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The 200k Challenge Live Webcast

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PAUL JAY, SENIOR EDITOR, TRNN: –final closing minutes, and we broke through the $200,000 mark just, I guess, about half an hour ago. It’s really remarkable. Something in the range, I’m guessing, about 1,200, we may have reached 1,300 individual donations since we started this campaign. It’s really amazing when over the course of these three evenings donations have been coming in literally one, two every minute. It’s really an amazing response. It’s such an encouragement for us in terms of our own work. But let me say, $200,000 barely covers four months of our work, and it certainly doesn’t cover any expansion of our work. And we really would like to have producers that are more specialized. We need four or five producers in different areas. One of the areas we’d like to greatly expand our work, and perhaps maybe the most important area that we need to work in, and that’s understanding the economic crisis, what public policy will be good for us. As you’ve heard me say many times over the last three evenings, we unabashedly think we’re ordinary people at The Real News Network, and we think when you look at economic issues and economic policy, you’ve got to ask the question for whom. And our for whom is pretty easy: it’s for other ordinary people. We’re not making policy for the elites, although perhaps many of the people that appear on the network have proposals that might even be good for sections of the elite anyway, in the sense that it’d be good for the whole society. But we need to do much more broader, more profound work in [the] economic area, including a lot of reports, interviews, more discussions, more debates, and more on-the-ground reporting that connects immediate local problems, like why is the cost of food going up at the corner store, with what’s going on on Wall Street and what’s going on in the economy globally, ’cause you cannot buy anything in a local store that doesn’t somehow get–isn’t somehow affected by the global economy, global food speculation, speculation on the price of corn, and so on. So we need your help. Please help us get, we hope, $205,000, $210,000–wouldn’t that be wonderful?–before we close out this evening or before the campaign’s over, which is over–well, the matching grant is over, but every dollar really matters to us now. So, quickly, if you want to donate, click on the buttons. If you want to call, you call 888-449-6772. That’s 888-449-6772. Okay. Now joining us, two gentlemen who have helped us greatly in the past, and I’m sure will more in the future, [to] understand the economic crisis. We’ve had a lot of discussions trying to break down why what’s happening is happening, and talk about alternative solutions. From Toronto, Dr. Leo Panitch, who’s a distinguished research professor at York University in Toronto. And from Amherst, Massachusetts, Bob Pollin, who’s the co-director of the PERI institute. Thank you very much for joining us, gentlemen, both of you.



JAY: Thank you. So, Bob, why don’t you kick us off? The big American story today, I guess, for people that follow this issue, is what happened in the House. The House Democrats said they’re not going to go along with the Obama-Republican deal to extend Bush tax cuts and such. What do you make of it? And what do you think is the significance of it?

POLLIN: Well, you know, the politics are that finally the House Democrats decided that they’d had enough of caving in to Republican demands and to Obama’s kind of going along to guarantee moving the center to the right. I mean, I think we should be reasonable. Obama’s always going to be where the center is in politics, and for anyone to have ever thought he’d be other than that, I think,was deluding themselves. So I don’t think Obama has betrayed anything, done anything inconsistent with what he always has done and would do as president. That said, therefore the struggle is not about Obama himself but about moving the debate and creating pressure to the left, and Obama would have to respond to that as much as he clearly responds to the right. So the fact that the House has told Obama, you know, very dramatically now, that they will not accept this deal that Obama is saying is absolutely necessary to get anything done is an important political step. Now, that is different than saying, you know, it’s going to solve anything in terms of the economic crisis, because it is a fact that if there isn’t something that gets worked out, something, millions of people are going to lose their unemployment benefits. That’s a fact. Now, how you deal with that over the next few weeks is, you know, the issue for politics. But that’s going to happen. So how we make sure that doesn’t happen is an open question.

JAY: But before we get more into whether any of these economic policies on the table are actually going to solve the crisis, Leo, what’s your take on the politics of this in the US, and perhaps to some extent Canada?

