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Today's
Stories
October
25 / 26, 2003
Karyn
Strickler
Down
with Big Brother's Spying Eyes
October
24, 2003
Kurt Nimmo
Ashcroft's
War on Greenpeace
Lenni Brenner
The Demographics of American Jews
Jeffrey
St. Clair
Rockets,
Napalm, Torpedoes and Lies: the Attack on the USS Liberty Revisited
Sarah Weir
Cover-up of the Israeli Attack on the US Liberty
David
Krieger
WMD Found in DC: Bush is the Button
Mohammed Hakki
It's Palestine, Stupid!: Americans and the Middle East
Harry
Browne
Northern
Ireland: the Agreement that Wasn't
October
23, 2003
Diane
Christian
Ruthlessness
Kurt Nimmo
Criticizing Zionism
David Lindorff
A General Theory of Theology
Alan Maass
The Future of the Anti-War Movement
William
Blum
Imperial
Indifference
Stew Albert
A Memo
October
22, 2003
Wayne
Madsen
Religious
Insanity Runs Rampant
Ray McGovern
Holding
Leaders Accountable for Lies
Christopher
Brauchli
There's
No Civilizing the Death Penalty
Elaine
Cassel
Legislators
and Women's Bodies
Bill Glahn
RIAA
Watch: the New Morality of Capitalism
Anthony Arnove
An Interview with Tariq Ali
October 21, 2003
Uri Avnery
The
Beilin Agreement
Robert Jensen
The Fundamentalist General
David
Lindorff
War Dispatch from the NYT: God is on Our Side!
William S. Lind
Bremer is Deaf to History
Bridget
Gibson
Fatal Vision
Alan Haber
A Human Chain for Peace in Ann Arbor
Peter
Linebaugh
On the Bicentennial of the Hanging of Thomas Russell
October
20, 2003
Standard
Schaefer
Chile's
Failed Economy: an Interview with Michael Hudson
Chris
Floyd
Circus Maximus: Arnie, Enron and Bush Maul California
Mark Hand
Democrats Seek to Disappear Chomsky
& Nader
John &
Elaine Mellencamp
Peaceful
World
Elaine
Cassel
God's
General Unmuzzled
October
18 / 19, 2003
Robert
Pollin
Clintonomics:
the Hollow Boom
Gary Leupp
Israel, Syria and Stage Four in the Terror War
Saul Landau
Day of the Gropenfuhrer
Bruce Anderson
The California Recall
John Gershman
Bush in Asia: What a Difference a Decade Makes
Nelson P. Valdes
Bush, Electoral Politics and Cuba's "Illicit Sex Trade"
Kurt Nimmo
Shock Therapy and the Israeli Scenario
Tom Gorman
Al Franken and Al-Shifa
Brian
Cloughley
Public Propaganda and the Iraq War
Joanne Mariner
A New Way to Kill Tigers
Denise
Low
The Cancer of Sprawl
Mickey Z.
The Reverend of Doom
John Chuckman
US Missiles for Israeli Nukes?
George Naggiar
A Veto of Public Diplomacy
Alison
Weir
Death Threats in Berkeley
Benjamin Dangl
Bolivian Govt. Falling Apart
Ron Jacobs
The Politics of Bob Dylan
Fidel Castro
A Review of Garcia Marquez's Memoir
Adam Engel
I Hope My Corpse Gives You the Plague
Poets' Basement
Jones, Albert, Guthrie and Greeder
October
17, 2003
Stan Goff
Piss
On My Leg: Perception Control and the Stage Management of War
Newton
Garver
Bolivia
in Turmoil
Standard
Schaefer
Grocery Unions Under Attack
Ben Terrall
The Ordeal of the Lockheed 52
Ron Jacobs
First Syria, Then Iran
David
Lindorff
Michael
Moore Proclaims Mumia Guilty
October
16, 2003
Marjorie
Cohn
Bush
Gunning for Regime Change in Cuba
Gary Leupp
"Getting Better" in Iraq
Norman
Solomon
The US Press and Israel: Brand Loyalty and the Absence of Remorse
Rush Limbaugh
The 10 Most Overrated Athletes of All Time
Lenni
Brenner
I
Didn't Meet Huey Newton. He Met Me
Website of the Day
Time Tested Books
October
15, 2003
Sunil
Sharma / Josh Frank
The
General and the Governor: Two Measures of American Desperation
Forrest
Hylton
Dispatch
from the Bolivian War: "Like Animals They Kill Us"
Brian
Cloughley
Those
Phony Letters: How Bush Uses GIs to Spread Propaganda About Iraq
Ahmad
Faruqui
Lessons
of the October War
Uri Avnery
Three
Days as a Living Shield
Website
of the Day
Rank and File: the New Unity Partnership Document
JoAnn
Wypijewski
The
New Unity Partnership:
A Manifest Destiny for Labor
October 14, 2003
Eric Ridenour
Qibya
& Sharon: Anniversary of a Massacre
Elaine
Cassel
The
Disgrace That is Guantanamo
Robert
Jensen
What the "Fighting Sioux" Tells Us About White People
David Lindorff
Talking Turkey About Iraq
Patrick
Cockburn
US Troops Bulldoze Crops
VIPS
One Person Can Make a Difference
Toni Solo
The CAFTA Thumbscrews
Peter
Linebaugh
"Remember
Orr!"
