Answers to All Your Election Questions

LI has found the leftist reaction (for instance, here ) to Obama this election season a little… puzzling.

LI has no qualms about wanting Obama to be president than John McCain. If I made a checklist that included Iraq, Iran, unemployment benefits, dealing with the recession, health care, the environment, Obama would score a 100 against McCain. Hell, if I made the same checklist and contrasted Palin and McCain, Palin would score well above her erstwhile partner. Palin’s lack of experience – that is, her non-processing by the DC factory of conventional wisdom, is a point in her favor. Right, she does wear hick resentment like a uniform, but when she is on her own, making a choice, often her common sense wins out over her talking points. For instance, there’s the cute mistake she made a week ago, in denouncing Obama’s stated policy to talk with Iran without preconditions, when she explained herself by confusing “preconditions’ with “preparations” – coming out solidly against meeting Ahmadinejad without the latter. This was just used to laugh at her ignorance; but I laugh that she naturally locates herself in the Obama camp.

So, the uninteresting political question at the moment is who to vote for. The more interesting question is asking: how can one operate on the conditions of reality at the moment when reality takes a left turn?

Here, it is revealing to contrast the scene that will await Obama’s presidency with that which awaited Clinton’s. Clinton, too, was elected during a recession. But, in distinction from the recession of 2008-, the recession of 1991-1993 did not fundamentally alter the structure of neo-liberal hegemony. Quite the contrary. Stage two of that hegemony was launching at that very moment – the true explosion of the financial sector. Plus, there was the tech bubble – which came about due to the convergence of two things: the socialistic largesse that had allowed a generation of Americans to get relatively cheap secondary schooling at public colleges and universities in the seventies and, partly, in the eighties – and the Reagonomics that had made the U.S. the primary target for foreign investment among the nations of the world.

Given these two factors, Clinton, during the course of his administration, came to think that there was a space for a “left” Reagonomics, a progressive neo-liberalism.

I don’t think that is the situation at present. I am guessing that neo-liberalism has no more cards up its sleeves. And that means that the very structure of it is under assault at the moment.

As I pointed out in my mangle of equality post, neo-liberalism became the dominant policy paradigm in tandem with the expansion of the financial services sector because the latter allowed it political viability.

If I were to pinpoint the launch point for neo-liberalism, it would be 1974. Duncan Campbell-Smith’s review of a book on the history of mutual funds says it well:

The massive switch from defined-benefit pensions to defined-contribution pensions based on private plans, fully launched by 1974, helped turn mutuals into a household word: they accounted by 2006 for about half of all assets in individual retirement accounts.

This is a shift that should loom symbolically large in any account of the shift from the Keynesian golden years to the years of Reagan and Thatcher. There is a sad little myth that floats around lefty circles that explains the rightward tendency of voters who are working and middle class to be all about cultural, as opposed to economic, values. It is all, we are told, a trick of GOP smoke and mirrors, and if these folks knew their real interests (which are, absurdly, supposed to be separate from their cultural interests), they would never have voted for the nasty Republicans. As we said in the mangle of equality post, this explanation doesn’t hold water. There, we emphasized the free rider aspect of Republican voting. If I vote for x, who wants to lower taxes and gut medicare, I can be pretty sure that lowering taxes will happen, and gutting medicare won’t. Thus, I get to luxuriate in a symbolic vote against big government while continuing to enjoy the benefits of big government. And I get a tax break. However, free riding isn’t the whole story.

The whole story begins with the familiar basics – the crushing of labor’s bargaining power, the decline of household incomes, the extrusion of a second earner into the labor pool, etc. But into this story comes the financial sector, in two ways: first, of course, is the extension of credit as it has never been extended before. But the other part of the story is a story of investment. And here, there is a slight paradox. Let’s say x company does its best to curb the benefits going to its workforce: truckers, middle managers, secretaries, whatever. And let’s say this increases its return on investment, sending its stock price higher. Now, it is possible that the workforce so effected, being pretty much forced to invest and – as is usually the case – settling for investing in the company, benefit from that increase in stock price. Think of it as a sort of mad bet on your own impoverishment. If the bet is such that the margin you gain from the bet exceeds the margin of your immiseration, you’ve gained from the bet.

The system of such bets was, in fact, what made coddling investors a politically advantageous position. It made households accept a world in which, relative to the wealthy, they were falling behind.

The crazy logic of this – borrowing on the one hand, investing on the other – has been dealt a double blow by the zona. One should never bet that the neo-liberal order doesn’t have another trick up its sleeve, but LI is going to boldly suppose that it doesn’t. What does that mean?

We see two options. Either, households will have to rely on that rustiest of tools – organized labor bargaining power – to wrest a fairer share of productivity gains from the investors – or they are going to have to cheapen their living costs. The first option, although it dances like a sugarplum dressed like Vladimir Lenin in my head, is I think a no-go. The second option, however, would entail unimaginable social democratic gestures by the government, from taking over health care costs to lowering the costs of secondary education to getting involved in improving American infrastructure.

This, then, is how I see the conditions for liberal politics at the moment.