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Thoughts on the History of the Current Crisis


Most of us who write on the economic history of our economic woes do indeed begin with Carter. We tend to cut him some slack, probably more than we should, because he was dealing with a bad recession and some temporary pro-business legislation during such a period would not be unusual and might even be useful. The problem is that when the recession went away these measures didn't. By then Reagan was President and voodoo supply side/trickle down economics was all the rage. Bush I was a continuation of the trends begun under Reagan.

Clinton, the Great Triangulator, plays a major role in all this because like Obama he not only embraced aspects of the Republican corporatist program, he legitimized it, made it bipartisan, and expanded it. Greenspan's easy money policies allowed Clinton to fuel terrific job growth. Wages went up too. But at the same time NAFTA was put in place. Free trade was sanctified. Even liberal Establishment economists like Krugman promoted it. (One of many bones I have to pick with him.) People may have fond memories of the Clinton Presidency both because of the man and the good times of the period but his legacy was highly equivocal and, to be honest, in the great scheme of things, negative.

It tends to get forgotten that in triangulation for every plus there is a minus. Hearkening back to Carter, the positives tend to be temporary while the minuses endure. The minuses in this case set the stage for Bush II. Bush II inherited a recession from Clinton. Clinton had goosed the economy with high employment and what became the fiasco. Bush sought to replicate Clinton's bubbles but in housing and the stock market. From an economic point of view, this was an extremely volatile and explosive combination. Add in Bush's mania for what amounted to total deregulation and it was suicidal. Limits were taken off debt and speculation. The days of the casino had begun. We all know how it turned out. The housing bubble burst. The casino blew up, and then was quickly rebuilt with your taxpayer money.

By the time we get to Obama, Democrats only triangulated in their rhetoric. On the policy level, they had embraced the whole of the Republican corporatist agenda. Indeed you can't even call it a Republican agenda because it has become the common ground of both parties. Yes, Virginia, this is what bipartisanship really means. And this was true across the board, not simply, or primarily, in economic matters. The electorate was behind the curve on this and remains so. They elected Obama expecting change when no meaningful difference existed between the two parties. The problem for us and our country is not Republicans and some Democrats. It is all officeholders and virtually everyone on our political scene. More, it is all the elites behind them in academia, the media, in think tanks, centers, and institutes, in industry, and in government.

We can not say that it was Reagan, Bush, and Obama, but not Carter and Clinton. We can not say, it was these Democrats, but not those. We must look past rhetoric and concentrate on what actually was done. It means nothing to say that this one meant well, and this one did not. The road to perdition is paved with good intentions. We do not elect Presidents and Congresses to mean well, but to do well, by us.

This has been a massive construction, more than 30 years in the making. Most of us, including those who perpetrate and benefit from it, have spent all or nearly all of our adult lives under it. There are many names for it. The wedding of state and corporate interests together with military excess is a standard description of fascism. However, the term is frowned upon by those whom it describes and it remains on the margins of our common discourse. Corporatocracy or corporocracy are accurate, but are not extensively used. Plutocracy is also out there but really doesn't capture the criminal nature of the enterprise. Oligarchy does but its usage tends to be identified with post-USSR events in Russia. I prefer corporate kleptocracy. It too is accurate but but suffers from being a bit of a mouthful. The simplest and easiest to communicate description is looting, generalized looting --by our elites, corporations, and wealthy.

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Submitted by MontanaMaven on

I read Doug Henwood's 1996 book "Wall Street" that predicted all this. I was struck by his description of the New York City bankruptcy and takeover by the Bondsmen in 1975-1976. Seems like it was a dress rehearsal for "The Shock Doctrine" of Milton Friedman and the Chicago Boys.

In a classic 1976 New York Times op-ed piece, L.D. Solomon, then publisher of New York Affairs, wrote 'Whether or not the promises...of the 1960's can be rolled back...without violent social upheaval is being tested in New York City...If New York is able to offer reduced social services without civil disorder, it will prove that it can be done in the most difficult environment in the nation." Thankfully, Solomon concluded, 'the poor have a great capacity for hardship'"

I lived in NYC starting in 1976 and the place was a mess with garbage in the streets. But I was young and excited to be in the Big Apple. I just thought that is what NYC looked like.

Then came Carter and deregulation of airlines and trucking. And I believe a Democratic congress lifted the cap on usury i.e. interest rates that banks could charge to usher in the credit society in 1979.

Submitted by Hugh on

Corporatism is like the tide. Each wave that comes in is higher than the last. Just so with the Democrats, they didn't start to suck all at once. It was a defeat here, a compromise there, never recovered, then a sellout here, acquiescence there, and on and on. I remember back when I was writing my Bush scandals list I got a lot of criticism over one item that dealt with the failure of the Democratic party to act in any sense like an opposition party during the Bush years. In retrospect, I should have taken their silence and inaction as a tell and been even harsher in my critique. The more we learn the further back and deeper we push the damage to our political and economic structures.

Submitted by libbyliberal on

Corporate cronyism, profits uber alles ... anti-feeling culture.

Thanks for this, Hugh. A good reminder.

Clinton's team became Obama's team, Greenspan once again the media's guru. WTF???

I remember when I got a notice with a paycheck so very long ago that my 401k was going to become speculative I thought "WTF? This isn't right!" but no one in my work community got excited enough to explore. I was clueless in my own personal financial fog. Learned helplessness.

We citizens are like children doomed to being raised by neglectful, addict, narcissistic parents. We are either angry hostages, haplessly despairing, misguided lemmings helping the rapists and pillagers, ... but there are 400 families in America that are really enjoying mountains of money as the rest of us sink into the quicksand.

As our government murders, tortures, terrorizes, displaces hundreds of thousands of innocent fellow human beings, abusing young soldiers to carry out the devastation and risk their bodies and minds and souls.