The Rise and Fall of the Neoliberal Order

this is rob johnson president of the institute for new economic thinking i'm here today with gary gerstel who's an extraordinary thinker and writer i i see in reading his work tremendous what i'll call pattern lateral pattern recognition and integration he's the paul mellon professor of american history emeritus and paul mellon director of research at the university of cambridge he's the author i believe 10 or more books he's won awards for american crucible in 2017 liberty and coercion in 2015. he writes for the guardian the atlantic monthly new statesman the nation and many would design many more we're here today to talk about his current project an extraordinary book and i will cite our mutual friend rana faruhar who has reviewed it recently in the financial times very enthusiastically the name of the book is the rise and fall the neoliberal order and it is a i was a half century long portrait of how we got where we got and i guess the off ramp where we might call trump and biden is something perhaps we can explore a little later but gary thanks for joining me and uh i'll start off with what inspired you what did you see that you had to say that brought this book to life well i think the inspiration came in uh 2016 and 2017 i am as i am an american who lives in britain and that meant in 2016 and 2017 i was dealing with two phenomena that i never thought would happen uh one was brexit the uk leaving the european union and the other was the election of donald trump these seem to me to be seismic events in the history of the united states and the united kingdom and the fact that they were happening there there are parallels between those two events and the fact that they were happening in both places suggested to me that uh this was quite an important event that had to be understood both internally in particular nations and and transnationally so this became an effort to understand what had happened not primarily by focusing on trump and everything that issued from him although there's a lot in that near the end of the book but to try and make sense of the united states and its odyssey over a 50-year period beginning in the 1970s and 80s and and concluding with the 2020 election to make sense of what had happened in america and i used an idea that i took from an earlier work that i did published long time ago before some of your listeners or viewers were born 1989 the rise of fall of the new deal order which was an examination of forensic examination of politics and society in the united states from the days of the new deal roosevelt in the 1930s through the 1970s and i had this idea of a political order which we can talk about more if you wish by which i meant a political movement that becomes so powerful and so dominant it's it rules its key ideas rule american politics both when the party and movement is in office and when it's out of office an example of this is the new deal order was established under roosevelt in the 1930s and 40s but it also flourished under eisenhower in the 1950s and did not crack up until the late 60s and early 70s so i became very interested i had long been interested in and how does a movement become an order how does it compel its opponents to play by its terms and part of the puzzle of understanding the neoliberal order in america and wanting to write a history of it was not simply its ascent under reagan in the 1980s and then subsequently under bush in the first decade of the 21st century but how did the democratic party become so implicated in this economic project under clinton in the 1990s how was the democratic party in a sense captured by neoliberal principles and ideologies i had long been interested in that but i thought couldn't really write a book about it until the neoliberal project began to fracture and unravel and i took trump's election in 2016 as being a major sign of its unraveling so once i had a decline underway uh that gave me the scope to write another rise and fall story which is what i've tried to do in this book so let's start with uh what you might call the rice what's what are the ingredients you're talking about i believe you said starting in the 70s we had the opec crisis we had some rising inflation which brought paul volcker to the office during jimmy carter's presidency problems in iraq what what were the things that uh how he said preceded ronald reagan that you see as building blocks to this new one well you you you mentioned a couple of them uh which i'll come back to in a moment let me first say that the uh something about the core idea of the new deal order because it it is it's unraveling that allows the neoliberal order to to take off the core idea of the new deal order was that capitalism left unmanaged uh left free uh to do what it wished capitalists able to deploy their capital really without limitation uh to the glo the glorification of free markets there was a sense that capitalism left to its own devices in that way was not going to work it was too prone to bust cataclysm uh too many casualties of the economic system too much economic power concentrated at the top uh and and too little for the the the people underneath and and so the goal of the new deal became to establish a strong central state federal government to manage capitalism in the public interest not to transcend capitalism but to manage it in the public interest and keynesian economics became very instrumental and and keynesian economics was very successful in smoothing out the business cycle laws were passed to strengthen labor which allowed for redistribution from some profits from the rich to the poor or at least to the organized portion of the working class the middle class thrived and flourished so these were some of the cardinal elements of the new deal order uh and it thrived from the 40s uh through the 1960s but any any uh political order has fracture points it's a complex uh project uh containing multiple constituencies and one of the issues that the new deal failed to address was race and racial equality because roosevelt in the 1930s required in order to get his progressive economic policies through he required the support of the white south which was a very important component of the democratic party and the white senators and congressmen who often had seniority in congress because there was no serious republican competition in the south