Tuesday, February 10, 2009

Yes, Even More Notes On Obamanomics

1) The stimulus bill passed the Senate, and I'm glad.

I'm glad because in a world of high finance and high debt, of credit and mortgages and investments, of economic obligations and dependencies and opportunities too numerous to count, throwing a wrench into the shaky, oversized, souped-up machine of American capitalism and hoping the whole thing collapses--which, whether they admit it to others or even just to themselves or not, is really what the House and Senate Republicans who attempted to stop or at least undermine the stimulus package were trying to do--is, if not madness, then something very close to it. I'd be willing to give the dissenting Republicans some real ideological and intellectual credit for the stand they're taking (hell, I'd be tempted to sign up with them) if they demonstrated some real thought about actual alternatives to the socio-economic world we're living in today--that is, if they were thinking and talking seriously about a world where people were more self-sufficient and more empowered to care for themselves in their own places, a world where corporations and banks didn't have the power to move capital and jobs and resources around the globe on the basis of tenuous and elite lines of credit, a world where expansion and growth and choice and consumption were not the secret keys to financial security and success. In other words, if they were all reading Rod Dreher, E.F. Schumacher, Gar Alperovitz, or Wendell Berry. But they aren't doing that; instead, they're insisting--to give them the most charitable reading one can--that there's no real mess in our present corporation-dominated, loan-addicted economy that more selective (and less overall) spending combined with more broad (and larger overall) tax cuts won't solve. They are, in other words, still living in Reagan's world.

Except that, in all honesty, a lot of them seem to be living in Rush Limbaugh's world: oppose the stimulus plan, paint it all as more "liberal Democrat big spending" (and, to be honest, some of that is in there), rally around "fiscal conservatism and economic liberty" (which, of course, is exactly what the unemployed desperately want), wait for the economy to continue to tank, and then return to power in 2010 via an electorate feeling betrayed by Obama. Given that plan, if you were a Republican member of Congress, why would you need to take any kind of actual thoughtful stand? Just throw your wrench in; after all, it's not like your job is in danger.


2)One of the commeters on my previous Obamanomics posts responding to my comment on bank nationalization by writing:

"The solution to decades of government-incentivized irresponsible lending and spending is to nationalize irresponsible lending and spending?"

Er, no; the solution is to put an actually accountable body of people--that is, the government we elect--in charge of managing literally trillions of dollars of bad assets which are sinking banks across the country, and thereby putting real stress on those abroad. Is there any reason to think that direct government oversight and management would result in worse decisions being made than those that have driven these banks into the ditch? The latest iteration of the argument over what to do about the country's credit problems still involves, I would argue, essentially a kind of passive nationalization of these institutions; why not make it direct? I'm not making the argument for it, I'm just arguing that there's no clear historical reason not to consider it. For better or worse, our current crisis is making it necessary for us to either A) re-evaluate and, to some degree, abandon the kind of economic opportunities and assumptions that have guided this nation ever since the emergence of modern finance capitalism (and again, I note that I'm by no means opposed to such a retreat), or B) accept that European-style state solutions, tied to the protection and expansion of local and collective ways of working and living, are going to have to be experimented with. Obama seems grown-up enough to recognize the choice, and make it one way or another; those who are shielding themselves from acknowledging our present moment (which, admittedly, may soon pass...but then again, maybe not) are not.

3) Another commenter on one of my previous posts--my old friend Nate Oman--wrote:

"The Buy American portion of the bill is undoubtedly the worst provision in the whole thing, particularly if it leads to a retaliatory set of trade tit-for-tats. Globalization may not make the cockles of your neo-populist heart warm, but a world full of trade walls is worse. See, e.g., the global economic and poltical system ca. 1930 to 1945."

As I see it, there are a few things worth saying here. A) Any Buy American provisions which survive the conference committee between the Senate and House will invariably reflect a consciousness of the fact that we have numerous mutually beneficial trage agreements in place that no one seriously wants to lose. B) The focus of the really crucial Buy American provisions is the iron and steel industries, and enforcing strict domestic purchasing policies in regards to such basic industrial products is hardly going to have a domino effect that will result in every single Volkswagen or Toyota quadrupling in price. If anything, it'll just be a reminder to other countries of what they already do, and of what the value of such selective protectionist measures truly is. C) The obsession over "trade walls" reveals the common presumption that all economic talk worth the name is really about growth, consumption, wealth; a concern for jobs and security and work rarely seems to come into it. On this point, I'll just quote Patrick Deneen:

