Profound Journalistic Ignorance of Climate Change Legislation

It’s not like this is a new issue. By now, you’d think that journalists would have figured out what’s what in the realm of forestalling climate change, but you’d be wrong. Just take a look at today’s long writeup in the New York Times.

After a quote from Lindsay Graham, a senator from South Carolina, pronouncing the death of cap-and-trade, the coauthors write

Mr. Graham’s opinion matters because he has been the only Republican willing to work with Democratic senators on some form of climate change legislation.

But towards the end of the piece we read that

Two senators, Maria Cantwell of Washington, a Democrat, and Susan Collins of Maine, a Republican, have proposed a system known as “cap and dividend” under which power plants, steel mills, refineries and other major carbon emitters would have to pay for permits to pollute, with all of the money being rebated to consumers to cover the higher costs of energy and manufactured goods.

So: Graham is the only Republican willing to collaborate, but Collins has also sponsored a carbon-capping bill (one that would allow trading too).

Even worse—in fact, much worse—the article completely mischaracterizes Cantwell-Collins. It does not, unlike Kerry-Boxer, require industry-by-industry emission permits. Instead, it requires permits for introducing fossil fuels into the economy, whether by extraction or importation. It goes after carbon from the top of the food chain, making its cap comprehensive, unlike approaches that try to determine which uses of fuels will be regulated and by how much. This also neatly sidesteps the political morass that results from inviting each industry to lobby for its own dispensations. Auctioning fossil fuel permits and rebating the proceeds to the public, as Cantwell-Collins proposes, is not an evasion of environmental responsibility, but a rational attempt to make the inevitable energy price increases economically and politically palatable.

The real story is not the death of climate change policy, but the collapse of one particular initiative that was largely smoke and mirrors, fatally compromised by payoffs to any business alliance that stuck out its hand. The bad news is good news, unless all we know is what we read in the papers, feel discouraged and give up.

A Woody Allen Moment

You may remember the scene from “Take the Money and Run” (if you’re as old as I am). Over and over, as he was growing up, bullies would pull Woody’s glasses from his face, throw them on the ground and smash them. Now, as an adult, he is cornered by the police after a failed heist. In a panic, he pulls his glasses off, throws them on the ground and smashes them. “See,” he says, “I did it myself.”

Fast forward to Obama post-Massachusetts, offering to shrink the beast all on his own.

Time to switch role models.

The Other Shoe

In broad outlines, the story is very simple. In bailing out the financial system without taking possession of more than a small equity position, and then in engineering a stimulus that was deliberately inefficient—devoting a third of its cost to tax cuts at a time of massive deleveraging—the Bush and Obama administrations squandered hundreds of billions of dollars in public resources. Now, to prove his fiscal responsibility, Obama wants to cut spending on core functions of government, like public health, the environment and national infrastructure.

You can blame him for leaving the bloated Pentagon budget off the table, or for prematurely panicking over fiscal deficits. Both criticisms are entirely justified. But in a larger sense, we condemned ourselves to a generation of torturous public finance in that spasm of terrible policy. We will be paying for it, one way or another, for years to come.

Obama is not a Wimp

Barack Obama gave the appearance of meekly appealing for bipartisanship, only to get kicked in his private parts. Yet, look how courageously he is willing to take on the liberals and his party. Along with Larry Summers and Rahm Emanuel, he can really kick butt. Locale he has taken on the teachers union by ramping up Bush's No Child Left Behind. Watch him cut back entitlements for those people without enough initiative to run their own hedge funds.

He may down to the Israelis, but look how decisive he is in Afghanistan, willing to fight an unwinnable war. Not even Joe Lieberman can top him.

And what about his decisive actions against the fat cats? He didn't kick them when they were down. A would not real hero to behave that way. No, he gave them billions of dollars, but now he's decided to take them on, by creating regulations so tough that the fat cats will have to spend thousands of dollars to figure out how to circumvent them.

Barack Obama, change you can believe in.

This Ford’s in Reverse

How should the Democrats respond to their collapse in Massachusetts? Harold Ford, who wants the Democratic nomination for Senate in New York, says swing to the right: cut taxes, lower our sites on health care, fast-track more foreign workers in high-tech fields (which companies want in order to undercut wages they see as “too high”), and cut government spending.