they were they had seniority they had power and they said we'll let your progressive economic policy pass as long as you don't interfere with the racial hierarchies of southern life which meant don't touch jim crow don't pass any federal anti-lynching legislation don't do any of that but blacks responded to the new deal and left the party of emancipation the party of lincoln uh which had been the republican party and gravitated to the democratic party in large numbers began to move north and and began to declare that we we are part of this party you cannot ignore our situation you cannot tolerate jim crow any longer so the race issue that the new deal had avoided uh comes to the four in the 1960s and this becomes one of the fracture points in the democratic party and in 1964 lyndon johnson is faced with either committing the democratic party to civil rights racial equality passing the civil rights act of 64 the voting rights act of 65 and then possibly losing the white south which is in fact what happens over a period of years or he could have continued with uh down the road of of white supremacy and jim crow he says we can't do that any longer as a democratic party so race becomes one of the issues on which the new deal order fractures then a very unpopular and ill-advised war in vietnam tremendous anti-war protests democratic presidents were the one who had escalated america's involvement uh in vietnam and that creates both an economic problem and a political problem the economic problem is that it's super inflating the economy and johnson can't do his domestic programs and fight the war at the same time and the political problem is that the war is not being won it's being lost and people especially young people begin to ask really urgent questions about what the hell is america doing in vietnam and on that basis a huge anti-war movement takes shape which sees the democratic party and its liberalism as the fountainhead of war so they have to go not they're not going to go to the republicans but they want more radical alternatives so those were cracks and and then the we get to the economics of the 1970s which is what you were referring to and their two basic alterations in the international economy of the 1970s that had not been there before one is the united states is complete domination of the global economy which it had enjoyed for 20 years after world war ii comes to an end america was the only economic power with its industrial base intact in 1945 and 46. and the world is its oyster it can do anything it wants to in the world and american industrialists and capitalists like this but they also understand the vulnerabilities because america needs to sell things abroad and it can't sell things abroad unless it helps the other economies of industrial nations get back on their feet again so it is supporting the resurgence of britain france especially germany and japan and in the late 60s and early 70s they have industries in automobile manufacture electronics uh other dimensions that begin to compete with the united states and the united states industrialists have gotten a little fat on their dominance and we're not really prepared for the competition when it comes its way so there's a lot of decline in american manufacturing in industries that suddenly have very serious foreign competitors and the other big change in the 1970s is alter alterations and relations between the global north and the global south the paradigmatic case is petroleum oil saudi arabia anglo-american interests have controlled the oil fields of saudi arabia determining how much oil was to be extracted over what period of time what the prices to be charged were going to be and all this was done in the service of cheap energy for the industrial global north heavily dependent on this petroleum and commodity producers in saudi arabia and elsewhere begin to say this is a form of theft this is our resource we must exercise control over it the 1970s is when opec opec is not new in the 70s but it becomes a formidable force in the 1970s and so america is hit by oil crises roiled by arab-israeli wars in in the decade petroleum flow petroleum from the middle east to shut off to the united states for a period of time there is panic uh the panic has gotten over but it's clear that the terms of trade on these commodities have changed petroleum is going to be much more expensive and america was not ready for it because it had been used for uh you know 60 or 70 years to the cheapest energy so it gave no thought to insulation efficient use of energy if you're old enough like i am to remember those gas-guzzling cars these beautiful cars made of tons of metal with these these gorgeous fins and getting on their v8s getting two to four or five miles a gallon and suddenly my goodness that's not working anymore any anymore and so this further deepens the economic crisis of the 70s and this is the third blow after race and vietnam and the keynesian toolkit which had managed the economy well which had spread distribution which had regulated the business cycle suddenly the toolkit is not working anymore and something that is not supposed to happen in the 1970s happens and that is stagflation you're not supposed to have unemployment by the economic textbooks of the time you're not supposed to have unemployment and inflation rising at the same time they're supposed to uh to move in opposite directions so you have stages phillips curve they called it phillips curve the stagflation moment no one really understands why it's happening and this opens the door there's a lot of unrest in america the suffering is is quite intense and this opens the door to alternative ideologies which had been there for 20 or 30 years these were the neoliberals that i i write about the milton friedmans of the world they are there they have been talking their game for quite some time and they want monetarist policies they want to get the government out of the economy they want to free markets up to to do their their work uh they want to unleash the power of capitalism without restraint reagan is their is their communicator their articulator uh he's uh he's been studying these ideas for quite some period of time we need to just discard the idea that he was only a um a b movie actor he might have been a b-movie actor but he was quite a sophisticated political thinker he's ready to move he's ready to put these ideas