the rage of the ignorant

Transiting through Dulles Airport in Washington, DC on my return from Dakar on Sunday, I was struck by the titles of the mass-market books on US politics in the bookstore. The shelves were full of books fulminating against US President Barack Obama; the rage was so palpably strong I could almost taste it.

That rage appears to be reflected in the results of the US mid-term elections on Tuesday. The media has been proclaiming the Republican triumph as the most dramatic mid-term swing since the 1930s, although the fact that only 37 per cent of the eligible electorate actually voted makes this result far less dramatic than the media would like. The mid-terms represent the rage of the white, socially conservative, Christian fundamentalist right, commonly called the Tea Party, which clearly represents a minority of the US electorate.

It seems to me that the rage of the Tea Party movement is the rage of the ignorant. While supporters of the Tea Party movement claim that they are interested in limited government and reduced regulation (although they love Federal entitlement programs that proffer largesse to their core constituency, such as Medicare) they seem to forget that in late 2008 US capitalism was in the midst of its worst crisis since the 1930s. Obama did not cause the crisis, which originated in the financial market de-regulation engineered by Alan Greenspan under Bill Clinton following Clinton's rightward tack after the 1994 mid-term elections. De-regulation was designed to address the dramatic rise in US social and economic inequality, and was predicated upon the type of policies the Tea Party supports, most notably the liberalization of US financial markets. True to his neoconservative ways, George Bush recognized that the crisis of US finance capital was turning into a crisis of US capitalism, which he and Hank Paulson therefore attempted to shore up by a massive injection of government spending designed to stabilize the US economy: at a cost of US$700 billion the Troubled Asset Relief Programme was enacted by Bush, in the face of Congressional hostility, a hostility that was only overcome in the wake of a stock market panic and a huge sell-off of equities as US financial markets plunged.

TARP was barely underway when Obama entered the White House, but to the 'right Keynesians' that populated his economic team following his inauguration, it was clear that TARP was, on its own, inadequate to sustain the resurgence of US capitalism. More was needed, especially as banks, fearful for their existence under the weight of so-called 'ninja' mortgages, has stopped lending. The Obama administration therefore enacted a second fiscal stimulus, the Recovery Act, worth some US$787 billion, within a month of his inauguration. The Recovery Act cut taxes, raised government spending and transferred money to cash-strapped states.

The Tea Party movement may not like government, but US finance capital knows that most of the 7800 banks in the US still exist because of the various liquidity interventions engineered by the Federal Reserve, along with guarantees, loans and outright bail-outs engineered by the US state. Obama did not take the banks into public ownership, as some were advising him to do. Drastic bank reform was off the table as the Federal Reserve embarked on a round of 'quantitative easing' to flood markets with cheap money designed to complement the Recovery Act. Instead, the Treasury designed 'stress tests' to increase the capital reserves of banks, with the result that US banks are now better capitalized –and financially healthier – than at any time in recent decades.

The companies that relied on those banks would have gone down if the financial system had collapsed. Instead, with cheap money, low interest rates, and rising unemployment not only have the companies, for the most part, remained in business, but profits after taxes in the US during the worst crisis in decades have actually increased by one-third. Consider the case of General Motors and Chrysler. The Obama administration brought GM in temporary public ownership under stringent conditions that allowed the company to rewrite its labour contracts, fire its ineffectual management, and quickly close its less efficient lines and activities. Placing GM in short order into such a favourable corporate environment allowed the company to quickly repay its government loans and rapidly return to profitability.

Strong profitability across the US corporate sector has produced a predictable result: equity prices in stock markets have boomed. From March 2009, some 7 weeks after Obama's inauguration, equity prices have nearly doubled. Booming profits and equity prices were not translated by the Obama administration into a tax grab: in the second quarter of 2010 total corporate taxes in the US were, at about US$442 billion, almost the same as during the peak of the credit boom in 2007, prior to the crisis; the US corporate sector is paying a lower share of its income in tax.

