When Obama accidentally saved neoliberalism

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You remember him (Photo credit)

It has been almost a decade since the most spectacular economic crisis of the last half century – the Global Financial Crisis (GFC). In approximately a fortnight, it will be exactly nine years since the collapse of the major American bank Lehmann Brothers (which constituted the most dramatic event of the crisis) put into perspective the extent to which the entire global financial system was at risk of collapsing. What is particularly striking about this historical event is that it could have constituted the beginning of a new era of political dominance for the Left but, due to the political miscalculations made in the immediate following months by leaders such as Barack Obama, it can in retrospect be seen as the beginning point for the rise of the populist Right, culminating in Donald Trump’s 2016 election victory.

The GFC demonstrated in dramatic fashion the extent to which the global banking system (including the credit rating agencies) was incapable of governing itself. The event seemed to my eyes (as, at that time, a first year uni student) to also present an opportunity for a new political era. The GFC provided solid empirical evidence that the doctrines of neoliberalism and free-market economics constituted an inherently flawed framework for administering economies in a globalised world. This was, after all, not a crisis caused by an unpredictable external event like a war, but rather was fundamentally inherent to the system itself.

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The Lehman Brothers bankruptcy was the largest in US history (photo credit)

The free-market advocates appeared to have been defeated and voters would consequently be won over by the inherent value of social democratic parties (who prioritised the importance of intervention and regulation of economic markets). My confidence in this outcome was reinforced by the knowledge that, by the end of 2008, the Democrats controlled the US Congress, Senate and the Presidency. It felt like the beginning of a new era.

If future-me was to tell uni-student me that, only two years later, the Republicans would recapture a majority in the Congress and that, in a further eight years, they would control the Congress, Senate AND be led by a President Donald Trump, I would have assumed future-me had become insane. Considering the way that the Global Financial Crisis had played out  – how could this outcome have occurred?

In retrospect, it’s clear that much of the responsibility for the resurgence of neoliberalism and the emergence of right wing populism across the Western world lies at the feet of Barack Obama. Indeed, it’s striking how little criticism the former US President attracts from the Left for his strategic errors and political misjudgement in the immediate aftermath of the crisis.

Obama, at the direction of his (heavily Wall Street connected) Treasury Secretary Timothy Geithner, implemented two key responses. The first was a program where the Government purchased the ‘toxic’ worthless loans (ie. the mortgages that couldn’t be paid) from the banks. The second was to implement an $800 billion stimulus program to make up for the huge loss in economic demand (and jobs) caused by the banking crisis.

To be fair, these actions did much to prevent the ensuing recession from becoming a depression (although some economists had argued that the stimulus package was far too small to adequately stabilise the economy). However, the true shortcoming of this approach was that it only addressed the technical aspects of the crisis. This economic focus was, of course, necessary, but it was not sufficient. The political issues presented by the GFC relate to the question of how to pursue justice for the taxpayers that had bailed out the banks and for the people who had lost their jobs. These political issues were not properly dealt with by the Obama Administration and the consequences have reverberated ever since.

There was a fundamental need on Obama’s part to articulate a political narrative of the crisis that illustrated the moral failings of the banking industry and compelled the financial sector to demonstrate meaningful contrition. This was a period in history where the financial class had not only required being bailed out by the taxpayers due to a failure to adequately do their jobs, but the broader public were the ones being punished for it through job losses and wage stagnation. The capacity for this crisis to tear divisions through different sections of American society (as with much of the rest of Western society) was almost inevitable. Accordingly, it was not a time for the language of compromise, stability and unity (which was Obama’s preferred political vernacular) but a time where fingers needed to be pointed and justice had to be seen to be delivered.

Obama’s failure to demand justice is personified in a memorable quote he delivered to a room full of banking CEOs in the months following the crisis: “My administration” he told them, “is the only thing between you and pitchforks.” An obvious question, both at the time and with the benefit of hindsight was; why stand between them? This is not to advocate for actual violence or the sacrifice of economic recovery for the sake of political scalps, but rather to point out that, despite the huge damage the GFC unleashed on millions of lives, no one has ever faced criminal charges. The Obama Administration’s willingness to act as a shield for the banks allowed the public to develop the impression that the state and the banks were one in the same.

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A great orator without a great narrative (photo credit)

Obama could have demanded that the bankers resign or at the least pledge to rescind any future bonuses for a number of years. He could have requested the Department of Justice investigate members of the banking industry for criminal culpability (even if no laws had been technically broken, the message sent to the public would have been clear). These actions should have been communicated through journalists, but also delivered in major public addresses to hallrooms packed with the crowds of grass-root supporters he had amassed in the 2008 election.