Website
of the Day
BRIDGES
October
11 / 13, 2003
Alexander
Cockburn
Kay's
Misleading Report; CIA/MI-6 Syrian Plot; Dershowitz Flaps Broken
Wings
Saul Landau
Contradictions: Pumping Empire and Losing Job Muscles
Phillip Cryan
The War on Human Rights in Colombia
Kurt Nimmo
Cuba and the "Necessary Viciousness" of the Bushites
Nelson P. Valdes
Traveling to Cuba: Where There's a Will, There's a Way
Lisa Viscidi
The Guatemalan Elections: Fraud, Intimidation and Indifference
Maria Trigona and Fabian
Pierucci
Allende Lives
Larry
Tuttle
States of Corruption
William A. Cook
Failing America
Brian
Cloughley
US Economic Space and New Zealand
Adrian Zupp
What Would Buddha Do? Why Won't the Dalai Lama Pick a Fight?
Merlin
Chowkwanyun
The Strange and Tragic Case of Sherman Marlin Austin
Ben Tripp
Screw You Right Back: CIA FU!
Lee Ballinger
Grits Ain't Groceries
Mickey Z.
Not All Italians Love Columbus
Bruce
Jackson
On Charles Burnett's "Warming By the Devil's Fire"
William Benzon
The Door is Open: Scorsese's Blues, 2
Adam Engel
The Eyes of Lora Shelley
Walt Brasch
Facing a McBlimp Attack
Poets'
Basement
Mickey Z, Albert, Kearney
October 10, 2003
John Chuckman
Schwarzenegger
and the Lottery Society
Toni Solo
Trashing
Free Software
Chris
Floyd
Body
Blow: Bush Joins the Worldwide War on Women
October
9, 2003
Jennifer
Loewenstein
Bombing
Syria
Ramzi
Kysia
Seeing
the Iraqi People
Fran Shor
Groping the Body Politic
Mark Hand
President Schwarzenegger?
Alexander
Cockburn
Welcome
to Arnold, King for a Day
Website of the Day
The Awful Truth about Wesley Clark
October
8, 2003
David
Lindorff
Schwarzenegger
and the Failure of the Centrist Dems
Ramzy
Baroud
Israel's
WMDs and the West's Double Standard
John Ross
Mexico
Tilts South
Mokhiber
/ Weissman
Repub Guru Compares Taxes to the Holocaust
James
Bovard
The
Reagan Roadmap for Antiterrorism Disaster
Michael
Neumann
One
State or Two?
A False Dilemma
October
7, 2003
Uri Avnery
Slow-Motion
Ethnic Cleansing
Stan Goff
Lost in the Translation at Camp Delta
Ron Jacobs
Yom Kippurs, Past and Present
David
Lindorff
Coronado in Iraq
Rep. John Conyers, Jr.
Outing a CIA Operative? Why A Special Prosecutor is Required
Cynthia
McKinney
Who Are "We"?
Elaine Cassel
Shock and Awe in the Moussaoui Case
Walter
Lippman
Thoughts on the Cali Recall
Gary Leupp
Israel's
Attack on Syria: Who's on the Wrong Side of History, Now?
