Ron Paul is right a lot Tuesday, Apr 13 2010 

Some readers might not believe it, but there was a period of time when I considered myself a “Ron Paul libertarian.” Paul is who inspired me to explore libertarianism and, indeed, politics in general. His run for presidency last election got me to not only explore political concepts differently but to also be actively engaged in the issues of the day, so he has always been an influential person in my political understandings. However, not long ago, I became disillusioned with Paul and suffice it to say I disagree with Paul on several key issues. There’s no need to go into the details of that transformation, but I should point out that I still agree with Paul on many things.

One thing that I particularly like about Paul is that he’s quick to criticize both of the political parties in the United States (even when he belongs to one of them). I don’t usually like to get involved in party politics, as they are usually inane, but I think Paul raises some great points that are hard to ignore. One salient point that he highlighted at last week’s Southern Republican Leadership Conference, much to the chagrin of many of the conservative Republicans in attendance, was the hypocrisy of mainstream Republicanism. He blasted them for their neoconservative tendencies. In his speech that drew both applause and ire, Paul pointed out, “The conservatives and the liberals, they both like to spend.” He condemned how “Conservatives spend money on different things.” To wit, “They like embassies, and they like occupation. They like the empire. They like to be in 135 countries and 700 bases.”

Certainly the right-wing loves to pay lip service to fiscal conservatism, balancing budgets, and keeping spending to a minimum. In practice, however, they act just the opposite, as the record clearly demonstrates. Paul, despite being a member of the Republican party, has no qualms mentioning this. Paul is right in lambasting them for their costly endeavors, which include the expansionist foreign policy, two wars in the Middle East, Wall Street bailouts, tax cuts without spending cuts, and radical spending on military. This is all okay by Republican standards, and they see no inconsistency in their rhetoric for small government and limited spending.

Republicans actually tend to outspend their Democrat counterparts. It was, after all, Bill Clinton who created a budget surplus and George W. Bush who accumulated more national debt than every other president combined (to use the words of Stephen Frank of the political science department and supported by King Banaian of the economics department). While Democrats do spend, they typically “spend money on different things,” like social programs, science, aide, education, and infrastructure. They also don’t tend go on and on about deficits, limiting spending, and so on.

The pattern is familiar. Ronald Reagan, for example, championed free markets, but very rarely ever adhered to the doctrine. Noam Chomsky refers to this as the “really existing free market doctrine,” namely because it rarely is ever consistent with “the official doctrine that is taught to and by the educated classes, and imposed on the defenceless.” George H. W. Bush railed against taxes—before he raised them. George W. Bush touted “no nation building,” before he began his senseless adventurism in the Middle East. Perhaps we shouldn’t expect anything else from politicians.

Indeed, to bring it to the present, Michele Bachmann, the congresswoman from Minnesota, claimed yesterday, “we’ve gone from the United States having 100% of the private economy private, to today the federal government effectively owns or controls 51% of the private economy” over the past 15 months of President Obama’s presidency (this is why she believes Obama is “anti-American” and “the most radical president” in U.S. history). Of course, it’s not very difficult to see how patently absurd her claims are. One of her examples is the bank bailouts. However, as FOX News’ Chris Wallace was quick to point out, it was President Bush who started those bailouts, which Bachmann responded was “unfortunate.” Certainly unfortunate for her argument. Even more unfortunate is that Obama’s actions don’t actually constitute “nationalization.”

As Ben Chabot of the Yale economics department keenly pointed out to NPR in 2008, “it’s not nationalization because they didn’t buy common stock with voting rights, so they don’t have a seat at the table.” The business press is in accord, and believe “the Obama plan is working.” But even if it was nationalization, there’s nothing “anti-American” about nationalization, as Harvard’s Richard Parker is quick to point out. He mentions our long history of government intervention and nationalization, beginning with “the Northwest Ordinance of 1789, and then the Louisiana Purchase of 1803.” He continues with mentioning the vast amount of land, airspace, roads, and valuable infrastructure that the U.S. government owns. During the two world wars, the U.S. government took over sizable portions of the economy—one reason for the U.S.’s recuperation from the Great Depression. After 9/11, Bush “effectively nationalized the private-security firms at airports, and replaced them with the federal TSA.” Needless to say, no one moaned about “anti-Americanism.” As I have always liked to mention, the United States has always been heavily involved in markets (having a Republican president or Congress makes no difference); fantasies about the “American free market system” are just that.