PANITCH: Well, it was my understanding that part of the deal was going to be that they would extend the unemployment benefits for something like 13 months. And I would imagine that if the Democrats in the House are holding out, what they may be holding out for is that the unemployment benefits be extended as long as the tax cuts on the wealthy be extended. That would actually have the effect, of course, of increasing the deficit even more, which, you know, probably isn’t the way to go, but definitely isn’t the way to go about solving the crisis. But it is what gets defined as a stimulus, insofar as you aren’t in fact coming through with austerity, which I must say on the Republican side has never been credible. It’s only been, as Bob says, the centrist Democrats who have ever taken that responsibility, and sometimes it causes them to lose elections, as it did with Mondale in the 1980s. And then, of course, Clinton ended welfare as we know it in order to balance the budget. But Republicans never do this. They have no interest in this. They’re interested in porkbarrel politics and reducing taxes. So, you know, as much as what’s going to get out of this [sic], what looks, to a foreigner like me, out of this really ugly game that the Democrats and Republicans play, you’re going to get out of it, at best, an extension of unemployment insurance, as well as the tax cuts on the wealthy, and that’ll mean that you’ll have a much fatter deficit, rather than all this baloney on austerity.

JAY: Bob, let’s get into more of some of the economic news in the last week or so. One of the stories that came out was the sort of revelation for many of just the extent of which the Fed had fed the system, something–I think it was close to $3 trillion of loans to corporations, American financial institutions, foreign banks. So did this number surprise you at all? And do you think it necessary?

POLLIN: No. No. In fact, I think I’ve published that number a few places myself. It’s no big news. I mean, the part, I guess, that is a bit of a twist is the extent to which they were making loans in Europe as well as the US. But the extent of the loans, no. This is–you know, one of the interesting things about the whole– the politics, as well as the economics of the crisis — is that there–with so much attention on the bank bailouts that were engineered via the Treasury, and rightfully, those are huger numbers and they were using taxpayer dollars, was–the fact all along is that the Federal Reserve was doing even more extensive bailouts every step of the way. That’s the number that we now see, the $3 trillion. So if you were reading the business press carefully, you knew that this was happening. And my argument all along is that, yes, let’s use that tool, but then let’s channel the credit into productive investments, into job creation, and let’s force the financial system to do that. And then we have–the banks are getting free money. And, you know, that’s maybe necessary to avoid a depression. But the step 2 they’re not doing, which is to force the banks to lend money to create jobs

JAY: Yeah, and which they–and if they don’t, then what have they done? And they keep some liquidity at the level of bank-to-bank. And in this kind of big, global capital flow, so much of it is speculative. But if they don’t somehow push actual investment, then what have they solved? And then how often do they keep–. I guess, are there not some limits to how much they can keep putting back into the system if some of the more structural things are solved? What’s your take, Leo?

PANITCH: But I think what this really tells us–and as Bob says, a lot of us have talked about how large that was and the extent to which they were taking responsibility for the global financial system. This goes back all the way to August 2007, when they engaged in enormous swaps of dollars to the European banking system immediately, soon as the crisis first hit, well before Lehman Brothers a year later. They were engaging in enormous swaps to the European banks to keep them going, and then programs that has just been documented that were–kicked in back in December 2007. Now, what that really tells us is the extent to which the American state is not merely responsible for the American economy: the American state is responsible for global capitalism. It was at the center of making global capitalism, largely by forcing states around the world to remove their capital controls and open themselves up to the free flow of financial capital. And when there is a crash of this size (this one was made in America, but inevitably it goes to the whole world), then it is the American central bank that is the world’s central bank. And all capitalist central banks have one primary function, and that is to be lenders of last resort in a crisis to prevent the banking system from freezing up. And that’s what they have done. Now, what you’re going to hear from the same people who don’t want unemployment insurance extended is that they think it’s appalling that the Federal Reserve should have been lending money to European banks and other banks. But in the end, while they make all the noise–Gingrich did this in 1994 when the Treasury bailed out Wall Street but had to bail out Wall Street ’cause they bailed out the Mexicans. Gingrich, at that point leading the right in the Republican Party, was all aghast over it. But when it came down to it, he said, yes, I know this needs to be done; I just want to make sure that it’s the president that takes responsibility for it and not the Republicans in Congress.

JAY: Right. Bob, if you say it’s okay to use the tool the Fed has used to put all this liquidity back into the global system, but it needs to be accompanied by some imposition that makes the banks do something constructive with it, but they’re not doing that side of it, so given that, then what?

POLLIN: Hello? Kind of fading in and out here, sorry.

JAY: Oh, okay. Did you hear my question?

