Contours of Descent: US Economic Fractures and the Landscape of Global Austerity

Rating:
Summary: Unsustainable Neoliberal Agenda
Review: "Contours of Descent" is a prescient reevaluation of the U.S. and global economies during the Clinton years. For some, the rise of the stock market, low unemployment and inflation, and budget surpluses, when taken together, are proof positive that the Clinton years were as good as it gets for the economy. But not so fast says the author.

Clinton ran a "putting people first" campaign, but at some point a "center-right, Washington Consensus" direction was pursued. It was a neoliberal agenda that emphasized smaller government, free trade, and deregulation of financial markets. Inflation, fueled by wage demands, was kept in check through the threat of outsourcing jobs. Welfare rolls were drastically reduced by forcing welfare recipients to work at sub-poverty level wages. The Clinton administration and Alan Greenspan made no attempt to curb the speculative excesses of the financial markets. Stocks rose to unsustainable price to earning ratios. The economy was driven by both increased consumer debt and private investment. The obsession with larger and larger budget surpluses precluded making needed investments in infrastructure and education and training.

Part of the Washington Consensus is the participation of globally-oriented financial and trade bodies, such as the IMF, the World Bank, and the WTO, who impose neoliberal policies when possible. The opening for these international bodies is when debt-ridden countries find themselves in untenable positions. But relief from these bodies is not unconditional. The countries are forced to privatize, eliminate subsidies for domestic purposes, cut government spending, and remove all restrictions on foreign investment. In addition, the countries are invariably pressured to pursue a strategy of producing for export to acquire the cash to pay off debts. Keeping wages low by disciplining workers is part of the strategy of exporting and attracting foreign manufacturers. The author shows that these neoliberal policies have had harsh effects in many countries, such as Mexico and Argentina.

Of course, the stock market bubble collapsed. The Federal Reserve had failed to exercise its power to limit speculation and now was unable to spur a recovery with huge cuts in the Federal Funds interest rate. The excessive investment during the Clinton boom had created excess capacity. The author continues with the Bush administration, which is even more committed to pursuing a neoliberal program. The massive tax cuts that are being pursued by Bush have added to the huge increase in inequality that occurred in the Clinton years. The resulting huge deficits preclude any increase in domestic spending but do allow the pursuit of a military agenda that seems geared to benefit multinational corporations. Again, it is hoped that inflation will be checked by worker insecurities.

It seems rather obvious that neoliberalism is unsustainable in the long-run. In an interesting take, the author presents neoliberalism as presenting problems that Marx, Keynes, and Polanyi delineated. He calls for the re-regulation of financial markets, limits on free trade, and more domestic investment, including full employment. But it is a glaring shortcoming of the book that no attempt is made to describe how such a redirection could or will come about. Can it happen only politically or must a major collapse on the scale of the Great Depression first occur?

For those who need convincing that the Clinton years were not as good as they seemed, this may be the book for you.

Rating:
Summary: Contours of Descent: US Economic Fractures and the Landscape
Review: Academic economists are a curmudgeonly bunch who, typically dissatisfied, need to cast blame and aspersion. One trick is to identify those causing the problems while avoiding in turn criticisms of political or other biases. Pollin (Univ. of Massachusetts-Amherst) accomplishes that trick admirably in this book by pointing out what he sees as the failings of the Clinton and Bush presidencies. In both cases, the failings are identified fundamentally as support of corporate over popular interests. The recession bridging the two administrations was caused by the flawed policies followed by President Clinton. The policies being pursued by President Bush are predicted to lead to even greater crises. Pollin contends that avoiding these problems requires a commitment to full employment policies and the "living wage." A less restrictive attitude toward inflation coupled with new financial market regulations, including a Tobin Tax on financial transactions, would facilitate the realization of these goals. The arguments are focused and well presented, although Appendix 3 explaining regression results could have been more detailed. All in all, a well argued case for taking the "neo" out of neoliberal. This volume will not convince everyone, but it should cause some heated discussions. ^BSumming Up: Recommended. Public and academic library collections.