Website
of the Day
Cable News Gets in Touch With It's Inner Bigot
October
6, 2003
Robert
Fisk
US
Gave Israel Green Light for Raid on Syria
Forrest
Hylton
Upheaval
in Bolivia: Crisis and Opportunity
Benjamin Dangl
Divisions Deepen in Third Week of Bolivia's Gas War
Bridget
Gibson
Oh, Pioneers!: Bush's New Deal
Bob Fitrakis and Harvey
Wasserman
The Bush-Rove-Schwarzenegger Nazi Nexus
Nicole
Gamble
Rios Montt's Campaign Threatens Genocide Trials
JoAnn
Wypijewski
The
New Unity Partnership:
A Manifest Destiny for Labor
Website
of the Day
Guerrilla Funk
October
3 / 5, 2003
Tim Wise
The
Other Race Card: Rush and the Politics of White Resentment
Peter
Linebaugh
Rhymsters
and Revolutionaries: Joe Hill and the IWW
Gary Leupp
Occupation
as Rape-Marriage
Bruce
Jackson
Addio
Alle Armi
David Krieger
A Nuclear 9/11?
Ray McGovern
L'Affaire Wilsons: Wives are Now "Fair Game" in Bush's
War on Whistleblowers
Col. Dan Smith
Why Saddam Didn't Come Clean
Mickey
Z.
In Our Own Image: Teaching Iraq How to Deal with Protest
Roger Burbach
Bush Ideologues v. Big Oil in Iraq
John Chuckman
Wesley Clark is Not Cincinnatus
William S. Lind
Versailles on the Potomac
Glen T.
Martin
The Corruptions of Patriotism
Anat Yisraeli
Bereavement as Israeli Ethos
Wayne
Madsen
Can the Republicans Get Much Worse? Sure, They Can
M. Junaid Alam
The Racism Barrier
William
Benzon
Scorsese's Blues
Adam Engel
The Great American Writing Contest
Poets'
Basement
McNeill, Albert, Guthrie
October
2, 2003
Niranjan
Ramakrishnan
What's
So Great About Gandhi, Anyway?
Amy Goodman
/ Jeremy Scahill
The
Ashcroft-Rove Connection
Doug Giebel
Kiss and Smear: Novak and the Valerie Plame Affair
Hamid
Dabashi
The Moment of Myth: Edward Said (1935-2003)
Elaine Cassel
Chicago Condemns Patriot Act
Saul Landau
Who
Got Us Into This Mess?
Website of the Day
Last Day to Save Beit Arabiya!
October 1, 2003
Joanne
Mariner
Married
with Children: the Supremes and Gay Families
Robert
Fisk
Oil,
War and Panic
Ron Jacobs
Xenophobia
as State Policy
Elaine
Cassel
The
Lamo Case: Secret Subpoenas and the Patriot Act
Shyam
Oberoi
Shooting
a Tiger
Toni Solo
Plan Condor, the Sequel?
Sean Donahue
Wesley
Clark and the "No Fly" List
Website of the Day
Downloader Legal Defense Fund
September
30, 2003
After
Dark
Arnold's
1977 Photo Shoot
Dave Lindorff
The
Poll of the Shirt: Bush Isn't Wearing Well
Tom Crumpacker
The
Cuba Fixation: Shaking Down American Travelers
Robert
Fisk
A
Lesson in Obfuscation
Charles
Sullivan
A
Message to Conservatives
Suren Pillay
Edward Said: a South African Perspective
Naeem
Mohaiemen
Said at Oberlin: Hysteria in the Face of Truth
Amy Goodman
/ Jeremy Scahill
Does
a Felon Rove the White House?
Website
of the Day
The Edward Said Page
September 29, 2003
Robert
Fisk
The
Myths of Western Intelligence Agencies
Iain A. Boal
Turn It Up: Pardon Mzwakhe Mbuli!
Lee Sustar
Paul
Krugman: the Last Liberal?
Wayne Madsen
General Envy? Think Shinseki, Not Clark
Benjamin
Dangl
Bolivia's Gas War
Uri Avnery
The
Magnificent 27
Pledge
Drive of the Day
Antiwar.com
September
26 / 28, 2003
Alexander
Cockburn
Alan
Dershowitz, Plagiarist
David Price
Teaching Suspicions
Saul Landau
Before the Era of Insecurity
Ron Jacobs
The Chicago Conspiracy Trial and
the Patriot Act
Brian
Cloughley
The Strangeloves Win Again
Norman Solomon
Wesley and Me: a Real-Life Docudrama
Robert
Fisk
Bomb Shatters Media Illusions
M. Shahid Alam
A Muslim Sage Visits the USA
John Chuckman
American Psycho: Bush at the UN
Mark Schneider
International Direct Action
The Spanish Revolution to the Palestiniana Intifada
William
S. Lind
How $87 Billion Could Buy Some Real Security
Douglas Valentine
Gold Warriors: the Plundering of Asia
Chris
Floyd
Vanishing Act
Elaine Cassel
Play Cat and Moussaoui
Richard
Manning
A Conservatism that Once Conserved
George Naggiar
The Beautiful Mind of Edward Said
Omar Barghouti
Edward Said: a Corporeal Dream Not Yet Realized
Lenni Brenner
Palestine's Loss is America's Loss
Mickey
Z.
