- This will appear in the next issue of Al-Ahram Weekly
- The gloves are off in the battle to shape our "new
world order", observes Eric Walberg
- The American Recovery and Reinvestment Bill passed this
week will define Barack Obama's presidency. But it is really just the younger
sibling to the Troubled Assets Relief Programme. To separate the now trillions
being handed out to the banksters from the $800 billion being handed out
to the lottery winners is to be ingenuous. The elder sister's patrons are
already blackmailing mama Obama, wailing for more trillions or they will
plunge the economy into even greater financial crisis. "You ain't
seen nothing yet," they hissed to Treasury Secretary Geithner, who,
according to economist Michael Hudson, quickly "pledged government
financing for as much as $2 trillion....to spur new lending and address
banks' toxic assets, seeking to end the credit crunch hobbling the economy."
- Hudson calls it "Stage One of a two-stage plan",
so far unannounced, to transfer trillions more to people who, in any sane
world, would be behind bars, the purpose being to re-inflate the bubble
economy that made them wealthy beyond their dreams while leaving wages
stagnant and creating little meaningful work. The "change" president
is continuing the Bush-Paulson giveaway, allowing the process of creating
a few giant Wall Street-based trusts which will act as the economy's central
planners in the new "socialism for the rich". Any talk of nationalisation
should be seen in this context. " Washington has given them
$9 trillion so far, with promises now of another $2 trillion and
still counting." Instead of sputtering about capping CEO bonuses,
if he is serious, why hasn't Obama reversed the Clinton-Rubin repeal of
the Glass-Steagall Act, responsible for the massive speculation for the
past two decades?
- But this is in fine American tradition, albeit taken
to the extreme. Bankers have always worked hand-in-glove (either that or
dagger-in-hand) with politicians. 19th century Democratic president Grover
Cleveland vetoed a bill to give Texas farmers $100,000 to buy
seed grain during a drought, saying: "Federal aid in such cases encourages
the expectation of paternal care on the part of the government and weakens
the sturdiness of our national character." However, he thought nothing
of giving bondholders $5 million the same year. After WW II, Keynesianism
provided an intellectual gloss to government handouts to failing industries,
especially military, with workers similarly being lectured about belt tightening
as executives quietly deposited their bonuses and accumulated their stock
- To pretend that throwing all this money at a sick economy
will heal it is the height of folly. To understand the way out of the crisis,
compare the situation with the world food crisis. Is the current economic
crisis due to too many people? That may sound foolish it is
but that is how many economists address the food crisis. Leaving aside
the debate about an optimal global (or US) population size, the correct
answer to both is: the crisis is due to extremely skewed distribution of
wealth and lack of access by the poor to basic food (and increasingly now
in the US shelter).
- The current crisis simply can't be addressed without
facing the accumulation of 30 years of creeping under Bush II, accelerating
income redistribution in favour of the rich. The wealthiest one per
cent have increased their share of returns to wealth dividends, interest,
rent and capital gains from 37 per cent a decade ago to nearly 70
per cent today. This is the highest proportion since records started, worse
than the situation in the 1920s, which incidentally preceded the 1930s.
Without facing up to this, no stimulus package will bring prosperity to
the homeless and jobless. Certainly no tax reductions will bring any positive
effect when more and more are too poor to pay taxes, and the rich, who
benefit from this, will spend not on basics, but luxury goods, probably
imports, or just spirit the extra funds into offshore accounts to avoid
- The centrepiece of the stimulus package, much like president
Franklin Delano Roosevelt's, is job creation. House Majority Leader Steny
Hoyer said that "millions and millions and millions of people will
be helped, as they have lost their jobs and can't put food on the table
of their families." All well and good, though there is no guarantee
that even if millions of jobs are created in the short term that this will
translate into a systemic recovery. This was the case under FDR. It took
WWII government-enforced socialism for all to drag the USout
- This brings us to the other distortion that has continued
to weaken the US economy since the days of Reagan (really, since WWII):
the inexorable militarisation of the US economy, spending money on unproductive
indeed destructive commodities, which only sap the economy's
vitality, providing no general-use infrastructure which can benefit all,
no goods which can be consumed or traded except to foreign dictators quelling
rebellions. The soaring trade and budget deficits are a direct result of
the joint US obsession with weapons and tax reduction. As the Soviet
Union found during its economic crisis in the 1980s, spending an exorbitant
amount almost a trillion dollars by the US today
on military nonproduction is simply unsustainable. America accounts
for nearly half of all global military spending, an amount larger than
the next 45 nations together.
