White Privilege, the Dems, and the Rhetoric of “Care”

To read some of the exchanges over the last week in the blogosphere, apparently “white privilege” means that one doesn’t attend to race and class issues at home, but instead privileges “foreign policy” and “national security” issues. This implies that there is privilege in worrying about the bodies and violations to foreign nationals over the bodies of brown and black Americans. Ok, let me grant that assumption for a second.  Still, I wonder why issues such as warrantless wiretapping, surveillance, unlawful (and supposedly “lawful,” warrantless) detention of US Muslim men of South Asian and Middle Eastern backgrounds, the nullification of judicial review, the assassination of not just 1, but multiple, US citizens, the incarceration of U.S. citizens (black and brown), should be deprioritized by American voters. Are these not issues that should be of concern especially to folks who are unencumbered by an excess of “white privilege”?

Still granting the assumption that worrying about foreign issues involves undue privilege: I wonder, after considering some of the policies that the present Administration has supported and backed (from NDAA 2012, Expansion and Renewal of FISA, Expansion of prisons, expansion of DHS deportations of migrants; expansion of detention centers), in which ways have U.S people of color and poor  people benefited under the present Democratic Administration? There may be some, such as college loans forgiveness, and the absence of a concerted attack on reproductive rights. But there are certainly anti-choice Dems, such as Harry Reid, who have managed to stifle somewhat. I would hardly call Health and Human Services Secretary Kathleen Sebelius’ decision to revoke access to OTC contraception a big win for pro-choice folks.

According to a number of progressive economists, the top 20% has remained pretty unaffected by the present Democratic Administration, and I’m betting that includes some of the folks lobbing around the “white privilege” accusation.  Could it not be the case that one is exemplifying white privilege by deciding that one should be loyal to the Administration and the Democratic Party in the face of a range of demonstrable discriminations against certain kinds of minority populations? In the face of violations to certain kinds of brown and black bodies? Does such a loyalty not imply that those who are in a position to make choices are simply refusing to see the world that they themselves have made, by insisting on a repeated loyalty to the Democratic Party, despite the years of abusive behavior on the part of the Dems? Charles Mills calls this “the epistemology of ignorance,” namely that state of the world in which whites refuse to see the world that they themselves have made.

According to a report by the Pew Research Center, “Median wealth fell by 66% among Hispanic households and by 53% among black households during the financial crisis, compared with a fall of just 16% among white households.”

Presumably, the President so cared about the devastating impact to US populations of color that he was going to support California Attorney General Kamala Harris to get as much from the banks as she could, right? POTUS’ response was to pressure Harris to accept a ridiculous settlement with the 5 BIG BANKS of $25 billion dollars, which cashes out either to $750 or $840—yes, you read that right– per household for families who lost their houses due to subprime mortgages.

Again, according to the Pew report:

“A disproportionate share of Hispanics live in California, Florida, Nevada and Arizona, which were in the vanguard of the housing real estate market bubble of the 1990s and early 2000s but that have since been among the states experiencing the steepest declines in housing values.”

Take a look at those quotes again. This is not a “white privilege” issue. It affects U.S. minorities more so than whites. Clearly, the Big Banks must have “cared” about those homeowners, too, right? They must just have been broke, to pay so little. Right. According to today’s Bloomberg, “Even as U.S. unemployment has remained above 8 percent for 43 months, the country’s biggest banks are making almost as much as they ever have.” Namely, a combined $63 billion in profits.  The original rescue was signed by Bush, but what exactly did O require in terms of accountability from the banks? Anyone?

As I mentioned in my last post, the privilege of deciding that the lives of others are easy to sacrifice, the privilege of deciding that certain civil rights are more important than human rights violations will backfire—This is nationalist privilege—American privilege, to be exact. And it has already backfired.  We are seeing the backlash in all kinds of cases—cases like that of Dr. Shakir Hamoodi, Sami Al-Arian, and hundreds of others.

Ultimately, I don’t care who Democrats vote for because I accept the argument that “the structure is broken.”  If it’s broken, voting for the Democrats yet again isn’t going to fix it. Instead, it’s going to amplify the message that Democratic voters have sent for the last 20 years: Please, screw us again. Abandon your constituents for yet another 4 years. And we’ll reward you as you move even further to the right after every term—we’ll send you the message that “we like it, we love it, and we want more of it.” It’s a state-of-emergency politics: It’s an emergency, so we have to vote for the “lesser evil” of 2 states. And the cycle will continue.