In other words, be like Republicans, only more civilized.

If voters voted on ideology this would make sense. With the Republicans racing to the right, the median voters ought to be there for the taking. Unfortunately, few people actually vote on ideology. Political preferences are based primarily on identity (who we think are “us” as against “them”), secondarily on narrative. If Democrats reposition themselves as responsible conservatives, it just means that, when they are in power, their policies will be more conservative.

Obama’s Gesture on Student Loans

According to this morning’s New York Times, in his state of the union address Obama will call for a cap on student loan repayments. The formula will set a maximum of 10% of post-graduation income above a living allowance. Money not collected due to the cap will be replaced from the general budget.

Is this better than nothing? Yes. It removes a bit of the pressure on grads who face a harsh job market or who want to explore less pecuniary pathways in life. It also encourages students to borrow more for their education, which is a good idea if it allows them to cut back on the number of hours they try to work as they go to school, study, raise kids and cope with life’s other challenges. The cost of tuition has gone up relentlessly, and students have responded by trying to earn more, at the expense of their ability to graduate in a reasonable amount of time and remain sane in the process.

But why is this proposal so much less than it should be? For decades education policy analysts have been calling for putting student loan repayment on an ability to pay basis. Repayment should be set as a fixed percentage of income, with a proportionality between the amount of the loan taken out and the number of years of repayment. Some, who make a bundle, would end up paying more, others less. The system would be progressive and predictable. It would also pay for itself, which in principle frees up more public money for reducing tuition in the first place. (Obama would have lower-income students paying a little less, but no one paying more.)

There is a larger debate that ought to be held around using tuition to pay for the costs of public education. Outside the US this is much less common. One reason is that societies want to encourage more students to continue to a higher level, and studying is already challenging without adding financial pressure to the pot. Another is that they want to separate curricular decision-making in higher education from student preference, at least to some extent. If a college depends primarily on tuition to make ends meet, it has to give greater weight to student demand when deciding what courses to offer, which programs to expand or eliminate, what kind of teaching to reward, and so on. Obviously there are arguments on both sides of this debate, but the US has swung very far in the direction of demand-driven revenues. My college, which is nominally public, now gets the majority of its funding from students, not the state legislature.

The Obama proposal is small, small, small. I guess we are entering Phase II of his presidency, where he shifts to Clintonoid minimalism, a fine mist of minute policy droplets that bathes the public with good PR even if no one actually gets wet.

Guard Labor

My article on Guard Labor is in the new issue of Dollars and Sense. It is extracted from my forthcoming book, The Invisible Handcuffs.

http://www.dollarsandsense.org/archives/2010/0110toc.html

The article begins:

Guards are everywhere in a capitalist economy. A few are dressed up in uniforms, so they are easy to spot. But most do not look like guards at all. Some sit in comfortable offices; others work on assembly lines in factories. James O’Connor, a prolific sociologist from UC Santa Cruz, describes one familiar set of guards whom we do not usually think of as guards:

Consider the labor of the ticket seller at a movie house. The seller’s task is merely to transfer the right to sit in the theater to the movie-goer in exchange for the price of a ticket. But it may not be immediately obvious that it is not the lack of a ticket that keeps you out of the theater ... The ticket is actually torn up and discarded by a husky young man who stands between the box office and the seat that I want.

These guards are a central feature of capitalism. Capitalists depend upon guard labor to protect their commodities, including the goods and premises they own, but especially the labor-power in their employ. Capitalism’s reliance on guard labor deforms the entire productive process, not only wasting labor, but also snuffing out badly needed creativity.

Fed Finally Dumps Eurojunk

Mark Thoma http://economistsview.typepad.com/economistsview/2010/01/links-for-2010-01-21.html links to a story from the WSJ entitled "Fed to End Overseas Dollar 'Swaps'-WSJ.com. It reports that as of Feb. 1 the Fed will have unloaded all of the nearly $500 billion in foreign currencies, mostly euros, that it obtained through swaps in its massive increase in its balance sheet in Fall 2008. That reportedly was used to hold all kinds of horrendous eurojunk coming out of the AIG collapse. It was the worst stuff on the balance sheet, most probably. Now it is about to be gone.

