A POST PRE-APOCALYPTIC POLITICAL ECONOMY: Trump was More Symptom than Cause of Our Failing State

We cannot solve problems with the same kind of thinking that we used when we created them. ________ Albert Einstein

A man is no less a slave because he is allowed to choose a new master once in a term of years. ________ Lysander Spooner

The US dodged a bullet in the recent election, well actually it was lodged in its tattered body armor, just over the heart. Plus, it remains to be seen how long Trump can keep his jackboot on that very spot. It cannot be overstated how lucky we all were that Trump was such an extremely inept Führer. It is certainly fortuitous that we did not give him another 4 years to perfect his skills, and/or allow his insanity to do irreparable damage. Yet we are far from out of the woods, as the political economy that drew such an unmitigated monster out of the woodwork remains completely intact. Moreover, the virulent ideology that buttresses this system (known by the misnomer “neoliberalism”) infects our economic apparatus and both political parties (including every president since Reagan, including Obama and Trump); not to mention the courts. Overly generous historians may even conclude that Trump’s populism, albeit inauthentic, was an appropriate response to our mounting malaise. Furthermore, while Biden will restore a bit of decorum and decency, he is unlikely to fully address the growing concerns of average citizens, regarding our perverse political economy. We may have averted our soft underbelly of crony-capitalism from becoming full-frontal fascism, but we may not be so lucky the next time around. Meanwhile the mechanisms of complete subjugation and their ideological justifications continue to be finely honed in our corporate board rooms and in bowels of our bureaucracy. Many scholars have observed that totalitarian fascism is the logical outcome of failed capitalism, and until we recognize the dimensions of those failures, we are doomed to a dystopian future.

The Massive Economic Mismanagement of Neoliberalism

I have set out the origins of our toxic ideological preoccupations in detail in my previous missives. Some might say I have been flogging this dead horse for decades. Yet the it is far from dead, and it might well be that a fifth horseman of the apocalypse will be riding it. In his excellent review of the problems associated with our dominant ideology in the Guardian, George Monbiot asks us to imagine if the inhabitants of the former Soviet Union had never heard of communism, in order to express our inordinate ignorance regarding the nature of our own embedded ideology. While less oblivious perhaps to their basic tenants, citizens of the Soviet bloc were equally misguided about the true nature of their oligarchic systems. Monbiot proceeds to explain how elements of our failed state (from “offshoring” and “financial meltdown” to the wreckage of our privatized health, welfare, and education apparatus, as well as “collapse of ecosystems”) have clear roots to our prevailing ideology.

Neoliberalism, which might more accurately be labeled NEOFEUDALISM, was vast elite project launched to reverse the adaptations made to capitalism via the New Deal, following WWII (note: https://daneke.medium.com/t-i-n-a-my-ass-6c403e7f4ed2). It not only captured most of the mainstream economics profession, that falsely claims to be apolitical, it became deeply entrenched public and private institutions. Worse yet, in order to extend their political dominance, they linked themselves to racist, religious, misogynistic, and militaristic undercurrents in American society; not to mention conspiracy theorists of all stripes. What makes this insidious ideology so terribly is that it is an powerful mythology, providing an elaborate smokescreen over the willfully designed dysfunctions of our actual political economy.

Leading international labor scholar, Guy Standing (of “precariat” fame), provides an elaborate exploration of the “lies” neoliberals tell us to disguise their oligarchical aims, in his recent book, The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay. In particular, they hide behind “free market” rhetoric to conceal their pandering to “rentiers”, those who create unproductive and phantom wealth from the manipulation of assets. It is essential to note that when classical economists (e.g. Adam Smith) spoke of free markets, they meant free from rent extraction. Famed modern economist, John Maynard Keynes, explained that for capitalism to work its magic we would need to euthanize those who extract “unearned wealth”, yet it is they who have euthanized the rest of us. Meanwhile the victory of our oligarchs over the shared prosperity project which prevailed up until the 1970s is nearly complete. Their anti-labor, anti-competition, asset inflating, “money for nothing” economy is a total house of cards, threatening to bring down the total global economy at any time. For example, the nominal value of financial derivatives (e.g. huge bets on debts) are nearly 10 times the GDP of the planet. The hyper-financialized economy requires increasingly burdensome bailouts by central banking cartels, ensuring that ultimate collapse will be catastrophic on a galactic scale.