Rating:
Summary: What the Democrats won't admit about Clinton-omics....
Review: From "Clintontime" by Alexander Cockburn at www.counterpunch.com:

We find the liberal populists Michael Moore, Al Franken, Paul Krugman and Molly Ivins all pouring sarcastic rebukes on Bush2 and, categorically or by implication, suggesting that in favoring the very rich and looting the economy in their interests Bush stands in despicable contrast to his immediate predecessor in the Oval Office.

So just get a Democrat, any Democrat, back in the White House and the skies will begin to clear again.

But suppose a less forgiving scrutiny of the Clinton years discloses that these years did nothing to alter the rules of the neoliberal game that began in the Reagan/Thatcher era with the push to boost after-tax corporate profits, shift bargaining power to business, erode social protections for workers, make the rich richer, the middle tier at best stand still and the poor get poorer.

We have just such an unsparing scrutiny of Clintonomics in the form of Robert Pollin's Contours of Descent.

Pollin is unambiguous. "It was under Clinton" he points out, "that the distribution of wealth in the US became more skewed than it had at any time in the previous forty years. Inside the US under Clinton the ratio of wages for the average worker to the pay of the average CEO rose from 113 to 1 in 1991 to 1 to 449 when he quit. In the world, exclusive of China, between 1980 and 1988 and considering the difference between the richest and poorest 10 per cent of humanity, inequality grew by 19 per cent; by 77 per cent, if you take the richest and poorest 1 per cent.

The basic picture? "Under the full eight years of Clinton's presidency, even with the bubble ratcheting up both business investment and consumption by the rich average real wages remained at a level 10 per cent below that of the Nixon-Ford peak period, even though productivity in the economy was 50 per cent higher under Clinton than under Nixon and Ford. The poverty rate through Clinton's term was only slightly better than the dismal performance attained during the Reagan-Bush years." We had a bubble boom, pushed along by consumer-spending by the rich.

The REAL legacy of the Clinton era is that the bargaining power of capital to cow workers, to make them toil harder for less real money, increased inexorably. Speculative rampages were given a green light.

At the end of Clinton's eight years, when the bubble tide had ebbed, what did workers have by way of a permanent legacy? Clinton, Pollin bleakly concludes, "accomplished almost nothing in the way of labor laws or the broader policy environment to improve the bargaining situation for workers Moreover, conditions under Clinton worsened among those officially counted as poor."

Nowhere is Pollin more persuasive than in analysing the causes of the fiscal turnaround from deficit to surplus, an achievement that had Al Gore in 2000 pledging to pay down the entire federal debt of $5.8 trillion. Was this turnaround the consequence of economic growth (producing higher tax revenues), along with the moderate rise in marginal tax rates on the rich in 1993. If indeed these were the causes of fiscal virtue, we might take a benign view of Clinston's fiscal policies. On the other hand, if surplus was achieved by dint of hacking away at social expenditures and at social safety nets, plus gains in capital gains revenues stemming from the stock market bubble, then progressives, even Democratic candidates, might not so eagerly extol the Clinton model.

In a piece of original and trenchant analysis Pollin shows that almost two thirds of Clinton's fiscal turnaround can be accounted for by slashes in government spending relative to GDP (54 per cent) and on capital gains revenues (10 per cent). Pollin then asks the question. Suppose there really had been a peace dividend after the end of the cold war was won. We could have had a few less weapons systems, 100,000 new teachers, 560,000 more scholarships, 1,400 new high schools and still had a budget surplus of $220 billion.

Wall Street applauded the surpluses and the ordinary folk paid the costs of all those slashes in the budget: fewer teachers, a dirtier environment.

Pollin suggests answers that steer past easy rhetorical flourishes about trade protections. If we are to move towards a world in which families don't have to line up outside churches to stay alive and teenagers don't have to work for 20 cents a day in Third World sweatshops, we have to have policies here that promote full employment and income security.

Such policies would have to include a strengthening of workers' legal rights to organize and to form unions; and also to fight on a level playing field in the conduct of strikes. To get a measure of fairness and stability in the financial system financial institutions would have to honor asset-based reserve requirements, of which one example would be the margin requirements Greenspan failed to impose in September, 1996. This same policy instrument could be used to channel credit to socially beneficial projects such as low income housing.

