None Dare Call it Fascism: Moyers and Galbraith

Last Friday, Bill Moyers sat down with Jamie Galbraith to talk about The Predator State and our current mess relative to 1929-. Galbraith says that like 1929-,

The situation today is very similar to the moment of panic and collapse that we saw in 1929. And for very similar reasons. An abandonment of the supervisory responsibility that should have been applied to keep the speculation and the fraud and the abuse from getting out of control. So there's going to be a major period of correction. And dad, [John Kenneth Galbraith, The Great Crash 1929 writing] in 1955, talks about how memory fades and how eventually, although so long as people remembered '29 it wouldn't be repeated, eventually it would be forgotten and the underlying speculative impulse would come back.

Galbraith differs from many who blame our current mess on"the deficit", on the US Government living beyond its means:

BILL MOYERS: But even Barack Obama's website calls the deficit America's "Domestic Enemy." Even he's aware of the fact that the deficit's beyond sight.

JAMES GALBRAITH: Well, the deficit isn't beyond sight. The deficits in the Bush administration in relation to the size of the economy were never all that large. They were certainly larger than they were under Clinton, but that was in part necessary because of the changed economic situation, the collapse of the dot-com bubble in 2000.

The United States government's credit is good. The deficit is a financial number that people are going to have to get used to because there is no way in these circumstances of avoiding an increase in the deficit. One of two things can happen. The government can take action and help stabilize the economy in which case we will have more spending but also more employment.

Or the government cannot take action and let the economy collapse in which case we will have much less tax revenue. The deficit is going to be larger either way. There is no way of avoiding that. The only question is do you work to have a good economy or do you accept a terrible economy?

BILL MOYERS: What are the negative effects of a soaring deficit?

JAMES GALBRAITH: Well, the one thing I would have worried about is that we might not find lenders who are willing to provide funds to the U.S. government, that the Chinese or the Japanese might decide that they would rather be in some other currency and that we'd then have trouble with inflation. But that's not going to happen. It's not going to happen because, as it turns out, the major alternative, the euro, simply isn't viable as a reserve asset for the rest of the world. It's the dollar or nothing. So the United States basically can finance itself to the extent necessary to deal with this crisis. And I'm right now quite sanguine about that, quite confident that we won't face a problem.

At the end of the interview, Moyers gets to Galbraith's new book, The Predator State, and how some like Steve Forbes are already beginning to blame the mess on reformers like Galbraith. Here's a snip

BILL MOYERS: [T]here are capitalists like Steve Forbes, … of "Forbes Magazine," who argue that people like you are going to go too far and that it was actually the government's excesses and failures in the '80s and '90s that contributed to what began to happen in 2007 with the meltdown. And that if you have your way, people like you have your way, you will criminalize business. You will raise taxes and dry up the economy. You will take government unchecked into the same kind of catastrophe that unchecked Wall Street has carried us. How do you answer a Steve Forbes?

JAMES GALBRAITH: Well, first of all, I very much agree with him, that it was failures of government that were responsible for this. It was the actual failure, the abandonment, the neglect of the supervisory regulatory responsibility. That's at the root of this.

Just as you cannot prosper without a private economy, you cannot prosper without an effective autonomous government capable of thinking for itself, capable of balancing things out, of standing for other interests, of standing for labor and consumers and for the public interest as a whole. If you don't have that, you're going to get these pyramids, these bubbles, these epidemics of fraud and abuse, and ultimately the collapse of trust and the collapse of the economy itself. That's what's happened in the predator state.

I agree with Galbraith on much, including the fact that both private (e.g. so-called "rating agencies") and public regulators (e.g. government agencies, the US Congress, and US Adminsitrations dating back to Ronald Reagan) were asleep at the wheel. I hope Galbraith is right about the US dollar's non-endangered "reserve currency" status for the near term. I also hope he and other reformers are able in the next few years to restructure the world's financial systems to set a stage for thoughtful investment rather than unbridled speculative excess.

Note: My title might better have been written "None Dare Call it Corporatism." Here is a Wikipedia link to Corporatism. See also Wikipedia on The Economics of Fascism.

Comments

[Danny L. McDaniel]

With the current economic downward spiral, there is probably no better potential for a fascist type state in America. I think that 2008, similiar to 1929, will be the start of an economic condition that will not be felt until the Spring of 2009.

I hope that Americans are smart enough to see the danger in economic planning and intervention by the government. Right now most policymakers cannot distinguish between a free-market and a circus parade.

Danny L. McDaniel
Lafayette, Indiana

[barneyt]

I've come to conclude that government isn't asleep at the wheel because chaos leads to more control so what motivation does the government have to create balance? creating codependency is more useful.

the other problem is: even though a government can create jobs, the same problems that come from unemployment remain.

more specifically, government ideally wants to keep you busy while restricting your consumption-- that's probably the goal of the global warming agenda.

for example, the new deal gave us roads and buildings that have ongoing maintenance costs. so, at some point, the benefits of consumption aren't outweighed by the negatives and I don't think this aspect was addressed.

[Danny L. McDaniel]

It is always easier and cheaper to build roads and bridges then it is to maintain them in the long run. The same people who want a massive federal government construction program are the same ones that view the internal combustion engine as the enemy of humankind. Apparently when you are spending other peoples money you can have it both ways.

Danny L. McDaniel
Lafayette, Indiana

[Lorraine]

Totally agree with Danny - the worst of the recession will not be felt until mid 2009. I too believe Governments were asleep at the wheel. Speaking as someone from the UK, we have had Gordon Brown telling us for the last 8 years how his policies will stop any future boom or bust. With large, well established businesses closing here everyday, housing out of control, redundancies, I don't think one man could have got it more wrong.

[george abney]

The Bank of America will become the default BAD BANK and as such will become a lightening rod for further negative economic liabilities. The US economy will become a singularity drawing the world debt down the black hole of our inverted capitalism. Last year taught international economies the effect of US economic policies resulting in severe profit losses. This year the economic portfolios of other nations will be on guard against negative US influences and the US economy will find no release from the black hole that will require transformation of US capitalism into another form of prosperity: a fascist hybrid administered by a democratic dictatorship. Hedonism and a culture of self conceit has contributed to this mess. The myth of success by education has brainwashed the US public into the disneyland belief of Peter Pan magic: Spend as if you are rich and the Monkey God will bless your trust in the promise of marketers... The Bull of Wall Street has been sacrificed by its priests to a Big Lie.