into political action and he's got the common touch as much as he disliked the policies of franklin roosevelt he regarded roosevelt as the most accomplished president of his lifetime and he wanted to duplicate roosevelt's success but from the neoliberal or conservative side of the political spectrum not from the democratic progressive side of the political spectrum and that's how we begin to see the emergence of a new political order that's a beautiful portrait i must say riding shotgun with you right now i grew up in detroit i watched what was happening with those big fin cars i knew that what had happened with the voting rights and civil rights act meant we were going to get no adjustment assistance from congress in detroit because a black majority city and so forth uh how would i say would have been like going back to the well first if it was lyndon johnson or anybody thereafter as you know nixon had the southern strategy which was playing on the other side but i watched a city uh from the 67 riots on come unraveled and i watched divisiveness in the state of michigan between republican and democrats and when i was a little one my mother was working with the detroit symphony and she knew george romney mitt romney's dead and she knew bill milliken and they were you know gerald ford was kind of cut of the same cloth what i'll call no bliss who believes republicans it's changed a lot and then i went to college and i worked to help pay my tuition for the oil economist morris edelman at mit and i was his research assistant for two and a half years and boy that was all these things the supply shocks and the turmoil charles kindleberger was very good on petrodollar recycling and the global south adjustments and all of that so you've done a very i mean in a very concise way you've really hit on the what i'll call the high notes of the provocations to transformation and reagan as you were saying was not a b level player he'd been the governor of california he he had a comprehension of politics in a i worked for pete domenici in my first job out of graduate school i used to go to white house events and i was a big baseball fan and i watched detroit guys come in detroit tigers in those days 68 uh alkaline and what have you but uh but when i'm watching him with whoever has won the world series i'd go because my friend dale petrovsky was a communications guy there he's from detroit and he set up thing called the mayo smith society for ex-pat detroiters that want to stay with the tigers anyway we're going into that and we're having a lot of fun but ronald reagan i saw him fall asleep at budget committee meetings but when he was with the big radio announcers and the star baseball players he was one of the most magnetic human beings i've ever seen live so there's a whole lot that you touched on here in in painting this uh opening portrait well thank you i treat reagan very seriously he did fall asleep but he had a lot on the ball and he he should not be underappreciated for his political significance and his political talent and having if you live through detroit you know the i mean given that you've lived in detroit you know the pain and suffering of the crisis of the 1970s inflicted on key manufacturing cities and centers in the united states and you know detroit probably got hit the worst of all because it was such a center of car manufacturing but you can multiply that story of detroit 10 12 15 times of northern cities and then you begin to appreciate the magnitude of the economic crisis cleveland ohio gary indiana chicago buffalo new york we you know we can begin to multiply the number of places where serious hardship is it the rust built yeah and that's when it began to rust that's right well they uh the tensions that were so vivid at that time uh were also what you might call a precursor of globalization michael moore eventually made roger and me and uh it was all about the anxiousness in michigan as they saw the plants first moving to mexico and then to asia and there was like you talk about the racial dimension the white flight to the suburbs detroit was being turned inside out and it was a very large footprint city i believe somebody told me is more square miles than the five boroughs of manhattan put together but when it goes from 2.1 million people to under 1 million people how do you keep that big footprint and all the school systems with require state and local taxes real estate how did you keep it all together you didn't we we just watched an unraveling and uh so let's so around what was it h.w bush's administration we're coming into the savings and loan crisis uh we've had 87 stock market crash there's anxiety about derivatives and futures markets and all of that then bill clinton arrives what does he do to what you might call take the lead in the in the evolution of this neoliberal order he he does take the lead and um i write in the book about in some way sees his deregulatory policies uh go further than reagan's or what reagan had achieved in the 1980s and i'll i'll speak about those in a moment but let me mention one other element that's a very important part of the story uh and that relates to the theme of globalization that you raised specifically the collapse of the soviet union in the years 1989 to 1991 and the and the elimination of of communism as a serious political ideology from the world and we can talk about china later we can describe china as many things but i wouldn't describe it today as communist to became something other than than that uh and i i i treat the collapse of the soviet union and communism as important in um in in two ways one it opened a large part of the world to capitalist penetration and capitalist globalization because as long as the soviet union was a force in the world if capitalism was to penetrate communist societies it was going to do it on the terms set by the soviet union or by china in in the same years but in 1989 the soviet union was a much larger influence in the world than china was beyond its own borders uh and so a very substantial part of the world east eastern europe uh the soviet union itself um arab countries where the soviet union had influenced various uh east asian countries african countries as well some presence in latin america suddenly with the elimination of the soviet union the world became global for capitalists in a way that it had not been since prior to the