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March 20, 2009

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What will they do? Complain about Obama, gun laws, teenage pregnancy, liberal judges, Demos, etc., etc., etc. The Kooks around me just don't get it and continue to believe the current situation is because the Repubs weren't pure enough because of those pansy liberal Demos (who really are pansies).

I talk to these people on a daily basis and there is nothing that can replace their Total Explanation for reality. It was Democrats giving all the money to illegals (or Welfare Queens, ACORN, Nancy Pelosi's jet travel, ACLU pedophiles, Bilderbergers, teacher unions, etc.). Joe the Plumber is no accident. Many people really are not only convinced, they're twitching with the kind of animus you see in gang fights.

It would help the cause if Obama could explain this instead of "transcend" it with conciliatory chit-chat. We really need this moment to educate the citizenry about the consequences of toxic ideologies (has anything been more toxic than modern conservatism?). FDR performed that function in the 30s. Now we desperately need someone to illuminate the tangled roots of the current economic meltdown.

If Obama fails here, that "illumination" will come from the right. It will be pure demonology mixed with sentimental invocations of rugged indvidualism and government-is-evil bromides. As the crisis worsens, otherwise rational people will begin believing these explanations. The 2000s are different from the 1930s in that there's no functional Left in America, whereas the Right has fully captured a major political party.

The anxiety of the average American was tweaked and poked during the Culture War. Now, the economy poses an even greater challenge. This time the war will have life-and-death consequences. For Obama, leadership may require more than likeability and charm. It may demand the willingness to fight.

Somehow liberals lost the ability to communicate clearly at the same time that conservatives learned how to do it, some twenty years ago.

For example, Conservatives repackaged the Estate Tax as the Death Tax and convinced the middle class that it would apply to them. They got their way.

Meanwhile the anti-smoking laws in Washington State passed easily and many businesses suffered for it. (How can you run a Cigar Bar with no smoking?) While it may have been liberals who thought of it, the only defense I heard was that it would be bad for bars and restaurants, and not enough people were convinced by that argumant. If they had, instead, compared it to Prohibition as an unnecessary restriction of freedoms and proposed some mitigation better than seat 11 is smoking and seat 12 is non-smoking, they could have convinced enough people that it was a bad law (I have never smoked). Shakeys Pizza used to have the kitchen in the middle and servered beer on the Adult side only. Something like would have worked for patrons and employees alike. I also don't see anything wrong with a sign that says "This is a smoking establishment - if you don't like it don't come in and don't apply for work" After all, people who don't like alcohol don't have to visit bars but bars are still legal! It only took me five minutes to come up with five different ad campaigns that would have been better than anything they used, but the people in charge couldn't figure it out.

A cursory look at history tells me that is is probably a recurring pattern. One party gains power and has a relatively long reign. During that time the people who engineered the revolution retire and the new generation comes in without knowing anything about how the change was made and having a sense of entitlement that it will always be this way. At best they learn to mimic the aging cliches but fail to alter their speil to keep up with the times. Meanwhile the losers keep trying the old ways that failed until a new generation figures out how the enemy pulled off the coup or re-invents the wheel, comes up with a re-packaged message that convinces the electorate and the power shifts the other way. The cycle begins again with roles reversed.

Mr. Talton makes a good point regarding fundamentals vs. trivia. Still, I think there is a fundamental point to be made about the 'trivia'.

Recent days have seen a kind of media backlash (on the op-ed pages) against "populist outrage". The substance of these criticisms is that AIG bonuses are a tiny fraction of the huge federal budget, so why don't we all forget about this and move on.

One wonders why, if $165 million is such a small sum in the grand scheme of things, establishment pundits are suddenly up in arms about "populist outrage". I mean, if it's small potatoes, then what difference does it make one way or another?

Of course, the issue of bonuses, given to the managers of the very corporate division that produced AIG's problems, isn't about spurious numerical comparisons, but rather is about something called "moral hazard".

The idea is that capitalism is a two-edged sword that, on the one hand, rewards innovation and competence, but *necessarily* on the other hand punishes irrational risk taking, blind greed, incompetence, and poor judgment.

The idea is that actions have consequences, whether good or bad, and that the "free market" should reward the productive while punishing the destructive, thereby conditioning economic forces and actors to behave productively.

Moral hazard is what happens when you suspend one half of this equation, allowing incompetent or imprudent economic actors to escape financial culpability for their mistakes, especially when this is made possible through government intervention.

The idea that AIG was "too big too fail" has yet to be adequately elucidated by the government. But, whether true or false, there can be no argument that the executives who brought AIG to the brink of insolvency through speculative excess and irresponsibility, are "too big to fail".

Here's a study in the kind of class interests alluded to by Mr. Talton: on the one hand, you have, in response to proposals to modify mortgage terms via legislation and/or judicial intervention, a media blitz attempting to convince the public that assisting irresponsible homeowners is tantamount to economic suicide because it rewards the incompetent and the grasping, despite the fact that many of these homeowners were perfectly responsible, but were simply caught up in a self-reinforcing downward spiral in which job losses and foreclosures, and in some cases mortgage contracts based on lenders' erroneous assumptions of a perpetually expanding housing market, rendered their positions financially untenable.

Contrast this with the recent media blitz on behalf of poor, poor, pitiful AIG executives in the company's derivatives branch, who are, we're told, the victims of a kind of vulgar witch hunt, complete with torch-bearing villagers who resent the rich simply for being rich.

These varying targets of "outrage" say a lot about class values. The public is outraged that the very managers responsible for a major casualty in the banking crisis are being rewarded, not merely with their already large salaries, but with lavish bonuses in addition.

