It’s still the economy, stupid

Bill Clinton and Barack Obama were elected President primarily because of the economic failures of their predecessors.  Each of them faced a backlash in the midterm elections following their victories, at least partly because of their economic policies.

The same thing will happen to Joe Biden unless he can act decisively and quickly to meet the impeding economic and pandemic crises, according to political scientist Thomas Ferguson in an interview with podcaster Paul Jay. 

Clinton ran in 1992 on the slogan, “It’s the economy, stupid.”  But during his two years, he did little to improve the economy.  He pushed through the North American Free Trade Agreement, which had been part of the Reagan agenda and was opposed by organized labor.  He failed to get Congress to even consider a health insurance reform bill.  Republicans won control of both houses of Congress in 1994

Obama was elected during the 2008 recession.  His administration rescued failed banks, but did not fully implement a law to rescue victims of foreclosures.  Republicans won control of the House of Representatives in 2010.

The decisive factor in the 2016 election was the voters, of all races, who supported Obama in 2008 and 2012, but either voted for Trump and declined to vote at all in 2016. 

The notion that racism and sexism were the primary factors driving the Trump vote is not borne out by the data, he said.  Economics was very important too.  Trump’s promise to revitalize manufacturing and impose tariffs on imports gave him just enough votes to squeeze out a majority in key industrial states.

The rural working-class found their lives a little better under Trump and don’t believe the Democrats care about them.  Some of this was the momentum of the economic recovery that had begun under Obama.  Much of it, according to Ferguson, was due to the Federal Reserve System artificially pumping up the economy by holding down interest rates.

He said polls indicate Biden’s margin of victory came from voters in the income brackets between $100,000 and $200,000—not the ultra-rich, but not the wage-earning class, either—who are uncertain about their economic future.  Biden’s message was reassurance and a promise of economic stability.

Trump’s gains among Mexican-American voters along the Texas border were due to so many of them working in the oil and gas industry, he said; some of them found construction work in building Trump’s border wall.

The received wisdom is that big business leaders supported Biden over Trump because they thought Trump is too erratic.  Biden did get a lot of campaign contributions from Wall Street, but much of corporate America supported Trump—the oil and gas industry, the pharmaceutical industry and pollution-heavy industries such as pulp and paper making.

Even an FDR would have tough going today

In 2017, the incoming administration inherited a bad system that needed to be reformed, but, as we know. it wasn’t.  In 2021, the incoming administration will face overlapping emergencies probably even worse than Franklin Roosevelt did in 1933. 

The USA and much of the rest of the world faces not only an economic crisis, but an ongoing series of weather-related crises and probably a continuation of the pandemic plus ongoing international crises.

FDR was sworn in with the economy in ruins, including Wall Street and the banking system.  The country was pretty much ready to accept any bold action that FDR might propose. 

Yesterday’s leader

There were a number of political currents much more radical than Roosevelt––the CIO, the Progressive Party in WIsconsin, the Farmer-Labor Party in Minnesota, Huey Long’s “Every man a king” movement.  The Communists and socialists didn’t have a mass following, but they were more influential than they ever were before or since and gave a lot of energy to the labor movement.

In the political spectrum of his time, Roosevelt was what we’d now call center-left.  The Democratic Party was never a true party. like the British Labor party or the French Communist Party, but labor unions had a place at the table, along with the oil industry, teh real estate industry adn so on..

The opposition to the New Deal didn’t coalesce until 1938, when the Republican-Dixiecrat alliiance blocked FDR’s attempt to pack the Supreme Court and FDR failed to purge the Democratic Party of his strongest opponents in the Senate.

Then, too, there was no military-industrial complex in the USA in the 1930s.  The U.S. had a smaller standing army than Portugal.  The military-industrial cpmplex as we know it today was a creation of the Democratic administrations of the 1940s and its main opponents were Republican isolationists, many of them progressives who remembered World War One

Lyndon Johnson’s Great Society was in some respects like the New Deal—a short period of radical reform terminated by a war. Johnson’s legacy is as a great civil rights president – the greatest since Lincoln and Grant.

But except for Medicare, none of the Great Society programs provided universal benefits to a wide public, and none of them except Medicare were broadly popular.

Tomorrow’s leader?

The incoming president in 2021 will face a different balance of forces than FDR did.  Wall Street and the Fortune 500 corporations are not in disarray. 

Policies put in place during the Obama administration allow the Federal Reserve to prop up the banking and financial system without legislation.  The bailouts enacted by Congress earlier this year primarily benefit big business.

It is hard to see how any program of progressive reform can be enacted without a drastic reduction in military commitments and war spending.  But millions of Americans depend on the war machine for their livelihoods—not just plutocrats, but working people and the middle class.