first world war since prior to the first world war since prior to 1914 so globalization has suddenly has a much bigger playing field and many more opportunities for investment profit everything we associate with free market globalization the other thing that matters in in terms of the soviet union's collapse uh is um it eliminated a constraint on industrialists and employers in the united states and i would say in western europe too because as long as the soviet union was a threat uh it had a moderating effect on industrial and employer display of prerogative and privilege because there was a worry in the back of their minds that at some point and in some way workers would be drawn to communism workers would be drawn to a soviet model uh they didn't think the soviet model offered anything but they worried that workers would be seduced by it and if that happened according to the theory of totalitarianism once a communist regime was established you couldn't dislodge it that's what made communism such a feared force in the world now that theory of totalitarianism turned out to be wrong because you could dislodge communists and regimes but the point is it was deeply believed and that put a constraint on the exercise of capitalist prerogatives made industrialist employers more inclined to share their wealth more inclined to share their profits more inclined to share progressive rates of taxation that are not imaginable in america today and this is an example too of how eisenhower was brought on board the new deal back in the 1950s the the tax rate on the highest marginal income group in world war ii goes up to somewhere between 91 and 94 percent eisenhower overhauls the tax code in the uh in the early 50s but he maintains that highest rate in over 90 percent and there it stays it's moderated a little bit by kennedy in the 60s but these rates remain very very high until reagan comes into office and the argument of the book is that in the in in the in an international political economy and geopolitical situation where the soviet union was a real threat capitalists were inclined to moderate their demands and inclined to compromise with labor in ways they otherwise would not have been able to do and once that pressure to compromise is gone this is when we begin to see a different kind of domestic politics a different set of labor relations in the united states this is important because this is a new world that is greeting bill clinton and what i have to say about bill clinton is not just about bill clinton it's about the situation in which he found himself and there's a lot of triumphalism that goes with the victory over the soviet union a sense that any kind of government planning doesn't work that reagan and the neoliberals have been right this is what we're going to do to free the economy from constraints let markets be markets let capitalists be capitalists let supply side economics drive this let investment drive this and perhaps they'll be growing inequality but the world of production and abundance that will be unleashed has got to lift all boats clinton when he comes into office doesn't buy into all of this he's got a quite radical health care plan that he intends to get past he's got some liberals and left liberals in his administration like robert reich joseph stiglitz was in his administration george steffen george stephanopoulos was also uh on on on the left so there are left liberal elements of his administration but the the spectacular loss of health care the spanking he gets in the 1994 midterm elections which is the worst defeat for a sitting american pres democratic presidents i i believe since 1946 losing both houses of congress you got to go all the way back to harry truman's first midterm this becomes sobering he is a political animal with well-developed political instincts and he says how am i going to survive and he says the only way we can survive is by taking the republican neoliberal philosophy of freeing up markets and somehow making it our own doing it better than the republicans will do it and thus precedes a series of pieces of legislation that secure neoliberalism as a political order it has an international component the approval of the world trade organization uh the embrace of the washington consensus internationally domestically he declares the era of big government is over he he reforms welfare in a way that reduces its benefits i spent a lot of time uh on the telecommunications reform bill of 1996 which ends what had been a very robust tradition in america of the government regulating media popular media in the public interest out of the conviction that the popular media was a property so valuable it really belonged to the american people and cannot be the property of private corporations the telecommunications act of 1996 um eliminates government regulation of the new media landscape that is rapidly developing and then he goes on to to deregulate wall street repeals the glass-steagall act in 1999 which has been one of the great achievements of the new deal separating uh commercial banking from investment banking and then as one of his final acts he signs off on the deregul the ensuring that the newly developed derivatives market would not be regulated in any meaningful way so if you add up all these elements of his policy together we have to understand that he is embracing a neoliberal consensus and he is really continuing the reagan revolution this time under democratic party guys and one of the most interesting elements i analyzed in the 1990s is the relationship of newt gingrich and bill clinton we know them to be sworn enemies we know them to hate each other's guts i don't think any two people in politics in the 1990s hated each other more than those two but they worked together very closely on the telecommunications reform bill of 1996. and so clinton i call him the democratic eisenhower and what i mean by that is just that eisenhower had achieved the inversion as just as eisenhower had achieved republican acquiescence to the new deal order clinton is the key figure in achieving democratic acquiescence to the republican neoliberal order of the 1990s that's fascinating i remember i i mentioned i used to work with pete domenici and though it's a little later in time i after he had retired i had a meal with him and he said isn't this a strange world i work with him 84-86 he says it's such a strange world