The coming economic catastrophe: Why do we still listen to free-market ideologues? - By Joseph E. Stiglitz - Slate Magazine

The coming economic catastrophe: Why do we still listen to free-market ideologues? - By Joseph E. Stiglitz - Slate Magazine

The Great Recession, Part II
The world could be headed for another economic disaster if we continue to listen to free-market ideologues.
By Joseph E. StiglitzPosted Wednesday, July 6, 2011, at 3:38 PM ET

Deregulated capitalism led us toward a recession. Why are we still listening to its champions?Deregulated capitalism brought us a recession. Why are we still listening to its champions?Just a few years ago, a powerful ideology—the belief in free and unfettered markets—brought the world to the brink of ruin. Even in its heyday, from the early 1980s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest of the richest country of the world. Indeed, over the course of this ideology's 30-year ascendance, most Americans saw their incomes decline or stagnate.
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Moreover, output growth in the United States was not economically sustainable. With so much of U.S. national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven by ideology and special interests, once again threatens the global economy—or at least the economies of Europe and North America, where these ideas continue to flourish.

In the United States, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed. Rather than balancing the benefits of each government expenditure program with the costs of raising taxes to finance those benefits, the right seeks to use a sledgehammer—not allowing the national debt to increase forces expenditures to be limited to taxes.

This leaves open the question of which expenditures get priority. If expenditures to pay interest on the national debt are not prioritized, a default is inevitable. Moreover, to cut back expenditures now, in the midst of a crisis brought on by free-market ideology, would inevitably prolong the downturn.
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A decade ago, in the midst of an economic boom, the United States faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health care costs—fueled in part by the commitment of George W. Bush's administration to giving drug companies free rein in setting prices, even with government money at stake—quickly transformed a huge surplus into record peacetime deficits.

The remedies to the U.S. deficit follow immediately from this diagnosis: Put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the U.S. economy in peril and that shred what remains of the social contract. Meanwhile, the U.S. financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

But matters are little better in Europe. As Greece and other countries face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

There is an alternative: an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.

Regrettably, the financial markets and right-wing economists have gotten the problem exactly backward: They believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government's fiscal position, or at least yielding less improvement than austerity's advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion.

Do we really need another costly experiment with ideas that have repeatedly failed? We shouldn't, but increasingly it appears that we will have to endure another one nonetheless. A failure of either Europe or the United States to return to robust growth would be bad for the global economy. The failure of both would be disastrous—even if the major emerging-market countries have attained self-sustaining growth. Unfortunately, unless wiser heads prevail, that is the way the world is heading.

Ralph Nader Is Tired of Running for President | Common Dreams

Ralph Nader Is Tired of Running for President | Common Dreams

Published on Monday, July 4, 2011 by TruthDig.com
Ralph Nader Is Tired of Running for President
by Chris Hedges

The most important moral and intellectual voices within a disintegrating society are slowly discredited when their nonviolent protests and calls for justice cannot alter intransigent and corrupt systems of power. The repeated acts of peaceful civil disobedience, efforts at electoral and political reform and the fight to protect the rule of law are dismissed as useless by an embittered, dispossessed and betrayed public. The demagogues and hatemongers, the purveyors of violence, easily seduce enraged and bewildered masses in the final stages of collapse with false promises of vengeance, new glory and moral renewal. And in the spiral downward the good among us are reviled as naive and ineffectual fools. [Illustration by Mr. Fish] Illustration by Mr. Fish

There is no shortage of courageous dissidents in America. They seek to thwart the imperial disasters, looming financial insolvency and suicidal addiction to fossil fuel. They have stood in small knots on street corners week after week, month after month, year after year, to denounce the wars in Iraq and Afghanistan. They have occupied banks, shut down coal-fired power plants, attempted to halt mountaintop removal, interfered with whaling ships and walked in blustery weather to the White House, where they were arrested. They are struggling to break the Israeli blockade of Gaza on a ship called the Audacity of Hope. But because the corporate state and the two major political parties are indifferent to principled calls for reform, and because the mass of the public still buys into the myths of globalization and the American dream, the plundering and destruction continue unimpeded.

