Thursday, September 23, 2010

July 1, 2010

Lawyers, Guns, + Money

Preserving our freedom to become obsolete

Thanks to a Supreme Court that is resolutely stuck in Red State politics, America will be well-armed for the upcoming depression. Last week, Blue State cities that are trying to corral handguns lost when the Court’s Bush-Reagan majority decided that personal firearm ownership is an essential element of “ordered liberty.” Progressives rightly shudder: There are parts of America, like our big northern cities, where folks have figured out that they really don’t like guns and don’t see the need for them and don’t hunt anyway, and if you want to fight, then go to Tae-Bo class or hire a lawyer. Even Red-minded suburbanites are culturally estranged from Texas and Tennessee, where the only remaining gun debate is whether one should be allowed to carry concealed weapons into saloons.

A Supreme Court that sides with the gun culture of rural Tennessee over the anti-gun culture of the Blue States is a reminder that in our beloved country, innovators though we may be, our vocabulary about freedom enables some of us to act as if we’re homesteaders on the wild frontier. The rest of the world envies our country’s enduring myth of the free individual, even when Ralph Waldo Emerson’s notions of self-reliance and Andrew Jackson’s populism have been twisted by the Reagan myth that we can do without any government at all. But the rest of the world also notices that thinking and acting like early-19th-century yeoman farmers weakens us at a time when China, Russia, Saudi Arabia, and other regimes that scoff at the idea of personal liberty keep gaining economic power.

As Ian Bremmer bluntly advises in his new book The End of the Free Market, the world is not about fair-minded cowpokes who accept our code of honor and play by free-trade rules. Bremmer’s subtitle begs the question and gives us the grim answer: Who wins the war between states and corporations? The “states” he writes about are not Kansas and New Hampshire: They’re the thug-ruled countries. China, Russia, Saudi Arabia, the Emirates, Venezuela, a few more that are succeeding in trading with us because our financial elites commanded our politicians to rewrite the rules that used to make it hard to deal with dictators.

Bremmer’s book has lots to say about capitalism’s essential devotion to individual liberty, but not enough to say about how the financial industry got to be so powerful. Here’s an anecdote from the middle of the globalization binge. It was March 1992. Arkansas Governor Bill Clinton was running for president. He had just lost the Connecticut primary to Paul Tsongas. On the eve of the New York primary, he was getting the snot kicked out of him by Jerry Brown on the issue of taxes and by the tabloids on the issue of bimbos. Your humble correspondent got hired to fix the tax policy problem, and thus worked for a couple of weeks in the “war room.” The daily meetings had all the star consultants: James Carville and Paul Begala, George Stephanopolous and Mandy Grunwald. But the war room itself was run by Mickey Kantor, an attorney who would become the US Trade Representative. And every day that I was there, guys with insanely expensive suits and astounding Swiss watches showed up. They were from Goldman Sachs and other investment firms. They were there to observe, and to consult quietly with leadership while the rest of us cranked out radio spots and talking points and position papers. In New York in 1992, Clinton’s was the campaign in which a Democrat finally got the financial industry backing that had been so Republican for so long. After he was elected, the globalization process accelerated dramatically.

Was it inevitable? So say many. All the world’s right-wing tough guys had Reagan to apologize for them and to help them get access to the wealth that American investors like to send to places where there are no independent judiciaries, filibustering legislators, or executives constrained by law. After George H.W. Bush was CIA chief and before he became Reagan’s vice president, he was our man in China, helping pave the path for American capital in the post-Mao era. As Kevin Phillips and other analysts have described, the outsourcing of American manufacturing jobs, the busting of American unions, the marginalization of the American working class has all occurred as financial elites have massively expanded their influence over our political class. While our Supreme Court reaffirms our antique right to play at firearm testosterone, our comparative respect for due process looks like a quaint notion in the world of trading partners described by Phillips, and by Bremmer in his book about how they’re eating us alive.

