Some people still argue that libertarianism will get us out of our current economic mess, even though a blinkered laissez faire attitude actually created the mess, and even though libertarianism/Friedmanism has created nothing but agony throughout the world. (See The Shock Doctrine.) Libertarianism is a magician who keeps muttering "Theoretically, this trick should work" as he reaches a thousand times into his hat only to come up with no rabbit each and every time.
Obama chose Larry "laissez faire" Summers to be director of the White House National Economic Council. There has been a lot of discussion of Summers in various corners of the internet. Let's start here:
Summers was one of the key proponents of the banking deregulation of 1999 that led to the current financial crisis. In addition, Larry Summers has argued that women are innately less gifted in science than men, that 'Africa is Underpolluted', that child sweatshop work in Asia is sometimes justified, and that job destroying trade agreements are good for America.The Hillary-hating prog-bots spent the primaries hammering the Clinton legacy on the very points on which Summers' advice carried the day. (Summers served in the Clinton Treasury Department and was eventually made Secretary.) So how can they justify Obama's choice of Summers?
Larry has written for the Liberty Fund, which funnels big money to libertarian and conservative groups. Here's Larry on unemployment.
Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment.
There is no question that some long-term unemployment is caused by government intervention and unions that interfere with the supply of labor.Apparently, unemployment wasn't really an issue in the 1930s or the 1890s, when unions were weak. But in the union-strong '50s, jobs were scarce.
Let's get back to The Shock Doctrine. Remember the section on the privatization of Russia's assets? Remember how all of that mumbo-jumbo about the magic of unregulated free markets proved to be nothing more than a cover for looting and power-grabbing by insiders?
One of the leaders of the crew that burgled the joint was a good friend and protege of Larry Summers, Harvard's own Andrei Shleifer. The story I'm about to relate may seem like a long, strange side-trip, but it's important, so pay attention.
Schleifer had led a group from Harvard which set much of the privatization policy which ruined Russia's transition from communism. Sorry to inflict Wikipedia on you, but this is the quick version of what happened:
During the early 1990s, Andrei Shleifer was an advisor to Anatoly Chubais, the then vice-premier of Russia, and was one of the engineers of the Russian privatization. During that time, Harvard University was under a contract with the United States Agency for International Development, which paid Harvard and its employees to advise the Russian government. The results of privatization in Russia were criticized widely in Russia and western academic circles. Under Anatoly Chubais, privatization led to valuable Russian business assets being acquired at extremely cheap prices amid accusations of rigged auctions.Chubais is now one of the most reviled figures in the long, sad history of Russia.
Shleifer was also tasked with establishing a stock market for Russia that would be a world-class capital market. That effort was also unsuccessful, and became mired in charges of corruption and self-dealing.
Under the False Claims Act, the US government sued Harvard, Shleifer, Shleifer's wife Nancy Zimmerman, Shleifer's assistant Jonathan Hay, and Hay's girlfriend (now his wife) Elizabeth Hebert, because these individuals bought Russian stocks and GKOs while they were working on the country's privatization, which potentially contravened Harvard's contract with USAID. In 2001, a federal judge dismissed all charges against Zimmerman and Hebert.The lawsuit was resolved in 2005. Shleifer had to pay a fine, and not an insignificant one. But the bulk of the settlement -- over $26 million dollars -- was paid by Harvard. (Individuals reap the rewards; institutions assume the risk. A familiar story.)
Larry Summers was the President of Harvard from 2001 to 2005.
In other words, Larry Summers bailed out his protege who had profited from the robbery of the Russian people. (Harvard's internal ethics committee pooh-poohed any charges of favoritism.)
Shleifer's involvement in Russia was investigated by David McClintick, a Harvard alumnus and journalist for Institutional Investor Magazine. His 30-page January 2006 article claims to show that "economics professor Andrei Shleifer, in the mid-1990s, led a Harvard advisory program in Russia that collapsed in disgrace." The article drew considerable criticism among Shleifer's close friends and collaboratorsOne of those friends accused McClintick of propagating a new "Protocols of Zion" attack on Summers and Shleifer, who happen to be Jewish. Apparently, anyone who criticizes the two men must be an anti-Semite. Isn't it nice to have a get-out-of-jail-free card?
McClintick's important article, "How Harvard Lost Russia," is here in pdf form. According to McClintick, before Shleifer left for Russia, Summers warned him that the world was a dangerous place and that he might even run into corruption over there. I presume that McClintick got this info from Summers, speaking after the fact.
So: Perhaps now we can glimpse what Obama has in store for us. Friedmanite solutions for a Friedmanite problem. Shock therapy. National misery. Free market rhetoric as a mask for cronyism and graft. (The Blago scandal offers a hint of what is in store for us on a national scale.) Loss of superpower status. Followed, perhaps, by a Putin-style authoritarianism...?
8 comments:
We have the best government that money can buy.
"... the supply of labor.": That's all I need to read to know that someone's full of shit.
thank you, joseph, you're onto something here.
windsun
The name escapes me but there there was another Harvard economist who wreaked havoc out there. Gosh, who would have thought I could forget. No doubt thats why he still gets gigs. He is often quotes on development issues but the man is a) horrible b) responsible for more misery than Brezhnev. Oh yes, Jef Sachs. May he spend eternity in the company of Russian Babooshki when his time finally comes.
I would also point out that Hays' "girlfriend" was a very impressive woman. Even a casual observer could not miss her talent.
They set up a fund together didn't they? All very corrupt. But then corrupt times in a corrupt place. I guess it was the hypocrisies which offended. They messed it up and then ran away, and blamed the locals. Shame on them.
Harry
Up to Nixon, all one had to do was to get out of the house, go apply and one had usually more than one job. On top of it, if one wanted higher education at any public university, it was almost free. The inflation that started with Nixon, and accelerated with Ford was devastating for the working class. Volcker, under Carter, destroyed the runaway inflation. It was painful, but it got done. Few give credit to Carter for a job well done.
Obama spent time at the University of Chicago. The neocons there told him they were brilliant--and Obama apparently believed them. It's hard not to see his Presidency failing unless he snaps out of this trance.
I never understood how the Obots could talk themselves into believing that Obama was anything other than a Friedmanite. The Illinois economy has been decimated by the loss of its manufacturing base with its good paying jobs. Back in 2006, 24,500 people (mostly from Chicago's south side, part of which was Obama's old state senate district) applied for 350 Walmart jobs. Yet during that 2005-2006 Congressional session, to my knowledge Obama never co-sponsored or introduced a bill that would have helped save what remained of the state's manufacturing.
By contrast, Hillary cosponsored the Foreign Debt Ceiling Act (introduced 2/10/2005) and Durbin cosponsored the Runaway Plants Bill (introduced 1/26/2005). In May, 2005, Obama responded to a question put to him during a town hall about the trade deficit, "This is an issue I agree is of utmost importance to our long-term future and that of our kids and grandkids, but it's just not being talked about in Congress." I believe that his ears then grew by at least 3 cm.
http://obama.senate.gov/news/050506-q_a_obama_answers_questions_at/index.php
old dem
Best way to describe a Libertarian: Ebenezer Scrooge.
(Although, come to think of it, that's not fair to Scrooge: A Libertarian would want the poor to pay for the poorhouses and the criminals for the prisons.)
Sergei Rostov
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