It is almost certain that large sections of the Democrat Party (let alone the Republicans) would have been moved to criticise his response as populist and unhelpful and it is similarly likely journalists would have criticised his actions for causing division in his political party. As we have seen from Trump and Bernie Sanders in taking on their respective political parties in 2016 however, this would have been a savvy political move. The public would have been able to see Obama as distinct from both the political and financial establishment that they were so justifiably suspicious of.

An immediate consequence of addressing the policy-side of the banking collapse without balancing it with a demand for justice was that other figures took the opportunity to nominate villains and point the finger. Most famously, CNBC reporter Rick Santelli delivered a fiery TV interview from the floor of the Chicago Mercantile Exchange blaming poor people who took on mortgages that they couldn’t afford on the one hand, and the Federal Government for “rewarding their bad behaviour” on the other hand.

Santelli’s neoliberal framing of the issue might seem spurious, but it fit with the prevailing narratives about free markets that had informed US politics up to that point and, in the absence of a moralistic counter-narrative from the Obama Administration, it was the only real narrative on offer. The Santelli interview is now seen a major step towards the emergence of the populist right Tea Party Movement which directly led to the Republicans retaking Congress in the 2010 midterm elections.

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There’s basically no images of Rick Santelli labelled for re-use, so here’s an image of the CNBC instead (photo by Kevin Action)

It is certainly possible that no amount of advocacy from Obama could have prevented this outcome in a country wedded to certain notions of free enterprise, but, based on the comments of a President who apparently saw his role as standing between the banking executives and the “pitchforks” of the public, it is also clear that he never really tried. As the writer David Bromwich observed of Obama early in his presidency, he tended to adopt a technocratic position of assuming that his actions would justify themselves: “He expected a gratitude he did not get. His choice of tactics could never have been easy to explain in a climate where so many bankers survived and so many ordinary people lost their homes and jobs.”

From this point on, the Left had lost the capacity to frame the debate and we have seen the following ten years characterised by austerity and the rapid growth of the far Right and nativist politics. It is only recently, through such figures as Jeremy Corbyn, Bernie Sanders and Jean Luc Melenchon that we are seeing the revival of Left political movements advocating for a larger role for government in society. Indeed, it is notable that these individuals couch their arguments in highly moralistic language that identifies specific culprits for the prolonged recession and subsequent wage stagnation that have characterised the last ten years.

To point out Obama’s political errors in the aftermath of the GFC is not to discount the fact that he was a savvy and talented politician. One cannot help but think however, that his brand of soaring rhetoric and progressive technocratism would have made him the perfect candidate in a 1996 or 2000 election when economic growth was consistently high and advocacy for a major program such as healthcare reform would have been consequently easier to make. Indeed, one can only imagine how valuable Obama’s relatively measured decision-making processes might have been in the immediate aftermath of September 11.

On this ninth anniversary of the GFC however, as the prospect of at least four years of a Trump Administration remains and populist movements across the globe show no sign of declining, we can see that Obama was not the right person for the times in which he found himself. While, in retirement, Obama is still largely feted by the Left and retains a ‘cool guy’ persona (which other figure on the Left could receive such a warm reception while kite-surfing with Richard Branson?) it is likely that history will see him as one of the primary factors in why the Left failed to capitalise on the event that posed the greatest threat to the primacy of neoliberalism in a generation.

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Fake news and ‘post-truth’

Following the unexpected victories of the Leave campaign in the Brexit referendum and Donald Trump in the US election, media commentators have been scrambling for an explanation. The search for an explanation stems from both the unexpectedness of the results and the fact that it took place despite the overwhelming majority of major media publications recommending against it.

A prevailing explanation across many parts of the media and political spectrum is that the results were largely driven by the phenomena of ‘fake news’. Some major examples include one of the central claims of the Brexit Leave Campaign – that 350 million is sent to the European Union every week (which, as The Guardian has written, does not stand up to the facts. The New York Times has written about “Fake News Sausage Factories” based in Eastern European countries churning out deliberately fake pro-Trump news stories with the purpose of influencing the US election.

I do not seek to dispute the veracity of the investigative journalism in the above articles or deny that there are partisans who are self-consciously propagating factually incorrect stories. What I am interested in however is the notion that ‘post-truth’ is a relatively new concept and the implicit assumption of many articles decrying fake news – and, indeed, of most mainstream media publications – that, had those fake stories not existed and people were instead exposed to ‘real news’, they would not have voted either for Brexit or for Trump.

To appreciate why this is a poor prism through which to understand the changes that have taken place in the media landscape over the last few years, it is worth asking not why people find ‘fake news’ believable, but rather why the value of ‘objective facts’ – and, by extension, fact-checking – has plummeted in public discourse.