POLLIN: I heard the beginning.

JAY: I said, well, you said that it’s okay to use it as a tool, but you also have to do something structural to make sure that the banks actually use this liquidity to get it into the economy. But they’re not.

POLLIN: Yeah, absolutely. I mean,–

JAY: But the thing is they’re not doing it.

POLLIN: –I guess, you know, there’s a legitimate debate among left people as to whether there should have been a bailout at all. And my view is that there should have been, because the alternative–I think there’s a serious issue of a global 1930s-level depression. But the next step is not just whether there’s a bailout but the nature of the bailout, and then what are the terms under which we allow the financial system to continue to operate. And so the failure was to not establish any standards and any plan for mobilizing the financial system for recovery.

JAY: Which is a pretty big failure, a systemic failure.

POLLIN: You guys need money; here’s your money; and now you guys decide what to do with the money. And that’s been a disaster as far as I’m concerned.

JAY: Right. Yeah, Leo?

PANITCH: But this is a big problem. I mean, you know, when you don’t have a economic planning system, it isn’t a matter of the banks being forced to lend. There have to be people who want to borrow. There have to be capitalists who want to invest. And part of the problem here is that they’re pushing on a string. It’s not just that the banks are reluctant to lend; it’s that there isn’t the demand for investment, you know, firms coming to the banks, or for that matter individuals, who are now trying to pay off debt. So, you know, this is a fundamental problem. And what I was saying when I said that what you see here is the Federal Reserve acting as the capitalist world central bank is that what we run up against is the nature of this state. It is a capitalist state, and it’s one in which the room for reform is incredibly narrow and small, much smaller than it’s been for decades. And with a working class that is not mobilized, is not putting pressure on them, as Bob was saying initially with Obama, then you can’t expect this state to simply follow policy guidelines that come from progressive liberals or social democrats. We might as well be calling (and I think we need to call) for the banks to become a public utility. Now, the forces aren’t for that–there for that, either. But since we’re not going to get the reforms, we’re not going to get the banks to lend into a vacuum (since they are private banks), we ought to be using our opportunity, when we can, not to be offering policy advice to a Washington policy machine which isn’t going to do it; we ought to be trying to educate people on how capitalism works and why what we need instead is a publicly owned banking system that is part of a system of democratic economic planning, in which what’s invested and where it’s invested and how it’s invested is democratically decided. Bob used to have some great ideas for how to democratize the Federal Reserve. And if I’d be slightly critical of him, since Obama got in, for all that he’s very clear on the limits on Obama, he perhaps has been offering policy advice that’s cast within the framework of what is realistic for a centrist Democratic Party.

JAY: Bob, what do you think?

POLLIN: I think that’s a fair criticism. I think that–you know, I think we’re kind of cast in this difficult situation in which everything Leo said is true, and it’s also true that they’re not going to–everything he says is not going to happen, at least not right now, and so that the problem, I think, you know, for–as I see it, as–in my role on the left, is to also try to mobilize people to see victories and to see things moving forward. So we need to also, I think, try to–as well as what Leo said, which I completely support, also try to kind of define the left wing of the possible. And that’s sometimes not easy to do, and it doesn’t sound that exciting sometimes, but I think that’s part of the dialog. Certainly in the discussions that I have with people, labor groups, progressive groups, which are pretty regular, that’s what they’re asking for. That’s certainly what they’re asking from–of me and my colleagues here. So that’s kind of a constant demand, I think, a legitimate demand, and I don’t think it’s inconsistent with what Leo said. I think that, you know, if we think about a public banking system, how exactly we establish such a public banking system is going to come out of the struggles, and we don’t really know exactly the features that it will have. We know in general where we want to go with it. But I think it’s also useful to be in the trenches and fight about these various things, like the specific features of the new Dodd-Frank financial reform bill, which I have been writing about, and testifying at the Securities and Exchange Commission. There are important fights going on. And if people on the left are not doing it, I assure you there’s nobody else, besides Wall Street, that is engaging with the Securities and Exchange Commission. So we’ve got to keep up that fight, too. In fact, people have asked me at the Commodities and Futures Trading Commission to keep writing this stuff because all they get is from the financial sector.

JAY: Right. Leo?