You already know the story. So-called “state capitalism” is what the world of democratic capitalism is up against. Until the bubble and crash of 2008—which the non-traditional economists of the Minsky school, the Levy Institute, and Buffalo State College, and’s Richard Janszen had been warning about—it was sort of halfway plausible, on sunny days, to be like Bill Clinton and believe that what was good for Goldman Sachs was good for America. “They can manufacture things so much more efficiently over there!” is the explanation. “Comparative advantage” and other such terms are meant to explain why nothing much gets produced here. The World Trade Organization, and this free-trade orthodoxy, and the various conferences at which this bunch of thugs and that bunch of thugs all swear to protect copyright, intellectual property, environmental standards, worker rights, and such, were all supposed to help those bad-guy ruling elites inch inexorably toward giving their huddled masses their own version of American-style democratic capitalism. It would never be likely that they’d get a Second Amendment, but then the notion of “ordered liberty” as proceeding from the barrels of personal firearms is hard to sell in places where the secret police use the term “disappear” as a transitive verb.

That fantasy of ever-spreading democratization gets its comeuppance about once a week these days, whenever the news about Google’s efforts to run an open, go-anywhere search engine in China comes back negative.

So back here at home in the Midwest, we should read with special interest Bremmer’s chapter entitled “what is to be done.” (How richly ironic that he quotes a great Communist when asking how our version of capitalism is going to gain power once again.) His answer, sadly, is too meek—and consists, essentially, of the same pro-globalization wishful thinking that if we just stick with it long enough, we’ll get along. Bremmer thinks that we have to remain “indispensible.”

"The End of the Free Market: Who Wins the War Between States and Corporations?" by Ian Bremmer (Portfolio, 2010)

What sorry bullshit that is. A few sober folks have figured out that the only reason America is still relevant is that we remain the world’s policeman. Our armed services are out there protecting the rights of our financial elites to enjoy the “freedom to hire workers and borrow money where they are least expensive and to sell in the fastest-growing markets,” per Bremmer.

Here’s what we in Buffalo know: When the decision-making is done by out-of-town investors, we tend to get left behind by the wearers of elegant suits and expensive watches, investors who can get a far better rate of return where democracy is non-existent and where labor does what it’s told to do.

But the Tea Party gives us hope!

The other court decision that came down last week didn’t get very much attention at all. A curious klatch of anti-government libertarians and progressive critics of corporate welfare won what could potentially prove to be a blockbuster case in the New York State Supreme Court’s Appellate Division. Their argument: that handing out public money to privately owned corporations and developers violates the New York State Constitution’s ban on making gifts or loans of public money.

What the Appellate Division decided was that the anti-handout plaintiffs do indeed have a case, and that the case needs to be heard. In the context of globalized capital, here’s what this lawsuit might mean: that only democratically elected officials who make specific votes in favor of specific handouts to specific enterprises can keep the corporate welfare flowing. But the case might also mean that corporate welfare in New York State might have to come to a screeching halt.

Would that mean the end of capitalism in our state? Would all business do what Andrew Rudnick recently suggested it do, and move to Florida?

Stay tuned. But we know this tune, don’t we? For at least since the late Jack Kemp campaigned against taxes in the early 1970s, Upstate New Yorkers have taken it as an article of faith that the reason businesses won’t hire more people here is because their taxes are too high. Our political elites have been shipping American jobs overseas at the behest of their financial backers, but still we have local people who believe that the fault is not in our stars but in ourselves.

That’s why elected officials in New York State and in just about every other state, too, have reacted to the globalization of capital by creating entities like Empire State Development Corporation, and the Erie Canal Harbor Development Corporation, and the Erie County Industrial Development Agency and its counterparts in Amherst, Hamburg, Clarence, and elsewhere. The specific task of these entities is to hand out public funds—in the form of tax abatements, infrastructure improvements, subsidized loans, or outright cash—on the theory that but for that public largesse, those businesses would locate elsewhere.

For the moment, left-leaning State Senate candidate Michael Kuzma and Tea Partier James Ostrowski are together winning the argument that our state constitution prohibits this stuff.

But what if they win? For should corporate welfare be declared illegal, can we not predict the hue and cry from the investor class? Will we not hear that Jack Kemp rhetoric again, and see the out-migration of yet more capital as it flees our messy gun-totin’ democracy for the high-return environments of the lands where state capitalism rules?

