Martin Kenney
by Martin Kenney
Sat Jan 23rd 2010 at 9:18pm UTC

Pollyanna Revisited

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On July 13, 2009, I wrote this comment Pollyanna Has All the Friends…. Here we are exactly six months later and my premonitions have been born out. The Senatorial election in Massachusetts was an earthquake – make no mistake about it – and unless there is change there will be many more. Massachusetts was not just tea-baggers or the health care debacle — the level of anger on Main Street is rising. This can be seen in the Bernanke renomination fight, which, though likely to be approved, is probably the last stand for what I believe is a Chicago School of Economics-driven flawed analysis of the current crisis. The anger will dramatically grow if, as I expect, the market takes another terrible fall during 2010.

The Obama victory was as fundamental as that of Franklin Roosevelt. Roosevelt’s victory heralded the appearance of the mass production industrial working class on the political scene. He galvanized their demands into the New Deal. The result, after World War II, was U.S. global leadership. I suggest everyone read Roosevelt’s first Inaugural Address. It is a statement of vision, leadership, commitment to change, and a recognition that a new order was in birth.

Many of us, me skeptically included, saw Obama as the harbinger of a different sector of the U.S. economy and polity, what Rich has called a “creative class,” moving into power. We all know what has happened since. Essentially, Obama felt it necessary to succor the old order, while not clearing the way for a new sensibility.

In my estimation, President Obama has about one month to dramatically change course or I fear his presidency will, for all intents and purposes, be finished and the nation will have three years of dangerous drift, while a hurricane rages around us. These are the things I think he must do now:

  1. Military spending must be cut massively and the two wars in Central Asia must be rapidly wound down. Iraq appears quiet, but Afghanistan is ramping up and will be far more costly than Iraq ever was. As an example, it costs $400 to deliver a gallon of gasoline to our troops there, and $1 million per year for every soldier there! This is unsustainable.
  2. Money must be withdrawn from bailouts, maintaining unsustainably low interest rates, and subsidizing mortgages in a vain effort to keep home prices high.
  3. The funds saved must be redirected toward jobs programs of all sorts, a Greentech roll-out, the arts, infrastructure renewal, education, and research. Most of these are low-cost, high labor-intensity.

Do you think my July premonitions are that far off where we are today? What is it that will be required to create a transition to a new order?

10 Responses to “Pollyanna Revisited”

  1. B.D. Says:

    You *do* realize that “tea-baggers” is a derogatory sexual term, right?

  2. Mike Says:

    Iraq isn’t in Central Asia, hotshot.

  3. Scott Says:

    Hi Martin,

    I think Obama’s election may be a symptom of where things are up to, but the way he reacts to the various issues may well determine the way things go from here.

    We are definitely living in “interesting times”. Many of the people currently suffering through unemployment in Western countries really have no idea how fundamentally different the world is becoming from the place they knew as kids.

    I’ve read in various places that real wages for many Americans haven’t shifted in over 20 years. I think much of Richard’s ideas are pretty accurate, but part of the trouble comes down to basic human nature. As manufacturing started going offshore, many people’s first reaction was “ooh, I should work harder”, followed by “gee, this company screws me, I’lll change my firm/my job”.

    This may have worked for some, along with possibly moving to cities where greater opportunities were percieved, but over time the Creative Class changes crept in everywhere – and there was nowhere left to hide.

    I think the next step to that played out in US politics with the election of George Bush (the son). He appealed to the desire of a Americans for a world they knew and felt safe with – even though that world was fading even before his election. 2 wars and billions of dollars later, living standards have still not risen, and in fact have plunged as economic reality (partially the shift to a creative economy) catches up with large swathes of American industry and society.

    Now Obama (I feel) is a reaction to the polarisation of the Bush era, and I think he’s doing his best to “settle the horses”, but he (Obama) is having to react to events on the run. People are hurting badly and they want to see action rather than words. To be fair to Obama and his team, to reform either Wall Street or the health care system doesn’t happen overnight.

    I agree with you that the market is headed for another large fall. China may be grwoing, but their proprotion of investment as a percentage of GDP is far too high. My government here in Australia smugly congratulates itself on having (just) avoided a technical recession, but like other Western countries, we are heavily in debt both as a nation and as individuals.
    If China stumbles, or something else happens to shock the markets, then I am afraid that Australia and many other countries have used all of their silver bullets.

    The plus side to this gloomy take on things is that, just like the 1930’s produced a lot of change, so will another crunch on the same scale. When assets can be bought at pennies on the dollar, it allows entrepreneurs to transform markets on a large scale, rather than piece by piece. Along with that, the demographic changes coming mean that governments are going to be forced to make hard decisions that have been put off for decades.

    I think that the trouble is that many of the people who would benefit from an understanding of the rise of the Creative Class,etc, are not likely to be exposed to it. The harder things get, the more some people like to cling to what’s familiar, and to reject much of what is new.

    The same network effects that propel people to creative cities are also functioning to reduce the flow of new ideas to more traditional/conservative locations. If young people no longer bother arguing with their elders in such places, and fewer people think they are worth investing in or moving to, what is left to drive a change in thought or behaviour?

