25 – Obama’s Failure (29 Aug 09)

    The most noteworthy thing that Barack Obama has done since he became president is to put his stamp of approval on policies that at the end of the presidency of George W. Bush were considered unacceptable by a majority of the American public (and which appalled much of the world). He has thereby joined the large number of his fellow Democratic Party members who, dependent as they are on support from special interest groups, had countersigned them long ago. I am referring to the two things in particular that have gone disastrously wrong, and which Obama had been expected by his activist supporters to try to reverse: American belligerency and the unaccountable power of the crisis-creating apparatus of financial institutions. While after the November election these most undesirable aspects of American participation in the world appeared ready for repair, the trends that made them what they are have now become irreversible. Europeans and Asians ought to take note. Latin Americans have already done so. It is the most significant thing we have learned this past half year in the context of all our future.
     The “give him time!” response from a multitude of those who had faith in Obama has proved to be very damaging, as it throttled the voices of protest that ought to have formed a thundering choir of Americans who are truly and seriously concerned with the fate of their country. Obama did not have any time. The credit crisis, which probably helped elect him, had prompted editorials asking whether capitalism as we had known it could possibly continue. The nation by then also obviously did not want war, and was clearly disgusted by the manner in which it had earlier been seduced by monumental deceit to support unprovoked invasion and illegal occupations. These two circumstances delivered a rare national mood ready for dramatic moves at the moment of his inauguration. Immensely popular and with more hopes invested in him than in almost all of his predecessors when they began, he could have counted on massive popular support for beginning the Herculean task to rein in American militarism and the corporatism that has steadily grown since the Reagan presidency. He was blessed with a Democratic majority in House and Senate. His own Chief of Staff, Rahm Emanuel, said in early February that “you never want a serious crisis to go to waste”. If ever there was an opportunity to demonstrate political greatness this was it. It will not come back, barring a calamity that will bring the lords of Wall Street, the Democratic Party, and Obama’s staff to their senses.
     The popular expectations were warranted. When he made his first moves for becoming president Obama based his candidacy on the promise of a quick withdrawal from Iraq, and throughout his campaign his critical attitude toward the American occupation of that country led voters to believe that one of the first things he would do as president was to give it back to its citizens. In his oratory that mesmerized millions he spoke of moneyed interests that for too long had “been able to bend the rules to maximize their profits on the backs of hardworking Americans”. When he began what he called his ‘improbable quest’ he put it in this perspective: “as people have looked away in disillusionment and frustration, we know what’s filled the void. The cynics, and the lobbyists, and the special interests who’ve turned our government into a game only they can afford to play. They write the checks and you get stuck with the bills, they get the access while you get to write a letter, they think they own this government, but we’re here today to take it back. The time for that politics is over. It’s time to turn the page.”
     Not only has Obama failed to turn that page, he is leading his country – and the world – into deeper trouble. This is not immediately obvious because of major advances in public relations. The situation in Iraq is not much of a hot topic anymore because the propaganda portraying the ‘surge’ as a formidable success has many Americans, once critical about the occupation, now thinking that this ruined country has actually been helped by the invasion. And the ‘Global War on Terrorism’ – something that, when taken literally, cannot possibly exist to begin with – has been exchanged for the ‘Overseas Contingency Operations’ – something that could mean anything, but has the advantage of euphemism and no longer conjures up irksome images of broken bodies and homes turned into bomb craters. The American military may be withdrawn from the streets of Baghdad, but it is going to stay in Iraq, along with the world’s biggest ‘embassy’ and largest foreign-based CIA headquarters.
    The war in Afghanistan has broadened to include Pakistan, and is now known as the Af-Pak war. So-called drones, remote-controlled flying bombers, are killing hundreds of innocent people and creating hundreds of thousands of refugees in that theater. The propaganda has it that American security needs require the continuation of this military intervention, because a return to full power of the Taleban in Afghanistan might embolden them to organise new terrorist attacks on the United States. In reality those who are resisting American and NATO forces with roadside bombs and sneak attacks are Pashtun tribesmen who object to the foreign occupation of their territory and who have no history of terrorist activities in foreign lands. Most neutral specialists, with an understanding of the history of that region, believe that ‘victory’ in that war is out of the question. It is worth noting that while those saying that the Afghanistan war is not worth fighting have recently reached a majority in American polls, the critics of this war and especially its expansion into Pakistan are marginalized by the mainstream media and relegated to the supposedly leftwing samizdat websites, as they were before the negative opinions about George W. Bush became commonplace.
     The deeper trouble that is even less a matter of public discussion has to do with the concentration and extension of financial power. It goes largely unnoticed because of the argus-eyed attention given to ‘green shoots’ and other supposed indications of recovering economic health.
     Taking a step back we can distinguish four things. Three are much of the time lumped together, and the fourth ignored by all except for the analysts that can be marginalized as leftist or too liberal. Most attention goes to the economy in general, its health measured by growth statistics, the stockmarket, and the other quantifiable aspects that may not actually add up to an accurate portrait but with which commentators have learned to be comfortable. Closely related are the credit flows that froze last autumn, causing the crisis; they indicate whether or not the financial institutions are getting back in general business again, allocating capital to those who keep American capitalism going. Yet another subject revolves around the question whether the big banks deserve to have been resuscitated as measured by their being responsibly back in business with safeguards in place so that another crisis will not occur.