he says i was further left than bill clinton john kerry or barack obama he said what this is really upside down and i remember when uh we'll walk forward a little bit further when i was in detroit around the time of the 2016 election one of the top aides to hillary clinton said she saw no prospect for winning michigan first in the primary against bernie sanders and then against trump and when i asked why she said there are three pillars nafta welfare reform and criminal justice reform and the people of the detroit metropolitan area are not going to offset the out state they'll stay home and uh and that proved to be the case but uh yeah well i still will i still wish he had spent some more time in michigan because she didn't lose by a lot of 13 000 votes and uh how would i say and turn out relative to mitt romney versus obama was down 122 000 in the city of detroit right that's a big portion of the city because they only have about 900 000 people but at any rate and that's that's that's that speaks to by 2016 we are the neoliberal order has fractured and hillary clinton who had been so central to the construction of the neo-liberal order is on the outside part of her journey in the 2016 campaign is coming to to terms with her sudden marginality not in terms of people who know her but suddenly policies that she thought were the way of the world in america for the democratic party are being looked at skeptically and bernie sanders is as much a phenomenon of 2016 as donald trump and in the book i treat them as players of excuse me equivalent significance one blowing up the neo-liberal order from the left and the other trying to blow it up from from from the right let's cut back a little bit right after clinton you've got george w bush we end up having the great financial crisis which is handed off to barack you mentioned race as being a big part the first black president in some ways people were very hopeful but that ended up during his reign a republican house republican senate and then donald trump and i'm not deprecating barack obama at all i'm just saying in this context that you've described as the pillars what what are the things what are the drivers what are the dynamics that you see starting with george w bush and through the end of the obama years well george w bush is a committed neo-liberal he he wants to uh free further free the market from uh from regulation and he he also he he has egalitarian sympathies he doesn't want affirmative action for african americans but he conceives of a homeowner policy which is he imagines as the republican equivalent of affirmative action in other words put a house within reach of every family in the united states he understood that blacks and latinos were way underrepresented in terms of home ownership so he wants to expand home ownership as part of the american dream clinton had wanted to do the same and bush's father had initiated some of this none of this was a bad idea except that it wasn't in any meaningful way funded by federal government support because that would entail a kind of government intervention that by neoliberal standards was considered to be illegitimate and so uh bush goes in another direction encouraging lending agencies um fannie mae and freddie mac to expand lending uh vast expansion of the issuance of subprime mortgages encouraging banks to loan irresponsibly so home ownership goes up but it's not under very very irresponsible financial circumstances which has to do with the degree to which george w bush was wedded to market solutions to social and political problems and this is going to lead to the housing crisis and bubble of 2006 2007 and that's going to become a critical element in provoking the financial crash of 2008 because by 2008 banks across the world were all involved in reckless real estate speculation and the issuing of all kinds of subprime mortgages i also spent a lot of time on on bush in iraq and here i focused less on the invasion of iraq which i think was a terribly ill-conceived measure one of the worst foreign policy mistakes in american history but i focus not on that as much as reconstruction where neoliberal principles are once again being applied the united states had good models for reconstructing countries torn apart part by war namely germany and japan it's got plenty of plans for doing this in state department drawers they all remain in state department drawers the responsibility is handed to donald rumsfeld the department of defense to to reconstruct iraq and both rumsfeld and and bush don't really want to be bothered they say the private sector can do this better than government can so we're going to hand this over to private sector we're going to hand this over to private corporations uh paul bremer the man brought in to oversee this reconstruction uh was not well suited for the job but insofar as he had any skills at all he had acquired them being involved in what happened in eastern europe after the fall of communism and there was shock therapy introduced free market capitalism of the stiffest short stiffest sort as quickly as possible tough medicine will almost kill the patient but will also cure them of this terrible menacing weakness for state involvement in the economy and the privatization of reconstruction in iraq uh deepened the catastrophe of iraq and made bush um a terribly unpopular president and the combination of his mishandling of iraq and then the mishandling of the of housing expansion produced the crisis of 2008 all in a world in which neo-liberal principles are not being seriously challenged by anybody get the government out of the way let private market forces private institutions private corporations do their work now i was one of those people who thought that barack obama obama could be a transformational president and this is how i wrote about him in a previous book of mine the new edition of american crucible published in 2017 which has a new chapter on obama and i call i i call i call the chapter the era of obama uh i like you probably didn't expect to see an african-american president elected in my lifetime and i thought there was something wondrous about this that the united states perhaps was really making progress on one of its most serious issues which is the issue of racial inequality and racial division that made it difficult for me to deal with obama in the context of this book because i know as i was