[Peace-discuss] banking bailouts are protectionism! from another fine Dean Baker article

Sat Nov 15 17:00:03 CST 2008

It's an excellent point, Stuart.  And I think it *is* complicated.

A generation or two, maybe more, have learned to pronounce "protectionism" (even "intervention" in the context of the economy) as if synonymous with "incest" or "child pornography", "free enterprise" as if synonymous with "truth, justice and the American way."  The truth is, capitalism doesn't actually *work* without constant intervention, and it can't develop anywhere without protection.

It's not just the bailout - we do it *all the time*!  What are copyrights, patents, trademarks if not protection?  Big tax breaks, industrial development funds, TIFFs - are these "free" enterprise?  Does Wal-Mart move in without publicly funded roads, publicly funded extensions of sewer lines - in some places water and electric utilities and trash pickup (which ought to be public here, too) - and in e.g. Urbana the gift of a new parking lot?

What about all the gov't research - not just pharmaceutical, the
internet (the whole thing), not to mention TV, and innumerable other 'hard' technologies, but also all that business development "research" that universities like UIUC charge the taxpayer for and then hand over gratis to 'investors'?  And what do *we* get out of it?  That question seems to be lost in the cheerleading.

It's not enough, we have to suppose, that capitalism itself is always based on theft - land from indigenous peoples, labor from slaves, resources from foreign lands whose governments we topple or manipulate with debt or military aid or some such drug, or labor again the full value of which the bosses never pay because if they did they could never "profit" but only  trade.  No, that part wasn't exactly easy - it took intensive and extensive support from centuries of sympathetic gov'ts willing to fight wars, suppress strikes and rebellions, execute "pirates", enforce the return of escaped slaves, sign and break treaties, etc., etc. - but we have it all behind us now, and more is required.

I personally think we shouldn't be naive.  Most of us are not primativists, much as we may respect Earth First! et al.   But if we want a certain kind of society, a certain 'level of economic development' (for lack of a better term) with high literacy and low infant mortality and so on, OK, there's a price.  But that doesn't mean Margaret Thatcher was right with TINA (There Is No Alternative).  If 'progress' is what we want, we should go into it with open eyes, sober, and say, all right, maybe certain types of technology can't develop so well in individual garages and cottage industries.  Or maybe there's a way to develop that kind of thing down the road, once we make the initial public investments and so on.  

And maybe in the current economic web in which we find ourselves, we can't allow huge chunks of the web to just collapse and take hundreds of thousands of lives along.  The cost - and I mean the human cost - of "letting them go" would likely be a humanitarian disaster, though probably not as bas as some of the predictions.

But the priorities need to be set socially, I think preferably in some sort of democratic way, though most methods will have their drawbacks.  We have to do our best.  Investments need to match these social priorities: probably something like health, education, sustainable energy, whatever - and I think some kind of international relations that don't privilege the military solutions.  

Of course we're light years from anything like that, at least from a system organized primarily along those lines.  Hard to imagine an interview with an award-winning economist in the New York Times saying this kind of stuff, without the word "satire" or "entertainment" affixed somewhere.  

But the funny part is, most people like the sound of it.  Not everybody, but most people.  We just don't believe it's possible.   Somewhere in the back of our brains millions and millions of heart-of-hearts socialists, really believe in TINA, not in the sense of believing in an ideal, but in the sense of believing in the law of gravity.  There's an idea that it's hard-wired into a supposedly immutable or at least biologically determined "human nature" that is willing to entertain ideas of social justice mostly as whims and fancies and is basically cutthroat.  It's junk-science, of course, but even those of us who haven't fallen into this trap still can't muster much hope for the kind of social revolution that could bring about such things.

I won't argue that right now - but just point out that it isn't all or nothing.   We already *have* massive intervention in the economy by every level of government.  What we have to do is pressure the gov't on its priorities.  It's actually a very good time to do it, too, confidence in capitalism being at a low, expectations of the incoming government being high, and so on.  But without the proverbial "heat from below" the system promises to recalcify quickly, and intervention is likely to follow the model of "socialized risk, privatized profit."

 Ricky

"Only those who do nothing make no mistakes." - Peter Kropotkin

________________________________
From: Stuart Levy <slevy at ncsa.uiuc.edu>
To: peace-discuss at anti-war.net
Sent: Saturday, November 15, 2008 12:20:27 PM
Subject: [Peace-discuss] banking bailouts *are* protectionism! from another fine Dean Baker article

We keep hearing from financial pundits & politicians
about the need to avoid falling into the sink of
protectionism.  Keep our markets free, etc.  

But Dean Baker's recent article points out that our
bank bailouts -- which guarantee the stability of US and
European banks, making them as safe as their governments --
is exactly that, protectionism, and it puts the banks of
other countries at an enormous competitive disadvantage:

    http://www.truthout.org/111008D
    "The G-20 and Biological Warfare", by Dean Baker

[...]

The G-20 will no doubt decide to make some aid, presumably through the
International Monetary Fund, available to the countries being hit by the
fallout from Wall Street's financial meltdown. But this aid will come with
strings and likely not be sufficient to make these countries whole.

    There is no easy remedy to this situation. But it should be obvious to the
developing world that the only way that they can protect themselves from the
episodic crises created by the rich countries is to have alternative poles of
financial support. Specifically, if they can establish regional funds, as the
South American countries have begun to do with the Bank of the South, then they
can hope to insulate themselves from the financial dealings and misdealing of
the wealthy countries.

    Building up regional funds will not be easy. Countries will have to make
compromises and surrender some control to allow a regional fund to operate
effectively. In addition, the wealthy countries will go to considerable lengths
to prevent the creation of effective regional funds. The most obvious route
will be to invite a few important actors in the developing world to sit among
the wealthy countries as junior partners.

    These tactics may prove successful. However, until the developing countries
can turn to alternative sources of capital, they will be susceptible to every
crisis resulting from the regulatory failures of the wealthy countries, even if
they had been completely responsible in managing their own financial affairs.
It's not fair, but that is the way the world works. 
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