The Austerians must be forced to compete in the political marketplace
by David Atkins
Eduardo Porter writes an excellent column today in the New York Times about the foolishness of the austerity experiment in Mexico, noting that it wasn’t until the implementation of what amounted to debt forgiveness in the guise of “Brady bonds” that the Mexican economy was able to grow enough to take care of its people while also paying back its creditors at least in part.
But it’s the end of his analysis that is most thought provoking:
Yet perhaps the most important lesson to be had about the dynamics of economic crises and relief is about what it takes to motivate the political will to act.
To some extent, we owe the Brady plan to the cold war. Political unrest simmered across Latin America. In 1988, Mexican voters almost ousted the party that had ruled the country since 1929. The region, Washington feared, risked falling into Soviet clutches. Arizona’s governor, Bruce Babbitt, even called Mexico “the ultimate domino.”
Lt. Col. John C. Mangels, studying at the Air War College in 1988, caught the flavor of thinking at the time. “A financially devastated and chaotic Mexico would strongly interfere with our ability to maintain an East-West balance,” he wrote. “The long-term security threat from Mexico thus hinges on economics.”
In a speech almost three years ago, Mr. Brady asked himself whether something like the Brady plan could work now. “I’m not sure,” he answered. “The level of cooperation I’ve described doesn’t happen by chance, or easily.”
So far, Southern Europe’s 1930s-style depression as done little to sway Europe’s paymasters in Berlin. But the quagmire across the southern tier could rend Europe as deeply as the Iron Curtain divided East and West. Isn’t it time for another U-turn?
No one wants to relive or recreate the horrors of the Soviet Union. But the existence of an alternative economic ideology meant that corporate plutocrats had to reduce suffering and mitigate their own excesses for fear of losing another domino to the dreaded Evil Empire. To put it in terms even they might understand, the existence of competition in the political marketplace forced them to create a better product for fear of losing paying customers.
What exists today is an economic monopoly wherein the excesses and rent-seeking of the world’s wealthiest continue unchecked.
This, too, is what makes the President’s offer to cut Social Security so galling. Seen within the tiny box of Washington politics, a certain kind of case might be made for offering such a thing as an alternative to a potentially worse sequester, or as a bulwark against potentially worse actions in a Republican administration. Such cases are weak at that, but placing the conversation on these grounds is a mistake in itself.
All around the world, wages are being subverted to artificially boost asset growth. The modern global economy is fundamentally broken and increasingly unstable.
True leadership isn’t about trying to “bring both sides together” to attempt to muddle through some terrible compromise in order to prop up the system that is failing the world’s poor and middle classes so miserably.
True leadership offers an alternative to the crushing neoliberal consensus that all labor must be cheap and fungible on a global scale, with corporations and plutocrats able to play governments off one another like puppets on a string, and a bare modicum of safety net provisions just adequate enough to prevent starvation and death by easily communicable disease.
True leadership would aim to provide competition in the marketplace of political ideals, an island refuge in the storm and shining city on a hill to which battered nations and peoples could turn as an example of what is possible.
The world still seeks such leadership in order to give the laissez-faire Austerians the actual competition they so richly deserve.
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