PANITCH: I’m very glad you’re doing that, Bob. But the result of this is that you’ve left those of us who have less knowledge than you do about how to democratize the Fed in a fundamental way out on a limb, making the case for the need for the banking system to become a public utility. Or not just those of us on the left. Ironically, people like Willem Buiter, who’s just been appointed, believe it or not, as Chief Economist of Citibank, was the one major economist who made the case that if banks, private banks, can only exist on the basis of the state acting as a lender of last resort and on the basis of the kinds of protection of bank accounts that–they can’t exist without these public protection of bank accounts, then they really ought to be public utilities. I realize that in order to be part of the policy debate in a country where the, you know, most left force in the public arena is the AFL-CIO, your voice needs to be there offering what they want to hear. But, you know, if it’s unlikely that what you’re calling for is going to get introduced anyway, we might as well be out there making socialists, we might as well be out there trying to have people really understand how to change the system.

POLLIN: Yeah. Well, I don’t disagree with you. I mean, I don’t think it’s an either/or. I certainly agree with you that the kinds of things that you and not that many other people are arguing about with respect to the nature of the financial system for the last 20 years have all come true, and the financial system is as bad as we’ve been saying. I was never quite 100 percent sure it was quite as bad as I was writing it, but it turns out it is. And therefore, yeah, thinking about fundamental transformation is really that task. At the same time, there is the question of how you get from A to B to C and to D. And, you know, the struggles around the Dodd-Frank bill, for example–that’s the financial reform bill that passed–these are quite serious, because there are–in principle, in law, there are decent features of this bill, and what’s happening now is the issue of how you specify those. And of course there’s 100 Wall Street lawyers for each thing that matters that they’re fighting to water down and destroy, and they–you know, on the other hand, there’s almost nobody on the other side. So I think it’s important that we keep up that one as well. And that’s true, that is being supported by the labor unions, AFL-CIO, other Washington progressive, you know, think tanks, NGOs, that kind of stuff.

JAY: Well, gentlemen–.

POLLIN: So there’s both things, and I don’t think that the two are at all incompatible. I do think you’re right, though, that we have to keep up the broader–kind of just keep the broader vision forcefully in front of people.

JAY: Well, this is just–.

PANITCH: I’m really glad to hear you say that, Bob. And I hope you’ll start writing pieces in The Nation now about how to fundamentally democratize the Fed. All you’d need to do would be to retread some terrific stuff you wrote in New Left Review a long time ago.

POLLIN: Okay, Leo. Well, why’d don’t you write?

PANITCH: But we haven’t been reading that from you in The Nation.

JAY: Alright. Well, listen, this is just the beginning of a wonderful conversation. In the coming year, what we’re going to do is a lot more discussion and debate about solutions long-term, short-term; short-term reform, longer-term transformation. But we’re going to discuss what we can do about our current crisis. Thank you both, Leo, Bob, for joining us tonight, and we hope to have you both back many times in the future.

POLLIN: Yeah, and I like being on with Leo. He’s a great guy.

PANITCH: Paul, thanks for giving me the opportunity to chastise Pollin.

JAY: Okay, both of you maybe give us 30 seconds on if you think people should support The Real News. Maybe, Leo, give us 30 seconds why you would think so.

PANITCH: Oh, absolutely. The Real News is one of the crucial media outlets for progressive opinion. And the great thing about it is that it really lays out the whole scene in terms of alternatives. It’s not operating within the box. It’s operating outside of the box. And people need to hear things that are outside the box.

JAY: Great. Bob?

POLLIN: Well, I agree with everything Leo said. And I would just add, as you [said] when you began this segment, Paul, trying to get stories out on the economy, on economic policy, I think, you know, certainly in the work that we’ve done over the past year, has been fantastic, to try to convey some, you know, fairly difficult things in ways that people need to understand. And I think you’ve been very successful, and I look forward to you building on this success.

JAY: Thanks to you both very much. And thank you, everybody watching. One more segment to go on the final night of the Real News Webathon. We’ve cracked $200,000. We’re inching towards $205,000. Maybe we’re inching to $210,000. That’d be tremendous. If you want to donate, you know where to click. Oh, there’s the screams in the background. And we owe all our screams to you, the more than 1,200 people who donated in the last few days. Please join us again in a few minutes for David Swanson, the author of War Is a Lie. And we’ll be back in just a few minutes.

End of Transcript

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