By Kumar David –
Trump scores big on economic recovery and Supreme Court confirmation: Republicans defeat American democracy
“A calculated, orchestrated hit, fuelled by pent-up anger about President Trump and the 2016 election, fear stoked about my judicial record, revenge on behalf of the Clintons, and millions of dollars from outside left-wing opposition groups”. Judge Kavanaugh; Senate testimony
“With unemployment down and economic growth up, Populists’ argue warnings by elites and liberals of dangers of Populist economics are baloney”. Harold James, Princeton University.
The previous week was one of the best for Donald Trump and the Republican Party (GOP or Grand Old Party); a chilly wind is blowing across America. With the addition of Kavanaugh to its highest level Trump won but the judiciary lost its legitimacy and the foundation of its authority. The ethos of checks-and-balances between the three branches of state – executive, legislative and judicial – that underpin democracy has come unstuck. As per the quote above Kavanaugh has shown himself a partisan and whatever the truth of the rape allegations he is unfit sit on the Court. Retired Justice John Paul Steven was so outraged that in an unprecedented comment on the appointment of a new justice he remarked “Kavanaughs’s emotional angry testimony disqualifies him from being able to serve effectively on the Court”.
There have been massive demographic and generational shifts in the US which have made the body politic sensitive to liberal, environmental and socially permissive attitudes. If for example 60% of Millennials were to vote they would decide Presidential and Congressional choices. Conservatives, religious traditionalists, social reactionaries and big-money, always powerful in America have seen their control decline. A strategy had to be found to limit democratic clout and popular intervention in political spaces. GOP control of both Houses of Congress in unlikely; the freak in the White House is a response to having gone so far as to elect a black man to the presidency so early in historical time. Hence the last desperate stand of moneyed conservatism was to fix the Supreme Court (SC) for a generation. Temporarily the goal has been achieved.
It is of course possible that Chief Justice Roberts, the only occasional swing vote in the Court may take alarm if public outpouring of alarm is large. He may find reason, from time to time and on issues that outrage the public to swing to a less rightist-reactionary position and use his vote to contain indignation which may do the Court’s credibility harm. This would be only a cosmetic fix. The way out is to amend the US Constitution and end lifetime appointment of Supreme Court justices; a 10 year term and retirement at the age of 70 or 75 is quite good enough.
What will be the public response to an SC that it no longer trusts? Protests by women’s and student groups may reach the streets and if they do it would be the first-time since the 1960s. Protests may dovetail into the ongoing election campaign and are likely to receive a further flip if the GOP is defeated. If Republicans lose both the House and the Senate (it seems certain Democrats will win the House) on November 6, politics will turn ugly and America will drift into uncharted seas. Populism would have come full circle and it would be open season in US politics. The prologue to the coming battles will be multiplied by the aggression of Trump and his associates who are determined to trim the scope of American liberal democracy as practised in the decades since the victory of the Civil Rights movement. Their confidence stems from a pronounced upswing in the economy.
The stamina of populism
Harold James, Professor of History and International Affairs at Princeton says in Road RunnerPopulism: “Populist Economics has rarely had it so good. The US economy is roaring, the stock market is soaring, and the Trump administration’s protectionism has had negligible impact on growth. His dictum that “trade wars are good” is catching on and confounding his critics. Critics still insist tariffs are undesirable but now concede such measures could be useful to stymie China’s rise”. Growth in Q2 2018 was 4.2%, the highest since Q3 of 2014. Unemployment is down to 3.9%, the lowest in 49 years. Trade made a big contribution to growth due to an increase in the export of soybean and other goods before tariffs take full effect.
However the Federal Reserve, the Congressional Budget Office and even the White House anticipate that growth will settle down to an unspectacular 2% by 2020 and beyond. It is likely that US interest rates will go up to 4-5% to contain possible inflation which if it get started is hard to control; then the 10-year treasury yield rise to over 4-5%. If this happens, market buffs will tell you alarms bells will go for fear of a fall in asset prices and leveraging of stock markets unwinding. This is how the much feared second recession could commence.