When most Americans face the nightmare before us, when they realize the irreversible devastation unleashed on the ecosystem and the economic misery from which they cannot escape, violence will have a broad and terrifying appeal. Those of us who demand a return to the rule of law and remain steadfast to nonviolence will find ourselves cast aside—the useful idiots Lenin so despised. I watched this happen in the social and political implosions in El Salvador, Guatemala, the Palestinian territories, Algeria, Bosnia and Kosovo. I watched the same cocktail of despair, economic collapse and callousness from a corrupt power elite mix itself into potent brews of civil strife. I watched the same untiring efforts by those who detested the violence and cruelty of the state, and the nascent violence and intolerance of the radical opposition. I covered as a reporter the disintegration that tore these societies apart. Those who held fast to moral imperatives, including Archbishop Oscar Romero in El Salvador and Ibrahim Rugova in Kosovo, were thrust aside and replaced with killers on both sides of the divide who embraced violence.

“Wait until October,” Ralph Nader said when we spoke this weekend. “That’s when the budget cuts will hit home. It is one thing to have the governors of Ohio, Wisconsin and Florida and the legislators saying we will cut this and that. We don’t know what will actually happen when the guillotines are put in place. You may have a different kind of surge of public resistance and protest.

“There will be more and more people in the streets, homeless and hungry,” he said of the looming cuts. “Babies will be sick. Everything will be overloaded from the free food to the clinics. You never know where the spark will come from. Look at the guy who robbed the bank for a dollar. That was not quite the spark, but that is what I am talking about. This is what you have to do to get health care. Let’s say 50 people did that. There are a lot of dry tinder piles like that."

The death of liberal institutions that once made incremental and piecemeal reform possible, which once could respond to the suffering of the poor, the unemployed and working men and women, which once sought to protect the Earth on which we depend for life, means the last thin hope for reform is embodied in acts of civil disobedience. There are no established institutions that will help us. The press ignores the cries of the underclass and the poor. The labor movement is atrophied and dying. Public education is degraded and being rapidly dismantled. Our religious institutions no longer engage in the core issues of justice. And the Democratic Party is on its knees before Wall Street. The most basic government services designed to ameliorate the pain, including Head Start and Social Security, are targeted by our corporate overlords for destruction. The Kyoto Protocol, which was not nearly ambitious enough to prevent environmental collapse, has been gutted so companies like Exxon Mobil can continue to amass the largest profits in history.

Radical reform, including a breaking of our dependence on fossil fuel, must happen soon to thwart the effects of dramatic climate change and economic disintegration. And this radical reform will come only through us. I will join, for this reason, those planning the prolonged occupation of Washington on Oct. 6. Acts of civil disobedience are our last, thin line of defense against chaos. Make a resolution this Independence Day to join us. You owe it to your children and to the generations who come after us. I am not naive enough to promise you we can reverse these trends. I know the monolith we challenge. But I do know that if we do not begin to take part in these nonviolent protests then we have, in effect, given up all realistic hope of change and succumbed meekly to corporate enslavement, environmental catastrophe and severe social unrest.

“The first sign that there is a real breakdown is that the bridge between the people you mentioned and the people who should be speaking out as a result of their professional status is not there,” Nader said. “I am talking about the deans of law schools and law professors, as well as leading members of the bar. The obverse of that is that in 2005 and 2006 there was a bridge built. It was the president of the [American Bar Association] Michael Greco. He thought the destruction of the rule of law by George Bush was historically very dangerous. He commissioned three reports, using members of the ABA who were formally in national security agencies such as the FBI, the NSA, the CIA and the Justice Department. They came up with three white papers on three subjects, one of them being signing statements. They concluded that the recurrent violations by President Bush had risen to the state of serious violations of our Constitution. These papers were made public. They sent them to President Bush. He never replied. Apart from The Associated Press, the press, including the [New York] Times and the [Washington] Post, ignored it. That to me was a much bigger litmus test. It showed how deep the institutionalized official illegality has become, more important than the ignoring of people like Chomsky and us.

