Fictions of Inequality

I replaced Fr. Frank with Père Alain this afternoon - Alain Badiou, the French philosopher, who did a public interview today (page 18) with a Le Monde guy in a big art complex on the banks of the Saône river here in Lyon. The topic was philosophy and the novel, and at one point Badiou said this in my paraphrase translation:

the novel is rooted in equality. All great novels have an equal regard for all their characters, in the sense that they all are subjects of understanding. The novel grants everyone an existence that is prior to social sorting and economic hierarchies. This is a special form of knowledge, because it is fundamentally egalitarian.

Bien sur, Père Alain: this is completely true. I would go further and say that the absence of equality eats the soul. There are many forms of this, like slavery as what Orlando Patterson called "social death," and other forms of domination from torture to incarceration that destroy the dominated's identity and kill the ability of society to grasp their existence.

Badiou said at another point that the novel and politics are different forms of knowing. And on top of this, there is no master discourse above them that translates one into the other: they are just different. And "novel" knowledge is desperately in need of expansion and distribution everywhere, especially where politics and economics now are.

I've said before that this thing called the "middle class" in the US - the annoying term for the vast multi-racial economic majority that does the vast majority of the work - doesn't exist without equality, and is crushed by it's absence. The crushing has been happening visibly for well over a year, witnessed in stupefying crash figures from Dean Baker last week, and neighborhood stories all over the place, and in charts like the one below, that show the crashing value of the only meaningful asset owned by most US families:

Part of the point is the familiar but always important one that the munchkins are getting screwed while the wicked witches of east and west are protected by the federal government.

But the deeper point is that the victims of this bust would never have been so vulnerable had they been able to stick with equality as a principle. They weren't. Their pensions were converted to mutual funds that rose and fell with the market, their unions were gutted and then humiliated, their industries deindustrialized -- the fall of GM and Chrysler has been going on behind a few years of great SUV sales and zero-percent financing profits - their government services cast by Reaganism as a slave addiction, and their skills disparaged as old-economy while their jobs were outsourced and shipped abroad. Their public universities were cut in real dollar year after year, ending up in 2005 per capita below where they had been 25 years before. To top it off, their real wages haven't gone up for 30 years.

So they trusted to one boom-bubble after another. They put their funds in dot-com and telecom stocks in the 1990s, which blew up in 2000. They put their money in real estate, which melted in 2007 and exploded in 2008. They might have put their trust in their jobs and maybe their savings in their companies, but what would they have gotten back from that?

None of this would ever have happened if US society valued equality of outcome, period. It would have been intolerable, violated the basic standards of society, and been stopped.

The crash is the real-economy effect of two things. The first is capitalism's structural problems that lead to what Giovanni Arrighi called the financialization that signals the beginning of the end for a hegemonic power like the U.S. The second is a deep cultural illiteracy at the top of the economy, which accelerates and brutalizes the crisis itself.

The good news, if you can call it that, is that the bubble solutions to painful inequality have run out. They only place for the working/middle-classes to go for help is back to wages, which need to increase, their jobs, which need stabilzation, and public services, which are the only thing that ever head their lives together.

Governor Whack Job

Arnold has gone around the bend and is ignoring polls that say the no votes on sales tax increases means the public wants to eliminate in-house care for Alzheimer's patients, CalGrants for students, CalWorks, state parks, everything. He's going to go down with the right-wing ship, with the extreme right of the California Republican party that hates him anyway, and is taking as many of us as possible with him. The Gov goes around saying stupid helpless stuff like, "I know that that could mean potentially that now Alzheimer's patients will not get this in-home service that they deserve. . . . But you know something? Even though those are tough choices, what is the alternative?"

Actually the alternatives are legion, but most of them involve increasing equity in the tax system, and we have all been taught that fairness is bad for California business, so
are totally ignored as the entire state political system is thrown into a paroxym of defensive lobbying. Who can take the U.S. and especially California seriously given this total inability to solve the most basic financial problems?

Genius at work:

"Several of the latest cuts were eye-openers, but the largest was the wholesale elimination of the California Work Opportunity and Responsibility to Kids Program, which provides grants to parents that people commonly refer to as "welfare."

"Matosantos said that by eliminating the CalWorks welfare program and the Healthy Families program for children's healthcare -- which would affect 930,000 children -- the state could save nearly $1.6 billion. But it would also lose $4.7 billion in federal funds."

The captain is crazy. The crew is awol. The ship is sinking.