Edward Said: a Well-Reasoned Voice
Tanweer Akram
The Legacy of Edward Said
Adam Engel
War in the Smoking Room
Poets' Basement
Katz, Ford, Albert & Guthrie
Website
of the Weekend
Who the Hell is Stew Albert?
September
25, 2003
Edward
Said
Dignity,
Solidarity and the Penal Colony
Robert
Fisk
Fanning
the Flames of Hatred
Sarah
Ferguson
Wolfowitz at the New School
David
Krieger
The
Second Nuclear Age
Bill Glahn
RIAA Doublespeak
Al Krebs
ADM and the New York Times: Covering Up Corporate Crime
Michael
S. Ladah
The Obvious Solution: Give Iraq Back to the Arabs
Fran Shor
Arnold and Wesley
Mustafa
Barghouthi
Edward Said: a Monument to Justice and Human Rights
Alexander Cockburn
Edward Said: a Mighty and Passionate
Heart
Website
of the Day
Edward Said: a Lecture on the Tragedy of Palestine
The Great Alejandro Escavedo Needs Your Help!
September 24, 2003
Stan Goff
Generational
Casualties: the Toxic Legacy of the Iraq War
William
Blum
Grand Illusions About Wesley Clark
David
Vest
Politics
for Bookies
Jon Brown
Stealing Home: The Real Looting is About to Begin
Robert Fisk
Occupation and Censorship
Latino
Military Families
Bring Our Children Home Now!
Neve Gordon
Sharon's
Preemptive Zeal
Website
of the Day
Bands Against Bush
September
23, 2003
Bernardo
Issel
Dancing
with the Diva: Arianna and Streisand
Gary Leupp
To
Kill a Cat: the Unfortunate Incident at the Baghdad Zoo
Gregory
Wilpert
An
Interview with Hugo Chavez on the CIA in Venezuela
Steven
Higgs
Going to Jail for the Cause--Part 2: Charity Ryerson, Young and
Radical
Stan Cox
The Cheney Tapes: Can You Handle the Truth?
Robert
Fisk
Another Bloody Day in the Death of Iraq
William S. Lind
Learning from Uncle Abe: Sacking the Incompetent
Elaine
Cassel
First They Come for the Lawyers, Then the Ministers
Yigal
Bronner
The
Truth About the Wall
Website
of the Day
The
Baghdad Death Count
September
20 / 22, 2003
Uri Avnery
The
Silliest Show in Town
Alexander
Cockburn
Lighten
Up, America!
Peter Linebaugh
On the Bicentennial of the Execution of Robert Emmet
Anne Brodsky
Return
to Afghanistan
Saul Landau
Guillermo and Me
Phan Nguyen
Mother Jones Smears Rachel Corrie
Gila Svirsky
Sharon, With Eyes Wide Open
Gary Leupp
On Apache Terrorism
Kurt Nimmo
Colin
Powell: Exploiting the Dead of Halabja
Brian
Cloughley
Colin Powell's Shame
Carol Norris
The Moral Development of George W. Bush
Bill Glahn
The Real Story Behind RIAA Propaganda
Adam Engel
An Interview with Danny Scechter, the News Dissector
Dave Lindorff
Good Morning, Vietnam!
Mark Scaramella
Contracts and Politics in Iraq
John Ross
WTO
Collapses in Cancun: Autopsy of a Fiasco Foretold
Justin Podur
Uribe's Desperate Squeals
Toni Solo
The Colombia Three: an Interview with Caitriona Ruane
Steven Sherman
Workers and Globalization
David
Vest
Masked and Anonymous: Dylan's Elegy for a Lost America
Ron Jacobs
Politics of the Hip-Hop Pimps
Poets
Basement
Krieger, Guthrie and Albert
Website of the Weekend
Ted Honderich:
Terrorism for Humanity?
Hot Stories
Alexander Cockburn
Behold,
the Head of a Neo-Con!
