24 February 2011

Scott Walker's Crisis: Economic necessity and Political opportunity

"This is not a budget bill" reads one sign hanging prominently in Wisconsin's capitol building. The message is a response from the thousands of protesters who have flocked to Madison to Governor Scott Walker. He claims that the proposed reforms of public employee pension plans, healthcare and most importantly the removal of collective bargaining rights is a financial necessity, the inevitable result of of dwindling state revenue and unsustainable public spending. The protesters, taking their guidance from the likes of Rachel Maddow and Paul Krugman, call bullshit. Rather, they claim, this is opportunistic politics attempting to consolidate republican power by gutting unions, which are the mainstay of Democratic party support, a position strengthened by the union's proposal to accept all financial concessions and a recent admission by an Indiana Governor Mitch Daniels that that targeting of unions is due to their political influence.

It would be theoretically neat if Walker was right and this was another objective manifestation of the crisis but that does not seem to be the case in this situation (though it is true in other states). That does not mean this event is not a manifestation of the objective conditions of crisis. Rather the events in Wisconsin (and now Ohio and Indiana as well) can be understood as a political manifestation of this crisis, and more importantly of the real ideological and historical implications of the right wing political victories in the US. Scott Walker is not just a right wing boss consolidating his power, but may be taking the first steps to realize a real response to the crisis and laying the ground work for a new economy of austerity.

The liberal argument goes as follows: Wisconsin finances have been bad since the crisis and democratic controlled state governments have been able to fill the gaps. This year a bit different since federal stimulus money has dried up but more damaging, Walker recently passed new cuts to the corporate tax rate. This amounts to a drop in state revenue of about $140 million. In addition to this, targeting collective bargaining rights is suspect. Walker and state republicans claim this is merely to allow more flexibility in budgetary reform, but this seems undermined by the concessions made by affected union that they will be as flexible as need be. The attack on unions, opponents argue, is due to their ability to support the Democratic Party, as evidenced by the fact that the three unions exempt from the bill, the police, state troopers, and fire fighters, are the only three unions to contribute to Walker's campaign. Assuredly Wisconsin is facing budge difficulties, but this is not California, and that's not why unions are the target.

Whether or not this is completely convincing, there is definitely an element of Republican opportunism at play. So what? This attempt to consolidate political power by the Right takes on another significance when we look more closely at the political and ideological program this consolidation entails. The right-wing common sense of "fiscal responsibility," and "living within our means," when paired with massive slashes to corporate taxes are all direct responses to the crisis and thus may indicate a larger vision.

Walker's three priorities (which he shares with most republicans at all levels of government), slashing corporate taxes, nearly eliminating government funding for social services, and gutting unions, have a number of intended effects. The intention is to incentivize capital investment by making it cheaper to do business through lowering taxes and labor costs. The elimination of public services is a little more subtle. It's proposed first out of an moral allergy to state and municipal debt, and to a lesser extent due to desire to free up more markets for private investment. Any goods or services provided by the government takes away a possible source of profit. All these are couched in an affect of shame that we been living beyond our means for too long and the only way to achieve greatness is through a cleansing of our social body (this is where Glenn Becks emotional love for his country comes from).

But this all does not actually amount to a response to the crisis. The problem of the crisis is a lack of capital to invest in the first place due to a collapse of global effective demand. By 2006 economic growth had become largely based on fictitious debt consumption. Making it "cheaper" to do business does not fix this problem. Tax cuts are mere subsidies and there's not a whole lot left to be done after neoliberalism by way of labor market flexibility (US labor will never be as cheap as in China and we're beginning to see the limits of that as well).

The fact is that radical austerity, in itself, is not a basis for a growing, inclusive, economy that creates jobs and affordable goods. Federal debt can be a source for monetary instability, but, so long as the bond market remains small, municipalities and individual states don't have the same kind of impact. However the consolidation of power of Republicans around the country brings austerity to the level of a unified political position and so we have to ask: what kind of response it is to the crisis? What new regime of accumulation does it point to?

One possible logic is visible in the second justification for cutting social services. Privatizing services does boost demand by opening up new markets. Capital might be revived by shifting certain parts of economic activity from the public to the private sector. This however is not a fix. Regardless of whether this would be enough scale, the current consumers of government services will not likely be able to afford private sector prices, especially when wages are being squeezed. Thus any growth that could arrive from privatization of visiting nurse services will be limited effectively to a luxury market. The provision of many services currently seen as basic will start looking more like luxury.

