Our foreign friends

Britain's political class and commentariat just don't get contemporary America. They don't understand the revolutionary nature of US conservatism and the profundity of its ambitions. They don't understand the extraordinary self-serving venality of corporate America and its Republican allies. They don't understand the ruthless pursuit of radical conservative interests and disregard for all others. They think, like Tony Blair, that America is having an eccentric wobble - and that if George Bush is engaged with, it will sooner or later be business as usual.

They should read these two books, by two of America's best economists and most forensic critics, and be disabused. I should declare an interest; I have long regarded the Nobel prize-winning Joseph Stiglitz and Princeton University's Paul Krugman as two of the best around. And so it proves. Stiglitz's careful dissection of the follies of the "Roaring Nineties" and the conservative thinking that produced them - penetrating the Clinton administration - is as good as it gets, and while I am wary of collections of columns as dull retreads (I plead guilty to having inflicted one upon the reading public myself), Krugman gets away with it on two counts. First, I only read a few of them in the original; and second, he begins his book with an introduction of such power that it is worth the price alone.

Krugman states quite baldly a truth from which many still shrink: today's conservatives are radical revolutionaries who do not accept the legitimacy of America's current political system and aim to subvert it. Their goals are the establishment of an American military imperium abroad, under American rather than international law, and to minimise the responsibilities of the rich and corporate America to the common weal at home. This is so breathtaking, says Krugman, that to say it risks being condemned as alarmist. Indeed, quoting Henry Kissinger, he argues it is one of the characteristics of revolutionary power that it draws just this response; it is those who "counsel adaptation to circumstances who are considered balanced and sane". Consensual mainstream opinion cannot come to terms with the radicalism of the revolutionaries - it is too far outside its ambit. It seems delusional, almost hysterical, to acknowledge what is really happening.

Krugman sets out the five maxims that must govern reporting in such a context: don't assume any policy proposals make sense in terms of their stated goals; do some homework to discover the real goals; don't assume the normal rules of politics apply; expect a revolutionary power to respond to criticism by attacking; and don't think there's a limit to a revolutionary power's objectives. His columns set out how he follows his own maxims in explaining the range of Bush's policies since he took office - from the conduct of economic policy, to how Bush and his political adviser, Karl Rove, shamelessly exploited September 11 for partisan ends.

It is a revelatory picture, and it will leave those who don't know America well shaking their heads in disbelief. Can it really be true that the regulators of the media and the securities industry are so completely compromised by their association with their Republican bosses and the industries they regulate? How is it possible that any government at any time could organise tax cuts to the rich on Bush's scale and present them as a patriotic economic stimulus that only traitors disagree with? Is it possible that any group of men and women could reward themselves as extravagantly as contemporary American chief executive officers, claiming enormous benefits for the companies they run, when in fact the benefits are paltry? How do people become this self-serving? And perhaps most worrying of all, Krugman shows how the American media have given up on active scrutiny - partly because the truth seems so incredible and partly because a sizeable proportion is owned by Republican interests.

Why has this happened? Stiglitz's answer is that the American centre and left have allowed the right to win the economic argument with a set of market fundamentalist propositions that are downright wrong - but which have the pleasing consequence for conservatives of validating their every prejudice and allowing them to dress up serving their own interests as promoting the common good. It was the confluence of this thinking with the unique circumstances of the post-cold war 1990s that led to the extraordinary and unsustainable boom. As chair of President Clinton's Council of Economic Advisers for four years and chief economist of the World Bank for three, Stiglitz had a bird's eye view of how the contagion infected the Democrats - and made them collaborators with the trends they deplored.

There is an element of confessional breast-beating in Stiglitz's book - and occasionally the overlap with his previous work, Globalisation and Its Discontents , gives you a sense of déjà vu. Some of this Stiglitz has said before. None the less his account of how a group of smart economists and policy thinkers with impeccable liberal credentials found themselves zealously cutting public spending, deregulating, privatising and even cutting capital gains tax, is important and well-marshalled. Time and again the combination of powerful corporate lobbies and appeals to the "rightness" of the new conservative economic consensus made it impossible for the Clinton administration to make progress, or even to shape deregulation in a less damaging way.

Stiglitz is a stout defender of the role of government, basing his view on the economics of information for which he won a Nobel prize. Of course markets don't work perfectly; they are structured so that insiders have more information than outsiders - so that prices don't reflect costs and excess profits and rents abound. Unless government is on hand to correct the imbalance with regulation, promoting competition and acting itself, markets will produce all kinds of follies - of which the 90s boom was the quintessential expression. The hangover of debt and bankruptcy is costing the US economy hundreds of billions in lost output; and all because the insiders - CEOs, investment bankers, corporate lobbyists - went on the rampage, aided and abetted by Republicans. Stiglitz's account of how the lobbyists shaped the 1996 Telecoms Act, opening up telecommunications to new entrants with minimal regulation in the name of "competition", is an eye-opener. In effect, despite self-serving talk of competition, they were giving a licence for an orgy of bids and deals as the industry jostled for what it knew were captive franchises (mobile and cable networks).