Why is [the argument against protectionism] so patently true for economists that it is proffered as if it didn't merit further thought? Because, of course, it's better when lots of people can purchase cheap goods that are manufactured in the lowest labor-cost areas of the world. Comparative advantage insists that everyone wins in this scenario....Yet, what if we were to widen our aperture a bit and consider whether a nation of self-defined consumers is a good thing? What if the very self-definition of ourselves as "consumers" - now used unselfconsciously as the one universally valid term to describe Americans (not "workers" and certainly not "citizens")--is deeply damaging to the civic and moral culture of a nation? What if economic and political policies that promote consumption over good, hard work induce very bad habits that in turn lead to very bad economic outcomes?...The economics of consumption is, in the first instance, a recipe for short-term thinking. It encourages the consumption of products intended very soon for the trash heap, thus promoting a culture of immediacy and waste. It is an ethic that encourages instant gratification, rather than encouraging virtues of thrift and deferred gratification....A culture of work--good, honest, hard work--on the other hand, promotes virtues of care and thrift. Where we have a sense that people near and around us will use our products, we work with pride and responsibility. Where we will have to live with the costs of our production, we work in ways that minimally damage our living places....A culture that values work over consumption is one that is likely to view manias with a jaundiced eye, aware that the cycle of nature is not one that offers quick rich rewards, but slow and steady earnings that are come by honestly and with patience and hard work.

If anything, the protectionist elements of the stimulus package may be the most important in the symbolic sense: they announce that, with this massive investment into the fundamentals of the American economy--and, of course, again, it's all a risk, or rather hundreds of tiny or not so tiny risks, any number of which may or may not add up in the end--America is looking to enable and reward the kind of learning and working that, perhaps, would have shown a little bit more resistance to the bizarre economic behaviors nostrums than Americans as a whole did over the past generation or two, during an era when the value (even the idea) of labor mostly went into a decline.

Maybe that's reading too much into it. But then, when you're looking at a bill that authorizes spending close to a trillion dollars, you can find just about anything between the lines.

3 comments:

Anonymous said...

On item #2, I think you're confusing this stimulus package with the prior bailout. This bill is about pumping money into the economy by spending and, to a lesser extent, leaving money in the economy by targeted tax cuts -- not buying up and managing troubled assets.

Regardless, I'm very curious why you think the government is a model of accountability. The reason I oppose a spending spree of this scope is precisely because government is fundamentally unaccountable. In a system in which politicians constantly have to raise money (and do favors) and campaign to keep their jobs, the incentive is to focus on short term problems (as a boost to their popularity), rather than long term.

The most any politician has at stake in a decision is possibly his job (which, in most cases, doesn't mean much, because he has independent wealth and a multitude of options available to him after he leaves public "service"). When a private citizen manages his affairs, he has ultimate accountability. He can't point fingers or walk away. He has to live with decisions. This is why the government won't address social security (which everyone acknowledges is unsustainable), but private citizens scrimp and save for their retirement. It's why the government won't take aggressive measures on global warming, but private citizens try to reduce their carbon footprint.

With Obama in the White House and strong Democratic control of the House and Senate, you have nothing to worry about. You'll get your bill. But someday we're all going to have to pay for it.

Matt said...

I'm more skeptical than you about the steel industry aspects of the "buy American" provisions. When we put tariffs on steel fairly recently (under Bush, in a blatantly political move)it was a disaster all around. It made trade partners very annoyed, especially since our move was clearly illegal under WTO agreements. It increased the cost of consumer goods in the US and hurt US manufacturers who had to pay more for steel. It wasted time and money for government lawyers who had to defend measures that were not defensible. It hurt the economies of our trading partners and made them think, quite rightfully, that we were not honest dealers when it came to trade- that we were trying to sucker them rather than seek mutually beneficial agreements. And, it didn't help the long-term health of the steel industry but rather kept it dragging along in an form that's not viable. These measures are somewhat less bad, at least if they manage to be WTO compatible, but will still have many of the other provisions. It would be far wiser to just take this money and use it to buy out the US steel industry, cutting it down into a form that can be viable. As-is, this won't really help anything and will almost certainly make some things worse.

Anonymous said...

Just saw this

http://www.calculatedriskblog.com/2009/02/tarp-visualized.html

i'm going to need a hernia repair.