- Just as the answer to the food crisis is promoting land
redistribution, providing peasants with ready access to the means of feeding
themselves, so the answer to the world economic crisis is wealth redistribution,
putting money in the hands of the poor, who will be likely to spend it
locally on basics, supporting themselves and their local communities. The
most successful of Obama's stimulus projects will put money into their
hands which will be rapidly respent on, say, house repairs, starting new
small businesses, paying wages to daycare workers, and the like.
- The original stimulus package included a clause requiring
US steel to be used in spending, a perfectly rational "protectionist"
policy. "Buy American" should not to be denounced per se. It
is nothing more than an application of "think globally, but act locally."
Any spending to stimulate the economy should of course rely on local production
wherever possible. It is the government's role to make sure it is more
economical to buy and sell locally than truck and fly goods thousands of
miles. If this violates WTO rules, then work to change those irrational
rules, for as well as hurting local economies, they promote ecologically
harmful global warming.
- The days of relying on both corporate agriculture and
global finance and industry are numbered, the very opposite of the conclusion
proposed by Henry Kissinger in The Independent on 20 January.
There, he gloats of the "unique opportunity for creative diplomacy"
which the present crisis provides. True, he admits that it struck "a
major blow to the standing of theUnited States ", encouraging
every other country to "seek to make itself independent, to the greatest
possible degree, of the conditions that produced the collapse." So
far so good.
- But his prescription, strangely, is more "common
action", a "political" "new world order", corresponding
to the international economic one now in existence, the alternative being
- But political decisions are already largely coordinated
among countries at such gatherings as the recent WEF and the upcoming G20.
These gathering of the most powerful political and economic leaders occur
like clockwork, and any independence shown by mavericks, such as Venezuelan
President Hugo Chavez or Iranian President Ahmedinejad, is ruthless attacked
and subverted, if possible. No, the NWO, relying on increasing world corporate
control legimitated by use of the likes of the UN has come
to an impasse not by some fluke, but because it is wrongheaded. It has
produced "chaos", and it must be abandoned.
- Kissinger calls for "a new Bretton Woods",
finessing the important point that this was a financial institution set
up primarily by the victorious US to meet its own global needs. It would
be more apposite to call for "a negation of Bretton Woods". His
provides a choice between "an international political regulatory system
with the same reach as that of the economic world" (that is, consolidate
the current inequalities) vs a dismantling of the current global monster,
and of course opts for the first alternative. But, it, ably administered
by Kissinger et al, is the one that brought us to this impasse. The "chaos"
Kissinger fears is really the democratic awakening of the people. Since
the collapse of the Soviet Union and the apparent eclipse of
socialism, they have been lulled into accepting the soothing promises of
politicians in thrall to their ever more powerful corporate masters."
- The extraordinary impact of the President-elect on the
imagination of humanity is an important element in shaping a new world
order," enthuses Kissinger. But will Obama's stimulus package be an
opening salvo in the battle for even greater imperial overreach, or will
Obama listen to the millions of simple Americans who stumped for him and
reject this ominous NWO proposed by his patron?
- Food is a human right, but production to feed mainly
corporate profit will merely lead to more food crises. Similarly, fulfilling
all our basic needs should be a human right as enshrined in the vaguely
worded UN Declaration of Human Rights, which should be dusted off and promoted
as part of the inspiration for Obama's defining policy tackling the current
economic "chaos". A truly new world order requires stimulating
real people, not yielding to banksters' threats and the failed policies
of Kissinger et al. There Is No Other Alternative.
- Eric Walberg writes for Al-Ahram Weekly. You
can reach him at www.geocities.com/walberg2002/