The strength of the two books is their authors' deployment of economic analysis to expose the duplicity, wrong-headedness and costs of conservative economic policies - and their streetwise awareness of who benefits and why. The weakness is that, while both deplore what is happening, neither offers a satisfactory explanation of quite why conservative America has the grip it has. Krugman at one juncture throws his hands up in the air: "I should admit," he writes, "that I am not entirely sure why this is happening." It's just clear that "the right want to do all these things" (abolish tax on capital, strip away all regulation, even of the environment, and invade foreign countries).

For Stigtlitz it is about intellectual argument; if the Clinton people had been more convinced they were on the right side of the argument, they would not have cut the budget deficit so aggressively - and the US would now have more research and a better public infrastructure.

Maybe so, but Clinton was governing within a conservative maelstrom. My own view is that market fundamentalism has been shaped by the American conservative think tanks to dovetail so neatly with great American myths - individualism, the frontier, self-reliance, redemption through hard work, from log cabin to White House - that it has become a self-reinforcing ideological thought system that is impervious to rational argument of the type Krugman and Stiglitz marshall.

Appeals to liberty overwhelm arguments for government and fairness, because they appeal to the gut of middle America and the raw prejudices of working-class America. I've been told of country clubs still operating informal bans on membership of Jews and black people; and in the south and west of the country - the core of which is the old Confederacy - deplorable attitudes towards women, black people and even Darwinian accounts of human evolution lurk just below the surface. Market fundamentalism, coupled with calls for liberty, legitimise this cocktail of prejudice - and the fall of the Soviet Union gave the whole story renewed and urgent legitimacy which has not burnt out yet. The US is a very foreign country; and Stiglitz and Krugman, both East Coast intellectuals who think like Europeans, have yet to come to terms with just how foreign it is.

Man, take a week off and the cockroaches multiply, don't they?

One should always be circumspect with criticism of those who "know" America as well as our putative friends at the Guardian, or who take their economic advice from strong-government Keynesian types who feel that the market needs regulation from those whose field of expertise is in coercion and not trade. When one views such commonplaces as "cutting public spending, deregulating, privatising and even cutting capital gains tax" with horror and alarm, it may be suspected that one's name isn't Friedman or Hayek.

The signal failure of the left dating from Marx is the insistence on regarding economic man as political man; this attempt to cast the current geopolitical ambitions of the Bush administration in economic terms is an unusually embarrassing result. It turns out not to be all of one easily digestible and theorizable piece, actually, and the ostensible relations of the Republicans with Eeevil Corporate America (good grief, does the Democratic party have no corporate donors?) turn out not to be particularly related to the attempt to cut off support and funding for Islamist ambitions by invading Afghanistan and Iraq, after all. Such issues are never entirely unrelated given the complexities of the real world, but those complexities are precisely what forcing this into the intellectual model of economic theory attempts to resolve by ignoring. It just won't wash.

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Where's the barf alert?

Here's a nice lie from Paulie Boy:
Krugman states quite baldly a truth from which many still shrink: today's conservatives are radical revolutionaries who do not accept the legitimacy of America's current political system and aim to subvert it.

Of course, it's the reverse!
Which side wants to destroy representative gov't and replace it with judicial fiat?

Which side was it that wants to violate the Constitution's provision that says that it alone should be the supreme law of the land?

Which party was it that is deliberately stalling judicial confirmations in an unprecedented manner in order to stop the president from fulfilling his constitutional duty to appoint them?

Which party is it that wants to take away everyone's right to spend money espousing his political views?

This guy recognizes two things about post 9/11 America, from a euro-leftist perspective.

First, America and neoconservatives really are revolutionaries on the world stage. It has always been true that freedom anywhere is a threat to tyranny everywhere. 9/11 taught, and neocons are promulgating the lesson, that tyranny anywhere is a threat to Americans everywhere including in their own homes and places of work.

Second, that market economics has won the intellectual battle with the statists.

That America is spreading real political and economic freedom to the Arab-Muslim world in the name of its own self-defense is something the euro-left and their American sympathizers like Krugman cannot stand or admit. It is against their religion.

It is a revelatory picture, and it will leave those who don't know America well shaking their heads in disbelief.

Yes. I am definitely shaking my head in disbelief at this point. Is this guy from another planet, or what?

Okay, now going back to try to read the rest of this pap.

Britain's political class and commentariat just don't get contemporary America...They should read these two books...

This is so hilarious. The writer chastises everyone else for their lack of insight. The writer's only credential is that he has...(drum roll)...read two books.

The Chinese say, "Beware the man of one book". I guess that should go for Brits of two books.

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