We need to replace the military-industrial complex with a Green New Deal.  But I don’t see any mass movement in favor of it, and even if there were, it would be a big challenge to bring about.

The strongest mass movement we have in the United States today is the Black Lives Matter protest movement.  It is the biggest U.S. mass movement in my adult lifetime.

But the leaders of this movement, unlike the New Dealers, see the main division in the United States as racist white people vs. African-Americans and their allies. They don;t see it as the common people of all races vs. a rich and powerful elite.

Of course racial prejudice and racial discrimination, including police abuse of minorities, are a great evil and it is good that there is a strong movement for change.

But seeing everything through a racial lens is perfectly compatible with plutocracy and the forever wars.  That’s why BLM gets support from big corporations and foundations. 

The goals of Black Lives Matter need to be part of a larger, more inclusive movement, and I don’t see one on the horizon.  Of course this could change overnight.  Maybe it already has changed and I don’t see it yet.

Trump as a possible one-term President

I think there is a strong possibility that Donald Trump will be a one-term President—provided there are still free and fair elections in 2020.

I think that for the same reasons I thought Hillary Clinton might be a one-term President.  I believe there will be another recession, as serious as the last, during the next four years, and I think Trump will be even less able to cope with it than Clinton.

He campaigned as a populist champion of the common people against the elite.  But he spent his life among the elite, and his business history shows that he is only tough with those with less wealth and power than he has.

Trump kicks downward.  He  doesn’t punch upward.

His transition team is drawn from K street lobbyists.   His preference is to appoint from the private sector, not from government or academia.

His likely choice for Secretary of the Treasury is Steven Mnuchin, his campaign finance chairman.  Mnuchin is CEO of an investment firm called Dune Capital Management, but, according to POLITICO, he worked 17 years for Goldman Sachs, whose subprime mortgage manipulations were a big contributor to the last recession.

The problem is that, in a recession, what makes sense for a business owner doesn’t make sense for a President.  A business owner’s instinct in tough times is to cut back.  That is rational behavior for the individual, but cutting back means less money in circulation, less economic activity and a worse recession.

Russia’s economic crisis and the danger of war

Russia is in an economic crisis—the result of U.S.-led sanctions, the Saudi attack on oil prices and the underlying weakness of the Russian economy.

With the collapse of the Russian ruble, Vladimir Putin has been backed into a corner with few options—all of them bad.

Click to enlarge.

My question is:  Is it a good idea to deliberately bring about a crisis in a nation with 8,000 nuclear weapons?

Only a small fraction of Russia’s nuclear arsenal would be needed to reduce American cities to rubble.   Yet the U.S. government treats Russia with less caution than it does North Korea.

I do not think that Vladimir Putin would intentionally launch a nuclear war, any more than Barack Obama would.  But I think their policies bring about a situation in which an unintentional nuclear war is highly possible.

I think President Obama is more to blame for this than President Putin.  For the United States, the stakes are geopolitical advantage.  For the Russian Federation, the stakes are the independence of the nation.

The United States command and control systems are much more lax than they were in the era of Curtis LeMay and the Strategic Air Command.  I don’t know about the Russian Federation, but it wouldn’t surprise me if things were just as bad or even worse over there.

Nuclear war was narrowly averted several times during the Cold War through good luck and cool heads both on the US and Soviet sides.  The world can’t count on being lucky forever.

And even if the worst is averted—this time—the world will never be safe until the world’s nuclear powers disarm, starting with Russia and the USA.   The current crisis has eliminated the possibility of disarmament for at least a generation.

President Putin is a tough and ruthless statesman, but a sane one.  If he is driven from power as a result of the crisis, his replacement may not be so sane.

I do not think that President Putin would throw his nation on the mercy of the US-dominated International Monetary Fund for a financial bailout.  The history of IMF bailouts shows that they involve a loss of national independence, and public sacrifice in order to pay off international creditors.

I think it far more likely that he would throw Russia on the mercy of China.  This would throw open Russia as well as Central Asia to be hinterlands of natural resources to support China’s growing industrial power.

President Putin some years back, which he was seeking recognition of Russia as a respected great power, proposed an integrated European market stretching from Lisbon to Vladivostok.   That’s no longer on the table.   Now the most likely prospect is a Chinese-dominated integrated Eurasian market stretching from Beijing to Berlin.

∞∞∞

Russia Tries Emergency Steps for Second Day to Stem Ruble Plunge by Ksenia Galouchko, Vladimir Kuznetsov and Olga Tamas for Boomberg News.

It’s Not Just Oil and Sanctions Killing Russia’s Economy: It’s Putin by James Miller for The Interpreter.

The bleakest winter by Ed Conway for Medium.  The six downward steps in a typical currency crisis.  Russia is at step four.

Eurasian Integration vs. the Empire of Chaos by Pepe Escobar for Asia Times.  (via the Unz Review)