The focus on fake news perhaps reached its zenith with the Oxford English Dictionary announcing ‘post-truth’ as its 2016 Word of the Year – which it defines as “circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.”

However, the real question is why Oxford English Dictionary might have waited until 2016 to declare it the word of the year, when the process of ‘objective facts’ being subsumed into ‘emotion and personal belief’ has been gathering momentum for decades.

Take, for example, the phenomena of human-induced climate change. This is a process which has been established to a high degree of certainty since the early 1990s. It has been the overwhelming consensus of national scientific organisations and reflected in each of the United Nations International Panel on Climate Change reports. The scientific nature of the issue was also expressed in economic terms in the landmark 2006 Stern Review, which found that “the benefits of strong and early action far outweigh the economic costs of not acting.” If there is any public policy issue that has significant expert consensus (and would therefore meet the articulated standard of ‘objective fact’), it is Anthropogenic Climate Change.

Despite this, significant sections of the media and political class have never truly accepted its veracity. From right-leaning media organisations who reject it outright to organisations such as the ABC and BBC who have in effect downplayed the issue through the promotion of ‘false balance’ in its reporting.

Climate change ‘critiques’ sometimes take the form of disproportionate coverage of a tiny minority of scientist ‘climate skeptics’ (usually from outside the field of climate science). More often however, climate science is rejected on the basis that the scientists are biased by their desire to implement communism or, more typically, through a vague religious devotion to environmentalism or groupthink. While this line of attack appears in all the usual suspect right wing media outlets, it is perhaps noteworthy that it also came from Bret Stephens from the New York Times – a reporter and newspaper which sees itself as a vanguard against the ‘war on truth’ just earlier this year, in his article warning against “overweening scientism” in the climate change debate.

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The NY Times’ insufferably sanctimonious advertisment – photo credit

Given the extent to which major media publications across the political spectrum have promoted the idea that public science institutions (originally established to provide objective policy guidance on issues requiring scientific-expertise) are either incompetent or motivated by political bias, it should not come as a shock that populist political leaders extend that critique to other institutions with ease.

That task has undoubtedly been made easier by the fact that many prestigious economic institutions have allowed themselves to be drawn into politics. The US Federal Reserve, through its former chairman Alan Greenspan promoted a vision of economic management that had significant consequences in terms of defining the policy options of governments (through, for example, a deference to market-based solutions to public policy issues). Following the Global Financial Crisis (GFC), he was forced to admit that he had put too much faith in the self-correcting power of free markets. The International Monetary Fund (IMF) was at the forefront of the post-GFC push to implement austerity policies in countries such as Greece to boost “market confidence.” In 2013, the IMF admitted these policies had not worked and instead resulted in a “deeper than expected” recession.

In an era where scientific institutions have been discredited for political ends and economic institutions, through their political ends, have discredited themselves, is it any surprise that significant sections of the public identify with the now-famous observation that “people have had enough of experts”?

The dilution and politicisation of objectivity explains why ‘fake news’ as a phenomena is not going anywhere and why many of the proposed antidotes are likely to fail. The interest in Facebook fake news filters or greater proliferation of ‘fact-check’ articles, for example, assumes that there is an organisation or set of statistics that somehow floats above the political partisan debate – but the media have, over the past few decades, methodically dismantled any such possibility.

In light of the above, it seems that the only difference between the ‘fake news’ of the past few years and the fake news of the past few decades is that traditional media organizations have lost their gatekeeper status and monopoly on its dissemination. The major media publications may not like the fact that Trump denies ‘objective facts’ but he is only taking advantage of a phenomena that they have created.

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Many thanks to the BBC for debunking this fake news story before something serious happened. photo credit

The trope of the Ex-Muslim Native Informant

On 25 June 2017, a group of LGBTQI+ rights activists of Muslim background took part in the Toronto Pride March and marched through the streets carrying posters focusing on homophobia in majority Muslim countries such as Iran. As they tried to march, a number of progressive activists (from Antifa Toronto among others) formed a circle around the group, accused them of Islamophobia and prevented them from marching. A comment from one of the Antifa members succinctly summarised the cause of their grievance: “anti-Muslim racists look at you guys and they are enboldened.” (the video can be found here)

Whilst the Toronto Police eventually intervened and allowed their march to go ahead, the incident reflects a growing trend within progressive circles to accuse Muslims (including secular, ex and atheist) of ‘Islamophobia.’

Other recent examples include the gleeful response to the news that Ayaan Hirsi Ali was cancelling her talk in Australia last April and the decision by the Southern Poverty Law Centre to designate the UK writer Maajid Nawaz – who identifies as Muslim – as an “anti-Muslim extremist.