writing this book i did not see him as a transformational president and this may accord with something you were suggesting earlier i saw him as not as a transformational president but really the last of the neoliberal presidents uh the last person who wants to help the economy recover by neoliberal principles and how do you do that well one of the things he does in the as he comes into office which i grant was a terrifying time for anyone to come into office because the global financial system was at the edge of catastrophe he brings he brings back bob rubin's team the key set of advisers not bob rubin himself but his his his key people like larry's yes he brings them back and they are the architects of his economic recovery plan and it's an economic recovery plan that says the first our first obligations is to render the banks healthy that is far more important than saving people's homes saving their mortgages saving some of ordinary people's private wealth and so there's a huge imbalance in his in the policies of his first year between money and revenues expended on saving the banks and what was not expended in terms of helping people keep their homes and stimulating the economy to the point where employment could recover with the same pace as the stock market was recovering and this divorce between the fortunes of wall street and the fortunes of main street are noticed by americans of all sorts white black latino they understand that ordinary people are being asked to sacrifice and the ways in which economic elites who had done so much to bring on this crisis were not going to be asked to sacrifice and it's very striking in this regard that no banker was hauled before congress to testify no one was made to run the gauntlet of congressional hearings no one went to jail for any of the misdeeds and there were serious misdeeds leading up to the great recession and i think this hurts um obama over the long term that he's associated with a political order that had done a lot of injustice to ordinary people white and black and this is going to become a huge problem for him now having said that it also needs to be said that he had a burden as an african-american president that a white president of that moment would not have had to deal with uh and uh and he was constrained and he felt constrained in terms of what he could do he understood that the expectations for him were higher than they would have been for a white president that the judgment of him being a failure would have come quicker and and there was a backlash against him which began very quickly after the exuberance that was so manifest during the days and months following his election a backlash among many white americans saying you know there really shouldn't be a black president in the white house so this has to be said uh and and it has to be understood that obama was operating under constraints uh that a white president would not have been operating under because the heritage of race and racial hatred and racial equality still hungover and still today hanzo hangs over very seriously the american republic you know now and uh recently uh david sirota journalists made a podcast series that just won i think the award yesterday for the best podcast of the year for last year is called meltdown and it was about exactly what you just described the financial crisis and who got paid and who didn't and uh but the meltdown in his title is not the meltdown of the financial markets it's the meltdown of trust and faith in expertise and governance as a result of the obama-led bailouts and by the way to give obama a little more relief much of the design of tarp and financial bailouts before the financial reform in dodd-frank were already baked in the cake by the bush administration and so you know former goldman sachs treasury secretary paulson and a lot of their uh which might call taking the hand off when things had already been designed and implemented to a great degree which didn't give them as much discretion at the margin to build their own plan but when tim geithner was talking about filming the runways joe stiglitz was standing up saying the polluters are getting paid what about the rest and with globalization with white people in the rust build suffering as well as black people they're starting to say now we got a black president what's this elitism taking care of the guys who made the mess as people in detroit said to me our real estate crashed we never had a bubble and then it went down and it went down to the red i mean like four bedroom houses were selling for five thousand dollars people just wanted to get out so i can see uh it was a very pivotal point in the deterioration of of trust and confidence but it's not something you could put all on barack obama's shoulders it's much more systematically in motion and as you said the hair triggered negativity towards him from the echoes of racism were are very profound i agree with that and it also needs to be said that there was no organized left in american politics when obama was elected president as there would be by 2016 with bernie sanders elizabeth warren and if there had been an occupy wall street left with elizabeth with national leadership elizabeth warren and bernie sanders present in 2008 they are they they're going to be a product of the crisis of 2008 2009 and the loss of faith and existing political leadership that you are referring to but they were not present in any significant form at that time if obama had a left uh uh some thunder on the left he would have been able to leverage a different kind of politics perhaps in 2009 and 2010. when the thunder came the political thunder the political thunder then came first from the right not from the left it's going to come from the left but this speaks to the deeper disorganization of the left in american life and the hangover of the soviet union's collapse in 1989 to 91 but if obama had that kind of left present in 2008 of the sort that biden had in 2020 and of course obama had what biden did not which is support in both houses of congress for for legislation he might have been able to chart a different course and that's also a way of saying one cannot put all this on an individual leader they have to work with what's there and one thing that wasn't there was a left able to flex its muscles in american politics it just didn't exist in 2008 and 2009 so now we've got