it as further evidence of its enduring appeal to the masses. If it can actually become more popular after precipitating such a disastrous slump, it will surely remain the world’s dominant economic system, they proclaim.
It is not because of its merits, however, that a system so clearly barbaric and destructive continues to be so widely sanctioned by electorates in the West. It is because most voters still don’t see socialism as a preferable alternative, either politically or economically. And that is a failing of the socialist parties and governments, not of socialism itself.
In any event, socialism is not on its death bed globally. Far from it. In Latin America, socialist parties have come to power in a dozen countries, and have demonstrated they can govern much more fairly and democratically than their right-wing predecessors.
In North America, however, left-wing parties have failed to offer voters a similarly enlightened vision of a just society. And in Europe, they have lost much of their innovative zeal and dedication.
Last month in this space, I chided the majority of Canadian voters for alternating their support between the right-wing Tories and Liberals, implying that the New Democratic Party would be a better choice. No doubt it would, but the improvement would probably be marginal. Given the NDP’s current leaders and their timidly uninspiring centre-left policies, the transformation of Canada into a democratic socialist state would still be a dream.
The recent victory of the NDP in Nova Scotia was won by implicitly promising never to implement socialist policies, and instead to emulate the Tories and Liberals in cutting taxes and avoiding deficits. One of the voters whose emails were read on CBC Newsworld following the outcome of the election, told viewers: “I’ve waited all my life to see a socialist government in Nova Scotia. I’m still waiting.”
The closest we’ve come to socialism in Canada was the CCF-NDP government Tommy Douglas headed in Saskatchewan. It was the government that, among its many accomplishments, overcame powerful medical, business and media opposition to bring public health care to this country. Political leadership and courage of that magnitude are nowhere to be seen in Canada today. The tendency is to shun any policy that might harm a party’s credibility or incur the wrath of the rich and powerful.
Elsewhere in this issue, the heading on an article by Madeleine Bunting from The Guardian asks this pertinent question: “Where are the politicians now needed to run green, no-growth economies?”
It is arguably the most salient question that could be asked at this crucial time in the history of the planet and its inhabitants. In the short term, despite the lack of brave and visionary political leadership, the current economic crisis will somehow eventually be survived. But if the outcome involves the perpetuation of the neoliberal madness that triggered the financial meltdown, the long-term prospects will be dire. A “business as usual” approach to the looming environmental threat would be bad enough, but combined with a “politics as usual” approach, it will be catastrophic.
Many people in Canada and around the world still pin their hopes for global sanity and salvation on the new president of the United States. They count on Barack Obama to convert the U.S. into an economic, social, and ecological Camelot – into a model society combining security and sustainability that will be a shining example for the rest of the world.
Most of us are not that starry-eyed in our assessment of Obama’s leadership. We would gladly settle for a modern equivalent of Franklin D. Roosevelt’s New Deal of the 1930s.It was his implementation of the progressive reforms devised by John Maynard Keynes that spurred the recovery from the Great Depression – for most other countries as well as the U.S.
Unfortunately, Obama is no Roosevelt. Far from it. Indeed, in a remarkable essay in the July issue of Harper’s, Kevin Baker makes a strong case that Obama is more akin to Herbert Hoover, the Republican president who preceded Roosevelt at the start of the Depression, than he is to F.D.R.
You’d have to read Baker’s long essay to appreciate his arguments and reasoning. His main point is that Hoover was not the hidebound ultra-conservative Neanderthal he has been painted. He genuinely sympathized with the people losing their jobs and homes, and wanted to help them. But he was locked into the capitalist system, believed in its “self-correcting” tenets, and was afraid to defy its powerful business, political, and media proponents.
Roosevelt, too, came from a rich and aristocratic capitalist family, but he didn’t believe that capitalism as a system was infallible. When he defeated Hoover in the 1933 election, he saw the need for radical measures to halt the economic slide and help its victims, and he had the courage to ram them through. He regulated the banks, saved the farmers, set up vast job-creating construction and forestry programs, and passed pro-labour legislation that helped the unions organize millions of American workers.
These achievements served to fundamentally remake the U.S. economic and political system – and they all required challenging the country’s most powerful and entrenched élites. They all involved conflict. It was Roosevelt’s resolute defiance of these influential élites that most distinguished him from Hoover. His outraged opponents, says Baker, heaped him with scorn, and called him “a traitor to his class.” But Roosevelt just scoffed at them. “They are unanimous in their hatred of me,” he laughed, “and I welcome their hatred.”
Roosevelt in the 1930s, unlike Obama today, also fearlessly cut himself free of the capitalist ideology.
“Much like Herbert Hoover,” writes Baker, “Barack Obama is a man attempting to realize a stirring new vision of his society without cutting himself free from the dogmas of the past – without accepting the inevitable conflict. Like Hoover, he is bound to fail.”
Baker acknowledges Obama’s charisma and eloquence, as I do, but regrets his inability, or reluctance, to make his actions live up to his words. The key cabinet members and advisors he has chosen for his team are mostly adherents of the failed system he seeks to change. Larry Summers and Timothy Geithner, for example, whom he assigned to clean up the financial mess, were among the key players on Wall Street who brought on the disaster.
Obama’s retreat or compromise on public health care, on the environment, on NAFTA, on pro-labour legislation, on mass transit, and on most of his other election campaign pledges reflect not so much a lack of sincerity as it does a lack of courage. Unlike Roosevelt, he is afraid to challenge or alienate the movers and shakers. Annoy them, yes, with modest health care proposals or a stem-cell research go-ahead, but not challenge them significantly on a major policy front. So massive military spending is maintained, private health care protected, the offshore drain of jobs unplugged, tax loopholes left open, the underfunded education system and underpaid teachers denied meaningful help.
Baker says it’s still not too late for Obama “to change direction and seize the radical moment at hand. But for the moment, just like another very good man [Herbert Hoover], Barack Obama is moving prudently, carefully, reasonably toward disaster.”
I’ve spent a lot of space on Obama’s failure to fill the role of a modern F.D.R. for two main reasons. The first is that, just as Roosevelt established the model for effective recovery from a global depression, a similar radical rescue effort today will also have to originate in the U.S. where the present crisis first started.
The second reason for focusing on Obama is that, if he is behaving like Hoover rather than Roosevelt, the consequences could be a lot worse today. Why? Because, unlike the 1930s, there is no contemporary F.D.R. waiting in the wings to replace Barack Hoover Obama. So there will be no new New Deal if – as now seems regrettably likely -- Obama remains unwilling or unable to provide one.
(Ed Finn is the CCPA’s senior editor.)