The
Perfect Storm Of Campaign 2008
By
Steve Fraser
10 December,
2007
Tomdispatch.com
Will
the presidential election of 2008 mark a turning point in American political
history? Will it terminate with extreme prejudice the conservative ascendancy
that has dominated the country for the last generation? No matter the
haplessness of the Democratic opposition, the answer is yes.
With Richard
Nixon's victory in the 1968 presidential election, a new political order
first triumphed over New Deal liberalism. It was an historic victory
that one-time Republican strategist and now political critic Kevin Phillips
memorably anointed the "emerging Republican majority." Now,
that Republican "majority" finds itself in a systemic crisis
from which there is no escape.
Only at moments
of profound shock to the old order of things -- the Great Depression
of the 1930s or the coming together of imperial war, racial confrontation,
and de-industrialization in the late 1960s and 1970s -- does this kind
of upheaval become possible in a political universe renowned for its
stability, banality, and extraordinary capacity to duck things that
matter. The trauma must be real and it must be perceived by people as
traumatic. Both conditions now apply.
War, economic
collapse, and the political implosion of the Republican Party will make
2008 a year to remember.
The Politics
of Fear in Reverse
Iraq is an
albatross that, all by itself, could sink the ship of state. At this
point, there's no need to rehearse the polling numbers that register
the no-looking-back abandonment of this colossal misadventure by most
Americans. No cosmetic fix, like the "surge," can, in the
end, make a difference -- because large majorities decided long ago
that the invasion was a fiasco, and because the geopolitical and geo-economic
objectives of the Bush administration leave no room for a genuine Iraqi
nationalism which would be the only way out of this mess.
The fatal
impact of the President's adventure in Iraq, however, runs far deeper
than that. It has undermined the politics of fear which, above all else,
had sustained the Bush administration. According to the latest polls,
the Democrats who rate national security a key concern has shrunk to
a percentage bordering on the statistically irrelevant. Independents
display a similar "been there, done that" attitude. Republicans
do express significantly greater levels of alarm, but far lower than
a year or two ago.
In fact,
the politics of fear may now be operating in reverse. The chronic belligerence
of the Bush administration, especially in the last year with respect
to Iran, and the cartoonish saber-rattling of Republican presidential
candidates (whether genuine or because they believe themselves captives
of the Bush legacy) is scary. Its only promise seems to be endless war
for purposes few understand or are ready to salute. To paraphrase Franklin
Delano Roosevelt, for many people now, the only thing to fear is the
politics of fear itself.
And then
there is the war on the Constitution. Randolph Bourne, a public intellectual
writing around the time of World War I, is remembered today for one
trenchant observation: that war is the health of the state. Mobilizing
for war invites the cancerous growth of the bureaucratic state apparatus
and its power over everyday life. Like some over-ripe fruit this kind
of war-borne "healthiness" is today visibly morphing into
its opposite -- what we might call the "sickness of the state."
The constitutional
transgressions of the executive branch and its abrogation of the powers
reserved to the other two branches of government are, by now, reasonably
well known. Most of this aggressive over-reaching has been encouraged
by the imperial hubris exemplified by the invasion of Iraq. It would
be short-sighted to think that this only disturbs the equanimity of
a small circle of civil libertarians. There is a long-lived and robust
tradition in American political life always resentful of this kind of
statism. In part, this helps account for wholesale defections from the
Republican Party by those who believe it has been kidnapped by political
elites masquerading as down-home, "live free or die" conservatives.
Now, add
potential economic collapse to this witches brew. Even the soberest
economy watchers, pundits with PhDs -- whose dismal record in predicting
anything tempts me not to mention this -- are prophesying dark times
ahead. Depression -- or a slump so deep it's not worth quibbling about
the difference -- is evidently on the way; indeed is already underway.
The economics of militarism have been a mainstay of business stability
for more than half century; but now, as in the Vietnam era, deficits
incurred to finance invasion only exacerbate a much more embracing dilemma.
