We're in for a wild ride. Exponentially accelerating technological, cultural, and socioeconomic evolution means that every year will see more developments than the previous one. More change will happen between now and 2050 than during all of humanity's past. Let's explore the 21st century and ride this historic wave of planetary transition with a confident open mind.

Tuesday, September 4, 2012

2012 Election Year Retrospection: Failure of Obama Administration

The Pragmatist came about when the crisis began and now it is time to look back at what this site has gotten right politically, what wrong, and how election will wrap up

Barack Obama was put into office with Wall Street hedging 57% financial support towards him (it is down to 37% presently). It was widely expected that he will partially channel FDR and do for American finance top heavy capitalist system what FDR did for industry top heavy capitalist system of yesteryear. Namely, restructure it to extend its lifespan for a few more decades. The Pragmatist assumed that the nationalist minded elite clans (such as General Electric shareholders, etc) that put the current figurehead in, recognize that their privileges are in danger and will thus tackle the crisis vigorously and seriously. To keep milking the cow one needs to keep it alive and periodically update the milking equipment. Any such restructuring would require simultaneous dual push for a solid baseline industrial policy and dramatically different approach to liquidity provision.

The state hasn't pursued major rebuilding of the manufacturing base along with major restructuring of the financial sector (that is sitting/managing on top of the industry) to the degree that The Pragmatist predicted. There have been some mild efforts and platitudes concerning emulating a corporate/labor/state collaboration system like Germany but nothing serious yet. We can assume that this nationally self sabotaging behavior is due to a combination of two factors:

1) Major shareholders behind both political wings of the oligarchy are substantially internationalized so that the whole world is now considered a cow and that saving the cow on the North American continent is not as big of an issue anymore. The world's economic/financial system that US built is seen as sufficiently institutionalized that profits can continue to be made in a multipolar world. Greater amount of capital and energy is seen as required to save the American empire than to keep looting it and extracting from it. Thus..

2) The elites are emotionally ambivalent about which side to back. This allowed the status quo alliance of regional and internationalist minded shareholders behind the republican wing to reorganize and stage a current comeback. The nationalist Northeastern Yankee faction of the oligarchy simply does not have enough interpersonal power to modify the federal state apparatus anymore. In that they are very similar to the reform minded faction in the Soviet communist party in the 1980s (which was always stifled in its restructuring attempts by the reactionary majority that just favored "tightening some nuts and bolts" on an airplane that was struggling to even fly horizontally, much less lift up). This is explicitly seen in Obama faction's weakness towards the military generals to the present day.

Long term demographic trends still point to elite clans increasingly ruling from urban hubs rather than from wealthy suburban enclaves. The Pragmatist is probably correct in predicting a multidecade slide toward Brazil style authoritarian developmental system as the wealthiest cosmopolitans cluster in the coastal cities and as the interior descends into accelerated rot and South American style poverty. As for short term, even with democratic wing taking the brunt of the crisis (unlike GOP Hoover's administration that weathered 1929-1932), The Pragmatist incorrectly predicted in 2009 that Republicans will undergo a crushing defeat in 2012. That was due to 1) correctly predicting even more severe self cannibalizing infighting in GOP primary (and Ron Paul faction becoming co-equal to other major GOP factions) and 2) incorrectly predicting that the most strategic way forward for rich people generally (so called enlightened self interest and seeing writing on the wall) to preserve their system is major moves towards accommodation with the plebs. As we approach November, GOP would have underwent, if not a Mondale style defeat, but a paradigm shifting defeat if democrat backers took advantage of the crisis early on.

However, this dramatically changed with Citizens United, weakness, incredulity, and paralysis of New England power brokers, and seeming (at first glance irrational) inability of GOP backing elite clans to accommodate a new populist cultural paradigm shift (betting that they can use the crisis to hijack populism towards a new long term type of pro-corporate paradigm shift, similar to but qualitatively cruder than the one that began in early 1980s). At this point it is futile to disentangle multitudes of contributing factors that caused general paralysis ranging from 1) the passing ideological spasm of firebrush libertarianism cynically used by some elites in the last two years (similar to a rash of "genuine" communists in Soviet Union in the 1980s who insisted that the map is not the terrain) 2) need to continue to cause destabilization abroad to preserve force backed dollar hegemony (restructuring mentioned above would hinder militarism for a number of years) 3) A cancer patient type fear that the treatment is worse than the disease and that treatment will be even worse for social stability than kicking the can down the road.

We only have the present situation to work with.

Even in the headwinds of Citizens United changes in figurehead selection, Obama can still campaign on offering the 18 million opinion maker households (that generally decide elections) a Dow Jones that returned to almost precrisis levels and some reduction in stock market volatility from the 09-10 period. Paradoxically however, stabilization and normalization for elites and their butler class allowed both of them to relax and entertain the idea of a Romney presidency. This is a classic case of a loyal fall guy who went out of his way to help out and got discarded after the job. A sidenote: Obama can not be considered to have been a general weakling since he periodically showed surprising strength and spine when defending certain oligarchic interests against the progressive wing of the democratic party (as well as Obama's direct involvement in crushing civil unrest in fall of 2011). Another interesting sidenote: Citizens United may appear to overwhelmingly favor the corporate block but it also allows individual oligarchs new influence that they didn't have before. 2012 GOP primary infighting demonstrates that unlimited money in politics strangely generates a sort of top down pluralism among the elites (even if the pluralism is neo-feudal in nature).

In summer of 2009, it was predicted that major debt restructuring (well beyond the floating rate scheme planned currently) will need to occur before 2012 election or US risks keeping its economic system while seeing major changes in its political system. This will be tested in the next 4 years even if Obama is reelected. The Pragmatist's June 2009 (and admittedly safe!) advice to buy precious metals has generally proven correct with gold rising well above most asset classes from $950 an ounce to $1695 today and silver doubling from $15 to $32 today. Since austerity has never historically helped finances of countries, we will see where the can eventually lands.

It is time to put fiat where the mouth is with a very safe and tame prediction. Barring engineered economic jolts to help Romney or a paralyzing foreign crisis, Obama will probably narrowly win again considering roughly 1.5 million annual boomer mortality rate. Romney and Obama are tied now and are rather close in swing states. It appears that "the war on women" wedge issues will be utilized by the federal center of force to try to push Obama's coalition over the edge in terms of support. Considering that youth turn out will be depressed again, it is also a rather perverse race between amount of people recently disenfranchised by GOP state apparatuses, roughly 6 million boomers who died of old age in last 4 years (demographic that McCain won handily), and amount of minorities coming of voting age. Finally there is also the fact that it is a potent historic anomaly that Mitt Romney, a pure bred northerner, secured support of a party grounded in the south and it will be an even greater historical anomaly if he wins (looking at surprisingly regular election results going back to 1870s). The final 2 months should finally uncover some of that Obama spine as he uses federal apparatus backed stunts and that megaphone that was always at his disposal.

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