     The fourth has to do with the power dimension. How will these institutions that brought us the crisis and untold misery and that aggravated American and world poverty, fit into the political scheme from hereon? That question was openly asked or at least implied in the most thoughtful and historically aware commentary in the autumn and winter following the calculated collapse of Lehman Brothers. I do not hear it anymore, except in the scarce articles that can be labelled ‘predictable’ (meaning irrelevant) from whatever is left of the American ‘left’.
     But that question is for the long term the most serious one. What I see is a consolidation of financial power as the few remaining big investment banks have, with the too-big-to-fail formula, been declared immune from bankruptcy. They and other relevant parties now know that the selected banks can count on a guaranteed perpetual line of credit from the state coffers (a ‘gift’ from the taxpayers). Fewer top banks means more concentrated power, and these banks are absorbing or placing under their control the smaller financial institutions. This is happening because of the reigning crucial illusion that the Federal Reserve functions as a properly neutral institution, and not as a plaything for politicians. But being cut off from direct political control by members of Congress or the president does not mean being insulated against political direction from elsewhere. Factual control over the Fed is exercised by the biggest of the very institutions that it is supposed to oversee and regulate. And those institutions and their CEOs do not appear to have even the remotest idea of what the public good might entail.
     The three lumped together questions have the attention of custodians chosen by Obama – Summers (head of the National Economic Council), Geithner (Secretary of the Treasury) and Bernanke (Fed Chairman). The fourth would appear to interest them only if the status quo were threatened. But it ought to have interested Obama most of all if he wanted to be true to what he said about turning the page in the speech with which he accepted his candidacy. Instead he appears most impressed, or overwhelmed, by the ‘expertise’ of the likes of Robert Rubin and his acolytes whose focus is the anxiety in the sacred financial markets: The restoration of trust necessary for credit flows nourishing the concrete economy everyone depends on, but also necessary for the whir of speculative activities that keeps bonuses astronomical. The bailed out banks are already at it with something relatively new, known as high-frequency trading, amassing profits not by what banks in the popular imagination are supposed to do, intermediate between borrowers and lenders, but by the predatory method of beating investors in speculative trades by microseconds with highly sophisticated algorithms and super high-speed computers, in which shares are held for a minute or less. How to recognize in that the supposed function of financial markets of allocating capital to businesses that need it?
     Turning the page that Obama talked about would have entailed huge confrontations that he is not, as much circumstancial evidence suggests, psychologically equipped to handle. Or perhaps he never intended to turn the page.
     There were quite a few warnings about his true motives. The most graphic came from a former Clinton administration official, David Rothkopf, who told the New York Times a couple of weeks after the election that Obama used the violin model: “you hold power with the left hand and you play the music with the right.” Others had pointed out that Obama’s campaign money had come mostly from financial institutions, the insurance industry and big lobbyists. But who would want to be guided by this in the heady days when eight years of a disastrous presidency were coming to an end, and when Obama who appeared to be saying the right things, was clearly better than any of the alternative candidates?
     Of course along with many others I smelled a rat when he chose the champions of financial deregulation for his economic team, excluding such well-known specialists as Joseph Stiglitz, James Gailbraith, and Paul Krugman who had cut through to the bone analysing the sickness of American economic institutions, and who had warned about a coming crisis. For some reason many had counted on them in some way being included to deal with what was portrayed as the biggest post-World-War-II crisis of capitalism, along the lines of how Franklin D. Roosevelt’s braintrust dealt with the Great Depression. Picking his economic decisionmakers from the realm of those who since Clinton had turned big banking into a rigged uncontrolled gambling game pushed into the center of the economic power system was an ominous sign. As the liberal economist Dean Baker suggested, it was like “putting Osama bin Laden in charge of the war on terror.” But this starting on the wrong foot could still be chalked up to inexperience and uncertainty in the face of a crisis Obama had not counted on.
     I had a sneaking suspicion that his choice of Biden for vice-president, and later Rahm Emanuel as chief of staff and Hillary Clinton as Secretary of State had been by agreement as part of the inevitable suitability vetting by the ruling elites behind and in the Democratic Party. They had all been fervent supporters of the Iraqi invasion. But I continued to have illusions that Obama worked with tactical schemes and would rise above what these people stood for, given the dire situation of the country that he appeared to grasp. Did Obama not have the reputation in Chicago of bringing opponents around by co-opting and using them?
     I began to suspect that the gravity of America’s situation in the world had not truly been grasped by Obama when he said that the United States was ready to lead the world once more. In what? War and economic devastation?
     What turned my suspicions into near-certainty that Obama was not going to deliver on his promises, and that his unquestionably superior oratory signified very little, were the first symptoms of a lack of political courage: his emphasis on consensus and pragmatism.