  4. Martin Says:

    Thankfully, Mike is up on his geography. I always think of EuroAsia as one land mass. However, Iraq is in West Asia. So I should have phrased it wars in Asia!

  5. hayden fisher Says:

    ….Martin, come on, please!

    – unemployment on the decline

    – overall economic recovery soaring, generally

    – lots of new improvements coming, such as high-speed rail

    – amazingly, U.S. manufacturing rebounding

    – even more astonishing, the U.S. auto sector surging with a renewed commitment to buy American cars by Y generation creative classers

    – Apple?? Say no more, they’re killing it, Mac sales soaring, iPhone sales soaring (and about to land on Verizon), iPod sales still strong and a new revolutionary product about to be released. Talk about a global powerhouse.

    – Google– also well-positioned worldwide,despite the China incidents

    – entrepreneur-friendly policies being implemented across the board

    – Iraq, history will judge the decision to go to war, probably negatively; but fortunately the prognosis looks positive

    – Afghanistan– necessary evil, remember the worst terrorist act in American history was plotted, planned and celebrated there

    – only rabid and soaring populism by the crazies threatens this upward trajectory

  6. Sandi Says:

    Reducing military spending #1 – ABSOLUTELY. If we spent a small portion of what we spend on the military every person on the planet could have potable water. Increasing health and prosperity across the globe should reduce acts of terrorism born from desperation.

    I work in retail which was hard hit by the recession. We did a lot this year to reduce inventories and have ended the year strong with slight year over year growth which is an extraordinary accomplishment. Our December sales were strong so “the recession is over” echoes a little in our halls. I do expect a double-dip recession however as the fundamentals are not in place, employment is still high with many people having a long period of difficult unemployment.

  7. Michael Wells Says:

    Martin’s reference to FDR is fitting and the first inaugural is an example of one place Obama has failed, which is losing control of the narrative. Martin & I disagree on some specifics, although I agree military spending is obscenely high and was even before these wars. But part of FDR’s genius was seizing and holding on to the storyline.

    I think Obama made the mistake of thinking he’d made the sale and didn’t have to continue to tell the public what and why he was doing at every step. And so the Republicans have seized the narrative because they have a simple story — taxes are the only problem with anything and so we’re not going to help govern, but will try to block everything. The Tea Party folks are a sideshow, although they will probably do damage for a year or so.

    In one way, FDR had it easier, he took office 3 years into the Great Depression. There was no need to explain that it was a nightmare. Preventing another one last year didn’t get anywhere near the glory, its hard for people to imagine things that didn’t happen. Imagine if they had stopped the 9/11 highjackers — would we be half undressing in airports, at war in Afghanistan and hysterical over a looney with explosive underwear? Would we even remember who Bin Laden was? The necessary things for the country that Obama has done have been thankless. He bailed out the Banks and they’ve stabbed him in the back.

    The other major fault isn’t with Obama but with his erstwhile backers and liberals who are waiting for him to do everything. No major social change begins in government, government follows social movements. FDR built the new Deal on the ideas Socialists and unions had been working on for years. Without the Civil Rights Movement there would have been no Civil Rights Act. While the Tea Party wierdos are organizing, the limping left is sitting back and criticizing Obama for not singlehandedly solving all of civilization’s ills.

  8. martin Says:

    Michael,

    Good comment. Of course Obama is not working single-handedly. He has Helicopter Ben, Turbotax Tim, women-are-not-capable-of-doing-science Larry, Bush appointee Gates, Hillary and Bill, the always loquacious Mr. Biden, and a number of ex-Wall Street investment bankers to assist him in solving civilization’s ills :-) ! No need for anyone beyond this crew.

  9. Brian Says:

    Can or should we start talking about ’system failure’? By which one would mean that neither the economic nor governmental systems are able to do what they are supposed to do (and what people expect them to do). In the most recent issue of The Nation, Christopher Hayes points out that merely removing Bush and the Republicans from office has been nowhere near enough to change course on a whole host of areas, even though the public wants (wanted) such course corrections. The system (now under Obama and the Democrats) just keeps plowing along in the same direction, with escalations of wars, corporate-dominated economic policies, bailouts, acceptance and institutionalization of Bush-era torture/detention/surveillance policies, etc. Many people ostensibly voted to rid themselves of these precise policies, and the various societal systems appear incapable of doing anything other than what they had been already doing. Is this not “system failure”? And as such, is there not something approaching what Habermas called a “legitimation crisis” – whereby “a governing structure still retains the legal authority by which to govern, but is not able to demonstrate that its practical functioning fulfills the end for which it was instituted”?

  10. Michael Wells Says:

    Martin,

    Point taken but different issue. What’s missing isn’t better insiders but community organizing. Rather than pushing the administration,the congress and the country to do better, the liberal left sits around and whines to each other on the Daily Koz — while the Tea Party, etc. are out working the streets, the precincts, the media. I think it was WB Yeats who wrote “The best lack all conviction, while the worst / Are full of passionate intensity”.

    FDR, Kennedy, Johnson didn’t go out ahead of the country, they responded to and built on what was coming from the grassroots.

    Brian, I think this speaks to your system failure observation as well. If people believe that one election is going to lead to the perfect society without continuing work and pressure, we may wind up in the Hades Martin is predicting.