Street roots
Feb. 17, 2012
Why are A the ruling elites destroying our economies?
BY ROBIN HAHNEL
C O N T R IB U T IN G C O L U M N I S T
Robin Hahnel is a
politial activist and
visiting professor of
economics at
Portland State
University. He is a
co-creator of the post
capitalist economic
model known as
participatory
economics, along with
Z Magazine editor
Michael Albert. He is
also Professor
Emeritus at
American University
in Washington, D.C.
n my January column, I explained that by
stonewalling financial regulatory reform
and imposing draconian fiscal austerity in
the midst of the worst economic recession
80 years, ruling elites in Europe, the U.S.,
and Canada have us on track for what
amounts to economic suicide, putting the
North Atlantic region fast on the road to
becoming formerly advanced economies.
How can this have happened? Why would our
ruling elites engage in such
counterproductive policies?
I
Collapse of the political center Left
Thatcher and Reagan launched the
neoliberal counter revolution against
regulated, mildly egalitarian capitalism in the
early 1980s. But not until the political center-
left had been turned into a willing center-
right did the economic policies of the
traditional political parties become barely
indistinguishable.
In the U.S. in the 1990s, it was the
“liberal” Democrat Bill Clinton who “ended
welfare as we know it,” pushed Congress to
pass the North American Free Trade
Agreement and bring China into the World
Trade Organization, and ended any pretense
of regulating the financial industry when he
signed legislation repealing the Glass-Steagall
Act separating high risk investment banking
from federally insured commercial banking.
Today it is the “liberal” Democrat Barack
Obama who pivoted from a woefully
inadequate fiscal stimulus in 2009 to offer up
social security and Medicare for deficit
reduction in 2011. It is Obama who aided and
abetted Wall Street’s successful efforts to
take the teeth out of the Dodd-Frank Wall
Street Financial Reform and Consumer
Protection Act of 2010 before he signed it.
And it is Barak Obama who scuttled
international negotiations to avert climate
change in Copenhagen and opportunistically
absented himself from the debate as
Congress failed to pass any legislation
whatsoever to address climate change.
The situation is no different in Europe. In
Greece, it was the Social Democratic
government of George Papandreou who
imposed fiscal austerity measure after fiscal
austerity measure before he was finally
forced to resign in November 2011. In Spain
it was the Socialist government of Jose Luis
Zapatero who presided over one fiscal
austerity package after another when the
economic crisis broke in 2008 until his party
in was overwhelmingly voted out of office in
December 2011.
It is hardly surprising that Tory Prime
Minister David Cameron in the United
Kingdom and Conservative Prime Minister
Stephen Harper in Canada have embraced
“blame the victim” fiscal austerity as the
policy response long favored by conservative
politicians. What has changed over the past
decades is the extent to which only rhetoric,
but not policies, change when center-left
governments replace center-right
governments. Now, even when we vote
overwhelmingly for “change you can believe
in,” what we get instead are the same policies
enriching the 1 percent at the expense of the
99 percent — during good times as well as
bad. The bottom line is poor and middle class
people no longer have a major political party
who even attempts to act in their interest
anywhere in the North Atlantic region.
Center-left political parties now behave as
center-right parties used to behave, no
matter what kind of populist rhetoric they
resort to during election season.
Multinational corporations
no longer care
But if I am correct that failure to enact
meaningful financial reform and launch a
massive fiscal stimulus will doom the
formerly advanced economies in the North
Atlantic to stagnation and decline relative to
other regions, why are our major
corporations fouling their own nest? Part of
the answer is blind free-market ideology. Part
of the answer is an economics profession that
has studiously unlearned lessons taught by
the greatest economist of the 20th century,
John Maynard Keynes. And part of the
answer is insatiable greed run amock. But
beyond all these contributing factors lies a
more fundamental answer to the conundrum:
The nest they are fouling is still our nest, but
no longer theirs.
Thanks to three decades of corporate
sponsored globalization — supported by both
center right and center left parties — giant
corporations are now free to (1) locate
Portland
production wherever wages, labor standards,
environmental standards, and corporate taxes
are lowest, (2) sell products produced
elsewhere in the high-income markets of the
North Atlantic region, (3) collect royalties on
“intellectual properties” from every corner of
the globe, (4) leverage their global lending
business through the roof with a guaranteed
taxpayer bailout in their back pocket
whenever a financial crisis threatens, and
last, but not least, (5) rely on an
overwhelming military force paid for by the
American taxpayer to squash any who dare to
threaten to take any of these “freedoms”
away from them. So what if the North
Atlantic region declines in relative economic
power? So what if the middle classes in
Europe and North America shrink to the size
of middle classes in the rest of the world? So
what if the dream that one’s children will
have better economic lives dies for the 99
percent?
The future for the 1 percent and their
children looks very bright indeed. They pay
less in taxes than ever before. Because their
fortunes no longer depend on one region
alone, their income and wealth continue to
rise spectacularly even while the North
American region stagnates. The educational
and healthcare systems that are falling apart
are not services they and their children use.
The jobs that are no longer there for many in
the 99 percent are of no concern to those
whose only “work” is to manage their own
assets. The 1 percent now enjoys the loyal
political services not only of right wing and
center-right political parties, but of formerly
center-left parties as well. With military
drafts a distant memory, they need not fear
that any hostility that proves “necessary”
might inadvertently claim the life of one of
their own children. In short, they are not
fouling their own nest at all. Their nest never
looked better.
Of course, sometimes privileged elites
discover too late that by over reaching they
drove those whose interests they trample to
revolt. In which case, with hindsight, we
might say some day that they fouled their
own nest. But short of losing power, only if
global warming and climate change proves to
be the rising tide that engulfs all boats does
the present behavior of our ruling elites risk
fouling their own nest along with ours.
c o ffe e b e a n
IN T E R N A T IO N A L ®
w w w .p o rtla n d h e a rin g v o ic e s .n e t
Fallen Off
the Edge
A new book by A r t G arcia
"Fallen Off the Edge" is a chronicle
of one man's experiences after returning
from the Vietnam War. Told through the
eyes of Street Roots columnist Art
Garcia, this book celebrates the major
victories born from a series of
questionable choices. Art's jocular
storytelling takes the reader along with
him in and out of the California prison
system over the course of 10 years until
he found the strength and courage to
pull himself up from the fall.
The book is available online at www.
blurb.com under searchword Art Garcia.
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