As those few modern economists who dare to challenge the status quo (e.g. Thomas Piketty) have documented, most of our monumental inequality is by design. Unrelenting policy decisions and/or lax enforcement built a rabidly anti-labor and unabashedly pro-monopoly edifice, which amounts to socialism for the 1% and free enterprise for the 99%. Policies to support on-demand and increasingly precarious employment (without benefits), privatize common resources (especially intellectual property), and indemnify extremely speculative activities, as well as regressive taxation (e.g. special treatment of capital gains) have made American safe for instant billionaires and exceedingly dangerous for everyone else. The resulting societal-wide anomie is a lush landscape for populist demagogs, particularly those who promise to return us to a previous golden age. First of all, our post WWII halcyon epoch was mostly reserved for white men. And secondly, leaders like Trump had absolutely NO intention to curb our kleptocratic political economy. In fact, he greatly enhanced devices for diverting distributions upward. We were merely taken in by a consummate con-man. Even if Biden decides to drive the money-changers from the Temple, the deadly mine fields laid by Trumpism remain dense and ubiquitous, and detectors and defusers are in very short supply. The American apartheid between the haves and have-nots requires more than a “truth and reconciliation commission”. But I would not hold my breath on that score. Plus, the continued impacts of the pandemic will combine with residual elements from the 2008 financial melt-down to virtually guarantee a protracted recession, if nor a full-blown depression.

A Few Immodest Proposals

As we begin to forage through the wreckage of our political economy, the first thing we need to get a handle on is our overwhelming propensity to bailout the plutocrats first, in the hope of the mythical “trickle-down effect”. An ecological view of systemic risks would tell us that if certain banks are “too big to fail” then they are too big to have around. Our patched-up Ponzi scheme financial system remains the greatest impediment to even minor reforms. We might have averted the last financial crisis (which is far from over) altogether, at lower cost, and less overall dispossession if we had sought to help homeowners rather than bankers and their shadowy companions. It is especially noteworthy that the Federal Reserve’s response to the pandemic thus far have been to extend direct and indirect (e.g. zero-interest rates) aid to mega-corporations and “shadow bankers” (e.g. hedge and private equity funds), and not merely the major member banks that make up their cartel. Moreover, the lion’s share of the billions provided by Congress for “pandemic relief” have gone to large firms, many of questionable necessity (e.g. sports teams and mega-churches). We need to address various fundamental flaws in our systems of money (e.g. debt money creation) and banking, if our welfare for the well-heeled is ever to be curtailed (note: https://daneke.medium.com/it-is-the-banking-stupid-1ec1345478d7). This, of course, is no mean feat, but public banking options, a financial transaction tax, and perhaps even the provision of interest free money (e.g. JFK’s short-lived Silver Certificates) would be a start.

In the meantime, we need to begin to address the fate of battered wage-workers in our rapidly evolving information and gig economies. Merely enforcing existing labor laws, along with a reasonable minimum wage as well as re-incentivizing unionization (as opposed to allowing open warfare on unions), could work wonders. A universal health care system, like all other industrialized nations would also help. However, as Democratic presidential candidate, Andrew Yang, demonstrated in detail, we need for a “Guaranteed Annual Income” for displaced workers as well.

We also need new provisions for obtaining a college education at a reasonable cost. Getting cash-strapped state governments to reduce skyrocketing fees may be a lost cause; nonetheless, as most of astronomical rise in the costs of college are the result of unbridled administrative growth, higher ed could definitely profit from a modicum of stream-lining. Given the Ubertization of faculties with temps, adjuncts and other third-class serfs (e.g. graduate students), instructional costs have actually gone down of late, while sports teams with multi-million-dollar coaches and student recreational facilities grabbed up the excess. The distance learning programs necessitated by the pandemic may engender a re-evaluation of delivery systems, yet we will still require new financing arrangements that don’t involve a lifetime of debt for a 4-year-degree. Trump officials managed to renege on programs that gave graduates an opportunity for having their loans written down in exchange a period of service in depressed areas. These could easily be restored. Plus, as we will probably need some sort of public works program before the next recession subsides, we could fashion a new “GI Bill” type system. We should allow individuals to earn tuition for college or apprenticeship programs by joining various cadres to rebuild our disintegrating infrastructure, as well as other forms of community service. After a lifetime of university teaching, I can say with little reservation that the average 18-year-old is NOT ready for higher education. After a couple of years of working on America and/or in military, missionary, or programs like the Peace Corp, they will be more serious students, as well as responsible citizens.

Such matters may seem trivial when faced with the vital need of entirely novel political economy, amid bitter societal divisions not seen since the 1860s. The challenge of re-establishing an economy that works for most American’s is herculean, to say the least. We clearly know how rigged the system is on the behalf of the 1%, but instruments for unrigging it (e.g. taxation, government spending, etc.) are completely hamstrung in the present political environment. Furthermore, just as Neoliberal project intended the level of trust in government is at an all time low. However, were we to decide to start enforcing existing anti-trust laws, and upgrade them for the new platform monopolies, we could use their own rhetoric about competitive markets against them. At a much larger level, we might make headway if we could begin to convince the rentiers that they are better off negotiating the remnants of our democracy than they will be with next wave of fascist dictators, currently waiting in the wings.

Written by

Gregory A. Daneke, Professor Emeritus, School of Business, Arizona State. Other teaching posts: Michigan & Stanford. Gov. service: GAO, DOE, and White House.

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