Subcomandante Marcos
The
Death Train of the WTO
Norman Finkelstein
Hitchens
as Model Apostate
Steve Niva
Israel's
Assassination Policy: the Trigger for Suicide Bombings?
Dardagan,
Slobodo and Williams
CounterPunch Exclusive:
20,000 Wounded Iraqi Civilians
Steve
J.B.
Prison Bitch
Sheldon
Rampton and John Stauber
True Lies: the Use of Propaganda
in the Iraq War
Wendell
Berry
Small Destructions Add Up
CounterPunch
Wire
WMD: Who Said What When
Cindy
Corrie
A Mother's Day Talk: the Daughter
I Can't Hear From
Gore Vidal
The
Erosion of the American Dream
Francis Boyle
Impeach
Bush: A Draft Resolution
Click Here
for More Stories.
|
October
25, 2003
The US Economy: an
Egalitarian Program
Another
Path is Possible
By ROBERT POLLIN
[Editors' note: The following
essay is excerpted from economist Robert Pollin's vital new book,
Contours
of Descent: US Economic Fractures and the Landscape of Global
Austerity, published in September by Verso.--AC/JSC]
"The world can and has been changed
by those for whom the ideal and the real are dynamically contiguous.
-- William James
"Too often a vehicle for mystification,
economics can best become an instrument for enlightenment if
we see it as the means by which we strive to make a workable
science out of morality."
-- Robert Heilbroner
Since I am attempting to present only a mere sketch
of an alternative program, I will focus on what I consider some
of the most basic considerations. The cornerstone of an alternative
policy approach in the United States is to return to the basic
commitment that emerged out of the Great Depression, the New
Deal, and World War II, and was sustained, for the most part,
through the 1960s. This is to promote full employment at decent
wages. The corollary to a policy of full employment at decent
wages is that workers can afford to spending money, which then
maintains overall spending in the economy at a high level. This
creates the further benefit of businesses wanting to increase
their investments to meet the demands of an expanding market.
Since the 1980s, U.S. economic policy
has been focused on "inflation targeting"-which means
to either completely stamp out inflation or at least to contain
it at a negligible level of two percent or less. Eliminating
federal deficits was added to inflation-targeting in the 1990s
as a first-tier policy concern. A shift back to what we may call
"employment targeting" does not mean ignoring either
inflation or excessive government deficits, which would be self-defeating.
But it does mean that the goal of expanding the supply of jobs
at decent pay should receive at least as much, if not more, consideration
among policy makers as controlling inflation or the federal deficit.
In other words, employment targeting means that when Alan Greenspan
and other Federal Reserve officials recognize that U.S. workers
are experiencing "a heightened sense of job insecurity,"
as Greenspan put it in 1997, this should not be celebrated as
a positive development because it inhibits inflationary pressures.
It should rather be attacked as problem requiring a solution.
The last years of the Clinton presidency
did illustrate how powerful a tool low unemployment can be. With
unemployment having fallen below 4.5 percent for three straight
years, average real wages finally began to rise and poverty fell.
The last time unemployment fell this low in the U.S. was when
Lyndon Johnson was President in the second half of the 1960s.
The benefits in this period of approaching full employment were
even more dramatic. As Arthur Okun, a member of the Council of
Economic Advisors under President Johnson wrote about those years:
Prosperity has been the key to the reduction
of the number of people below the statistical poverty line from
40 million in 1961 to 25 million in 1968. It has meant jobs for
those formerly at the back of the hiring line.It has made economic
security a reality to millions of middle-income families.
Of course, both under Clinton in the
1990s and Johnson in the 1960s, there were severe problems with
the way low unemployment was attained. Because workers had experienced
the "heightened sense of job insecurity" under most
of Clinton's tenure, when wages did finally start to rise significantly
in 1997, this was from an extremely low base. Moreover, the injection
of increased spending under Clinton that produced low unemployment
came from the stock market bubble which, as has now become transparently
clear, was unsustainable. In the 1960s, the catalyst driving
the economy to full employment was government spending on the
Vietnam war-that is, a source of economic stimulus that was also
unsustainable and even more undesirable than the 1990s market
bubble.