The resulting market for these services (those that are still viable. Drug counseling programs will likely not be and would, if done at all, be taken over by non-profit groups) will thus be shrunk, with fewer and fewer people having access to them and growth of this sector relying more and more on a boutique mentality. Liberated from constraints on labor costs these firms would thus be based less on increasing inclusion of people, but reliant on a smaller elite consumer base. It means a more austere economy which, ironically, is oriented toward growing emphasis of luxury.

It's unclear how this logic of exclusion amounts to a basis for accumulation, but it does seem to be the economic logic corresponding to austerity. As a response to the crisis this means internalizing the terms of the crisis, accepting the natural constraints of our economy. Right-wing moralizing that we have lived beyond our means is wants to claim we must accept the means that we have to live within them, growth will happen, but it may not be as cozy as we once though. Scott Walker thinks we are Icarus, and the new economy will merely have to fly a little lower.

The question is, will this work? With a long comatose left my prediction before the events in Madison would have been that we're screwed. But in the Madison capitol building there are traces of an alternative. We don't know yet what we're for, but we oppose austerity and we oppose taking things lying down. This is going to have to be a fight, and the scenes from the capitol show that folks just might be up for one.

23 February 2011

Emanuel is the opponent the left needs

I'm glad Rahm Emanuel will be the next mayor of Chicago. Why? Because it's a job that I would wish on my worst enemy. Emanuel will have no choice but to preside over brutal cuts to public services, to squeeze the city workforce and in the process alienate the main voting constituency in Daley's machine, and probably also raise taxes and fees across the board, alienating everyone else - potentially even his most important constituency, multinational capital. He's going to be a one-term mayor. And that gives progressives the best chance we've had since Harold Washington to produce a viable candidate in 2015. If we can somehow get our act together.

Chicago's budget is an absolute catastrophe right now. The $6.15b regular budget is short $655m - over 10 percent - and the schools budget is running $370m in the red. Not to mention the disastrous unfunded pension liabilities the city holds, which amount to $7000 for each and every citizen of Chicago - even if all future pensions ceased today.

There are no easy solutions. Daley has already squandered a vital asset that was supposed to pay for a significant part of Chicago's future: he sold the parking meter system and then immediately spent almost all the proceeds to paper over the budget gap. Real estate prices have plummeted to their lowest level since the crisis began, taking with them a major source of city revenue, property taxes. The economic recovery (if it can even be called that), is little more than another speculative bubble that will come crashing down once consumer demand fails to materialize - if inflation fears or instability in the oil countries don't do the job first.

Emanuel is not responsible for any of this in any direct way, but he has been a vigorous proponent of the economic regime of neoliberalism that got us into this mess. That makes Emanuel the ideal symbol for the left to mobilize Chicagoans against. Emanuel is a pure product of the forces we are combating - the other candidates would have muddied the waters too much with their own personal incompetence, membership in the Daley machine, or the worst possibility of all, a progressive administering devastating cuts to public services.

Chicago is entering a very fluid political moment, not just because of the new mayor and many new faces on the city council, but because of continuing instability produced by the crisis. The next year will be extremely important in defining Emanuel's approach and the nature of the opposition that will rise to meet him. The left cannot waste this opportunity.

But it won't be good enough to simply offer resistance. The protests in Wisconsin and elsewhere in defense of basic labor rights have been heartening, but they are completely inadequate to the current political moment. What is required is, first, a clear understanding of what caused the crisis. And second, a clear set of concrete policies that can lead us out of it. Short of this, protests will be seen - with substantial justification - as nothing more than a defense of parochial interests.

The fact that the left hasn't even begun to address either of these two central tasks is a shocking failure - not only in Chicago, but around the world. One of the aims of this blog in the coming months will be to lay out an adequate understanding of the continuing crisis and, on this basis, to develop a concrete politics around an identifiably progressive counter-program. Emanuel's election is not to be mourned - it has given Chicago progressives a golden opportunity to create the first viable left politics in 25 years. But to seize it we will have to start spending as much time trying to understand our predicament as we usually do bemoaning it.