Of course they have replaced it with US mortgage backed securities that do not look so hot, although they are promising to stop accumulating those in March. If that does not work out, could trigger the dreaded second dip.

The Hypocrisy of Corporate Personhood

"Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like." -- often misquoted as "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?"

Edward Thurlow, 1st Baron Thurlow. 1731-1806. Lord Chancellor of England, 1778-1783, member of Parliament at end of eighteenth century

In light of the Supreme Court's outrageous decision about campaign finance, I would suggest a move to treat corporations as persons -- making them liable to imprisonment and even the death penalty, when they cause loss of life.

But no, the pro-corporate types invoke a brilliant act of legerdemain, making the death penalty for corporations unthinkable.  As I noted in Manufacturing Discontent:

"during the height of the scandal regarding Enron's multibillion dollar frauds, a "Wall Street Journal opinion piece entitled, "Corporations Aren't Criminals," noted:  "Under the common law, a corporation could not be guilty of a crime because it could not possess mens rea, a guilty mind" (Baker 2002).  Sadly, the author was correct -- at least in so far as the current courts are concerned. In the eyes of some judges, the law goes even further than ruling that corporation that violate the law lack a guilty mind.  They insist that corporate managers, who should possess a mens rea, have an ethical responsibility to violate the law when doing so will prove profitable for stockholders.  For example, Frank H. Easterbrook and Daniel R. Fischel, the former a federal judge as well as a senior lecturer at the University of Chicago School of Law, wrote:

It is not true, however, that there is a legal duty to enforce every legal right ....  Managers do not have an ethical duty to obey regulatory laws just because those laws exist.  They must determine the importance of these laws.  The penalties Congress names for disobedience are a measure of how much it wants firms to sacrifice in order to adhere to the rules:  the idea of optimal sanctions is based on the supposition that managers not only may, but also should violate the rules when it is profitable to do so. [Easterbrook and Fischel 1982, pp. 1171 and 1177 n]"

Haiti Everywhere

"Much was said this night against the parliament. I said that, as it seemed to be agreed that all Members of Parliament became corrupted, letter to chuse men already bad, and so save good."

James Boswell

In my book, The Pathology of the US Economy, I wrote about how I was witnessing the United States following when I called "The Haitian Road to Development." What I meant was an economic strategy based on pushing wages down to make the economy productive.

Over the last two days, I have been thinking about the Haitian Road to Development more broadly. We lost our power. I don't mean political power; I mean electricity that powers our house. Without electricity, the computer was dead. Reading was possible only during particular hours. We were dependent upon a corporation that has been attempting to maximize profits by cutting back on maintenance.

Yesterday I had to ride my bike about 12 miles in a heavy rainstorm with winds up to 60 miles an hour. The rains stung my face. At times, I had to dismount and walk the bicycle to avoid getting pushed into oncoming cars.


Finding myself at the mercy of the elements, for brief moments, I would think about my minor difficulties and inconveniences for brief moments, then imagining how conditions in Haiti were infinitely worse. Everybody who knows anything about Haiti realizes the way that outside forces (largely the United States) have crippled the public sphere. Poor people have no choice but to denude hillsides for charcoal and build shanties that are vulnerable to the inevitable mudslides.

To much of the outside world (well, maybe just United States), the cause of the miserable conditions in Haiti are obvious: the voodoo religion, insufficient markets, ….

In many ways, I was thinking about how the US was coming to resemble Haiti. Of course, the decline in this country is of our own making, wasting our fortunes on wars that have no possibility of a long-term positive outcome -- as if any wars do. But the mudslides in California would be familiar to Haitians. The destroyed houses are more affluent. The missing trees were not chopped down by poor people needing fuel. The inhabitants are not left without water or food. Even so, I suspect that Haitians might have more understanding of the destruction than we do.

The Haitian state is incapable of protecting the people, but it weakness is not self-inflicted. In the prologue to The Confiscation of American Prosperity, I wrote "since the election of Franklin Roosevelt in 1932, every Democratic administration with the exception of Lyndon Johnson’s has been more conservative—often far more conservative—than the previous Democratic administration. Similarly, every elected Republican administration, with the single exception of George Herbert Walker Bush’s, has been more conservative than the previous Republican administration." Obama has done nothing to reverse this destructive trend.