Despite the best efforts of our doctrinal leaders, the moral sentiments of the people are not entirely corrupted. Consumers, for example, are prepared to pay a premium of they can be assured they are buying products not made in sweatshops. And third-world countries need not survive only under the sweatshop conditions ("tremendous good news") praised by Krugman and his colleague at the Times, Nicholas Kristof. They have to be permitted to return to the somewhat protected conditions encouraged in the development policies of an earlier era, without agencies of the US government decreeing that their reformers and their union organizers be murdered by death squads.

Posted by DAVID HAVELkA

Rating:
Summary: Powerful
Review: Read "Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity" by Robert Pollin, the co-author of "Living Wage." Pollin is a brilliant economist interested in using economics for the good of our society. He's also ruthlessly honest, and you won't catch him bragging, a' la Dick Gephardt, about the glorious Clinton days. Pollin's critique of Clinton's economic program is harsh and that of W. Bush's devestating. The lessons are clear, and Pollin closes with useful recommendations.

Rating:
Summary: Towards a more equitable, stable and prosperous world
Review: Robert Pollin's "Contours of Descent" is a lucid and coherent dissection of neoliberal economic policies as practiced in the U.S. and around the world. The author very effectively cuts through the political doublespeak of recent U.S. administrations to show that neoliberalism has served as the guiding principle for both Bill Clinton and George W. Bush. Following a careful and methodical critique of the Clinton/Bush record, Mr. Pollin advances an alternative set of policy proscriptions that might lead us towards a more equitable, stable and prosperous world.

Mr. Pollin is a Professor at the University of Massachusetts-Amherst. The humanity and practicality that infuses this book is no doubt a reflection of Mr. Pollin's real world experiences, which includes work on developing living wage proposals in various U.S. cities, serving as a consultant to the United Nations Development Program in Bolivia, and as Economic Spokesperson to the 1992 Presidential campaign of Governor Jerry Brown.

Neoliberalism is defined by the "Washington consensus" of decreased government spending, free trade and deregulated markets. Mr. Pollin critiques the system for its three major defects: The "Marx problem" pertaining to the relative bargaining relationship between employers and workers; the "Keynes problem" of the tendency of financial markets to engage in speculation; and the "Polanyi problem" of the corrupting effect of corporate power.

The author builds a convincing case that all three problems have been exacerbated by neoliberalist policies, resulting in a host of deleterious effects. These include widening gaps between the rich and poor (Marx), speculative bubbles in the financial markets (Keynes), accounting scandals (Polanyi), and others. Moreover, the author provides research to show that the cumulative effect of these policies has been to slow world economic growth, thereby undoing years of progress and preventing many developing nations from significantly raising living standards for their citizens.

Mr. Pollin critiques the Clinton administration and Robert Rubin in particular for championing financial market deregulation as the linchpin for its "Eisenhower Republican" economic strategy. The author is presuasive in detailing how the stock market boom of the 1990s provided fuel for the economic boom; unfortunately, its demise quickly erased most of the gains attributed to the Clinton economy, such as a real decrease in the number of persons living in poverty. In fact, the author suggests that the single-minded pursuit of a balanced budget allowed Clinton to squander a historic opportunity to use surplus government dollars to invest in education, healthcare and the environment --programs that the author believes are critical to creating a more durable kind of prosperity for the American people.

Mr. Pollin launches a no less scathing critique of the Bush administration's policies, which the author believes have been designed to be little more than a "bonanza to the rich" at the expense of workers. The author explains that crisis has been used by Bush to justify giveaways to corporations and the wealthy; meanwhile, aggressively anti-labor and anti-environmental policies have further squeezed living standards for most. Furthermore, by highlighting the inconsistencies in Bush's budget proposals, Mr. Pollin suggests that the administration is intent on creating a fiscal crisis in order to force a dismantling of the populist social safety net.