Of course, part of the discontent that the Tea Party has played to is high unemployment. Yet increased unemployment has been pivotal to the success of the US corporate sector since the depths of the crisis were breached. Unemployment disciplines the labour force and in so doing sustains the corporate profits that have restored the vigour of US capital. Indeed, according to the Congressional Budget Office, a non-partisan body, far more would have been out of work without the stimulus and quantitative easing.

Claims that Obama is the first US president not to believe in the US Constitution, that Obama is committed to fundamentally rewriting the relationship between the US state and civil society, and that Obama is a socialist thus seem to brazenly ignore what Barack Obama has done since he became President. In the face of a crisis of US capitalism, under the advice of his 'right Keynesian' economic team Obama's actions have robustly restored the reign of capital – and particularly finance capital – in the US. Indeed, the new round of quantitative easing announced on the day of the US mid-terms is great for finance capital – it is good for equities, for bonds, as well as real assets, while at the same time cheap money will depress the US dollar, stimulate exports, and stimulate corporate profits in circumstances where labour has been fiercely disciplined by increased economic insecurity. The US has gone back to the future, facilitating the continued rise of the plutocrats that increasingly shape the operation of the US political economy, and in so doing directly shape the process of global development.

The Maoist insurgency in India

From Jairus Banaji, this is a typically astute and erudite analysis of the Maoist insurgency in central India, written partly in response to Arundhati Roy's “Walking With The Comrades”. It is, in my view, essential reading for those interested in India, but also in anti-capitalist political forces and factors more generally.

The Maoist insurgency in India: End of the road for Indian Stalinism?

What’s the new global source for fresh, shiny produce?

As people scramble to make a living, food is being exported so that European supermarkets are full of fresh produce in the off-season. There is a systemic injustice in our food system.

What’s the new global source for fresh, shiny produce? - World - Macleans.ca

Rural India's communication divide and rural class differentiation

An excellent article from The Hindu on how social inequality in access to mobile telephones in rural India mirrors social inequality in access to land and other productive assets. Not surprising in the least, but having the evidence is extremely good.

The Hindu : Opinion / Op-Ed : Rural India's communication divide

the moment of truth in Afghanistan?

This morning saw the biggest leak of classified military files since the Pentagon Papers. In The New York Times, The Guardian and Der Spiegel, the true extent of the failed military 'strategy' in Afghanistan became apparent. Unreported incidents that have led to the deaths of many hundreds of civilians; 'black' units with instructions to kill or capture Afghan insurgents without any recourse to any kind of judicial process; the increasing use of Reaper drones to hunt and kill by remote control from Nevada; the acquisition by the insurgents of surface-to-air missiles.

Emerging from documents leaked by a 22 year old military intelligence analyst named Bradley Manning, who is now in prison facing court martial, the 'collateral damage' of the conflict has never been starker: French troops strafing a bus full of children in 2008; a US patrol machine-gunning a bus; Polish soldiers mortaring a village wedding party, apparently in reprisal for a previous attack, which constitutes a war crime--in all, the files document 144 unreported incidents. For example: British forces are identified as being involved in 21 unreported incidents resulting in at least 26 deaths; at least 16 children were killed or wounded. This is a brutal war against the Afghan population; no wonder the insurgents are growing stronger by the week. War crimes tend to do that.

Richard Norton-Taylor, writing in The Guardian, said this:

'The logs...provide unprecedented insight,...painting a picture...of brutality, cynicism, fear, panic, false alarms and the killing of a large number of civilians -- many more than of foreign troops or insurgents -- by all sides in the conflict. And, inevitably, "friendly fire". It is a story of deep-seated corruption by senior members of the Afghan police, of black operations by coalition special forces engaged in assassinations of dubious legality, of spies, and of unmanned but armed drones controlled by "pilots", including private contractors, sitting in front of computers thousands of miles away.'

Every citizen concerned about this war should read these files, and decide for themselves:

http://www.guardian.co.uk/world/blog/2010/jul/26/afghanistan-war-logs-wikileaks

I have little doubt that these files will make an enormous contribution towards government leaders finally coming to say what the world has said for a long time: that this war is not only unwinnable, but quite fundamentally unjust.

how not to solve an economic crisis

Thirty months ago the contours of the global economic crisis began to become apparent. Twenty-two months ago the developed capitalist countries came exceedingly close to a private sector financial collapse. The causes of the global economic crisis have been laid out, in full, in previous entries to this weblog. What is remarkable, however, is how little has been learnt by global economic policymakers.