Start with
the confidence game being run out of Wall Street; after all, the subprime
mortgage debacle now occupies newspaper front pages day after outrageous
day. Certainly, these tales of greed and financial malfeasance are numbingly
familiar. Yet, precisely that sense of déjà vu all over
again, of Enron revisited, of an endless cascade of scandalous, irrational
behavior affecting the central financial institutions of our world suggests
just how dire things have become.
Enronization
as Normal Life
Once upon
a time, all through the nineteenth century, financial panics -- often
precipitating more widespread economic slumps -- were a commonly accepted,
if dreaded, part of "normal" economic life. Then the Crash
of 1929, followed by the New Deal Keynesian regulatory state called
into being to prevent its recurrence, made these cyclical extremes rare.
Beginning
with the stock market crash of 1987, however, they have become ever
more common again, most notoriously -- until now, that is -- with the
dot.com implosion of 2000 and the Enronization that followed. Enron
seems like only yesterday because, in fact, it was only yesterday, which
strongly suggests that the financial sector is now increasingly out
of control. At least three factors lurk behind this new reality.
Thanks to
the Reagan counterrevolution, there is precious little left of the regulatory
state -- and what remains is effectively run by those who most need
to be regulated. (Despite bitter complaints in the business community,
the Sarbanes-Oxley bill, passed after the dot.com bubble burst, has
proven weak tea indeed when it comes to preventing financial high jinks,
as the current financial meltdown indicates.)
More significantly,
for at least the last quarter-century, the whole U.S. economic system
has lived off the speculations generated by the financial sector --
sometimes given the acronym FIRE for finance, insurance, and real estate).
It has grown exponentially while, in the country's industrial heartland
in particular, much of the rest of the economy has withered away. FIRE
carries enormous weight and the capacity to do great harm. Its growth,
moreover, has fed a proliferation of financial activities and assets
so complex and arcane that even their designers don't fully understand
how they operate.
One might
call this the sorcerer's apprentice effect. In such an environment,
the likelihood and frequency of financial panics grows, so much so that
they become "normal accidents" -- an oxymoron first applied
to highly sophisticated technological systems like nuclear power plants
by the sociologist Charles Perrow. Such systems are inherently subject
to breakdowns for reasons those operating them can't fully anticipate,
or correctly respond to, once they're underway. This is so precisely
because they never fully understood the labyrinthine intricacies and
ramifying effects of the way they worked in the first place.
Likening
the current subprime implosion to such a "normal accident"
is more than metaphorical. Today's Wall Street fabricators of avant-garde
financial instruments are actually called "financial engineers."
They got their training in "labs," much like Dr. Frankenstein's,
located at Wharton, Princeton, Harvard, and Berkeley. Each time one
of their confections goes south, they scratch their heads in bewilderment
-- always making sure, of course, that they have financial life-rafts
handy, while investors, employees, suppliers, and whole communities
go down with the ship.
What makes
Wall Street's latest "normal accident" so portentous, however,
is the way it is interacting with, and infecting, healthier parts of
the economy. When the dot.com bubble burst many innocents were hurt,
not just denizens of the Street. Still, its impact turned out to be
limited. Now, via the subprime mortgage meltdown, Main Street is under
the gun.
It is not
only a matter of mass foreclosures. It is not merely a question of collapsing
home prices. It is not simply the shutting down of large portions of
the construction industry (inspiring some of those doom-and-gloom prognostications).
It is not just the born-again skittishness of financial institutions
which have, all of sudden, gotten religion, rediscovered the word "prudence,"
and won't lend to anybody. It is all of this, taken together, which
points ominously to a general collapse of the credit structure that
has shored up consumer capitalism for decades.
Campaigning
Through a Perfect Storm of Economic Disaster
The equity
built up during the long housing boom has been the main resource for
ordinary people financing their big-ticket-item expenses -- from college
educations to consumer durables, from trading-up on the housing market
to vacationing abroad. Much of that equity, that consumer wherewithal,
has suddenly vanished, and more of it soon will. So, too, the life-lines
of credit that allow all sorts of small and medium-sized businesses
to function and hire people are drying up fast. Whole communities, industries,
and regional economies are in jeopardy.