There is something more important that James says in Road Runner Populism in a blog called Project Syndicate. He draws a provocative parallel between the rise of Trump Populism and the Nazis.
(A road-runner is slender fast running bird; I don’t understand what parallel James sees!)
In 1939, James says, Cambridge economist Claude Guillebaud argued in The Economic Recovery of Germany that the German economy was robust and would not collapse in the event of war. He was vilified. The Economist, then bastion of liberalism (and in a Pinochet-Regan-Thatcher era mouthpiece of neo-liberalism), James says: Pilloried him in an unprecedented two-page review claiming that even chief Nazi propagandist Joseph Goebbels could not have improved on it. The Editors lamented this was emblematic of a “dangerous tendency to play the Nazis’ game”. The point that James is using Guillebaud to make is that liberals see the ‘evil’ in Trump and alt-right populism but are hopelessly out of depth in understanding its political-economic roots and likely durability. This was a mistake that Trotsky did not make when he tore his hair out warning Europe and the Left that if the fascists took power they would pulverise every independent organisational form (political, social, religious and learned society) and establish a new dark age.
No one including James suggests that Trumps obscene government is fascist, but how long the effects of the changes he has wrought will survive needs reflection. Although the US economy is powering ahead Market Analysts (commentators on business TV and press) call the surge in US equity prices giddy and speak of an “ominous outlook for the global economy”. There is escalating gloom that Sino-US spat will worsen. They are apprehensive that Chinese state-owned companies are gearing up to challenge US dominance in computing and AI. The IMF warned last week “Investors are underestimating the risk of a financial shock” and predicts lower global growth in 2019.
Finance-capital and alt-right neo-populism
I have a somewhat different take on some of this. Endurance of fascism and global depression was just what the world went through in the 1930s. Likewise a scenario of a global slump coexisting with neo-populist, mainly alt-right political instability, is possible. The Trump Base is fired up not only by reactionary and racist sentiments but also by a deep sense of alienation, of not being listened to by the Washington elite and by inequality of wealth and income. People no longer have a stake in the system. Trump is a businessman from the billionaire class but the unwavering loyalty of the Base proves that sometimes you can fool all the people all the time. Trump is praying that agitated #MeToo hating white males will outnumber distressed women at the elections.
Finance-capital is the name of the instrument that manages the new financial order on behalf of the wealthiest classes. The organs of wealth management are banks, investment banks, aggregators and fund placement vehicles that bring together colossal amounts of money, bonds, stocks, mortgages, leveraged holdings and derivatives that go by an alphabet soup of names. The modern capitalist game is played in financial markets not production enterprises. I recall hearing on Bloomberg that 80% of profit in America is generated in the financial “industry”. The other side of this same coin is global indebtedness; global debt is 50% higher than it was 10 years ago. Asset-price inflation and debt servicing cost tens of billions and cut into jobs, education, welfare and the things the Base, along with the rest of the populace wants.
Ideologically, alt-right anger and the expansion of finance-capital are compatible. It’s not like an exploitative employer at whose factory gates famished workers congregate demanding more wages. Bankers don’t send out cops and thugs to beat up depositors. The class struggle happens elsewhere, it is sublimated into abstract political space. European fascists of the inter-war years did coexist happily with not yet globally dominant European and American finance-capital. In modern times this has gone further. Therefore the crunch will come financial-capital suffers a fit; 2008 was a foretaste of what is possible. To that extent Guillebaud and James are right; the splintering of alt-right neo-populism will not come because of liberals snivelling about the hollowing out of democracy; it will be heralded by big events in the financialsphere. The storm in the teacup murder of Jamal Kashoggi in the Saudi Consulate in Istanbul will subside and come to nothing; the US will ensure that Turkey sweeps the scandal under the carpet. Hence whatever happens on November 6 in America is a bit of a side show. The real McCoy is still to come.
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