     I was inoculated against the notion of ‘consensus democracy’ in Japan, where it pops up all the time. It is something that, just like the war on terrorism, cannot exist. Above the level of very small communities an announced consensus is nearly always imaginary. It substitutes for genuine debate in which political struggle might produce policy guidance. It implies that deep dispute requiring fundamental judgment and political leadership does not exist. It also enforces submission to a power structure, avoiding an explanation for the need of such submission. Which is why it cannot exist. The two words contradict each other. Democracy is about conflict, and about mechanisms for conflict resolution. It cannot exist if we deny that such political conflict exists since such denial preserves existing power relationships. And there it was, staring us in the face, Obama believes in it.
    Reports on how President Obama arrived at his plan to reshape financial regulation speak of weeks of meetings with financial experts, industry executives and lobbyists. In other words, consensus formation is in the hands of the representatives not of the many but of the politically powerful vested interests, as we are seeing again in the most blatant manner with the ruckus surrounding Obama’s healthcare plan. Corporatism in its shiniest perfection. His portrait by Ryan Lizza in The New Yorker (of July, 2008) that mentioned “the greatest misconception about Barack Obama” of being “some sort of anti-establishment revolutionary” while “every stage of his political career has been marked by an eagerness to accommodate himself to existing institutions rather than tear them down or replace them” should have tipped me off.
     A general quality of successful political rhetoric is that it is normally made to sound commonsensical, so that hardly anyone in his or her right mind can be against its pleas. When campaigning last year Obama’s associates from his time in Chicago made a point of lauding him as a great consensus builder, believing that to be a great advantage for getting things done. Belief in consensus as the political grail to pursue would explain Obama’s efforts to achieve a mood of bipartisanship immediately after his inauguration. Since then, ‘working with the opposition’, his ‘outreach’ to a Republican Party that wants to destroy him has baffled many of his supporters. But outreach, bipartisanship, and the adjectives that come with all that, are positive buzzwords in American political discourse.
     It makes them ideal tools for digging political traps. Particularly in these days when ‘the end of capitalism as we have known it’ and other alarming threats to our way of life are being announced, the knowledge that Obama is forever searching for a consensus and prefers bipartisanship may be quite reassuring to many Americans. With utopian schemes that brought about human disaster in Europe’s 20th century still in fairly recent memory, they are on the whole, probably scared to death of revolutionary approaches. And instead of a radical reformer Obama appears to be the epitome of reasonableness (notwithstanding the nonsensical accusations from right-wing Republicans about him being a socialist).
     But shouldn’t this general impression of reasonableness have put the American nation on guard? Do not the two biggest problems he inherited require measures that in quite a few quarters would inevitably be interpreted as the height of unreasonableness? His facing them would have been a limited revolution; the halting of a development in which the financialization of the economy created politically uncontrollable forces, which along with increased corporatism affecting almost all things political, have pushed the American citizen entirely out of the arena in which significant political activity takes place.
     Yet another term that is being celebrated in the context of Obama’s approach to policy making is ‘pragmatic’. In an interview with the New York Times he said “what I have been constantly searching for is a ruthless pragmatism”. Now, pragmatism describes an approach toward a purpose. Should the newspaper not have asked what he was ruthlessly pragmatic about? Has his aim been merely to get the economy running again as it did before?
     The incontestable fact that Obama has inherited about the worst set of problems that a predecessor can bequeath a new incumbent has also delivered him the benefit of a mighty reservoir of patience. The most charitable conclusions that have come out of the widespread endeavour to make sense of Obama’s governing so far revolve around the idea that the new American president wisely chooses to first fight the political battles that he thinks he can win, and that having won those he will move slowly, with increased ‘political capital’, to incrementally repair the things that need repairing. And the idea that he is constantly playing a kind of three-dimensional chess, as one awakening critic put it, against known and potential political opponents continues to linger. Practically everyone had all along understood that in order to get elected in the first place Obama could not appear dismissive of political predilections and policies that belonged to ‘the other side’. The majority of hopeful Americans and politically interested Europeans, as well as circles that consider the United States from farther away, have yet to open their eyes to the fact that Obama is not working on a basic repair program.
     Obama’s election produced a thick layer of positive expectation that overlaid the understanding of political reality in many minds. More so than had been the case with any other American presidential election in living memory. A layer of expectations shot through with wishful thinking on the part of people who could have known better if they had looked closer at all the knowable facts. As this layer is now rapidly being peeled away, much more than a sadly inadequate president has become visible. Laid bare are certain fundamental conditions of the American situation, and by extension the situation of the countries that continue to see themselves as American allies or as part of ‘the West’.
     If the American economy does get back to a state it which it appears to be running as before, and the pretense that the big banks merely had a liquidity problem rather than being bankrupt has worked, the full consolidation of a transmuted American capitalism will have become a fact. And if the American public does not muster all its available talent and energy to force acknowledgment by the American elite that the United States does not want to be the world’s most warlike country in the early twentyfirst century, the Bush doctrine reserving the right for the United States to attack countries for whatever reason and whenever it feels like it, will have become standard American foreign policy.