In my opinion, all this says something about the intellectual and moral culture of today’s Republicanism and our society in general. The underpinning assumption on which all this works is that what’s wrong for you is right for me. It’s a poor reflection that we cannot rise to even a minimal moral standard.

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A new era: worth its weight in lead Sunday, Nov 15 2009 

The last 35 years or so, an era of liberalization and “globalization,” has been hailed as an era of fantastic growth and economic prosperity. Thanks to Reagan and his economic reforms, we currently live in an era of magnificent economic conditions. Is it true? Is all the triumphalism merited? Well, as usual, it depends on who we’re talking about. It’s true that there has been outstanding performance of the economy, but it’s a very narrow part of the economy. It’s quite true that the ultra-rich have been making out like bandits. We get to read about their euphoria all the time. For the ordinary American, however, the story is quite different.

In my post on what are called “economic miracles,” I noted that the ordinary worker in America has been working harder and longer hours only to see their wages stagnant or decline. Most people have actually seen their wealth go away, not accumulate. The poor have been getting poorer (and the rich, richer). On my post on what’s being called “globalization,” I pointed to data to shows world GDP growth rates have slowed nearly 40% in this new era compared to the era before, which was called the Golden Age (Robert Skidelsky also discusses this in his book, Keynes: The Return of the Master). Poverty rates were steadily declining right through the early 1970s; since then, the poverty rate has either increase or stagnated. The same is true of unemployment rates, but instead of staying stagnant after the early ’70s they soared to unprecedented levels and today we are again approaching the levels we saw under Reagan.

Just about on every measure, this “Golden Age of Capitalism”—the Bretton Woods era—has outperformed this new era, which is now being dubbed the “Leaden Age.” Writes David Harvey, “The only general point of agreement is that something significant has changed in the way capitalism has been working since about 1970.” In The Long Twentieth Century: Money, Power, and the Origins of our Times, Giovanni Arrighi explains: “Rigidities increased further, real growth ceased, inflationary tendencies got out of hand, and the system of fixed exchange rates, which had sustained and regulated post-war expansion, collapsed. Since that time, all states have been at the mercy of financial discipline, either through the effects of capital flight or direct institutional pressures.” That is, states have been undermined by “the empowerment of financial capital” and economies have gone out of control.

The Golden Age of Capitalism (by “capitalism,” it’s understood we mean “state capitalism”), unlike the current Leaden Age, was marked by economic growth that was egalitarian, less severe business cycles, and overall stabilization. The dismantling of the Bretton Woods system and the descent into the Leaden Age has brought about rampant speculation, loss of capital controls, and unregulated exchange rates, all resulting in volatility, severe business cycles (take now, for example), slower growth, higher interest rates, worker insecurity (or, more euphemistically, “labor market flexibility”), and all the rest described above. (This descent is also discussed in John Eatwell and Lance Taylor’s book, Global Finance at Risk.) Now Paul Krugman, an economics professor at Princeton University and the recipient of the Nobel Prize in Economics in 2008, has been doing some Reagan mythbusting of his own. First, he debunks the idea that growth was greater in the Leaden Age than in the Golden Age. Next, he dispels myths about Reagan policies creating greater growth on a per capita basis. Finally, he goes on to explain productivity growth was more rapid during the Golden Age, not during the era of Reaganomics.

Now I’m sure some people may not be happy with the foregoing arguments, even though I find them more descriptive than normative. They might see it as an attack on free markets, but I don’t think it is. In fact, the Bretton Woods system was built around the idea that free trade was good but there needed to be some regulations on finance. Those arguments are not novel and you don’t need to read Keynes to find them. And while Reagan certainly liberalized the economy in some senses, for example through deregulation, Reagen really had no faith at all in free markets. He was, in fact, a big-time state capitalist; take, for example, James Baker who boasted to business groups that the Reagan administration has offered more protection to American business than any post-war presidency (it was, in fact, more than all of them combined). Today, we continue to operate on the idea which is that you socialize risk and costs and privatize profits—the idea of lemon socialism. Contemporary examples stare us right in the face. But Bush’s idea of abandoning “free market principles to save the free market system” is not new by any means. The point I wish to make, if any, is that these ideas are not healthy for democracy are not, as shown above, particularly conducive to economic growth in any meaningful sense.