If voting for the incumbent accords with your conscience, then by all means do so. If you, like me–despise the Democratic record on wars, drones, murders, assassinations, detention, torture, solitary confinement of foreign nationals without charges (and that includes migrants of various nationalities—since solitary confinement is used more and more widely), but still feel that this vote matters, voting for POTUS is a better option to other options, do what you need to do.

But don’t bake me a dungpie and tell me it’s my birthday. Just tell the truth. Tell the truth about the Democrats’ record on civil liberties issues, on NDAA 2012, on H.R. 347, on S.Comm, on detention policies, on migration policies, on deportation policies. Don’t tell me that the Democrats “care” more, or that “Obama’s heart is in the right place,” or “he would have done more if we didn’t have a GOP-led Congress (um—again, how did that stop the Dems from getting things done in the first two years under Obama?), or that he’s pro-union, or that innocent civilians aren’t getting killed, or that the Affordable Care Act involved actual health care reform, or that Obama’s not interested in cutting Social Security, or that the Dems “care” about civil liberties or human rights violations.

And by the way, how does one know whether Obama or the Dems “care”? Just because they say so? If POTUS is willing to lie about not wanting the U.S. government to be able to kill Americans (thanks, Sen. Carl Levin), then why wouldn’t he lie about whether he “cares” for you, me, or black and brown folk?

Why don’t the same folks who insist that we must vote for the Dems believe that the Republicans “care” just as much? Because of their track record, I hear. Ok, that’s my standard for the Democrats, too. For those who insist that POTUS/Dems cares about poor black and brown folks, I’ve explored the track record on “care” all over this site. For some examples, see here and here and here.

A friend whose political insights I respect tremendously suggested that she was voting for the incumbent precisely because there are racists who will vote against him because he’s black. I can respect that.  Others suggest that they’re voting Dem to “prevent GOP access to power.” Okay, I can live with that—but I don’t buy that this will increase the likelihood that poor folks, folks of color in the US and internationally will be less vulnerable to having social safety nets or economic structures decimated by Democrats.

Just do what you need to do, but stop insisting that folks who reject the false dichotomy between the lives of U.S. folks of color, black and brown, and the lives of international folks of color are “conservatives,” or libertarians.

And the day after the election, for those of you who feel like you had to vote for the Democrats as the least crappy option among crappy options, please, let’s start pursuing the viability of a third party. We need to change the conversation, we need to hold the Democrats accountable for abandoning voters, poor folks, black and brown folks—in the US and elsewhere. Only the threat of not being re-elected, of losing “winnable votes” will bring them around.

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Guest Post: Robert Prasch, “The Economics of the SOTU”

Here is another guest column by economist Robert E. Prasch that translates several of the issues that President Obama raised during his SOTU the other night. It’s a clear, comprehensible, and calm discussion of manufacturing and jobs; taxes and offshoring of jobs; education and technology; and the banks and the bailouts.

 The Economics of the State of the Union Speech

By

Robert E. Prasch

President Obama was correct to focus the substantive parts of his speech on the economy.  Undoubtedly he is aware that his re-election prospects depend greatly upon the public’s satisfaction with the economy.  Since the Second World War, only Ronald Reagan has been reelected with the unemployment rate over 7% (it was 7.4% in November 1984, down from 10.8% two years earlier).  Thus far, at 8.4%, the current rate is off its highs, but those who have given up searching for work are responsible for too much of this “success.”  With his fairly modest stimulus plan largely over, banks sitting on money they won’t lend, consumers still overly indebted, and Europe in too much disarray to provide much of a market, there is some doubt about who will provide the spending necessary to drive a recovery.  Obama knows this, his advisors know this, his campaign people know this, and so do many of the people who heard or read his speech.

This, then, was the reason that the State of the Union Speech emphasized economics and economic policy.  However, to be candid, even if the President had free rein to enact a perfect economic policy tomorrow morning, the lags between action and result are such that it would probably not have much impact before Election Day.  To an important degree, the President has already (or not) set in motion the policies that will (or will not) set the economic conditions upon which he will ask to be re-elected.  If this were the only issue on hand this fall, he would likely be in trouble.  The race seems to be the Republicans to lose, but they appear to be up to the task.

