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In an effort to demonstrate united establishment support for Hillary Clinton Democrats are trotting out the reanimated corpse of serial war criminal Henry Kissinger, neocon debacle-monger Robert Kagan and a veritable who’s who of everything wrong with America over the last half-century. Were Donald Trump other than the uncensored id of the residual Republican pissed-ocracy pretending to be an economic populist the choice for or against the status quo would be clear. In neither case will a political direction be found to resolve the material circumstances driving current political disaffection. Perhaps Milton Friedman’s corpse could join Hill and Hank on the Democrats’ ‘fresh ideas’ team.
The thread linking Mrs. Clinton to Mr. Trump is economic struggle being carried out under the cover of politics. The American ruling class and its water-carriers in the bourgeois near-precariat have concluded that times are great to passable in descending order of place in the economic order. These are the people for whom stock prices and house values suggest that all is right with the world. The other 80% or so of the population, the recently dispossessed now struggling to get by alongside those who never had a dream that comported with bourgeois fantasy, seems to have concluded that it is Hillary Clinton’s establishment that put them where they are. Mr. Kissinger’s presence will no-doubt move the pro-genocide crowd toward the Democrats’ camp.
Graph: Following sequential Republican failures to pass NAFTA, the North American Free Trade Agreement, liberal Democrats Bill and Hillary Clinton used identity politics and the temporary boom created by deregulation of Wall Street to convince gullible Progressives that their antique capitalist blather hadn’t already been disproved by the Great Depression. The predictable result was unmitigated calamity for manufacturing workers. But hey, stock prices are up. Source: St. Louis Federal Reserve
Those frightened at the prospect of Donald Trump being elected need to explain precisely where they were when Democrats launched their three-decade-long class war against the great majority of the American people. The Clintons passed NAFTA in 1994 after Republicans had been unable to get it passed because of (righteous) opposition from organized labor. They ‘freed’ Wall Street from social accountability while making it more dependent than ever on government bailouts. They cut social spending while increasing the economic vulnerability of the poor. Both the dotcom stock bubble and the housing bubble began under the Clintons and were caused by their finance-friendly policies. The Clintons are singularly responsible for the Democrats’ turn toward finance capitalism that has dispossessed the middle class, immiserated the working class and left the poor to fight over the crumbs that fall to them.
In the abstract, but never-the-less relevant, terms of economic theory the Clintons separated claims on economic production from that-which-was-produced. The claims went to one group— connected financiers, as the task of economic production remained with a freshly diminished working class. This politicized money system can be seen most clearly in the distance between those who received ‘free’ money in the Wall Street bailouts and those who didn’t. Bankers, hedge funds and private equity received billions in low interest ‘non-recourse’ loans while the American political establishment urged austerity as the moral antidote appropriate for the rest of us. The spectacle of bankers, with the support of leading figures in the Obama administration, claiming that their clearly defrauded borrowers presented a ‘moral hazard’ to them would be as implausible in fiction as it was true in fact.
Graph: the liberal economists who support Clinton-Obama-Clinton-omics have long claimed that job losses in ‘low value-added’ occupations like manufacturing would be made up for in the high value-added industries. In fact, employment for the prime-age workers who must work to live has plummeted since NAFTA was passed as low-wage and increasingly contingent service sector jobs have replaced manufacturing employment. This has required the robots-stole-their-jobs fallacy as productivity (the ‘benefit’ of automation) has fallen to five-decade lows. Source: St. Louis Federal Reserve.
The political establishment now circling the wagons around Hillary Clinton feeds at the trough of money creation and depends on the misdirection that in ‘normal’ circumstances nature ties its distribution to economic product produced. Upon his election in 1992 Bill Clinton claimed to have inherited an ‘unexpectedly’ large budget deficit that tied his hands with respect to social spending. The result was that Mr. Clinton abandoned his political program except inasmuch as the ‘private’ economy that included Wall Street, arms manufacturers, pharmaceutical and telecommunications companies and the insurance industry were ‘freed’ from social accountability as government funds and privileges continued to be directed to them. The money was somewhere ‘found’ to bomb Iraq for eight years but that needed to keep the poor living indoors and eating regular meals had to be cut because the Federal budget deficit required it.
