Sunday, February 27, 2011

Conversations That Matter: Alan Nasser (Part II)

Since I've already made introductory remarks about my engaging conversation with Alan Nasser, I'd like to immediately launch into the second part of our talk. (You can read the first part here). 

CCJ: In 2009, you argued that New Deal Liberalism had written its obituary. In this piece you assert that Obama is a new type of Democrat. Ominously you wrote, "[Obama] means Business. Working people, take cover." Are there any policies of the current administration that indicate they are concerned about working people?

AN: We all like balance. I'd like to say that there are some things he’s doing for working people, but there are so many more anti-working-class policies. I don't see a single thing in this administration's agenda that is designed to benefit working people.

CCJ: Agreed.

 AN: If you take a look at the most recent developments, specifically the Council on Jobs and Competitiveness, the head of that council is Jeffrey Immelt, who is the CEO of GE . Immelt is an ardent outsourcer. GE employs more people overseas than in the U.S. In the last ten years GE has closed 29 plants, eliminated ten thousand jobs, and created thirty-thousand in India.

In 2002, Immelt gave a speech to his investors and said, 'I am a China-nut. When I meet people I say, ‘China, China, China, China, China.’ This is where it's cost effective.'

The guy is an outsourcer and this is the guy Obama appointed to be head of Council on Jobs and Competitiveness?

CCJ: It’s problematic to say the least.

AN:  The name [of the council] also bears reflection. It’s this idea that the goal of job creation is not so much to provide working people with a decent living, but rather to promote jobs in industries targeted for export-oriented growth. [Obama’s] principal aim, his macroeconomic aim in shaping economic policy, focuses on investments and exports. We want to become competitive like we were during the Golden Age by becoming exporters. He seems unaware that we were the world’s major industrial exporter in ’50s, ’60s, and ’70s because we monopolized world markets. However Europe eventually re-industrialized after World War II and became a formidable competitor, and we now have a similar situation in Asia. So the U.S. will never be a dominant exporter in the way that it used to be. Even worse, if you focus on exports, you are going to be driving wages down. Our competitors have a system based on low wages. Since there is now, for the first time in history, a global labor market, international competition will drive wages in high-wage countries down towards the level of wages in low-wage countries. We've already seen that happen. For instance, the median wage has been declining since 1973. 38 years of stagnant or declining wages – that’s astonishing. Economics 101 tells you that can’t happen. What does that tell you about mainstream economics?

I want to get a little deeper into the logic of this. Obama sees the job issue as subordinate to the export issue, and there is a causal chain. If you want to promote exports, you have to increase investments. How do you do that? We know how Obama does that, you cut corporate taxes. The next link in the causal chain is that by cutting taxes on the rich you increase the deficit. When you increase the deficit, you then have a pretext to cutting social programs. It's not apparent on the surface, but an export economy is where public spending is slashed.

Another relevant point in this connection is that some time in 2010, President Obama gave a speech where he said, 'I've never believed it was government’s  purpose to create jobs. Job creation has to happen in private sector.' Obama is a free-market libertarian.

These policy changes suggest we're living in such radically different times, and this requires that we change the way we think about progressives and progressive ideas. Mainstream liberals like Paul Krugman and Robert Reich call for an increase in government spending and aggregate demand. That’s not a Keynesian position. For Keynes it was not about aggregate demand or output but effective demand. That means it was about increasing jobs, not merely increasing output. Increasing output won’t necessarily have any effect on jobs. Keynes was a believer that ultimately you have to have government directly providing a stimulus for working people, and the point he made – and no one talks about this, and I think it’s important – is that government should provide direct aid where it is needed, not indirect aid by, e.g. reducing corporate taxes to stimulate hiring, or recapitalizing banks to stimulate lending, which we see now has failed. The way Keynesian policy has been taken up is to only provide jobs during recession. That’s not what Keynes argued. Policymakers think that it should be done during a recession, but Keynes thought it should be done during recessions and expansionary periods, because unemployment persists even during economic expansions.

 So it’s not very helpful to think that there is 'too much unemployment,' but rather be more specific [that’s according to Keynes]. There are specific cities, states, regions where unemployment is a serious problem, and other places where it isn’t. So government should specifically target jobs by providing employment at these specific [geographical locations]. It seems like you would say, 'of course,' but when you read Krugman and others, they’re into what the British economist Joan Robinson called bastard Keynesianism. That is the kind [of Keynesianism] that has been adopted by U.S. policymakers, and it is a distortion of Keynes's thought.

