Doug wrote: > By almost any orthodox economic measure, the U.S. is due for an > austerity program. The consumption share of GDP is over 70%, up from > 67% a decade ago, and 62% at the end of the 1970s. There was an > unprecedented housing boom and massive mortgage borrowing. Household > savings are 0 and the current account is a wreck. The currency is > sagging. What is any president who takes office on 1/20/09 likely to > do?
No doubt the next president will inherit an economy in deceleration and with some inflation. The USD will continue its decline. But I don't see why *non-orthodox* policies would be impossible -- or less likely -- to implement in the late 2000s than, say, in the early 1990s. In fact, in the early 1990s, economic orthodoxy was the only game in town. History ended back then, remember? Except that it didn't. And now it's the age of turbulence! Back then, the neo-classicals were the leading force in academia. Nowadays, the neo-Keynesians rule. Even in the public perception old free-market economics has fallen in some disrepute. Back then, Paul Volcker's move had become an enduring legend on Wall Street. Notice how rapidly the ratings of Alan Greenspan declined as of late. So the chances that a new president would go global-Keynesian are much better now than at any point after the early 1970s. With a new president, the foreign policy of the U.S. is likely to change. A mere stylistic makeover -- even if it falls far short of a full progressive reform -- could help change economic expectations, domestically and globally. A few moves could help. Getting out of Iraq. Toning down the conflict with Iran. Re-launching the WTO and the World Bank for serious. Having a truce with Latin America. I don't see the opposition to the occupation of Iraq disappearing if the troops are not pulled out. A new president could get serious about reforming the international monetary system. After the subprime mess and the credit crunch, the financial sector is in a much weaker position to dictate policies than it was under Rubin/Fisher/Clinton. There's a lot of global money, sovereign funds, reserves, etc. out there. I don't see what can keep the biggest economy in the world from setting up conditions to induce the recycling of all that global liquidity into projects that are even marginally better for the global economy. The president could reverse the taxcuts for the rich and even tax them some more. Even Buffett and Gates are asking for that. Some reform to the health care system could also contribute to change economic expectations. People with some insurance are more willing to take economic chances and switch resources to areas of the economy offering a bigger bang for the buck. Even longer term projects, like tackling the crisis of basic and high school education, rebuilding the transportation infrastructure, dealing with global change, etc. could re-set expectations. All those problems are now more urgent than in the early 1990s. And, again, the main requisite to induce change (pressure from below) is more serious now than it was in the early 1990s. I just don't get the counter-posing of mass mobilization with electoral politics (see Louis Proyect's posting). That's a false disjunctive. It's ideological garbage. You can have both mass activity and electoral politics complementing each other. I think the left needs to become a more serious electoral force. Look, if you have the ability to mount a credible challenge to the DP, by all means, go ahead! If you don't, then build up the forces. But, for now, why do you feel you need to surrender the meager political weapons that are currently within your reach? Question: Did people get as excited and involved in the early 1990s with the presidential election as they are now? I doubt it.
