[R-G] [BillTottenWeblog] Obama's Chicago Boys

[Bill Totten]

by Naomi Klein

The Nation (June 12 2008)


Barack Obama waited just three days after Hillary Clinton pulled out of
the race to declare, on CNBC, "Look. I am a pro-growth, free-market guy.
I love the market."

Demonstrating that this is no mere spring fling, he has appointed
37-year-old Jason Furman to head his economic policy team. Furman is one
of Wal-Mart's most prominent defenders, anointing the company a
"progressive success story". On the campaign trail, Obama blasted
Clinton for sitting on the Wal-Mart board and pledged, "I won't shop
there". For Furman, however, it's Wal-Mart's critics who are the real
threat: the "efforts to get Wal-Mart to raise its wages and benefits"
are creating "collateral damage" that is "way too enormous and damaging
to working people and the economy more broadly for me to sit by idly and
sing 'Kum-Ba-Ya' in the interests of progressive harmony".

Obama's love of markets and his desire for "change" are not inherently
incompatible. "The market has gotten out of balance", he says, and it
most certainly has. Many trace this profound imbalance back to the ideas
of Milton Friedman, who launched a counterrevolution against the New
Deal from his perch at the University of Chicago economics department.
And here there are more problems, because Obama - who taught law at the
University of Chicago for a decade - is thoroughly embedded in the
mind-set known as the Chicago School.

He chose as his chief economic adviser Austan Goolsbee, a University of
Chicago economist on the left side of a spectrum that stops at the
center-right. Goolsbee, unlike his more Friedmanite colleagues, sees
inequality as a problem. His primary solution, however, is more
education - a line you can also get from Alan Greenspan. In their
hometown, Goolsbee has been eager to link Obama to the Chicago School.
"If you look at his platform, at his advisers, at his temperament, the
guy's got a healthy respect for markets", he told Chicago magazine.
"It's in the ethos of the [University of Chicago], which is something
different from saying he is laissez-faire".

Another of Obama's Chicago fans is 39-year-old billionaire Kenneth
Griffin, CEO of the hedge fund Citadel Investment Group. Griffin, who
gave the maximum allowable donation to Obama, is something of a poster
boy for an unbalanced economy. He got married at Versailles and had the
after-party at Marie Antoinette's vacation spot (Cirque du Soleil
performed) - and he is one of the staunchest opponents of closing the
hedge-fund tax loophole. While Obama talks about toughening trade rules
with China, Griffin has been bending the few barriers that do exist.
Despite sanctions prohibiting the sale of police equipment to China,
Citadel has been pouring money into controversial China-based security
companies that are putting the local population under unprecedented
levels of surveillance.

Now is the time to worry about Obama's Chicago Boys and their commitment
to fending off serious attempts at regulation. It was in the two and a
half months between winning the 1992 election and being sworn into
office that Bill Clinton did a U-turn on the economy. He had campaigned
promising to revise NAFTA, adding labor and environmental provisions and
to invest in social programs. But two weeks before his inauguration, he
met with then-Goldman Sachs chief Robert Rubin, who convinced him of the
urgency of embracing austerity and more liberalization. Rubin told PBS,
"President Clinton actually made the decision before he stepped into the
Oval Office, during the transition, on what was a dramatic change in
economic policy".

Furman, a leading disciple of Rubin, was chosen to head the Brookings
Institution's Hamilton Project, the think tank Rubin helped found to
argue for reforming, rather than abandoning, the free-trade agenda. Add
to that Goolsbee's February meeting with Canadian consulate officials,
who left with the distinct impression that they had been instructed not
to take Obama's anti-NAFTA campaigning seriously, and there is every
reason for concern about a replay of 1993.

The irony is that there is absolutely no reason for this backsliding.
The movement launched by Friedman, introduced by Ronald Reagan and
entrenched under Clinton, faces a profound legitimacy crisis around the
world. Nowhere is this more evident than at the University of Chicago
itself. In mid-May, when university president Robert Zimmer announced
the creation of a $200 million Milton Friedman Institute, an economic
research center devoted to continuing and augmenting the Friedman
legacy, a controversy erupted. More than 100 faculty members signed a
letter of protest. "The effects of the neoliberal global order that has
been put in place in recent decades, strongly buttressed by the Chicago
School of Economics, have by no means been unequivocally positive", the
letter states. "Many would argue that they have been negative for much
of the world's population".

When Friedman died in 2006, such bold critiques of his legacy were
largely absent. The adoring memorials spoke only of grand achievement,
with one of the more prominent appreciations appearing in the New York
Times - written by Austan Goolsbee. Yet now, just two years later,
Friedman's name is seen as a liability even at his own alma mater. So
why has Obama chosen this moment, when all illusions of a consensus have
dropped away, to go Chicago retro?

The news is not all bad. Furman claims he will be drawing on the
expertise of two Keynesian economists: Jared Bernstein of the Economic
Policy Institute and James Galbraith, son of Friedman's nemesis John
Kenneth Galbraith. Our "current economic crisis", Obama recently said,
did not come from nowhere. It is "the logical conclusion of a tired and
misguided philosophy that has dominated Washington for far too long".

True enough. But before Obama can purge Washington of the scourge of
Friedmanism, he has some ideological housecleaning of his own to do.

_____

Naomi Klein is an award-winning journalist and syndicated columnist and
the author of the international and New York Times bestseller The Shock
Doctrine: The Rise of Disaster Capitalism (2007); an earlier
international best-seller, No Logo: Taking Aim at the Brand Bullies
(2002); and the collection Fences and Windows: Dispatches from the Front
Lines of the Globalization Debate (2002).

http://www.thenation.com/doc/20080630/klein


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