CCJ:  I'd like to stay on this topic of working people. I've noticed that the SEIU has been promoting and arguing in support of 'middle class workers' Correct me if I'm wrong, but that seems to be another way in which working class people have been 'erased' from the public discourse. Do you agree? 

AN: Of all the questions you asked so far, this has to be my favorite one. Furthermore, of all the questions, this one is the most significant. You could go on endlessly, too. I think you’re right in asking it, and I think I know why.

CCJ: Well, it seems to me that the working class and the poor are no longer being discussed.

AN: I am very troubled by the usage of the term middle class. Of course [the term] suggests that there is a class above and a class below. Americans are very angry at what the rich are carrying off and what they've been able to carry off. They're doing better now than they ever have in American history. But what about that other class? If there is a middle, logically, there has to be at least two others. There has also been a significant change in the rhetoric of the Democratic party. As you know, they used to call themselves the party of the working class, but they don't call themselves that anymore. It's as if [working class people] don't exist. Maybe they don't vote, so they don't carry much weight. They can't donate money, so they are no use to the elites. The rich say: 'we don't care about them. It's the middle class who goes out there stumping.'

The earnings of a typical wage earner is far lower than you'd think. These [wage earners] have in fact been marginalized. They are not constituents of the Democratic party. They are not a constituency of any party, except maybe that of a marginalized party. Parties that the press will acknowledge . . . well . . .  the working class might well as not exist.

CCJ: To continue on this topic of the poor and working class. What does this mean then, this sanitizing of the poor and the working class from political discourse? What are the ramifications?

AN: The ramifications are the forces and tendencies that I outlined in the longer article that I sent to you that are leading towards rendering the majority of the population into permanently indentured debt peons. There is something dramatic happening, and that is the majority of wage earners will be consigned to an even lower standard of living, lower wages, and debt peonage. They are going to be ignored, and they will not be discussed in the media.

At the same time you hear how we need to pay attention to middle class, even though the media admits that the middle class is shrinking. Robert Reich makes a very big deal about this thing. He is not alone. Others like the Center for American Progress, Dean Baker, and Robert Kuttner – the best social democrat out there – all have very detailed explanations about the disappearance of the middleclass.

CCJ: Of course. I’ve argued that if the middleclass isn’t extinct already, it’s fast heading that way and ought to be considered endangered. And I guess that’s similar to what these folks are talking about.

AN: Yes, and all of them talk about the declining middleclass. OK, but where are they going? Some other class – the increasingly impoverished working class – might be getting bigger. But that's not talked about! There was this great song that came out in the 1930s. It was called “Remember The Forgotten Man,” and the working class is now a part of that. It has become that forgotten class. It’s disregarded. It is treated like an appendix! It is an appendage that is there, but who cares about it? It doesn’t matter. The result of this, if I am right, is that the working class is becoming increasingly impoverished and larger. It is less an object of policy and political concern. People, however, will not sit there like bumps on a log. I see this larger class becoming part of a new form of resistance. But I also foresee that there will be more domestic violence, more crime, and more suicide. That always happens when economic insecurity increases. That is why I think progressives need to be looking at ways we can organize the poor and the working class. First, and you’ll understand this well, people need to be educated. They need to understand how the economic system works, how it grows in stages, and why it fizzles out at some point.

CCJ: And of course you’re speaking specifically about the stages of capitalism, correct?

AN: Yes. So, people need to understand how it works. Economic systems have come to an end many times throughout the course of history. Then there is something very new and different that needs to be born [afterwards]. That’s why it’s important to promote a sense of historical imagination, of greater possibilities whose contours are indicated by the way the current system malfunctions. Liberals have no historical imagination. That is why I can kind of admire Tea Partiers. They have strong beliefs and they act on them. Liberals seem to believe only in letting people do what they want as long as they don’t prevent other people from doing what they want. They seem to have no values.

Regular people need to know that there are greater possibilities. We need a correct diagnosis of our society. That will point us to a better future and help us understand what it will look like. That is a Marxist position, but I think it can be defended. If someone criticizes me for that, I can say, 'What’s your suggestion then?'

CCJ: How do you feel people think about socialism versus capitalism? 

AN: I noticed that the Rasmussen poll showed that the majority of people say they prefer socialism to capitalism. But I think that what they meant was that they prefer Obama to his far-right critics who call his policies “socialist.” Of course Obama is as far from democratic socialism as you can get. To my mind, Cryn, a major task at this point is for people who see democratic socialism as both possible and desirable to explain to their interlocutors exactly what democratic socialism is. Hardly anyone in the US, including the intellectual class, knows what democratic socialism means.

Alan Nasser is professor emeritus of political economy at The Evergreen State College in Olympia, Washington.

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