The central challenge for an employment-targeted
policy in the U.S. today would therefore be to identify alternative
sources of job expansion that do not require waging war or destabilizing
the financial system. The Bush-2 plan for huge military spending
increases obviously does not qualify any more than the Vietnam
War as a desirable source of job expansion. But an alternative
plan is staring the Bush administration in the face: to expand
substantially federal government support for state and local
governments programs. This would enable the state and local governments
to reverse the severe spending cuts they experienced in the aftermath
of the 2001 recession, and beyond this, to expand their commitments
in education, childcare, health, environmental protection, and
public infrastructure investments. Increasing spending in these
areas would have a double benefit, in that they stimulate overall
spending in the economy in the short-run while also promoting
higher productivity and general well-being in the long run.
But if an employment-targeted federal
spending program could be crafted around expanding such socially
desirable projects, that still wouldn't prevent, on its own,
a return to the afflictions that accompanied the expansion of
the 1990s, i.e. destabilizing financial practices, along with
rising inequality and wage stagnation for most of the decade.
The employment-targeted spending program would therefore have
to be buttressed by new forms of regulation of both labor and
financial markets. How to proceed in these areas?
Labor regulations. One of the most basic
elements of a new regime of labor regulations in the U.S. has
already been powerfully advanced since the mid-1990s by the so-called
"living wage" movement. By the end of 2002, some version
of a "living" minimum wage standard has become law
in around 90 U.S. municipalities, while similar such measures
are being debated elsewhere throughout the country. The guiding
principle behind the U.S. living wage movement is very simple:
that the minimum wage should be high enough such that workers
can support themselves and their families at least at a modestly
decent standard. This means a wage which offers workers "the
ability to support families, to maintain self-respect, and to
have both the means and the leisure to participate in the civic
life of the nation," as the historian Lawrence Glickman
describes the concept as it initially emerged during political
struggles early in the 20th century. In practical terms, it is
impossible to identify a single hourly wage rate to which this
notion of a "living wage" corresponds. But municipal
governments around the country have passed ordinances setting
the minimum within a range of $8 - $11 plus benefits. This contrasts
with the current national minimum wage of $5.15.
But workers also deserve the right to
organize themselves to achieve more than a decent minimum-that
is, to promote gains in wages, benefits, and workplace conditions
more broadly, not just for those near the bottom of the pay scale.
This will entail strengthening the legal rights of workers to
organize and form unions. In his powerful 2001 Presidential Address
before the Industrial Relations Research Association, Sheldon
Friedman surveyed ways in which workers in the U.S. "who
seek to form a union nearly always face a broad array of well-honed
and devastingly effective employer tactics designed to suppress
their freedom to organize." Among other evidence, Friedman
reports on a 2000 study by Human Rights Watch that documented
the exploding rate at which workers in the U.S. face job discrimination,
harassment and discharge for attempting to form unions. In the
1959s, only hundreds of workers suffered such reprisals. But
by the 1990s, just the number of cases recognized by the National
Labor Relations Board had risen to over 20,000 per year. Clearly,
advancing an egalitarian policy agenda will not be sustainable
unless employers and government regulators respect workers' fundamental
rights to organize themselves as they wish. Indeed, the very
notion of an egalitarian policy project absent this basic right
is a contradiction in terms.
Defending workers' rights to organize
can also produce broader benefits, since workers receiving decent
wages through union contracts will also be able to stimulate
overall demand in the economy through their own enhanced ability
to spend. A well known, though probably apocryphal encounter
between Henry Ford and Walter Reuther, the first President of
the United Auto Workers union, captures this point. Ford and
Reuther were said to have been together watching as one Ford
plant became more automated. As the new machinery rolled into
the plant, Ford said to Reuther, "Well Walter, how will
you organize those machines?" Reuther responded, "Yes,
that will be a problem Henry. But how will you get them to buy
Fords?"
Financial regulation. U.S. politicians
began deregulating the financial system in the 1970s based on
the contention that the regulatory structure devised during the
1930s Depression-the so-called Glass-Steagall system-was not
appropriate to contemporary conditions. Bill Clinton, Alan Greenspan,
and Treasury Secretary Robert Rubin maintained that same position
through the 1990s, as they presided over the final dismantling
of Glass-Steagall.
Given that the financial system has become
infinitely more complex since the 1930s-including in its capacity
to circumvent regulations-there is no question that the Glass
Steagall system was becoming increasingly outmoded. However,
the conclusion that the financial system should therefore be
deregulated-as Greenspan, Clinton, and virtually all other policymakers
have claimed over the past 30 years-never followed from this
fact. After all, the Keynes problem-that, if left to their own
devises, financial markets will inevitably be overtaken by destabilizing
speculative forces-did not disappear over the past 30 years.
