Let’s just say that Comrade George Bush’s $700 billion no-speculator-left-behind bailout of US financiers – perhaps the most significant wave of government takeovers of the economic commanding heights since Fidel Castro’s moves in tiny Cuba back in the 1960s – undermines the credibility of neo-conservative insistence that all problems must be solved through unregulated markets.
‘I’m a market-oriented guy, but not when I’m faced with the prospect of a global meltdown,’ Bush told admirers at the looney-right Manhattan Institute. This on the eve of his efforts to forge a coalition of the willing among the top twenty economic powers to issue blank checks to his proposals for superficial reform of global financial casinos.
Until this speech, some people have thought that what’s good for the goose is good for the gander, and that some variant of $700 billion in government money could be found to help people on low and middle incomes pay their mortgages or put food on their table, thereby making sure that taxpayers wouldn’t have to bail out bankers. To be honest, that idea even occurred to me.
‘It is crazy for us to think we can develop countries around the world without increasing their ability to feed themselves.’
Don’t bank on it. ‘History shows that the greater threat to economic prosperity is not too little government involvement in the market, but too much,’ Bush told Manhattanites, best known for promoting crackdowns on crimes by law-breakers from low-income communities while ignoring high-end mayhem. Bush concluded his pleas to leave financial markets unregulated with pleas to leave world trade unregulated (actually, “free” is the word he used, not quite an accurate synonym for “deregulated”). Since the usual pre-condition for entering either World Trade Organization deals or direct bilateral trade deals with the US is a ban on government regulation over financial, food and agricultural markets, it’s logical he would link unregulated finance with deregulated trade.
But I digress. Bush’s swan song to the world does more than give a misimpression of free bailouts of financial speculators. It gives a misimpression of the full legacy newly-elected US president Barrack Obama (weirdly, my Microsoft spellcheck still shows the correct spelling on that name as Osama) will confront when he assumes the US presidency amid global optimism about his commitments to empowering change in the world.
If truth be known, Bush inherited, as Obama will soon, deregulated financial, agricultural, trade and social policies, courtesy of Bill Clinton and Al Gore. That was their 1990s achievement – a historic ten years that need to be understood, not (as many once hoped), as the “turnaround decade” toward a green economy – but as the turnaround decade when major popular gains from the 1930s to ‘70s were reversed.
Founded in 1995 under US leadership, the World Trade Organization (WTO) overturned the more sensible trade rules developed after World War Two, which left food and agricultural policy out of trade deals. The fundamental human right and need for food – as essential for national survival as it is for individual survival and well-being, in the minds of almost everyone at that time – was the cornerstone of both the United Nations human rights declaration of 1948 and the 1948 General Agreement on Trade and Tariffs. GATT put no major restrictions on a country’s ability to nurture food, fishery and agricultural policies which protected vulnerable people, and thereby respected the priority of human rights to food over free trade. By contrast, the WTO not only subjected national food policy to global trade deals; government obligations to the WTO trade rules trumped government obligations to support food producers or protect citizen rights to food.
Clinton’s government was the driving force behind this insistence that deregulated trade triumph over food planning and rights by downgrading food to a mere market commodity rather than essential right and need. Clinton now admits the error. ‘We blew it,’ he told a UN group celebrating World Food Day on 16 October.
‘Food is not a commodity like others,’ Clinton said, in his widely unreported speech. ‘We should go back to a policy of maximum food self-sufficiency. It is crazy for us to think we can develop countries around the world without increasing their ability to feed themselves.’ Hallelujah! The protestors who marched against WTO have been vindicated, as have those who campaign today for public policies that support food self-reliance and equitable food access.
Another Clintonian relic, Alan Greenspan, also admitted to some errors of his ways. Greenspan was originally appointed by Ronald Reagan in 1987 to keep his hand on the tiller of the US Federal Reserve, home of the money supply that Richard Nixon established during the 1970s as the benchmark of monetary value in global trade. Greenspan was regarded as the wizard of high finance until his retirement in 2006.
If truth be known, Bush inherited, as Obama will soon, deregulated financial, agricultural, trade and social policies, courtesy of Bill Clinton and Al Gore.
Greenspan, like other US institutions of world rule, was a bi-partisan choice, despite his lifelong adolescent conservatism linked to Ayn Rand’s ode to self-serving greed, Atlas Shrugged. World rule is essential to US financial capital, just as financial capital relies on US world rule, since the inflow of low-cost capital and credit to the US keeps an economy wed to wasteful militarism and cheap manufactured imports afloat – a major reason why a market guy like Bush saved the bankers’ butts and dedicated his swan-song speech as prez to the defense of free markets and free trade.
In 1999, Clinton and Greenspan introduced financial deregulation that tore down the Berlin wall that kept institutions handling risky investments separate from those handling low-risk loans, such as mortgages. The inevitable results of this casinoization of the financial sector came crashing down in October 2008.
Greenspan confessed to Congressional investigators in mid-October that he was in ‘in a state of shocked disbelief’ by financial bungling of late October. The ‘whole intellectual edifice’ behind the paradigm leading to unregulated markets ‘collapsed in the summer of last year,’ he said.
That was a mild confession compared to the thoughts he blurted out during a mini-crisis in 2002. ‘There’s been too much gaming of the system. Capitalism is not working! There’s been a corruption of the system of capitalism,’ the wizard screamed at colleagues, according to Ron Suskind, author of The Price of Loyalty: George W. Bush, the White House and the Education of Paul O’Neill.
If the transition to Obama is to become the end of an era as well as the end of an error, the legacy of Bill Clinton as well as George Bush will need to be overcome.
Wayne Roberts is the author of the No-Nonsense Guide to World Food.
Adapted from NOW Magazine, 20-27 November 2008.