Dogs are Feeding

I got back to France from Santa Barbara a week ago today. The most memorable political moment back home was when Bill Maher's show came on while I was hooking up my mother's new computer to her giant TV monitor so she could see it better. Maher got through a sequence about Christian breast implants and then had Elizabeth Warren as his guest, an interesting law professor who has done a lot of good work on the decline of family finances in the new economy and how they get screwed by debt, and became the head of the Congressional Oversight Office charged with evaluating the uses of TARP bailout funds. Maher talked TARP for a while, and they agreed Repubs undid 50 years of prosperity with the help of Bill then said you passed the economics part of our show, but I have a philosophical question.

He then used a word I never thought Maher would use: "Philosophically." "I mean just put on another cap for a second. The root cause of our problems is that we really don't treat each other very well as people. . . I don't know if in Norway or Denmark, they are always trying to trick and trap and screw each other for money. . . if you look at a dozen problems in this country, it always comes down to that. We will do anything to each other for money."

Well um yes. Capitalism. Honed to perfection.

Warren's reponse was terrible: "But you know. Every game has rules . . ."

Here are the rules in Arizona, put in story form by this excellent piece that you must read: “You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

That means you bought high, prices fell, so you drive around town all day to find people getting foreclosed and try to by superlow to make up your losses by forcing them to eat theirs. Pure Road Warrior for a nation of house flippers.

Or Terminator 2, where John Connor, whom Terminator is now protecting, watches two boys hitting each other with sticks and says, "we're not going to make it, are we? "Who?" asks Arnold S, newly good Terminator. "People."

Well Arizona isn't. Maybe not the U.S. It's economy turns on shitheaded cons, like billionaire mayor Bloomberg making NY taxpayers cough up $1-4 billion in still-not-clear amounts of bond financing for the NY Yankees' new stadium. It's not just jet-lagged me saying crap like this. Currency traders, not exactly critics of Yankee capitalism, are again crushing the dollar on the generally correct theory that the main Obama financial strategy is to print huge oceans of money and then give it all to the banks, who will not pocket it fast enough to keep its value up.

Warren said we might have to say: "This is what America looks like for the next 50 years." Well yes. Because we're aren't changing too damn much now are we??

And I haven't even started in on California or the higher ed budgets. Or Star Trek, the longest series of movie quotations in movie history.

Battered Wall o Bunkum

Dean Baker and his crew do a nice job of exposing the inefficiencies of the US economic model on its own terms. The central index of its alleged superiority to "social capitalism" in Europe was a lower unemployment rate. Past and present measures of this take a useful hit in this helpful piece.

For a parallel debunking of Arnoldo-nomics in California, monstrous offspring of Prop 13, see Michael Hilzik in the LA Times.

Hilzik's most important point is not about the self-inflicted Republican train wreck but about it's non-necessity: "The truth is that real solutions to the budget crisis are obvious."

For an overview of Hooverization across the states, see this Wash Post piece from last week.

Hooverize Them

I've been having to do a ton of stuff lately besides lament financial dumbness in our time. I was in California when Arnold announced his stunningly bad budget proposal. It's a cross between "Say Anything!" and Andrew Mellon's 1930 "liquidate everything." Republicanism Degree Zero. Mental end times. Unfortunately the dead zone includes the state house.

I also caught up on some back reading (back dreading I wrote). Mike Davis had a very good wrap-up on the election in the New Left Review for March-April. (Or read this borrowed version, and then subscribe to NLR). Davis makes a good case for the Obama-Clinton fusion that will keep his presidency from being an epochal shift, which so far it really is not.

The key thing is that however well Geithner has propped up Morgan Stanley we're dying out here. The states are sinking fast, taking in stimulus money and flushing it right through the big holes in the bottom.

In other places, like Spain, labor is marching again, and against an unemployment rate of 17.4% in the wake of the implosion of their fake real estate bubble economy. So good, and then what?!

Hooverization Continued

Willliam Greider offers a nice example of why people need to push in a much more organized way against the oblivion to which Washington's fixes are resigning the rest of the country. I've written about the California example, and Greider discusses the thousand-plus local banks that are measurably sliding down the quality slope with no assistance coming from the rest of the government. The stress-tests were for 19 of the biggest banks. There's no similar reporting from Washington on all the other banks, although this is where you can measure the financial health of the rest of the country.