One section that I found particularly interesting was Mr. Pollin's discussion of stimulating the economy by means of defense spending and the Iraq war. His analysis of the situation however suggests that the occupation of Iraq will further slow the U.S. economy as a whole but will benefit specific corporations engaged in the production and distribution of oil, thereby calling into question the real motives for the war.

Mr. Pollin dedicates a chapter examining the "landscape of global austerity" that has resulted from Washington's imposition of neoliberal policies onto the developing world. The analysis focuses on case studies in India, Argentina and elsewhere to highlight the human costs of the neoliberal experiment in specific countries. For example, the author shows how Asian sweatshop bosses have repressed their workers in order to gain competitive advantage for their export-oriented economies. The author argues that "policies to eliminate sweatshops and guarantee workers decent...minimum wages" are needed to narrow inequality, restore impoverished communities and develop new markets.

The final chapter explores the author's alternative economic policies more fully. The recommendations include full-employment policies, living wages and labor rights to solve the Marx problem, and financial system regulation, taxation, and increased banking reserve requirements to solve the Keynes problem. The issue is one of morality as well. Recalling Adam Smith, the author suggests that continuing with the failed neoliberal experiment of privileging the interests of capital over the rights of people amounts to "corruption of moral sentiments on a global scale" and should rightly yield to an economics dedicated to equity and social justice.

I strongly recommend this powerful, insightful and humane book to everyone.

Rating:
Summary: Are we all neoliberals now? No!
Review: Robert Pollin's 'Contours of Descent' has been a welcomed addition to the debate over the nature and course of recent American economic history and the policies that contributed in to the making of that history. Pollin provides a well-researched and -argued look at the economic policies of the Clinton and Bush administrations. 'Contours' treats both presidential administrations as instances of Reaganomics in action - that is, as political regimes beholden to the neoliberal consensus that began to form in Washington during Jimmy Carter's term and which the Reagan administration turned into programmatic focus of American economic policy. The New Deal Order might have ended with the Reagan administration, but there has not been a return to a 'golden age' defined by full employment and an equitably distributed abundance. Consequently, Reaganomics or neoliberalism has proven to be an austerity program for the majority in the United States and elsewhere. Clinton and Bush the Younger merely follow their master in this regard.

What is most useful in Pollin's analysis is the debunking work it performs. More specifically, Pollin makes it clear that Clintonomics differs from Bush the Younger's 'New Rapacity' mostly in degree but not in kind. The stock market bubble economy of the late 1990s merely obscured the class biases inherent in the administration's policies, biases which Clinton expressed by claiming that he would be an Eisenhower Republican.

Pollin's critical work won't prove to be overly useful to those implementing the neoliberal consensus at home and abroad. They will likely ignore it and will continue to greatly exploit whomever they can, whenever they can, notwithstanding the consequences produced by their policies and actions. On the other hand, his analysis should be very useful to those on the left who believe the Clinton wing of the Democratic Party has something to offer in economic matters. It does, of course: It offers a recipe for making the rich richer and the poor poorer! What it fails to offer is a strategic path leading to a full employment and high growth economy in the United States and elsewhere. Pollin sheds a much-needed light on the methods and consequences of neoliberalism. We can only hope that it aids sensible Americans as they make their way out of the Democratic Party.

Rating:
Summary: Time For A Real Change
Review: This is not only one of the most readable, persuasive, and substantial books I have ever read on the US economy - it also probes well below the surface of much of the current media hype.

While Pollin takes on the shameless economic policies of Bush - rewarding the rich at the expense of everyone else - he also argues strongly against Paul Krugman or other apologists for Clinton. Arguing that essentially both Bush and Clinton (and Greenspan throughout) have operated under the same absolute Washington 'Consensus' ideas about the economy, he shows how these ideas have led to greater inequalities in US society and worse conditions for the average American. The fabulous decade (the late nineties) were really just a "hollow boom." He also explains how neoliberalism has been a disaster for the developing world.

But its not all gloom and doom. Pollin has a chapter on simple and proven economic changes that could be achieved and which would not only give every American a fairer chance, but would boost the economy at the same time. If you want great background reading to Democrats economic proposals for the 2004 elections - and any real and achievable change - read this book !!!