By contrast, a significant fraction of the media's contingent of highly paid op-ed writers is rushing to minimize this concern, and to castigate the plebes for witch hunts and obsessing over trivia.

That said, Mr. Talton, whose basis for criticism is quite different, is absolutely correct: the general public is missing the forest for the trees. Not because they're concerned about AIG bonuses, as well they should be, but because they are missing the much broader, and deeper, implications of the current crisis. And whose fault is that? The public which relies on mass media sources to provide news and insights, or the media sources which, on balance, have failed to give them the education they need to understand the causal connections and the underlying basis?

Incidentally, USA Today (citing an editorial in the Las Vegas Review-Journal) reports that AIG gave Democrats 70 percent of its campaign finance contributions last year, and that the two biggest individual recipients of its largesse were Obama and Chris Dodd, D-Conn, Chairman of the Senate Banking Committee. Even if true, I doubt that this explains the special treatment of AIG by the new administration: but the time has come for the government to stop relying on alarmist rhetoric about economic collapse, and provide some quantitative analysis, or at least a more detailed explanation, of its rationale in bailing out this firm. I happen to think that there may well be some compelling explanation, but the administration isn't exactly winning the public relations battle in failing to provide it.

Some excerpts from "Friendly Fascism" by Bertram Gross (1980). The book is sometimes cranky and by no means always accurate in its prognostications, but contains plenty of interest:

"... as I survey the entire panorama of contending forces, I can readily detect something more important: the outline of a powerful logic of events. This logic points toward tighter integration of every First World Establishment. In the United States it points toward more concentrated, unscrupulous...control by a Big Business-Big Government partnership.

"...At any particular moment First World leaders may respond to crisis like people in a crowded night club when smoke and flames suddenly billow forth. They do not set up a committee to plan their response. Neither do they act in a random or haphazard fashion. Rather, the logic of the situation prevails. Everyone runs to where they think the exits are. In the ensuing melee some may be trampled to death. Those who know where the exits really are, who are most favorably situated, and have the most strength will save themselves.

"...Despite the sharp differences from classic fascism, there are also some basic similarities. In each, a powerful oligarchy operates outside of, as well as through, the state. Each subverts constitutional government. Each suppresses rising demands for wider participation in decision making...and genuine democracy. Each uses informational control and ideological flimflam to get lower and middle-class support for plans to expand the capital and power of the oligarchy and provide suitable rewards for political, professional, scientific, and cultural supporters.

"...A major difference is that under friendly fascism Big Government would do less pillaging of, and more pillaging for, Big Business. With much more integration than ever before among transnational corporations, Big Business would run less risk of control by any one state and enjoy more subservience by many states.

"A friendly fascist power structure in the I United States, Canada, Western Europe, or today's Japan would be far more sophisticated than the "caesarism" of fascist Germany, Italy, and Japan. It would need no charismatic dictator nor even a titular head... it would require no one-party rule, no mass fascist party, no glorification of the State, no dissolution of legislatures, no denial of reason. Rather, it would come slowly as an outgrowth of present trends in the Establishment.

"...Under the full-fledged oligarchy of friendly fascism, the Chief Executive network would become much more powerful than ever before. And the top executive -- in America, the president -- would in a certain sense become more important than before. But not in the sense of a personal despotism like Hitler's.

"Indeed, the president under friendly fascism would be as far from personal caesarism as from being a Hirohito-type figurehead. Nor would a president and his political associates extort as much "protection money" from big-business interests as was extracted under Mussolini and Hilter. The Chief Executive would neither ride the tiger nor try to steal its food; rather, he would be part of the tiger from the outset. The White House and the entire Chief Executive network would become the heart (and one of the brain centers) of the new business-government symbiosis.

"Under these circumstances the normal practices of the Ultra-Rich and the Corporate Overlords would be followed: personal participation in high-Ievel business deals and lavish subsidization of political campaigns, both partly hidden from public view.

"This transformation would require a new concept of presidential leadership, one emphasizing legitimacy and righteousness above all else. As the linchpin of an oligarchic establishment, the White House would continue to be the living and breathing symbol of legitimate government. "Reigning" would become the first principle of "ruling". Only by wrapping himself and all his agents in the trappings of constitutionality could the President succeed in subverting the spirit of the Constitution and the Bill of Rights. The Chief Executive Network, Big Business, and the UltraRich could remain far above and beyond legal and moral law only through the widely accepted image that all of them, and particularly the president, were fully subservient to law and morality. In part, this is a matter of public relations-but not the old Madison Avenue game of selling perfume or deodorants to the masses. The most important nostrils are those of the multileveled elites in the establishment itself; if things smell well to them, then the working-buying classes can probably be handled effectively.

"It is no easy task to erect a shield of legitimacy to cloak the illegitimate. Doing so would require the kind of leadership that in emphasizing the long-term interests of Big Business and the Ultra-Rich would stand up strongly against any elements that are overly greedy for short-term windfalls. Thus in energy planning, foreign trade, labor relations, and wage-price controls, for example, the friendly fascist White House would from time to time engage in activities that could be publicly regarded as "cracking down on business." While a few recalcitrant corporate overseers might thus be reluctantly educated, the chief victims would usually be small or medium-sized enterprises, who would thus be driven more rapidly into bankruptcy or merger. In this sense, conspicuous public leadership would become a form of followership.

"...A successful transition to friendly fascism would clearly require a lowering of popular aspirations and demands. Only then can freer rein be given to the corporate drives for boundless acquisition. Since it is difficult to tell ordinary people that unemployment, inflation, and urban filth are good for them, it is more productive to get middle-class leaders on the austerity bandwagon and provide them with opportunities for increased prestige by doing what they can to lower levels of aspirations."


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