Luckily for us, the summer sun shines nowadays, and young people happily scoop up real-estate bargains in our rusty cities. The bloggers of celebrate the distinctiveness of Buffalo and other capital-abandoned Great Lakes cities where young folks can pick up beautiful old places and replenish them with the talent and energy and taste that created them in the first place—and because of globalized instrumentalities like the internet, these same talented people can make exports happen.

Bremmer worries about protectionism, but he should instead be worried about the resurgence of destructive economic theories and policies, like the sharp drop in government spending that the geniuses of the G-20, plus Republicans and deficit-fearing Democrats, are now advocating.

Meanwhile, the Ivy-educated activists of the Great Lakes Urban Exchange will hold their annual conference in Cleveland this summer (many came to Buffalo for our Great Lakes Metros summit last summer). These folks are clever enough to celebrate the possibilities that we still cherish, even if Bass Pro may be prohibited by law from getting tens of millions of dollars to entice it to build a store here rather than…where, in China? We here in the left-behind globalized economy have our summer theaters, our local produce, and even our summer operas to entertain us as we fade from historic dominance. Perhaps as we sing our summer song, we can choose as our mascot a different character than Alberich the dwarf, the Wagner creature who foreswore love so that he could get the gold, the character I nominate as the icon of globalized capital.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

Reader Comments

Frederick Stimson Harriman
01 Jul 2010, 11:21
A nice synopsis of the mess we've gotten into. The last thing we need right now is for the Libertarian fantasy to take hold and distract legislators from the measures that need to be taken to keep the country stable and make it possible for America to be solvent again.

Rosalie Guttman
01 Jul 2010, 14:22
A brilliant analysis and commentary about the state of affairs in this country. One wonders when the frontiersman mentality of many of our citizens will evolve "out" so that we can all enjoy the same freedoms and security..

01 Jul 2010, 16:28
Well done again, Dr. Fisher!

The court's decision to co-opt local and state gun laws flies in the face of the typical conservative rallying cry of "state's rights" which has been used to deflate civil rights measures and most recently, elements of the health care reform enacted by Congress.

That coupled with the apparent free reign granted to the corporatists by the court in Citizens United decision means it's open season to buy influence through any and all means available.

My hope was that Congress would remedy the situation, but with the likely swing in mid-term majorities that seems remote.

Our voices will be drowned out by the resulting deluge of dollars; our streets will echo with the sound of gunfire. I'm reminded of Franklin's admonition of "A republic if you can keep it."

I don't think we can keep it under those circumstances.

Lloyd A. Marshall, Jr.
01 Jul 2010, 18:57
A sheriff in Florida, when news came out that "right-to-carry" became the law, said it best: "The people should freely arm up; they need to protect themselves."

mike hudson
02 Jul 2010, 10:19
While I'm aware of the anti-gun culture embraced by some Blue Staters, it is not shared by myself or the rest of the members of the LaSalle Sportsman's Club, which is also located in New York.

Likewise, the 1 million New York hunters who harvested 300,000 deer last year would also likely be offended by your characterization.

The Supreme Court has done great work in its adherence to the 2nd Amendment of the United States Constitution. And there are many of us in New York and all the other Blue States who believe that the 1st Amendment simply isn't any good without the 2nd.

Bruce Fisher
04 Jul 2010, 19:07
I've had a hunting license since age 14, and venison is my favorite (except for partridge or wild duck). Hunting has nothing to do with the discussion of appropriate regulations for handguns, which constitute a class of weapon that is distinguished by its limitation: handguns, like military rifles, have but one purpose, which is to kill humans, which is why those classes of weapons should be left to the military and to those charged with the task of securing public safety.

mike hudson
06 Jul 2010, 14:55 might want to tell that to the maine guides who assisted me on my bear hunt season before last, or to the guy whose camp i hunt out of down in allegheny county every year who hunts alternately with a s&w .44 magnum or a muzzleloading rifle and takes a buck every year.

as for military rifles, i use a customized .30-06 mauser or a similarly worked 6.5 mm beretta for my big game hunting. one was made for the argententian military in 1909 and the other for the imperial japanese government in 1938.

and also, do you just make this shit up as you go along?

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