Rather, the symptoms of the Keynes problem only became more virulent
as deregulation proceeded. Recognizing the flaws of the old regulatory
system should therefore have led not to deregulation, but to
constructing a new regulatory system appropriate to these contemporary
symptoms.
Because the contemporary regulatory system
has become so complex and nimble in its capacity to circumvent
regulations, an effective regulatory system should be guided
by a few basic premises that can be applied flexibly and broadly
across market segments, including the stock, bond, foreign currency
and derivative markets (these last including the markets for
options and future contracts on financial instruments). In this
spirit, one principle around which a new system should be structured
is that the regulations be applied consistently across the various
institutions and financial instruments that make up the overall
market. A major problem over time with the Glass Steagall system
was that there were large differences in the degree to which,
for example, commercial banks, investment banks, stock brokerages,
insurance companies, and mortgage lenders were regulated, thereby
inviting clever financial engineers to invent ways to exploit
these differences. Beyond this, an egalitarian system of regulations
would clearly also promote the aim of fairness as well as economic
stability.
One measure for promoting both stability
and fairness is a small sales tax on all financial transactions-that
is on the sale of all stocks, bonds, derivatives and foreign
currencies. Proposals of this type have become well-known through
the specific case of taxing foreign currency transactions. This
is the so-called "Tobin Tax," named for the late Nobel
laureate economist James Tobin who first proposed it. The idea
behind the financial transaction sales tax-whether it applies
to foreign currency transactions or to stocks, bonds, or other
instruments-is that it raises the costs of speculative trading
and therefore discourages the types of excesses that occurred
in the U.S. stock market in the 1990s, since the tax would have
to be paid every time a trade takes place. The tax will not discourage
investors who intend to hold onto their assets for a longer time
period, since, unlike the speculators, they will be trading infrequently.
A tax of this sort will also raise lots of revenue, even if one
assumes a sharp decline in trading occurs after the tax is imposed.
Two colleagues and I have estimated that a consistently applied
tax of this sort in the U.S.-starting at a 0.5 percent rate for
stocks and sliding down from there for bonds and other instruments-would
generate approximately $100 billion per year in revenue, even
after factoring in a significant decline in the amount of trading
due to the tax. The funds generated by this tax, in other words,
would itself fully cover all the cuts in state and local
spending for 2003 that are likely to occur due to shortages of
revenue sharing funds from the federal government.
A second type of measure that would be
important for promoting both stability and fairness in the financial
system is what are called asset-based reserve requirements. These
are regulations that require financial institutions to maintain
a supply of cash as a reserve fund in proportion to the other,
riskier assets they hold in their portfolios. Such requirements
can serve both to discourage financial market investors from
holding an excessive amount of risky assets, and as a cash cushion
for the investors to draw upon when market downturns occur. One
example of an asset-based reserve requirement that is already
in operation is the so-called margin requirements on stocks purchased
with borrowed funds. As we have discussed, Alan Greenspan acknowledged
in September 1996 that he could have prevented the speculative
market bubble at that time by raising margin requirements. A
simple proposal would therefore be for Greenspan or his successors
to actually make use of this policy tool as the next incipient
bubble begins to form.
The same policy instrument can also be
used to push financial institutions to channel credit to projects
that promote social welfare. One major example of this was that
from the 1930s to the 1970s, Savings and Loan institutions in
the U.S. were permitted to only lend money to households to finance
the purchase of private homes. This requirement channeled massive
pools of credit toward supporting the goal of middle-class home
ownership, and everything that goes with that. This same policy
measure could be used to promote the construction of low-cost
housing over more vacation homes. Policymakers could stipulate
that, say, at least five percent of banks' loans portfolios should
be channeled to low-cost housing. If the banks fail to reach
this five-percent quota of loans for low-cost housing, they would
then be required to hold this same amount of their total assets
in cash. The banks would therefore not necessarily have to meet
the five percent low-cost housing threshold, but they would have
a strong incentive to do so rather than to hold cash, which would
generate no interest for them.
Implications for Trade Policy. If the
U.S. successfully implemented a complimentary set of egalitarian
policies such as these, an important additional result would
follow: that the costs to U.S. workers would fall sharply from
opening the economy to exports, in particular, from poor countries.