Upon election Barack Obama did essentially the same thing claiming a fiscal emergency in 2010 that required cutting Social Security and Medicare as he spent $6 trillion – $14 trillion to save Wall Street. That unlimited funds were found for Wall Street but none could be found to restore the fortunes of the victims of Democratic ‘trade’ agreements and the predatory finance of Wall Street renders evident the class-war being perpetrated by the Democrats. Liberal economists— court jesters dressed in the garb of storied academics, prattled on about the ‘zero-lower bound’ (cartoon monetary economics) as the Clintons and Barack Obama forewent the power of the public purse that FDR used to create the Federal jobs programs that brought tens of thousands of desperate citizens out of the misery of the Great Depression.
When Hillary Clinton outlined her ‘economic’ program she claimed that upon election she would direct Congress to create ten million jobs rebuilding infrastructure without explaining how this jibed with her public career as a deficit hawk, how rebuilding infrastructure would create ten million jobs when Mr. Obama’s program created at best a few thousand and why this wouldn’t be just one more Clinton scam to shove public resources to their cronies? As the Wall Street bailouts demonstrated, the public purse is virtually bottomless when social emergencies require rectification. The problem is that Hillary Clinton has spent her career poisoning the well for public expenditures in the public interest through both the misdirection that taxes are a binding constraint on public expenditures and by corrupting the public realm to the point where nothing works as advertised.
Graph: The Clinton’s state-capitalism works for their Wall Street patrons by transferring a larger piece of an economy in decline to it while using identity politics to divide working class interests. Liberal economists understood that resurgent capitalism would redistribute income and wealth upward but argued that ‘we all benefit’ from the rich being made richer. This was derided as ‘trickle-down’ economics when Ronald Reagan re-introduced the concept. As history has it, the actual result is broad economic decline where the already wealthy use state power to immiserate the ‘bottom’ 80% – 90% of the population. Source: St. Louis Federal Reserve.
Bill Clinton and / or Barack Obama could have created government jobs programs to employ dispossessed workers at living wages just like FDR did. They could have even claimed the economic emergencies they helped create as reasons for doing so. Mainstream economic theory has ‘free-trade’ beneficiaries compensating those displaced by it. However, the Clintons and Mr. Obama chose instead to promote the right-wing lie of a binding budget constraint to limit and / or preclude increased social spending more effectively than the old-line Republican misery squad could have ever imagined possible. So the question for Hillary Clinton is: will she prove her husband and Barack Obama to be ruling class tools for lying about Federal budget constraints on social spending or will she maintain the lie to renege on her promise of creating ten million jobs?
Jay Gould once speculated that he “could hire one-half of the working class to kill the other half.” Rising liberal vitriol directed against working class supporters of Donald Trump pits the near-precariat with ‘private’ health insurance, pensions and recovered home equity against those without them with little apparent understanding of the broadly declining circumstances for all but the very rich (graph above). Democrats sold trade agreements, deregulation, privatization and balanced budgets as ways to ‘grow the economic pie.’ With history having demonstrated otherwise, the Party leadership now wants to change the subject. Barack Obama is selling the TPP (Trans-Pacific Partnership) ‘trade’ agreement as a geopolitical endeavor. Hillary Clinton now claims she will recover the ghost of FDR that national Democrats spent the last forty-years exorcising. In the parlance: whatever.
The day after Election Day will be like any other in the sense that the problems of looming environmental catastrophe, gratuitous wars and long-term economic decline will remain profit-generating ‘opportunities’ in the realm of official concern. The American political establishment is calcified and out of ideas. The problem is that the residual rationales and institutional tendencies lean toward catastrophe generation. Democrats saved Wall Street in particular, and finance capitalism more generally, to kill again. The most destructive militarists in modern history have attached themselves to Hillary Clinton and the American war machine. Unless functional politics are recovered and asserted outside the electoral system more of the same is the outcome that Western political economy is designed to produce.