But, that said, what can — or should — we make of the President’s assessment of his performance and the new programs he proposed?  In the interests of brevity, I will address four broad areas of the speech.

(1) Manufacturing Jobs in America.  The President made much of his “rescue” of the American automobile industry.  This was and remains an important industry and he was correct to bail it out.  However, one should be skeptical of the claim that these firms failed as a consequence of inefficiency and high labor costs.  On the contrary, their problems were not all that different from the banks.  General Motors, for example, was heavily dependent upon relatively short-term financing that ceased to be available when credit markets dried up as the financial crisis unfolded.  Worse, when people experience or anticipate a decline in income, they tend to postpone the purchase of “consumer durables” such as cars.  Unsurprisingly, this is exactly what occurred during the financial crisis and car sales duly plummeted.  By contrast, Ford Motor Company had the foresight to negotiate and pay for a substantial line of credit in 2006.  Its customers also disappeared with the onset of the crisis, and the firm reported losses of $2.7 billion in 2007 and $14.1 billion in 2008.  But its line of credit enabled it to survive.  GM and Chrysler failed.  But let us note that the ultimate cause of this failure was poor planning on the part of the front office.  Of course, following a time-honored script, labor was blamed and the Obama Administration forced the unions to reopen settled contracts and agree to large givebacks before signing off on government assistance.  You might recall that when the banks that actually caused the crisis needed massive federal support, Lawrence Summers explained to a shocked public that this aid would be granted without asking anything of senior management “because contracts are sacred.”  Summers did not elaborate, but it would appear that some contracts are more sacred than others.

(2) Taxes and the Offshoring of Jobs.  Undoubtedly this part of the speech played well.  But it was largely symbolic or meaningless.  A few exceptions aside, American corporations no longer pay enough in taxes for comparative rates to constitute the “make or break” element of the decision as to where to locate their production.  More important is the structure of “free trade” agreements, which are really agreements concerning the treatment of overseas investment, intellectual copyright, and financial flows.  During the 2008 primaries candidate Obama suggested that he would renegotiate a number of these proposals including NAFTA, but the campaign was soon forced to admit that had no intention of doing any such thing.  In fact, Obama is as passionate as George W. Bush and Bill Clinton in his support of these agreements.  This explains why he spent the early fall orchestrating the passage of three free trade agreements negotiated by George W. Bush (not exactly what one might call “hope and change”).

In Tuesday’s speech, the President had the audacity to suggest that these trade agreements would be net creators of jobs.  Ten minutes reflection and access to Google should be adequate to refute such a claim.  Before we start, let us recall that international trade that is balanced will only change the variety of goods available and the types of jobs we have.  To have more or better paying jobs requires a trade surplus.  Now, the chances of the U.S. running a trade surplus with South Korea over the next several years is very remote.  For one thing, the Koreans understand the link between their trade balance and the level of employment, and can be counted upon to protect their current surplus.  We, of course, will only attend to the interests of the financial sector, big agriculture, and the rentier interests behind TRIPS (trade-related intellectual property).  But, what of Columbia and Panama?  We have a trade deficit with Columbia that is likely much larger than the official tally as it does not account for the most valuable product traded — cocaine.  As to Panama, one might begin by reflecting on the fact that their Gross Domestic Product is larger than Vermont’s but smaller than Rhode Island’s.  Even if we were to run a trade surplus with Panama worth 20% of its GDP every year, it would (a) be hard for them to finance and thereby difficult to sustain over time, would (b) not amount to much anyway, and would (c) certainly not make a dent in our current economic doldrums.