The US state's idea of protecting people is to launch wars elsewhere and collect dossiers on people within the country. In the face of Hurricane Katrina or other disasters, it proves itself totally incompetent. The state is even less capable in protecting the people who fall between the cracks -- a child who cannot study because of a toothache. An elderly person who requires care and home -- care which the state of California keeps restricting. Instead, the state takes on the responsibility of caring for more than 2 million prisoners.

In effect, the state is fast ceding power to the corporate world, which threatens to go much further in Haitianizing our society.

Pass And Sign The Senate Health Care Bill As Is

I have to say it because the Senate health care bill is terribly flawed and very far from what so many of us were hoping for. However, we must face the hard reality in light of the election results in Massachusetts. There is simply no way anybody is going to get the Senate to pass any variation on it once Scott Brown is seated, unless they can actually change the rules to do reconciliation with 50 votes without mucking about at it for too long. The only possible bill likely to be actually signed into law at this point is the one passed with such enormous effort by the Senate in December. If the House refuses we will not see another serious effort for many years. The bill does little, but it is better than nothing, increasing coverage to two thirds of the uninsured and forbidding insurance companies from refusing people over preexisting conditions or arbitrarily dumping them.

Basically there are six systems of health care out there: 1) more or less pure laissez faire, formerly seen in the US but now no high income countries, although some very poor countries; 2) the US system of mixed public private with for-profit health insurance companies and no universal coverage; 3) universal coverage through private but non-profit insurance companies, seen in Switzerland and the Netherlands; 4) mixed private public system with universal coverage, non-profit private insurance companies, and a public option, see Germany and top-rated on health-care-by-the-WHO France; 5) a single payer system by government with universal coverage, with health care workers still privately (mostly self) employed, with Canada the leading example, and 6) full socialized medicine with health care workers employees of the state, see the UK and the former Soviet Union. There has been talk in the US of single payer, and many in Congress wanted a public option (although nobody was willing to push to change our badly behaved for-profit health insurers to non-profit), but in the end the Senate bill does not move us off System 2, merely extends and improves it some. Still, it is better than nothing, and killing it with no alternative will not help Dems politically this fall in the elections.

Obama And The Generals On Iraq

The inimitable Juan Cole (http://www.juancole.com) is at it again, this time documenting a very poorly reported on showdown last year between the newly installed President Obama and the top generals dealing with Iraq, Petraeus and Odierno, along with SecDef Gates. They wanted him to alter the Status of Forces Agreement that Bush had made with the Iraqi government to withdraw US troops in 16 months, with independent patrols to cease last June. The generals wanted to the patrols to continue beyond June by relabeling them, something that Cole reports would have infuriated the Iraqi government. As it was, Obama stood firm with his campaign promise to stick with the 16 month timetable, and active troop patrols ceased last June as scheduled, despite the pressure from Gates and the generals. Apparently the last combat US Marines will hand over control of long-violent al-Anbar Province this coming Saturday and depart completely from Iraq shortly thereafter, and there were no combat US deaths in December. Of course Iraq continues to have many problems, but Obama has succeeded in effectively ending an active US war role there, although few realize what was involved or are noticing it now.

The currency quarrel with China is a dangerous distraction

In an article in the Washington Post last November entitled ‘The currency quarrel’ [1] there were a number of assertions made about the economic relationship between the US and China that are questionable, to say the least.

The opening sentence begins by pointing out that “it is a cliche that the United States has no more important bilateral relationship than that with China.” Is that true? Steve Dunaway, adjunct senior fellow for international economics at the Council for Foreign Relations says:

“Only roughly 15 percent of U.S. imports come from China. Moreover, all of the basic types of manufactured consumer goods that China exports to the United States (clothing, textiles, footwear, toys, small appliances, etc.) can be imported from other countries or could be produced domestically. The prices for goods that could substitute for products from China would be higher, but the difference in costs would be relatively small.” [2]

It's Canada – NOT China - that is the U.S.'s largest trading partner. It has been for some considerable time. [3]

The Washington Post article goes on:

“The United States, in fact, consumed more than it produced, but China enabled this by accumulating $2.3 trillion in reserves and plowing much of it back into U.S. government bonds.”

