[Peace-discuss] Obama's rightist economics

[C. G. Estabrook]

[The sign of hope Klein finds in her penultimate paragraph may be illusory: 
"James Galbraith, son of Friedman’s nemesis John Kenneth Galbraith," may be more 
conservative than his father, mutatis mutandis.  --CGE]

	Published on Saturday, June 14, 2008 by The Nation
	Obama’s Chicago Boys
	by Naomi Klein

Barack Obama waited just three days after Hillary Clinton pulled out of the race 
to declare, on CNBC, “Look. I am a pro-growth, free-market guy. I love the market.”

Demonstrating that this is no mere spring fling, he has appointed 37-year-old 
Jason Furman to head his economic policy team. Furman is one of Wal-Mart’s most 
prominent defenders, anointing the company a “progressive success story.” On the 
campaign trail, Obama blasted Clinton for sitting on the Wal-Mart board and 
pledged, “I won’t shop there.” For Furman, however, it’s Wal-Mart’s critics who 
are the real threat: the “efforts to get Wal-Mart to raise its wages and 
benefits” are creating “collateral damage” that is “way too enormous and 
damaging to working people and the economy more broadly for me to sit by idly 
and sing ‘Kum-Ba-Ya’ in the interests of progressive harmony.” Obama’s love of 
markets and his desire for “change” are not inherently incompatible. “The market 
has gotten out of balance,” he says, and it most certainly has. Many trace this 
profound imbalance back to the ideas of Milton Friedman, who launched a 
counterrevolution against the New Deal from his perch at the University of 
Chicago economics department. And here there are more problems, because 
Obama–who taught law at the University of Chicago for a decade–is thoroughly 
embedded in the mind-set known as the Chicago School.

He chose as his chief economic adviser Austan Goolsbee, a University of Chicago 
economist on the left side of a spectrum that stops at the center-right. 
Goolsbee, unlike his more Friedmanite colleagues, sees inequality as a problem. 
His primary solution, however, is more education–a line you can also get from 
Alan Greenspan. In their hometown, Goolsbee has been eager to link Obama to the 
Chicago School. “If you look at his platform, at his advisers, at his 
temperament, the guy’s got a healthy respect for markets,” he told Chicago 
magazine. “It’s in the ethos of the [University of Chicago], which is something 
different from saying he is laissez-faire.”

Another of Obama’s Chicago fans is 39-year-old billionaire Kenneth Griffin, CEO 
of the hedge fund Citadel Investment Group. Griffin, who gave the maximum 
allowable donation to Obama, is something of a poster boy for an unbalanced 
economy. He got married at Versailles and had the after-party at Marie 
Antoinette’s vacation spot (Cirque du Soleil performed)–and he is one of the 
staunchest opponents of closing the hedge-fund tax loophole. While Obama talks 
about toughening trade rules with China, Griffin has been bending the few 
barriers that do exist. Despite sanctions prohibiting the sale of police 
equipment to China, Citadel has been pouring money into controversial 
China-based security companies that are putting the local population under 
unprecedented levels of surveillance.

Now is the time to worry about Obama’s Chicago Boys and their commitment to 
fending off serious attempts at regulation. It was in the two and a half months 
between winning the 1992 election and being sworn into office that Bill Clinton 
did a U-turn on the economy. He had campaigned promising to revise NAFTA, adding 
labor and environmental provisions and to invest in social programs. But two 
weeks before his inauguration, he met with then-Goldman Sachs chief Robert 
Rubin, who convinced him of the urgency of embracing austerity and more 
liberalization. Rubin told PBS, “President Clinton actually made the decision 
before he stepped into the Oval Office, during the transition, on what was a 
dramatic change in economic policy.”

Furman, a leading disciple of Rubin, was chosen to head the Brookings 
Institution’s Hamilton Project, the think tank Rubin helped found to argue for 
reforming, rather than abandoning, the free-trade agenda. Add to that Goolsbee’s 
February meeting with Canadian consulate officials, who left with the distinct 
impression that they had been instructed not to take Obama’s anti-NAFTA 
campaigning seriously, and there is every reason for concern about a replay of 1993.

The irony is that there is absolutely no reason for this backsliding. The 
movement launched by Friedman, introduced by Ronald Reagan and entrenched under 
Clinton, faces a profound legitimacy crisis around the world. Nowhere is this 
more evident than at the University of Chicago itself. In mid-May, when 
university president Robert Zimmer announced the creation of a $200 million 
Milton Friedman Institute, an economic research center devoted to continuing and 
augmenting the Friedman legacy, a controversy erupted. More than 100 faculty 
members signed a letter of protest. “The effects of the neoliberal global order 
that has been put in place in recent decades, strongly buttressed by the Chicago 
School of Economics, have by no means been unequivocally positive,” the letter 
states. “Many would argue that they have been negative for much of the world’s 
population.”

When Friedman died in 2006, such bold critiques of his legacy were largely 
absent. The adoring memorials spoke only of grand achievement, with one of the 
more prominent appreciations appearing in the New York Times–written by Austan 
Goolsbee. Yet now, just two years later, Friedman’s name is seen as a liability 
even at his own alma mater. So why has Obama chosen this moment, when all 
illusions of a consensus have dropped away, to go Chicago retro?

The news is not all bad. Furman claims he will be drawing on the expertise of 
two Keynesian economists: Jared Bernstein of the Economic Policy Institute and 
James Galbraith, son of Friedman’s nemesis John Kenneth Galbraith. Our “current 
economic crisis,” Obama recently said, did not come from nowhere. It is “the 
logical conclusion of a tired and misguided philosophy that has dominated 
Washington for far too long.”

True enough. But before Obama can purge Washington of the scourge of 
Friedmanism, he has some ideological housecleaning of his own to do.

Naomi Klein is the author of many books, including her most recent, The Shock 
Doctrine: The Rise of Disaster Capitalism. Visit Naomi’s website at 
www.naomiklein.org, or to learn more about her new book, visit 
www.shockdoctrine.com .

© 2008 The Nation