Outside of the United States, where the fiscal stimulus designed to offset the worst possibilities of the crisis is gradually winding down but is nonetheless still having an impact, there has been a move to 'fiscal consolidation'. In Europe in particular--Germany, Britain under the Conservative-Liberal Democrat coalition, the Netherlands and elsewhere--economic policymakers seem to be blithely unaware of the grievous state of their economies. In an effort to cut government budgetary deficits sooner rather than later, European economies are slashing government spending and raising taxes as their attempt to steer their countries out of the crisis. I have seen economic incompetence amongst policymakers in the developed capitalist countries before: but never on this scale.

Consider: the current driver of global economic growth are the developing capitalist countries, and in particular China, India, Brazil. All of these countries have an economic model predicated upon producing goods and services for the developed capitalist countries that are comparatively cheap because of their lower unit labour costs. For these countries to continue to grow, and pull the world economy along with them, they need to be able to sell their products. Who are supposed to be buying these products? We are: the developed capitalist countries where we live.

However, the withdrawal of the fiscal stimulus and the shift to fiscal consolidation has to make one wonder how we are supposed to buy these products that the developing capitalist countries are supplying to us. As budget cuts hit Germany, Britain and elsewhere, this is a stark question. It is, however, most starkly posed by the most important developed capitalist country of all: the United States.

How are Americans going to buy the products of China, India and Brazil in the current economic climate? Consider these findings of a recent Pew survey on how the recession has affected Americans:

* more than 50% of all American workers have either experienced a period of unemployment, taken a cut in working hours or rates of pay, or have been forced to go part-time since the onset of the crisis
* an average unemployed worker in America has been out of work for almost 6 months
* collapsing share and household prices have destroyed 20% of the wealth of an average American household, making them effectively poorer than they were 35 years ago
* 60% of Americans have either cancelled their holidays or have cut back on their holidays, in a country with the shortest holidays in the developed capitalist countries
* 25% of those between 18 and 29 have had to move back in with their parents
* less than 50% of all American adults believe that their children will have a higher standard of living than theirs, and more than 25% believe that their children will have a lower standard of living

One does not have to be an unreconstructed Keynesian to see that the only way that this crisis will not be borne by those least capable of bearing the costs of the it is to maintain the purchasing power of households that have been hit hardest by the crisis. Chinese, Indian and Brazilian goods need people to buy them: but right now governments in the wealthiest parts of the world seem to be doing everything in their power to ensure that those that would most want to buy goods and services from the developing capitalist countries are not able to do so. Weak consumer demand for wage goods is no way to solve the crisis; it is a recipe for deepening the crisis.

current activities, spring 2010

Spring seems to always see me quite busy, and the spring of 2010 will be no different, even though my teaching responsibilities in the Department of International Development Studies take a holiday. The biggest delight I have this spring is attending the Convocation of the first international development studies cohort at the University that I have seen through from the beginning to the end. Even more pleasing, I will be handing out their diplomas.

The only teaching I will do in the spring will be to act as External Examiner at a PhD defence at Wageningen University in the Netherlands on 16 June, which will require my presence. Of course I will have to maintain my ongoing responsibilities as Chair of the Department of International Development Studies to students, staff and faculty. This will also involve, for the first time, attending the annual meetings of the Canadian Consortium of University Programs in International Development Studies.

In terms of my research, I will be revising the manuscript of my forthcoming book for Fernwood Publishers, Hungry for Change? Farmers, Agrarian Questions and the Global Food Crisis as well as my chapters in the forthcoming textbook An Introduction to Gender and Economics: Foundations, Theories and Policies. I will also be giving a paper at the Second Annual North American Historical Materialism conference in mid-May, while late May sees me at the annual meetings of the Canadian Association for the Study of International Development.

Finally, a large amount of my time in the spring will be taken up undertaking some advisory work for the United Nations Development Programme New York, and possibly elsewhere if it is required.

I will find some time, though, to enjoy the new season.