Re: [Marxism] Cockburn's contrarianism

["Fred Feldman" <ffeldman@xxxxxxxxxxxxxxxx>]

Cockburn, or at least Counterpunch, pays a serious price for their dalliance
with right-wing libertarian antiwar Buchananites.

Case in point: former Assistant Secretary of the Treasury Robert Paul
Smith's anti-immigrant, anti-Latino, nativist screed -- basically
Buchananite with more left window-dressing (about which he is undoubtedly
sincere), which appeared on Counterpunch without any response to its
hard-right core political line.

I like a lot of Smith's contributions frankly, especially those on
democratic rights such as the Padilla case and the Iraq war. His passion on
these issues seems deep and real -- and includes a real identification with
the real victims, the people of Iraq and Afghanistan (in contrast to other
recruits such as "Fourth Generation War specialist Robert Lind, who
basically couldn't care less).  

But he remains a nativist through and through at his political core, and
thus on the opposite ide of an enormous social-national-class gulf from
people who view "illegal immigrants" as what they are -- working people,
including a vital and dynamic new component of the working class.

The fact that this article could go by without any response being published
in Counterpunch shows that the Counterpunch regroupment with right-wingers,
which began with Cockburn's brief endorsement of Buchanan as the "antiwar"
candidate in 2000 (he eventually backed Nader) has taken a real toll.
Fred Feldman


January 22, 2008

Neither Supply-Side Theory Nor Keynesian Remedies Can Save Us Now
Farewell to Old Economic Nostrums
By PAUL CRAIG ROBERTS

With his tax rebate policy, President Bush has put economic policy back on a
Keynesian basis. Will it work?

During the two decades it was in effect, supply-side economics had
restorative effects on the American economy. Its predecessor, Keynesian
demand management, stimulated demand more than supply. Consequently, over
time the trade-offs between employment and inflation worsened, and for a
while it appeared that inflation and unemployment would rise together. The
breakdown of the Keynesian policy opened the door for the Reagan
administration's supply-side approach.

By following Nobel economist Robert Mundell's advice to "reverse the policy
mix," the supply-side policy allowed the US economy to grow without paying
for the growth with rising rates of inflation. However, the new
macroeconomic policy was not a cure-all, and its success in banishing
worsening "Philips curve" trade-offs between inflation and employment masked
the appearance of new problems, such as the loss of jobs and GDP growth to
offshoring, problems from deregulation, and the growing concentration of
income in fewer hands.

The Bush administration is turning to tax rebates, because problems in the
financial system and the amount of consumer debt hinder the Federal
Reserve's ability to pump money to consumers through the banking system.
Like an easy credit, low interest rate policy, the purpose of a tax rebate
is to put money in consumers' hands in order to boost consumer demand.

Will consumers spend the rebate, or will they use it to pay down their
debts? If they spend the rebate on consumer goods, will it provide much
boost to the economy?

Many Americans are overloaded with debt and will have to use the rebate to
pay down credit card debt. The gift of $800 per means-tested taxpayer is
really just a partial bailout of heavily indebted consumers and credit card
companies.

The percentage of the rebate that survives debt reduction will be further
drained of effect by Americans' dependency on imports. According to reports,
70% of the goods on Wal-Mart shelves are made in China. During 2006,
Americans spent $1,861,380,000,000 on imported goods, that is, 23% of total
personal consumption expenditures were spent on imports (including offshored
goods). This means that between one-fifth and one-fourth of new consumption
expenditures will stimulate foreign economies.

Americans worry about their dependency on imported energy, but the
$145,368,000,000 paid to OPEC in 2006 is a small part of the total import
bill. Americans imported $602,539,000,000 in industrial supplies and
materials; $418,271,000,000 in capital goods; $256,660,000,000 in automotive
vehicles, parts and engines; $423,973,000,000 in manufactured consumer
goods; and $74,937,000,000 in foods, feeds and beverages.

The Keynesian policy of driving the economy through consumer demand was
applied to a different economy than the one we have today. In those days the
goods Americans purchased, such as cars and appliances, were mainly made in
America. Construction workers were not illegals sending their wages back to
Mexico. The US had a robust manufacturing workforce. When consumer demand
weakened, companies would reduce their output and lay off workers.
Government policymakers would respond to the decline in employment and
output with monetary and fiscal policies that boosted consumer demand. As
consumer spending picked up, companies would call back the laid off workers
in order to increase output to meet the rising demand.

Today Americans are losing jobs for reasons that have nothing to do with
recession. They are losing their jobs to offshoring and to foreigners
brought in on work visas. Today many American brands are produced offshore
in whole or part with foreign labor and imported to the US for sale in the
American market. In 2007, prior to the onset of the 2008 recession, 217,000
manufacturing jobs were lost. The US now has fewer manufacturing jobs than
it had in 1950 when the population was half the current size.

US job growth in the 21st century has been confined to low-pay domestic
services. During 2007, waitresses and bartenders, health care and social
assistance, and wholesale and retail trade, transportation and utilities
accounted for 91% of new private sector jobs.

When a population drowning in debt is hit with unemployment from recession
on top of unemployment from offshoring, will the people spend their rebates
in eating places and bars, thus boosting employment among waitresses and
bartenders? Will they spend their rebates in shopping malls, thus boosting
employment for retail clerks? If they become ill, the lack of medical
insurance will direct their rebates to doctors' bills.

Economists and other shills for globalism told Americans not to worry about
the loss of manufacturing jobs. Good riddance, they said, to these "old
economy" jobs. The "new economy" would bring better and higher paying jobs
in technical and professional services that would free Americans from the
drudgery of factory work. So far, these jobs haven't shown up, and if they
do, most will be susceptible to offshoring, just like the manufacturing
jobs.

The Bush administration has in mind a total rebate of $150,000,000,000. As
the government's budget is already in deficit, the money will have to be
borrowed. As the US saving rate is about zero, the money will have to be
borrowed abroad.

Foreigners are already concerned about the US government's indebtedness, and
foreigners are bailing out some of our most important banks and Wall Street
firms that foolishly invested in subprime derivatives.

Under pressure from budget and trade deficits, the US dollar has been losing
value against other traded currencies. Having to borrow another $150 billion
abroad will further erode the dollar's value.

Meanwhile, Congress passed a $700 billion "defense" bill so that the Bush
administration can continue its wars in the Middle East.

Our leaders in Washington are out to lunch. They have no idea of the real
challenges our country faces and America's dependence on foreign creditors.

The rebate will help Americans reduce their credit card debt. However,
adding $150 billion to an existing federal budget deficit that will be
worsened by recession could further alarm America's foreign creditors,
traders in currency markets, and OPEC oil producers. If the rebate loses its
punch to consumer debt reduction, imports, and pressure on the dollar, what
will the government do next?

As long as offshoring continues, the US cannot close its trade deficit.
Offshoring increases imports and reduces the supply of potential exports.
With Washington's Middle East wars, with private companies ceasing to
provide health coverage and pensions, with political spending promises in an
election year, and with recession, the outlook for the federal budget
deficit is dismal as well.

The US is moving into a situation in which the government could find it
impossible to close the twin deficits without massive tariffs to curtail
imports and offshoring and without pursuing peace instead of war. The
outlook for the United States will continue to worsen as long as hegemonic
superpower and free trade delusions prevail in Washington.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He was Associate Editor of the Wall Street Journal editorial
page and Contributing Editor of National Review. He is coauthor of The
Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@xxxxxxxxx






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