Short Term and Long Term: Letter to Barack #4

OK Barack,  I admit that I am one of the millions of people who wish they knew how to read your mind, and I admit that my brother Ken is probably not as good at it as your wife Michelle, but I nevertheless think he has an inside track so instead of guessing myself I will adopt his guess.   Ken has some professional political experience and some high-up contacts and I believe he can assess what you are probably thinking more accurately than average persons, with the possible exceptions of average persons who happen to live in Illinois or Hawaii .    Yesterday my brother expressed the opinion that your mind is probably preoccupied by two questions:

 

One:  How to save people’s 401(k) plans and other retirement assets that are invested in stocks and lose value when stocks lose value.

 

Two:  How to save the American automobile industry.

 

          One might say –I know people who do say—that until these and other short term issues that make up the current economic crisis are resolved, the Obama administration will not be able to turn its attention to the long term.

 

          Indeed you did say –I watched you say it on television—that before implementing some major parts of your program we need to “get past” the current crisis. 

 

          The same day, yesterday, the day my brother expressed an informed opinion concerning what is on your mind, the Secretary of the Treasury, Henry Paulson, reported on what his office is doing to restore confidence in the economy.

 

            Paulson’s office is doing two sorts of things:

 

          1)  It is providing cash to banks and other credit-granting institutions.  For example it has bought preferred (non-voting) stock in banks.   The bank gets the cash and the government gets a right to dividend payments in the future.

 

          2)  It is guaranteeing loans.

 

          The rationale is that if credit-granting institutions have more money and/or run less risk they are more likely to make loans.   Then people can borrow more easily to meet payroll, to buy an automobile, or for any business or consumer purpose.

 

          The Congress has already:

 

          3) Put more money into the pockets of consumers with tax rebates and tax cuts.

 

          The rationale is that the consumers will spend their money buying products, thus making it profitable to produce them.

 

          If I may elaborate a little on what my brother guessed was on your mind yesterday, I suspect that you are thinking of three other ways to stimulate the economy:

 

          4) Subsidies for the automobile, green technology, and perhaps other industries.

 

          5)  Incentives to produce in America rather than overseas.

 

          6)   Massive public works, for example hiring the unemployed to plant trees.

 

          Behind all of these measures is the assumption that the economy runs on profits.  When business stops being profitable it stops running.   The government then takes measures to restore profitability, in order to restart the economy.   Even (6) is about restoring profitability insofar as it expects the workers employed on public works to stimulate business by spending their pay.

 

            Let the above serve as an executive summary of the sorts of measures that are generally expected to “get us past the crisis.”            An element missing in the public debate about these measures is the need for a paradigm shift.

 

          Anybody who does not believe the following should check it out for herself or himself:   Postings on anti-Bush websites and listserves and eloquent print prose pieces in Nation magazine, articulate many arguments in favor of putting money into the pockets of ordinary people and rescheduling their debts to save their homes.  They condemn spending billions to bail out the wealthy.  It is argued that people-oriented stimulus packages are fairer and more effective.   But there is no questioning of the paradigm.  It is taken for granted that the objective is to generate economic activity by making it profitable.

 

          My humble suggestion is to walk on two feet.   One foot moves to restart the economic machine by restoring confidence (not because it is an ideal economic machine, but because it is the one we have).   The other foot moves to diversify the economy, freeing us from our excessive dependence on expectations of profit to motivate production and distribution.

 

          Don’t wait.   Don’t wait to get past the crisis to get started on the transformational agenda.   If we wait for stimulus packages to restore investor confidence (if they ever do); if we wait for gradually rising rates of employment to re-integrate society, we will wait too long.  We need to pick up the slack ASAP with civil society efforts and with public efforts and with private-public partnerships.   A world full of loafers and part-timers (and of people a bit better off who fear crime and despise the loafers and part-timers) is a world that will generate strange and violent ideas.   Before government policies bring about economic recovery (if they ever do), the culture war will be lost.   People will hang on to every word Rush Limbaugh speaks.  They will be attracted to the worldview of Fox News.  On a best case scenario their arms will be tattooed with images of Sarah Palin; in the worst case the image will be a swastika. 

 

          These considerations lead to a renewed appreciation for the work community activists do, not just because they achieve material goals such as decent housing and food security, but also because they engage people in constructive activities.   Organizing, as Cesar Chavez frequently said, means giving people something to do.   A disorganized unemployed population passively waiting month after month for someone to bring them employment is a dangerous population.

 

Howard R.

November 13, 2008