donald trump in the white house and i went on election night i was in detroit and i voted for hillary clinton along with one other person all of these are people i went to high school with they all had md jd mba or cpa these were professional caucasian people and they all with one exception and myself had voted for trump and i i can say to you foreshadow when by when joe biden got elected that same group all they all called me and it was unanimous for biden but what i said to him to the night that night was trump is a symptom and trump has ignited things by on the stage in the republican primaries and after saying this system is rigged we gotta change it and nobody was saying that in either party as vividly but i predicted that night he's gonna seduce you and abandon you and what's fascinating to me is in light of this dynamic that you're writing about and all the underpinning the structural evolution what did trump do where did he make mistakes and then we'll go to where where is bob joe biden able to find running room and what should he do now that he's our president in the context of all these disturbances well i don't think trump expected to get elected i think it was a a media ploy i think he wanted to further burnish his brand um and then he um he caught fire i we shouldn't uh we shouldn't underestimate his uh a certain kind of tactical political brilliance in him decades being a media star and entertainer he he he he learned a lot but he also was a um he was a man for the moment and um he had certain beliefs there are many beliefs he doesn't take very seriously but he had certain beliefs that had been with him really since the 1980s he he didn't believe in um free trade he had always since the 80s he had been protectionist he didn't believe in the perfection of markets he had manipulated so many markets and and so many contractual relations on his own he knew markets were bringing together tricksters of one sword or another and you you triumphed in a market not by fair exchange but by imposing your will and suing the hell out of your opponents until they couldn't bear the cost of attorneys anymore uh so he so but he he had no fondness for um for markets and was not seduced by the neoliberal promise of market perfection and that allowed him to speak frankly about the problems of globalization and the unequal cost it was imposing uh on people and also he took a very strong stand against uh one of the positive elements of neoliberalism which we haven't talked about which is it's cosmopolitanism if you are glorifying a world of free trade free movement of people free movement of capital free movement of information you're also probably going to celebrate a kind of cultural hybridity and a and a cultural diversity you're going to if you believe all those things you're going to want to encounter the world and and encounter other cultures and take a certain delight in other people's cultures in america during the neoliberal age became far more diverse than it had been in the era of the new deal order when immigration in that period was sharply restricted uh and and he did not like cosmopolitan america he he he hated it he he he loathed it and he was able to turn his critique of globalization into a critique of uh minorities getting ahead in american life and taking the birthright away from the true americans who were who were white had been in this country a long period of time whose ancestors were european of one sort or another so he becomes uh one of one of the forms that anti-globalization takes uh is a privileging of one's own ethnos or the ethnos associated with one's own nation uh and the criticism of obama that you mentioned earlier he's part of the elite what's worse than a white elite from the perspective of many poor white americans is a cosmopolitan elite uh that obama and hillary clinton and other people were thought to embody uh and uh trump uh becomes quite vicious in his tax and his attacks on cosmopolitan america and this unfortunately resonates pretty deeply with the white america that feels excluded from the benefits of globalization and even though trump in some respects is is promising to constrain corporations in terms of what they can do he's much more comfortable building a wall against rapist mexicans than he is about curtailing the power of corporations in american life because he was transparently about enriching himself and his own fortune and and so the turn that he gave to this anti-globalization view was to privilege white americans of yesteryear to restore america to its past greatness which meant isolating america from the contamination of the world and isolating true americans from the contamination of its own minorities and he unleashed all this toxic poison into the american bloodstream we now know that i think racism never really goes away you can lock it up and keep it in the closet and keep it out of major discourse in american life but trump had no interest in doing that he was interested in provoking the master of the provocation throwing out one provocation after another and then when he found a provocation that would really hit home he doubled down on it without any regard for what effect that provocation would have on the future of american democracy and the future of the american republic and so he was able to identify racism as one of these provocations and um embraced that point of view endlessly and deeply and uh enabled a much more corrosive and much more racist public life in america from which we're still suffering but in the process brought a lot of people on board and a lot of a lot of these people and i'd be interested in hearing you know more about your your friends in this regard or that i don't know if they're your friends but people you went to high school with they exactly what exactly what was it that drew them to trump certainly his his declaration that the system was rigged hit home has promised that he was going to drain the swamp hit home but part of his appeal was the rawness of his appeal this was a man who would do anything say anything and i think a lot of people who voted for him he said understood that he was going to break a lot of things in american life but that ultimately some system in america some heritage of constitutional rules some affection for the declaration of independence of the constitution would would triumph in the end that somehow trump would be