The Left critiques of secular and ex-Muslims usually takes two forms. The first could be described as the Useful Idiot argument. It centres on the notion that the ex-Muslims are unable to realise that their critiques of Islam validate and embolden the arguments of right wing reactionaries and racists which ultimately works against their own interests. This is the tack taken by the Antifa Toronto activist at the LGTBQI+ activists, as quoted above.

The second form (directed more commonly at figures such as Ms Hirsi Ali and Maajid Nawaz) takes the form of the ‘native informant’ argument. The native informant is a concept originally developed by Franz Fanon to refer to a “Black Subject” who “will try to appropriate and imitate the culture of the coloniser.” In contemporary use, it is a racial slur* directed at Muslims who are assumed to be selling out their ethnic community by expressing an opinion (purely for personal financial gain) which is assumed to validate the assumptions of right wing reactionaries and racists.

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Maajid Nawaz (photo credit)

To understand how we have arrived at a point where anti-racist campaigners are accusing non-white intellectuals and academics of racism, we have to explore the framework through which we perceive diversity and multiculturalism to operate within society.

In any critique of the Left’s approach to race issues, it is important to note that it is well-intentioned. We can safely assume that the Left critique comes from a desire to inclusively accept different cultural practises and non-white people (as opposed to a Right critique which comes from a desire to enforce a monoculture and exclude all others). It’s also reasonable to assume that the LGBTQI+ activists of a Muslim background want a world free of racism (I assume that even Ms Hirsi Ali’s most vigorous critiques on the Left would accept that she does desire an end to racism). It can be established therefore that ‘we’ want the same outcome – the disagreements center on how we get there.

The conflict over how to reach a racism-free outcome is ultimately dependent on the framework through which one believes society is structured and that political change can be implemented. The British academic Kenan Malik has argued that the belief that a particular member of a minority can ‘betray’ their commnunity by acting as a ‘native informant’ requires an attachment to a particular political framework which can be termed ‘multiculturalism’. In this argument, it’s very important to distinguish the lived experience of multiculturalism whereby one encounters diversity and lives in a cosmopolitan society (which is obviously a good thing) from multiculturalism as a political process where policies are designed and implemented in an attempt to “institutionalise diversity.”

Conceiving of society as the sum of a range of different cultural groups living harmoniously has many advantages for the Left in that it establishes the principle that communities that constitute a minority in a particular society have an inherent right to live in the West. Furthermore, it is a useful response to the common refrain from the Right that migrants should “assimilate”.

The disadvantages however – especially for those who are ‘minorities within minorities’ – are also evident. A view of society dependent on cultural rights leads to a view of minority communities as distinct, ‘authentic’, homogeneous and bounded with interests that can be represented by a community representative or even ‘leader’. As a consequence, conflicts and diversity within a community are not noticed or are actively downplayed. Through this framework, the treatment of the Muslim LGBTQI+ activists in Toronto and Ms Hirsi Ali is justified as these individuals are – in some way – seen to be betraying their community’s interests by taking a position that is contrary to the majority.

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Ayaan Hirsi Ali (photo credit)

As Malik notes, the problematic consequences of this view of multiculturalism do not result from an emphasis on diversity per se but rather from a reliance on “too rigid a notion of what diversity entails” which distorts “the right to be treated the same despite one’s differences of culture, ethnicity or faith to meaning the right to be treated differently because of them.”

So, how can a white person be a good ally not just to minority communities but to minorities within minorities? Being a good ally does not require one to believe Ms Hirsi Ali speaks for all Muslim women (has she ever claimed to?) but it does require one to acknowledge her right to speak for herself. Being a good ally does not require one to focus exclusively on homophobia in Muslim-majority countries, but it does require one to not block Muslim LGTBQI+ activists in the streets and imply they are too dumb to realise they are emboldening racists.

Indeed, rather than embolden racists, such acts may be have the opposite effect, as the acceptance of a plurality of views in minority communities can encourage the idea that one cannot judge a person’s political beliefs based on an assessment of their ethnic identity markers (just like how we do not assume two white people – say, Jeremy Corbyn and Tony Abbott – would agree on any particular issue because they have the same ethnic heritage).

Ultimately, any anti-racist campaign that seeks to cast secular or ex-Muslim activists as part of the problem is, at best, a regressive view of racial identity and, at its worst, a mirror reflection to the racial bigotry found on the far Right.

* it is worth noting there is nothing inherently racist about the idea as originally conceptualised and developed by Franz Fanon, however its contemporary use towards Muslims invariably is.