In actual fact, it is clear that the US Government created the conditions under which America consumes more than it produces at home. Successive American Governments have deliberately pursued a policy entailing the embedding of its domestic corporations or their subsidiaries in foreign nations. “Investment abroad is investment in America” has been the slogan of American corporations at least since the late 1960s.

Nowadays the world economy is quite literally dominated by giant transnational global corporations, most of which are owned and controlled by American citizens. In 2002 it was written:

“9 of the top ten companies in the world, 72% of the top 25 global corporations, 70% of the top 50 global corporations. 5 of the top global banks, six of the top 10 pharmaceutical/biotech companies, 4 of the top ten telecommunications, 7 of the top IT corporations, 4 of the top gas and oil corps, 9 of the top ten software companies, 4 of the top ten insurance companies, 9 of the top ten general retail companies.” All call the USA their home. [4]

and these firms tended to enjoy extraordinary levels of dominance in world markets:

“By the early 1990s, five firms controlled more than 50 percent of global market share in consumer durables, steel, aerospace, electronic components, airline, and auto industries. In oil, personal computers, and media, five firms controlled more than 40 percent of the market. In American markets ranging from commercial airlines and aerospace to computer hardware and software to household appliances, three or four firms control up to 90 percent of the market, and market share concentration continues to increase through mergers and targeted growth strategies.” [5]

China’s domestic firms, on the other hand, simply can’t compete with these global giants.

“At the start of the 21st century, not one of China’s leading enterprises had become a globally competitive giant corporation, with a global market, global brand, and a global procurement system…The brutal reality is that after two decade of reform, China’s large firms mostly are still far from being able to compete with the global giants. ” [6]

It seems odd under these conditions that the Washington Post article complains about China’s attempts to protect its export industries by linking its currency to the plunging US dollar. Why is the dollar plunging in value in the first instance?

The American government has pursued economic and military policies whose net effect tended to consistently devalue its domestic currency. Actions such as engaging in decades of avoidable military aggression against a long list of nations, refusing to enforce viable fuel standards for vehicles, failing to use the decades of opportunity since the ‘70s oil crisis to foster and protect an sustainable alternative energy industry, deregulation of financial and commodity markets that have consequently bred inflationary speculative activities on a disastrous scale. And so forth. The list of US government failure is a long one.“U.S. exports are not growing as much as they would otherwise, and neither are those of other countries in Asia.” Says the Washington Post.

Well, the United states is still, by every measure, the world’s largest economy but even the citizens of this wealthy nation are struggling to find the financial resources to sustain the huge markets that the global TNCs would like to see continued indefinitely. Neoliberalism has bred massive inequality:

“Between the mid-1970s and 2006 the Gross Domestic Product of the United States trebled; the level of labour productivity almost doubled; the Dow Jones Index rose from 1000 to 13,000. Yet astonishingly enough, during that entire period, according to several studies, the income of the average American worker and family essentially remained stagnant [whilst] …. from 1980 to 2006, … the wealthiest 10 per cent of Americans increased their share of national income from 35 per cent to 49 per cent.” “By 2006 the wealthiest 1 per cent earned 20 per cent of national income.” [7]

The rich have gained access to virtually unlimited funds in the context of the world economy being on a precipice. People all over the planet have been struggling to pay their bills. When China opened itself up to capitalism the global labour force increased immensely. Consequently, wages could be kept low almost everywhere. Consumption predictably declined and at a time when inflation was being experienced with the rising costs of business inputs. This has occurred in a general situation of global oversupply.

“Corporations had little motivation to increase investment and employment, so no interest in borrowing no matter how low the Fed made the cost of credit. On the contrary, they had every incentive to slow down capital accumulation and reduce costs by way of cutbacks on jobs and plant and machinery, while availing themselves of falling interest rates to pay down their debt. And that is what they did.” [8]

The Washington Post will probably continue to blame China for US’ woes. The US and other nations, however, cannot grow their way out of this slowdown. Governments around the world may try to continue pump-priming aggregate demand but if they do ecological catastrophe and other severe problems will continue to play out. They must stop blocking the urgently needed consolidation and restructuring of our economies.