domesticated he would break things and then the good people and maybe the people you were talking about earlier would come in and clean things up and restore america to what it really needed to be and what we found is that once you unleash this wrecking crew there really was no stopping them and we are suffering deeply the ill effects of that wrecking today well my friends at the outset were saying and truthfully i had come to the east coast both for college graduate school and professional and that my children my two older children now in their 30s had thrived their children had stayed in michigan and even in college and this state you know the public universities even university of michigan were very diminished in their funding etc and so they didn't see without somebody shaking things up that their children actually were on a runway of opportunity and what they felt was that trump had come right after his nomination in cleveland to the detroit economics club and he didn't quote pander to donors and corporate leaders he said you guys are the example of losing jobs in michigan moving your plants to mexico etc and even though they were all in the professional class etc they felt like somebody had acknowledged the devastation that in this case the state of michigan in the region had experienced without any adjustment assistance without any acknowledgement and they were and like i mentioned to you earlier the great financial crisis was like a blow to them because they were already down and nothing came there the bankruptcy of the city of detroit all kinds of people who had worked 45 years as municipal workers had their health care cut off and their pensions cut down to twelve thousand dollars a year and they were outraged by all of that and and so i think it's it's in that context that they were in despair but when i think part of what part of what trump hit home on was that how much your life chances were determined whether you were in the districts of globalization benefiting from this neoliberal global economy or or whether you were not and that's something he understood very well and he played um very consistently to those who he felt had been left left out and left behind and and and so and i i don't i do understand that sentiment on the part of the people well you've got people like david brooks who was writing books like bobo's in paradise you know bohemian bourgeoisie in paradise and he was talking about elite universities where people got advanced degrees to join i'll call it the one percent and be their marketing men to the detriment of the republic and we're supposed to respect them as though because they went up the ladder to you know the ivy leagues or stanford or university of chicago or whatever that somehow this was they made them wiser and a lot of my friends said it didn't make you all wiser it made you safer because you were accepted and trusted by the elite for not being controversial or disrupting what was happening and david brooks was writing about this well before trump and uh so i think there is a there's an element of what is education and and is it credentializing or is it educating is the famous writer jane jacobs wrote about in her last book called dark age ahead uh but but i think like you said it became unleashed it got so wild and so out of control and i think in that disorientation it created the opportunity for what call a gentle good soul kind of guy like joe biden who kind of you know he'd walk up to a blue collar worker and pat him on the shoulder i worked in the senate for six years he had a common man kind of aura about him that allowed him to create what you might call through his authentic behavior a sense of healing of those disturbances that you arrived at but now it's installs feeling like the boat is swamped yes tremendous empathy and i think uh also the pandemic which we haven't mentioned suited his skills um very well because um he is someone who had suffered immense personal tragedy in his life and in terms of the loss of two children and the loss of his first wife um and he he dealt with that by becoming not emotionally shut off but emotionally available and empathetic and his ability to connect with the american people um it was really impressive in a moment of distress in a moment when trump was in complete denial about the ravages of of the pandemic and that certainly helped biden to the white house for the sake of brevity let me say about biden that i think he understood that a political order had come apart that he could simply not duplicate obama or clinton he could even though he admired those men immensely he had to design a different kind of democratic politics more like the new deal than and the new deal order than the neoliberal order of the 1990s or the obama obama administration and he had i think quite interesting plans and i was uh impressed by them and and wrote about this in the first six months and also he had a left that he was in dialogue with and the democratic party has prospered the most when the center and left of the democratic party have been in serious dialogue with each other is true of the 1960s and true of the 1930s so um i had high hopes for him but really he's you it's hard to be a transformational president and institute a new political order when you don't really have a majority in the senate and in fact he he has not and uh it would have been a very different biden presidency uh with the real majority and um the lack of a majority has thwarted most of those ambitions and the pandemic continues to be a difficult uh beast to master and the ukraine crisis which i think the biden administration is handling well but he's is he's stalled on the home front and the domestic front and it's not because he's too old or he's not because he's demented but because he doesn't have the political majority he needs to implement the kind of vision he wants for america so i think america is in for an extended period of disorder before a new political order really begins to implant itself and that political order may come from the progressive left or it may come from the authoritarian right and i can't tell you at this point where our future lies but that is the choice that americans are going to have to make

Channel: New Economic Thinking

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Id: vW2Tz4Lg_nc

Length: 61min 41sec (3701 seconds)

Published: Mon Jun 13 2022