[R-G] A Time between Ashes and Roses

[Yoshie Furuhashi]

<http://montages.blogspot.com/2007/11/time-between-ashes-and-roses.html>
A Time between Ashes and Roses

Observing that a majority of capitalists have abandoned the Republican
Party for the Democratic Party (58% of campaign contributions have
gone to Democrats and 42% to Republicans so far), Doug Henwood, the
editor of the Left Business Observer, notes in his interview with Il
Manifesto (Marco d'Eramo, "Primarie Usa: Pioggia d'oro sui candidati
democratici," Trans. Yoshie Furuhashi, 4 November 2007, p. 3):

    «L'unica soluzione -- conclude Henwood -- sarebbe per i
     democratici un grande piano di opere pubbliche, visto che
     le nostre infrastrutture -- ponti, strade, ferrovie, reti elettriche,
     aeroporti - stanno letteralmente andando in rovina. Questo
     piano consentirebbe aumento dell'occupazione, la ripresa
     economica e anche succosi profitti per il capitale. Ma nessun
     democratico si sogna di proporlo perché per finanziare
     queste opere pubbliche bisognerebbe reintrodurre una
     parziale progressività fiscale e questo, nei tempi che corrono,
     è una tabù, un'eresia che ti può mandare al rogo
     (politicamente parlando)».

     The only solution -- concludes Henwood -- for the Democrats
     would be a grand plan of public works, inasmuch as our
     infrastructures -- bridges, roads, railroads, electrical grids,
     airports -- are literally falling apart. This plan would allow job
     growth, economic recovery, and also plenty of profits for capital.
     But no Democrat dreams of proposing it because, in order to
     finance these public works, it would have to introduce a little
     fiscal progressivity, and this, for the time being, is a taboo, a
     heresy that can condemn you to be burned at the stake
     (politically speaking).

Moreover, a question may be asked: even if the Democrats were to
propose "a grand plan of public works," would it be possible given the
political economy of the United States?

In Japan, the worst impacts of deflation during the 1990s were
mitigated by public works as well as government loans to the private
sector. The net capital outlay of the Japanese government in 1995 was
7.9 percent of GDP, more than double the OECD average (Paul Atkinson
and Paul van den Noord, "Managing Public Expenditure: Some Emerging
Policy Issues and a Framework for Analysis," Economics Department
Working Papers No. 285, OECD, 8 February 2001).

Trends in General Government Total Outlays by Economic Category, Percent of GDP
SOURCE: Atkinson and Van den Noord, P. 6
Net Capital Outlays
SOURCE: Atkinson and Van den Noord, p. 49

It was the option to which the Japanese government, which some call
the "construction state" based on the alliance of "construction
ministries and agencies (MLIT, MAFF), the construction 'tribe' of
(largely LDP) politicians, and the construction and real estate
businesses" (Jeffrey Broadbent, "The Institutional Roots of the
Japanese Construction State," ASIEN 84, July 2002, p. 43), was
naturally predisposed.

More to the point, the Japanese government could take this option
because it had at its disposal gigantic postal savings, whose size in
2006 was "roughly 65% of Japan's GDP" (Thomas F. Cargill and Hal S.
Scott, "Postal Savings in Japan and Mortgage Markets in the U.S.,"
FRBSF Economic Letter, 3 March 2006).

Not so with the US government. The massive US current account deficit
puts downward pressures on the dollar: "The United States borrows a
whopping $2.5 billion daily from abroad to service its burgeoning
debt," a result of "a manufacturing base that has declined 60 percent
since World War II" (Hamid Varzi, "A Debt Culture Gone Awry,"
International Herald Tribune, 17 August 2007). At the same time,
higher energy prices and rising inflation in China make for more
inflationary pressures. Combined, they cannot but narrow the options
of the US government in fiscal and monetary policies even as US
economy, which has barely begun to experience the deflation of
debt-financed asset bubbles, heads into recession.

In short, there is no organized sector of the US population capable of
pushing and willing to push for a solution to the problem of US
economy that would favor US workers; and in any case, options
available to US workers have already been narrowed considerably and
will be narrowed further in the near future.

The US economy facing serious trouble does have a silver lining: for
the first time after the end of World War 2, there is an objective
potential to put an end to the dollar hegemony, the economic pillar of
US imperialism. For everyone else besides hapless Americans, now may
very well be a time between ashes and roses.

          A time between ashes and roses is coming
          When everything shall be extinguished
          When everything shall begin.
            -- Adonis, "An Introduction to
                the History of the Petty Kings"

--
Yoshie
<http://montages.blogspot.com/>