There is now a dire shortage of energy and minerals and this problem will not be able to be addressed for years to come. The bailing out of big financial institutions is also causing the entrenchment of inflationary expectations.

We need a public media that ceases to point the finger at economic rivals and, instead, looks for real solutions to the whole range of pressing problems we all now face. Or we’ll be inundated by much bigger problems very, very soon. Avoidance is not a strategy.

[1] The currency quarrel
China won't change on command. America must retake control of its own financial destiny.
Tuesday, November 24, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/23/AR2009112303039.html

[2] The U.S.-China Economic Relationship: Separating Facts from Myths
Author: Steven Dunaway, Adjunct Senior Fellow for International Economics
November 16, 2009
http://www.cfr.org/publication/20757/uschina_economic_relationship.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+cfr_main+%28CFR.org+-+Main+Site+Feed%29

[3] Canada, Not China, Is U.S.'s Largest Trade Partner
Sunday, January 03, 2010
http://mjperry.blogspot.com/2010/01/canada-not-china-is-uss-largest-trade.html

[4] Facts on the US Economic Empire
by etra Jaimers. Eat the State. Volume 7, #3 October 9, 2002
http://eatthestate.org/07-03/FactsonEconomic.htm

[5] 'Corporation Nation' by Charles Derber. 1998. ISBN 0-312-19288-6. Pages 59- 62 Chapter three:'The Mouse, Mickey Mouse, and Baby Bells'

[6] (Nolan, P. 12) as quoted in:
The China Factor:Mystery, Myth or Magic?
CTMA Roundtable. Kim Korth and John Cleveland. February 26, 2004
IRN, Inc. 550 Three Mile Rd. Grand Rapids, MI 49544
www.irn-auto.com
http://www.ctma.com/news/documents/CTMAChinaPresentationbyIRN-Feb2604.pdf

[7] The Great Recession and neo-liberalism
Extract from Robert Manne's 2009 QE Lecture in Quarterly Essay 36, http://www.quarterlyessay.com
19.01.10 12:24 am
http://tasmaniantimes.com/index.php?/weblog/article/the-great-recession-and-neo-liberalism/

[8] Brenner, Robert. (2009). What is Good for Goldman Sachs is Good for America The Origins of
the Present Crisis. UC Los Angeles: Center for Social Theory and Comparative History. Retrieved
from: http://escholarship.org/uc/item/0sg0782h

Off the Table or Under the Table: Economics vs. Health Care

Apparently, the Obama folks are following the Bush precedent, paying Johathan Gruber, a health care economist, under the table -- at least he seems to have done nothing to let it be known -- to influence the health care debate

http://emptywheel.firedoglake.com/2010/01/08/gruber-did-not-disclose-conflict-to-the-wapo/

I posted two brief mentions about Jonathan Gruber and health care, without realizing that he had a $392,600 contract with Health and Human Services that had not yet been made public.

First, last November, I posted the following comment in response to a New York Times article about Health Care, alluding to single payer being "off the table.":

Jonathan Gruber is a health economist from MIT -- an expert, no doubt. David Leonhardt quotes his favorable comment on the Senate health care bill: “I can’t think of a thing to try that they didn’t try.”

Leonhardt, apparently, never bothered to ask him about single payer, which was off the table.



A year before, prior to the contract, I posted:

I’m just looking over the August NBER digest. It covers five NBER articles, of which three may be mildly interesting. The first has the scary title, Public Insurance Expansions Crowd Out Private Health Insurance by Jonathan Gruber and Kosali Simon. We learn that: For every 100 children who are enrolled in public insurance, 60 children lose private insurance.” Thank God that George Bush had the courage to stand up to the radicals and threatened to veto an expansion of child health coverage. Otherwise, they might lose their private insurance.

http://www.nber.org/digest/aug07/w12858.html

Jane Hamsher has a piece showing how effectively the White House and the Democrats use Gruber's expertise to support their own mangling of health care reform.

http://www.huffingtonpost.com/jane-hamsher/how-the-white-house-used_b_421549.html

Glenn Greenwald has a piece, the second part of which compares this arrangement to what Bush did with Armstrong Williams and Maggie Gallagher and the CNN generals.

http://www.salon.com/news/opinion/glenn_greenwald/2010/01/15/sunstein/index.html

What Ails Us

I began reading Chris Hayes’ latest rumi-Nation like a fan, cheering him on. Talking about the last national election, Hayes wrote:

If the working hypothesis that bound this unwieldy coalition together--independents, most liberals and the Washington establishment--was that the nation's troubles were chiefly caused by the occupants of the White House, then this past year has served as a kind of natural experiment. We changed the independent variable (the party and people in power) and can observe the results. It is hard, I think, to come to any conclusion but that the former hypothesis was insufficient.