From the workers standpoint, trade protectionist policies are
actually a form of social protection. They aim to preserve U.S.
workers jobs and bargaining power over wages by reducing the
pool of foreign workers that effectively compete to produce products
for the U.S. market. But trade protectionist measures are a poor
substitute for direct forms of social protection, including the
measures we have discussed in the areas of employment targeting
and increasing overall demand as well as labor and financial
regulations. Thus, contrary to the neoliberal perspective on
globalization, the case in behalf of an open trading system actually
becomes stronger when effective social protections work to promote
standards of fairness and social solidarity that a free market
economy undermines.
*
* *
Adam Smith's dictum which has served
as this book's epigram deserves reflection at its close. The
corruption of moral sentiments through "the disposition
to admire, and almost to worship the rich and powerful, and to
despise or at least neglect persons of poor and mean condition"
is an unavoidable, ever-present peril in any large, complex society,
regardless of whether it is called capitalist, socialist, or
something else, and independently of the extent to which the
society is integrated into the global economy. But this danger
is naturally compounded under a neoliberal economic regime, given
that the premise of neoliberalism is that the market determines
society's winners and losers in a fair and efficient way. It
further follows within a neoliberal framework that the rich and
powerful-those that have either been the biggest winners in the
market or at least have had close relatives or friends within
this gilded circle-should also be responsible for establishing
the boundaries of a society's acceptable political debate and
economic policy interventions.
The priority of serving the rich and
powerful was obviously foremost during the Clinton presidency.
How else to explain, among other things, Clinton and Greenspan's
energetic advocacy of deregulating the financial system when
Greenspan knew full well that the stock market had become a dangerous
bubble? Then there is the Bush-2 administration. Can anyone doubt
what its priorities are, given Bush's unwavering dedication to
cutting taxes for the rich, converting both a national security
emergency and a recession into opportunities to shower more gifts
on the overprivledged? The International Monetary Fund has also
made no secret of its own fealty to the premises of neoliberalism
as expressed in its Washington Consensus policy model for less
developed countries. The fact that this model has failed to promote
economic growth and financial stability, or to reduce poverty
and inequality, appears beside the point to Washington Consensus
insiders when the fundamental premises of neoliberalism are at
stake. This is the corruption of moral sentiments on a global
scale.
Adam Smith was clear that a market economy
will not be sustainable without a commitment to social solidarity
as its undergirding. But creating this foundation of solidarity
does not mean eradicating markets, competition and inequality
of wealth. We do not yet have the self-knowledge or wherewithal
to organize a society in a fair and effective way without these
basic elements of capitalism. We can debate whether it might
be possible to do so within a longer-term historical horizon.
But as that debate proceeds, we have the capacity now to push
the institutions of liberal capitalism to their limit in allowing
democratic politics and egalitarian goals to gain ascendancy
over acquisitiveness. Economics, moreover, need not continue
in its present role as the insurmountable fortress defending
the moral sentiments of neoliberalism. Economics is fully capable
of serving now, as it has in the past, as one useful tool among
many that creates the pathway toward a more just society.
Robert Pollin
is professor of economic and founding co-director of the Political Economy Research
Institute at the University of Massachuesetts-Amherst.
He is also the author of the Living Wage (with Stephanie Luce).
He can be reached at: pollin@counterpunch.org.
Weekend
Edition Features for Oct. 18 / 19, 2003
Robert
Pollin
Clintonomics:
the Hollow Boom
Gary Leupp
Israel, Syria and Stage Four in the Terror War
Saul Landau
Day of the Gropenfuhrer
Bruce Anderson
The California Recall
John Gershman
Bush in Asia: What a Difference a Decade Makes
Nelson P. Valdes
Bush, Electoral Politics and Cuba's "Illicit Sex Trade"
Kurt Nimmo
Shock Therapy and the Israeli Scenario
Tom Gorman
Al Franken and Al-Shifa
Brian
Cloughley
Public Propaganda and the Iraq War
Joanne Mariner
A New Way to Kill Tigers
Denise
Low
The Cancer of Sprawl
Mickey Z.
The Reverend of Doom
John Chuckman
US Missiles for Israeli Nukes?
George Naggiar
A Veto of Public Diplomacy
Alison
Weir
Death Threats in Berkeley
Benjamin Dangl
Bolivian Govt. Falling Apart
Ron Jacobs
The Politics of Bob Dylan
Fidel Castro
A Review of Garcia Marquez's Memoir
Adam Engel
I Hope My Corpse Gives You the Plague
Poets' Basement
Jones, Albert, Guthrie and Greeder
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