Wednesday, April 29, 2020

Political Economy Musings

I wrote here about the political prospects for 2020 back on 10/2/2019.  I'd like to revisit a few of my observations / predictions from that time.
I think the Dems will nominate Warren, who is the only plausible candidate to bridge the Clinton-Sanders divide that plagues the party.  
I missed this one.  While I was correct that opposition to Sanders would stop him from getting the nomination, I overestimated the ability of Warren and the Democrats to bridge the gap.  Warren seems to have been taken out by the "centrists" who thought she was too radical.  She reacted by moving to the center and trying to draw contrasts between herself and Sanders.  As a result, Sanders supporters (such as myself) moved away from Warren, while the centrists stayed with the more status quo candidates.

Looking at this in more depth, it seems that I underestimated the inflexibility of the status quo.  Sanders' signature issue was Medicare for All, in the sense of a Canadian style single payer health care system.  This is very practical except to the degree which it would disrupt the vested interests in the healthcare industry.  The COVID-19 situation gives further clarity to the dysfunction of our current system, and the advantages of a Canadian type system.  The Bloombergs and Bidens of the Democratic party seem to be continuing down the wrong path.

On the other hand, not only Sanders but all the candidates were drifting far to the left before Bloomberg jumped in.  They were mostly in favor of forgiving student debt, going easy on illegal immigration, and supporting some sort of green new deal.  Conservatives such as Michael Bennet and John Hickenlooper were among the first to drop out of the presidential race.  Future conservatives such as Pete Buttigieg were on the liberal side (e.g. Medicare for All) early in the campaign.

Bernie Sanders seemed to have the only coherent campaign, and the pushback was fierce.  In addition to the mainstream press which had been strongly against him in 2016, all the other Democratic candidates got the message that he was beyond the pale, as were his policies.  By the time of the crucial South Carolina and Super Tuesday primaries, the debate consensus had shifted to the attitude that Sanders was too much of a socialist too win the general election.  In about one week, he moved from being the overwhelming favorite to virtually all other candidates endorsing Biden.  The Democratic status quo held, although Biden was not the fresh face that many had hoped to see.
If the Democrats nominate a status quo figure such as Biden, Republicans will be in a better position to benefit from economic weakness. 
The economy has cratered, but due to natural disaster as opposed to manmade failure.  Trump is widely seen (correctly) as having bungled the response, so Biden has thus far not taken much heat as a symbol of the status quo.  Rather, Trump is a lightning rod for the status quo failures.  Democrats have been wise to keep Biden out of the spotlight, but this cannot continue through a presidential election.

The economy has cratered, but federal stimulus has poured in and the stock market has been resilient.  Uncertainty reigns, but most expect to see a return to the status quo prior to the pandemic.  Yet changes such as reduced economic globalization and increased labor power are likely to persist.  These factors point to higher prices, offset somewhat by a weak government and a weak economy.

I sense that the U.S. is desperate for a strong leader.  Sanders would have been a good leader, but hounded by all parts of the status quo.  Joe Biden is weak in that he is a figurehead or compromise candidate, and will be in a weak position if elected in my opinion.  I would expect a lot of infighting behind the scenes in a Biden administration.  Trump is weak, with little support from the establishment including the mainstream media.  There is something of a vacuum of leadership at the moment.

As much as I'd like a progressive like Sanders or FDR to be the strong president that people crave, it must be acknowledged that the Democratic party is moving in the opposite direction.  Many Dems now associate with CIA, FBI, and renewed cold war against Russia and China.  They are in lock step with the media to a frightening degree.  The stage is set for the mother of all negative presidential campaigns, as the Republicans have long been strong in this regard and Trump is a particularly savage negative campaigner.  The situation may get so ugly that we get some sort of military coup.

Unfortunately or fortunately depending upon your perspective, the U.S. military is much stronger at home than it is in its role as defender of the neoliberal empire around the world.  China and Russia are out of our control, as is much of the Middle East, where the U.S. has suffered a string of defeats, and Africa.  The U.S. military-intelligence-industrial establishment is likely to focus on the homefront, further marginalizing populists while at the same time enacting some populist reforms.

Only a firm right wing military type will be able to implement socialist reforms to our healthcare, legal, and political systems.  Such a figure will also curtail the culture wars in favor of patriotism and strict enforcement of select laws. 

How we get from here to there seems fairly straightforward, if impossible to predict with regard to details.  The Dems have already attempted to remove Trump via a couple of intelligence agency inspired investigations and charges of treason.  And the Dems demonstrated in the Democratic primaries that they will do whatever it takes to prevail.  But the Republicans have some weapons too, including Attorney General Barr and the truth with regard to the Russiagate offensive by the Dems.  With the Covid-19 uncertainly cancelling remaining primaries, it is not clear that the presidential campaign can go ahead on a business as usual basis.  The chances that Reps and Dems will agree on new rules to accommodate the virus without breaking down in partisan rancor are slight.   Biden is a mirror image of Trump, with allegations of sexual assault, lying pathologically, and poor mental acuity.  There is a need for someone at least moderately credible to take charge, and only a military type man would be acceptable to the powers that be.

With regard to the economy, chaos looms.  The political chaos described above is matched by the uncharted territory of the global economy.  Supply chains have been disrupted, unemployment is soaring, and there is no clear path to recovery.  Stay in cash and near cash equivalents for the time being.  When the coup has been accomplished and the new strongman allows markets to find their own way again, then will be the time to reinvest.

The center of U.S. politics has not held.  Trump was elected in 2016, and the status quo has continued to unravel since then.  Culture wars and identity politics have brought the Dems to the Biden candidacy, which would seem to be the end of that road.  Crumbling empire and domestic impotence make it inevitable that there will be a coup of one sort or another, and the democratic path for populist change is blocked. 






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