Yes, I thought. He is hot on the trail.

But then he seemed to get distracted. I agree with his diagnosis, that America suffers from a gross imbalance of power, but between whom? He would put “the people” on one side, I suppose, but this vague label always conceals as much as it explains—which people? On the other side we have total darkness: he doesn’t say who the other side is, other than it’s the force that makes us bargain over crumbs in policy arenas like health care.

Power is indeed a big part of the story. I would emphasize two specifics: (1) America has virtually lost the voice of organized labor. Show me any industrialized country that gives progressive politics even a remote shot and doesn’t have substantial union representation of the workforce. (2) We face the political consequence of almost two generations of exploding income inequality. The ones who have prospered in this ruthless world are relatively numerous (perhaps 20% of the population, even more of the electorate), conscious of their class interest, and willing and able to pony up for the cause. Yes, I know the lion’s share of growth has gone to the sliver at the very top, but the broad upper-middle is more interested in protecting what it’s got than pining after the super-rich.

But there are other elements that belong in the picture.

A big one is the devolution of the Republic Party. It is difficult to find words to express this. I have never, not even when I was a young kid, had any affection for this outfit, but in retrospect I have to admit that, once upon a time, they were conscientious in support of the values of their constituency. In office, they would hire experts (more conservative ones, but not always) to provide reasonably informative reports and forecasts. They often found themselves on the yea-side of important, progressive legislation, such as the wave of environmental and consumer initiatives of the late 1960s and early ‘70s. They were worth arguing with.

I can’t remember how many years it’s been since I paid any attention to the intellectual content (if that’s the right term) of Republican discourse. At least since Gingrich, it's been fools-or-knaves all the way. But our political system is set up to lock in place a two-party governance structure, and if one party goes bonkers, the machinery simply breaks down.

An overarching problem has been the rise of the finance view of the world as the ruling perspective in the US and those regions under its influence. This is partly about the power of individual people and institutions, essentially the massive private funds that dominate the resources of government in speculative markets—at least during profitable times. In that sense, it helps nail down the specific identity of “them” in Hayes’ us-against-them power imbalance story.

More broadly, however, there are ideological and social dimensions to financialism that have to be taken into account. In the realm of ideas, this perspective sees the financial “moment”, the decision to invest or trade, as the crucial link in the chain of wealth creation, denigrating such mundane activities as doing physical work or managing the day-to-day complexity of production systems. It justifies a system of corporate governance and personal rewards that would otherwise be indefensible. The ideology has a mass base because (and here we see again the consequences of inflated inequality) that same 20% or so has acquired a consequential financial stake and has come to see itself in those terms. That’s what the ticker at the bottom of your TV or computer screen is telling you when you tune into the news.

As I’ve written elsewhere, this elevation of financial interests—the claim that all of us are best off if investors are able to reap the highest return possible—is the deep force behind both global imbalances and the financial crisis. That must be worth something.

And then there is simply the never-ending sequence of historical moments, the context that makes our situation unique and not just a deduction from some generic model. Throw in the fallout from the debt crisis of 1982, the collapse of Communism in 1989, the continuing standoff between Israelis and Palestinians and its impact on the Islamic world, the about-face in Chinese (and to a lesser extent Indian) economic policy, the information and communications revolution, and we can begin to fill in the details.

If this list is even remotely correct, the vague, we-are-the-world democratic euphoria provoked by the Obama campaign and recalled, nostalgically by Hayes, was impotent from the outset. (The ideology of bipartisanship also missed the point.)

But Hayes is right in the end: Bush, for all his horrors, was not the root problem, and the election of Obama is hardly the solution. If we want to try to turn this thing around by design and not just depend on dumb luck, we need to identify the deeper issues and focus our energies on them.