I've often wondered whether the US is too big to live. One reason why it would be is that its leaders think all the action is at the top. Most people in the US who want to be leaders imitate this behavior. Anyone who does'nt is classed as a community organizer, i.e. someone who does good on the ground but has no future in politics. Obama was a community organizer, but there are signs that his rise to the top has been accompanied by taking his eye off the ball - Main Street. If this keeps up, we're looking at a long slow slide and not the bounce.

Herbert Hoover Watch

As I was saying yesterday, Hoover is Happening under the stimulus. Helpful explication comes from this CEPR report, "The State and Local Drag on the Stimulus." It is coauthored by Dean Baker, he who called the housing bubble (a little early, but better early than late), and one of the Angry Ones. Also on Hoover Watch is Paul Krugman today. This eerie market calm and journalistic ambivalence is making me very nervous.

Europe is awake. In France, employees at some firms that shut facilities while making good profits are taking the CEOs hostage in their offices, and the French public mostly finds this understandable. The Eurozone is now predicted to shrink 4% this year, and a few people have noticed. Like many of France's prison guards, who blocked prisons today to protest overcrowding and declining working conditions and the suppression of posts. It's not everyday you see riot police tear-gassing protesting prison guards. But then in France, lots of prison guards belong to the old Trot union Force Ouvrière!

Mental Limbo

May Day was good here in Lyon - luminous sunny weather, a nice lunch and walk with my friend Anais, and of course the marches all over France. They were bigger than the useful for 1ere Mai, and smaller than the earlier protest days during this winter of discontent.

Listening to my Sunday radio show, L'Esprit Public, Jean-Louis Bourlanges summed up a major current in the US as well as here in France by saying that the centrist leader Francois Bayrou addresses people who are "exasperated by inequality, by economic insecurity, and by the inability to have any confidence in their future, and yet who are unable to propose a solution." That's definitely where the press is these days, and leaders - completely stuck, and unable to provide any direction for people who have to work for a living.

And yet the conservative daily Le Figaro fretted on April 9th that in spite of the assurances of writers like Francis Fukuyama and Francois Furet, "the French Revolution may not be over." Max Gallo on the abovementioned show said the same thing: unions and parties are busy being moderate and negotiationist, while regular people are mad as hell.

Why is no big mystery. Their leaders screwed up royally, the economy is still going down, employment is getting crushed, retirement and financial cushions in the form of home ownership in the US and UK have lost 20% to 50% of their value in the past year, and leaders are doing much except attending to the care and feeding of wealthy bankers.

Just one small example of ongoing Hoover 2 - money to the top, little below: University of California president Mark Yudof told the Chronicle of Higher Education last week that the state of California calculated the federal stimulus payout to UC, cut their general fund by that amount, and then gave them the stimulus money - as zero.

The big stories this week were the celebration of May Day in America with the bankruptcy of Chrysler, another death knell for the industry that more than any other created the 20th century American economy, and the biggest quarterly GDP shrinkage in decades. And yet most of the press was thinking maybe the recession was bottoming out.

To help explain the stuckness of leaders, it's worth remembering via polls that give the Republicans twenty (20!) percent of the electorate that Republican rule was always minority rule. They brilliantly engineered short-term plurality coalitions for elections by exploiting right-wing majorities on compartmentalized issues (the Iraq invasion in 2002-04, for example). They had some good glue in anti-government sentiment and in genuine hostility towards elites based on real popular grievances like decades of economic stagnation and cultural condescension (a misreading of the problem of out-of-touch concentrated economic power, but nevermind). The Republicans got the judicial branch by controlling the executive branch through constructed pluralities that depended entirely on the illusion of prosperity, bought with cheap credit and the ruses of Republican trickster figures like Alan Greenspan. The Gingrich Congress of the 1990s was also a wedge Congress, combining authoritarian party discipline with total opportunism on issues (scrambling everything from closing the government by refusing to pass a budget to impeaching Bill Clinton for his blow-job cover up). But though smarter on strategy than the Dims by necessity, it was always a minority party. The weakness of the US economy is in part the weakness of the US top-down management system whose poor judgement nearly destroyed the financial system - until it figured out that Big Government was its new cash cow.

The Republicans are idiots so now we're again a one party state. Great. The Revenge of Mr. Rove.

Crisis history, anyone? Here's a good piece on Lehman and commercial real estate debt securitization. These guys weren't printing money. They were getting out their crayons and writing "1000 million dollars" on construction paper and then handing it over to investors. Then they collected 20 million dollar fees. Gillian Tett at FT has written a book about JP Morgan as the source of much of the 1990s theorizing, and had a good summary last week.

Is the crisis history? Ha ha ha ho ho ho, um, well, no.