(3) Education and Technology.  Classical and Neoclassical economists are known for their nostrum claiming that “supply creates its own demand.”  John Maynard Keynes famously taught us that when the economy is operating at less than full capacity the opposite is true.  Under such conditions “demand creates its own supply.”  Conservatives, of course, never liked Keynesian economics and for that reason have continued to champion “supply side economics” (For a criticism of this theory, read http://www.commondreams.org/view/2011/05/07-7).  Unfortunately, the Democrats have long championed their own notion of “supply side economics” and this is “education.”  While education is a wonderful thing in itself, and well worthy of public expenditure, Democrats are strangely committed to the demonstrably false belief that the problem of mass unemployment in the wake of a financial crisis is a mismatch or absence of skills.  This is simply untrue.  The millions who are currently unemployed are not a hopeless rabble lacking ability.  Far from it.  Americans who have become unemployed and underemployed in the course of this recession are generally a well-educated and talented group.  Moreover, even before the recession, about 30% of college graduates were working in positions that did not require a college degree.  Worse, for over a decade it has been well-known that American engineers are leaving their profession in disturbingly large numbers – suggesting that the supply of engineers has been persistently larger than the demand.  The problem, then, is not on the “supply side” of talented young people; it is on the “demand side.”  The United States simply does not demand a lot of talented young people in engineering, math, and the sciences.  This is, of course, in keeping with the fact that we have become something of a “casino economy” that has become dependent upon serial financial bubbles to spur employment while remaining unable (or unwilling) to develop a sustained capacity to build things that people here and abroad would actually like to buy.  The point is that an economy that grows at a brisk rate on the basis of sound innovation and production would require lots of talent, and profit-seeking firms would be willing to train that talent on the job.  Naturally, CEOs and Human Resources departments are always and everywhere anxious to have the government or employees shoulder the costs of training, but in periods of rapid growth and labor shortages they will be happy to pick up the tab – let us remember that the “Rosie the Riveters” that the President referred to in his speech learned their skills on the job.

(4) The Banks, Bailouts, and Financial Fraud.  The President claims that the nation will “never again” bail out large financial institutions.  To be blunt, this is very premature as many of the most important rules associated with the Dodd-Frank Act have yet to be written.  Moreover, even after this occurs, it will be unlikely to work as the core problem – the overarching economic and political influence of the largest of the Too Big To Fail banks has not been checked and the resolution authority supposed put in place simply isn’t credible.  President Obama and Timothy Geithner did have a marvelous opportunity in 2009 to do what all thinking adults understood had to be done – break up these large, inefficient, and terribly insolvent institutions.  Instead, they worked tirelessly to protect them both at that time and throughout the negotiations leading up to the signing of Dodd-Frank.  Jamie Dimon and his 1% friends should be very thankful for this stoic service.  Former OMB director Peter Orzag has already left the government to collect his portion of gratitude from Citibank, and it has just been announced that Geithner will soon be leaving government “service,” no doubt to settle into very green pastures at a major banking institution that he helped deregulate under Bill Clinton, bailed out when he was at the Fed, and protected from being broken up or substantially reregulated while with Obama.  He has been a true and valiant servant of the plutocracy and they owe him a very nice sinecure.

But, let us revisit the claim made in the speech.  No more bailouts?  The irony is that the Fed is continuing its ongoing bailouts even as the speech was being presented.  This can be affirmed with a glimpse at the Federal Reserve’s balance sheet.  Its enormous size, as they themselves explain, is a direct reflection of its ongoing, if indirect, bailout policy.  Large sums of next to free cash are being placed with the banks every business day.

Recently, Mitt Romney casually referred to the ongoing accounting games that allowed the banks to continue marking the failed loans on their books as if they were worth their full face-value.  Romney suggested that it was past time for the banks to recognize their losses and write down the value of these assets.  For once, he is correct.  Of course, such recognition would immediately being into question the capital adequacy of several of the nation’s largest banks, and return the public’s attention to questions concerning their solvency when the banks revisit the Fed or the Treasury for more bailout funds.  CEOs know that this would then induce more awkward questions around bonus time.  In sum, since it is an election year do not expect the Congress, the Fed, or the administration to reestablish anything like sound accounting practices, to say nothing of transparency, at our nation’s largest banks.

Finally, before closing, we should all applaud the beginnings of Obama’s commitment to investigate and actually penalize the fraud at the heart of the crisis.  But, one wants to know, why did we have to wait for three years after the election of “hope and change”?  Why was this not pursued soon after the new administration took office?  On September 17, 2004, more than three years before Obama took office, the F.B.I. publicly presented a report claiming that there was “an epidemic” of fraud in the mortgage industry, so it is very difficult to believe that the administration is only now discovering the existence of a problem.  So again, why now?  Is it because the administration is anxious to head off the more substantial investigations that have been initiated by the Attorney Generals of California, New York, and Nevada?  Let us hope that this is not the motive underlying this extremely belated proposal, but the timing induces one to wonder …