“Usually people who are candid in calling things as they are, are viewed as people on the outside who want to change the system,” Nader said. “In the historic past they were socialists. They were radical labor leaders such as the [Industrial Workers of the World]. This time those people who are speaking out want a restoration of the rule of law. This is a pretty conservative goal. The extreme radicals are now in charge of our country, the military-industrial complex and the White House. It is not so much the military as the civilian leadership, the neocons in the White House. The military does not like to get into wars, but once they are in it is very hard to control them because they want to win.

“It’s not like Japan in 1939, which really was a militaristic society,” Nader went on. “It is exactly the opposite of what the constitutional founders thought would be the case. They put the civilians in charge to restrain the military. In effect, these people are activating and pushing the military into places the military does not want to go. They use a volunteer Army, flatter it, give it a lot of weaponry and send it abroad. Only about 5 million people, soldiers and their families, feel what is going on. Once it is entrenched, once you accept this neocon ideology, which is a vitriolic, aggressive, empire-spreading ideology, run largely by draft dodgers who in their youth gung-hoed the Vietnam War but wanted their friends to go and die for it, then democracy is too weak to overcome that. Two dozen people plunged this country into war. The first arena designed to stop this is the Congress, but it does not observe its constitutional duties or require a declaration of war.”

While protests are useful, Nader does not see any possibility for reform until there is a widespread effort to organize a sustained and radical opposition movement. This will come by building a movement that offers an alternative ideology and vision to that of unfettered capitalism, consumerism, empire and globalization. It is something Nader tried and failed to do during his own presidential campaigns.

"There is a tremendous asymmetry,” Nader said. “Seven hundred thousand people demonstrated in London. But where are they the next day? And where are their adversaries? The next day their adversaries are on the job. Where are the 700,000 people? They are out of there. How many organizers are on the ground in the 435 districts? Could labor unions have been organized without organizers? Could the suffragist movement have been organized without organizers? Could the anti-slavery movement or the civil rights movement been organized without organizers? If you don’t have organizers on the ground you know ipso facto that your demonstration is going nowhere.”

When I asked Nader, who mounted campaigns for the presidency in 2000, 2004 and 2008, if he would consider running again, he answered that it was “very unlikely.”

“You have millions of people who say run, run, run,” he said. “Then you put yourself out there and find they are voting for Obama. Until they become mature, until they realize that if they generate 5 to 8 million votes behind a progressive third-party candidate for leverage, what is the point? Why should people try four or five times? Let someone else do it.

“The people who go out there with some credibility and record, go into 50 states, sweat it out month after month, beating back ballot access obstacles, fighting the Democrats who are trying to suppress free speech and candidate choices for the voters, and then you still can’t get on the air to discuss civil liberties,” he said. “Never mind that they do not want to upset dear Obama or dear [John] Kerry. They don’t give you airtime to discuss the simple issue of the denial of civil liberties and the crushing of third parties.”

If elections were that effective, as the anti-war activist Phil Berrigan used to say, they would be illegal. We must follow the path Nader forged, attempting to sway enough people with conscience to sever themselves permanently and unequivocally from the mainstream and especially the Democratic Party. This defiance will again be dismissed as counterproductive and ineffectual. The sacrifices we are called to make will be real, uncomfortable and immediate, while the goals will be distant and uncertain. It will remain hard, for this reason, to jolt people awake. The expediency of the moment has a habit of subsuming the moral imperatives of the future. But time is not on our side. The impending disasters that await us, ecological and economic, are already visible on the horizon. If we do not sever ourselves from established systems of power, if we do not become in every action we undertake agents of rebellion, then the ecological, economic and, finally, human distortions that arise in times of confusion, suffering and collapse will overwhelm us.
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