Information Landmine

"The Americans keep telling us how successful their system is. Then they remind us not to stray too far from our hotel at night." - An un-named EU trade representative quoted during international trade talks in Denver, Colorado, 1997.

Sunday, November 16, 2008

My last Naomi Klein post. Probably.

Naomi Klein bashing is a popular enough sport on the internet that I've felt a bit bad about sticking my oar in of late, but this really cannot go unremarked. After a year spent pushing her whole "Shock Doctrine" idea - the idea that nasty right-wing folk take advantage of crises in order to impose big ideologically-driven changes before anyone can work out what's going on - she's switched to the important business trying to keep the Obama administration on the true path. Nothing wrong with that, in itself. Her latest column in the Guardian starts out pretty sensible:
Yes, there is only one president at a time, but that president needed the support of powerful Democrats - including Obama - to get the bail-out passed. Now that it is clear the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right, but a grave responsibility, to intervene forcefully.
Makes sense to me - if the US government is going to be in the business of handing out big wads of cash to Wall Street, it should be as transparent as possible.

More generally, she thinks that the Obama administration's apparent policy of trying to reassure the markets is really just a way of appeasing the folk who got us into this mess in the first place, and she's pissed off about it:
More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for "change", the mantra abruptly shifted to "smooth transition" and "continuity".
Again, there's nothing I actually disagree with here - at some point, there is going to need to be some pretty serious regulation, although I personally would wait until things had calmed down a little bit. Naomi, though, doesn't see it that way - regulation too long delayed is regulation denied, or something like that. Democrats shouldn't just be providing stricter oversight, they should be firing the opening shots in a bold new campaign to get some regulation with teeth on the cards:
There is no way to reconcile the public's vote for change with the market's foot-stomping for more of the same. Any moves to change course will be met with market shocks. The good news is that once it is clear the new rules will be applied across the board, fairly, the market will stabilise and adjust. Furthermore, the timing for this turbulence could not be better. Over the past three months, we've been shocked so often that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that predates him, or fault him for honouring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories will fade.
Lets take another look at that: "Over the past three months, we've been shocked so often that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first." Seriously? So Obama could, like, take advantage of the fact that the public is in a state of shock and rewrite the economic rules of the game? Cool!

Now don't get me wrong here. I think some sort of broadly Keynsian "borrow, spend, regulate, recover" plan is probably a good idea, and if that's one of the outcomes of the crisis, then that's all to the good. But you can do this quickly or you can do it right. I think we can all agree that an effective set of new rules that can be "applied across the board, fairly," - without having some seriously nasty unintended consequences - is not the sort of thing that you can just put together over a few bottles of organic wine. Furthermore, even the best designed set of rules is going to make for a very uncertain transition period as the armies of accountants, tax lawyers and financial engineers wrap their heads round them; you change all the rules of the game, you have to expect a little turbulence and, Naomi's "there's already turbulence" platitudes notwithstanding, I don't think the US public thought they were voting for more volatile financial markets.

If, as Klein suggests, the voters are genuinely hungry for this sort of plan, they presumably won't have changed their mind by January, so what's the problem with waiting for regulation until this has all calmed down? And there's the rub: an Obama strategy of breaking as little of the economy as possible is only a bad thing if you think that by delaying they're squandering an opportunity for something bigger. And if you honestly believe that the fact that there's a crisis now presents a unique opportunity to force through your plans, then you shouldn' t have spent the last few years spouting conspiracy theories about how that sort of opportunistic behaviour is the mark of evil right-wing ideologues.

Update: Corrected some typos and tidied up a bit.

Also, I think there's a more charitable way of putting my basic point: What I took to be one of the key arguments of the Shock Doctrine was the essentially conservative insight that you shouldn't force through violent changes just because they look good on paper - if you violently rearrange a country's economy and something goes wrong, it's pretty cold comfort for those on the ground to see you sitting there scratching your head and saying: "well that never happened in the models." Given all that, and Klein's general fondness for medical analogies, you'd think she'd be more sympathetic to a "first, do no harm" attitude from the Obama camp.


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