All of that
might be considered enough, but there's more. Oil, of course. Here,
the connection to Iraq is clear; but, arguably, the wild escalation
of petroleum prices might have happened anyway. Certainly, the energy
price explosion exacerbates the general economic crisis, in part by
raising the costs of production all across the economy, and so abetting
the forces of economic contraction. In the same way, each increase in
the price of oil further contributes to what most now agree is a nearly
insupportable level in the U.S. balance of payments deficit. That, in
turn, is contributing to the steady withering away of the value of the
dollar, a devaluation which then further ratchets up the price of oil
(partially to compensate holders of those petrodollars who find themselves
in possession of an increasingly worthless currency). As strategic countries
in the Middle East and Asia grow increasingly more comfortable converting
their holdings into euros or other more reliable -- which is to say,
more profitable -- currencies, a speculative run on the dollar becomes
a real, if scary, possibility for everyone.
Finally,
it is vital to recall that this tsunami of bad business is about to
wash over an already very sick economy. While the old regime, the Reagan-Bush
counterrevolution, has lived off the heady vapors of the FIRE sector,
it has left in its wake a de-industrialized nation, full of super-exploited
immigrants and millions of families whose earnings have suffered steady
erosion. Two wage-earners, working longer hours, are now needed to (barely)
sustain a standard of living once earned by one. And that doesn't count
the melting away of health insurance, pensions, and other forms of protection
against the vicissitudes of the free market or natural calamities. This,
too, is the enduring hallmark of a political economy about to go belly-up.
This perfect
storm will be upon us just as the election season heats up. It will
inevitably hasten the already well-advanced implosion of the Republican
Party, which is the definitive reason 2008 will indeed qualify as a
turning-point election. Reports of defections from the conservative
ascendancy have been emerging from all points on the political compass.
The Congressional elections of 2006 registered the first seismic shock
of this change. Since then, independents and moderate Republicans continue
to indicate, in growing numbers in the polls, that they are leaving
the Grand Old Party. The Wall Street Journal reports on a growing loss
of faith among important circles of business and finance. Hard core
religious right-wingers are airing their doubts in public. Libertarians
delight in the apostate candidacy of Ron Paul. Conservative populist
resentment of immigration runs head on into corporate elite determination
to enlarge a sizeable pool of cheap labor, while Hispanics head back
to the Democratic Party in droves. Even the Republican Party's own elected
officials are engaged in a mass movement to retire.
All signs
are ominous. The credibility and legitimacy of the old order operate
now at a steep discount. Most telling and fatal perhaps is the paralysis
spreading into the inner councils at the top. Faced with dire predicaments
both at home and abroad, they essentially do nothing except rattle those
sabers, captives of their own now-bankrupt ideology. Anything, many
will decide, is better than this.
Or will they?
What if the opposition is vacillating, incoherent, and weak-willed --
labels critics have reasonably pinned on the Democrats? Bad as that
undoubtedly is, I don't think it will matter, not in the short run at
least.
Take the
presidential campaign of 1932 as an instructive example. The crisis
of the Great Depression was systemic, but the response of the Democratic
Party and its candidate Franklin Delano Roosevelt -- though few remember
this now -- was hardly daring. In many ways, it was not very different
from that of Republican President Herbert Hoover; nor was there a great
deal of militant opposition in the streets, not in 1932 anyway, hardly
more than the woeful degree of organized mass resistance we see today
despite all the Bush administration's provocations.
Yet the New
Deal followed. And not only the New Deal, but an era of social protest,
including labor, racial, and farmer insurgencies, without which there
would have been no New Deal or Great Society. May something analogous
happen in the years ahead? No one can know. But a door is about to open.
Steve
Fraser is a writer and editor, as well as the co-founder of
the American Empire Project. He is the author of Every Man a Speculator:
A History of Wall Street in American Life. His latest book, Wall Street:
America's Dream Palace, will be published by Yale University Press in
March 2008.
Copyright 2007 Steve Fraser
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