PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. As the national debate about the economy intensifies, as the leadership campaign amongst the Republicans continues and the debate in Congress and President Obama goes back and forth across the country, there’s a lot of talk about taxes, there’s talk about debt, but there isn’t a heck of a lot of talk about the real roots of this crisis. Well, a new book has come out that tries to grapple with all of this and propose some alternative solutions to what we might be hearing in the national media, and that book is Economic Collapse, Economic Change: Getting to the Roots of the Crisis. And now joining us is one of the authors, Professor Arthur McEwan. He’s a professor emeritus at the University of Massachusetts Boston, and he joins us from the PERI institute in Amherst. Thanks for joining us.
ARTHUR MACEWAN, UMASS BOSTON: Thank you. It’s nice to be here.
JAY: So in your book, you talk–it’s a very rich book, with a great deal of analysis of why the crisis took place and what to do about it. But let’s start with just a couple of things. You–at one point you acknowledge that it probably needed to be some kind of, quote-unquote, bailout of the finance sector, but you don’t think TARP was the way to do it. So what was the alternative, both for Bush and then for President Obama?
MACEWAN: Well, first of all, it’s necessary to distinguish between bailing out the financial sector and bailing out the financers. That is, you can save the banks without saving the bankers. There were a number of ways this could have been done. It was done partially elsewhere, for example, in England, but not completely; that is, the government could take over the banks temporarily. This is not something that would be nationalizing the banks for a long period of time. Indeed, many conservatives even thought this was an option worth considering. Alan Greenspan, for example, suggested this as a possibility. Also Lindsey Graham, the Republican senator from one of the Carolinas, thought this was a reasonable option to consider. The government takes over the banks. It takes the bad assets of the banks, the so-called toxic assets, puts them in a separate account, what’s called a bad bank–it’s a bad bank because it holds these bad assets. The government runs the banks, puts money in them to get them back in their–on operation. Stockholders lose. The people that ran the banks lose. This is what’s supposed to happen, of course, in a capitalist economy when a company fails, as the banks essentially did. In any case, when the banks are back on their feet, the government sells the banks back to the private sector. If they’re–if it actually makes money on that whole process, then the shareholders might get something. But the way it was done was absolutely outrageous. That is, it may have been necessary to keep these financial institutions functioning, but it certainly was not necessary to make sure all the people that got us into this mess were making out as bandits in the whole thing. They got–came out very well.
JAY: Well, I guess that speaks to the political power of those people. And I guess–and what you’re talking about, I think, was successfully done in Sweden. But if you’re going to go through that process, why not at least keep some of that nationalized? I mean, why not have some of the banking system public with some kind of public interest mandate?
MACEWAN: Oh, yes, now you’re talking about a long-run solution, and that I’m all for. I was simply taking it in the context of the immediate situation, how you could do it without even a dramatic change in the nature of the system. But certainly it would be highly desirable, from my perspective and the perspective of many other people, to keep the banking industry either tightly regulated or actually in the public sector as a nationalized operation. Certainly those are options that should be considered for the long-run preservation of stability in the economy. There’s no doubt about that.
JAY: So this is what some people are calling banking as a public utility. What would that look like? Is that something you think–I take it that it’s a long-term solution. Is that something people should be fighting for?
MACEWAN: Well, yes, but, frankly, I don’t think that that’s a political option in the current circumstances. As you mentioned earlier, what happened was based on the extreme power that the bankers in particular, but the corporate sector in general, has in our society. And this is something that has been building up over a long time. So you can’t talk about how we fix the financial sector and do this and do that without getting at what we consider to be the roots of the crisis, and that is the combination of the extreme economic inequality that has developed in our society, the power of the business elite and the very wealthy that goes along with that inequality, and the rather perverse ideology that is both supported by and supports that situation, an ideology which says leave it to market, the market can solve all our problems. That’s of course nonsense. We’ve experienced in the last decade what leaving things to the market can mean–in the worst possible sense. So our argument is that in order to be able to do what’s necessary with the banking sector, you have to focus on the roots of the crisis, that is, you have to focus on the extreme economic inequality, the perverse ideology, and the concentration of power.
JAY: Okay. Before we dig into that, let’s just talk about one more issue you raise in the book. You know, conservatives point to what they call the failure of the Obama stimulus program. I mean, in the book you talk about how this was at the very least a break with sort of conventional US government policy, to get so involved in the economy through direct stimulus. But you’re also quite critical of it and say there was another way to do it. So what was that?
MACEWAN: If you’re going to stimulate the economy through government spending, which we think was essential in the immediate situation, you have to do it big enough, and they didn’t do it big enough. They did it maybe half or two-thirds what was necessary. As a result, I think it’s possible to say that they stopped the rising of unemployment, but they didn’t increase employment. They stabilized the situation without getting us back to a reasonable level. And, of course, Obama is paying a high political price for this. They claimed that what they would do would be enough. It wasn’t enough. And you can see this through some calculations we and others have presented on this. If you figure out the amount of economic growth that is needed to bring employment back up, then you can figure the amount of government stimulus which would be needed for that. It was much bigger than Obama asked for. Now, perhaps some defenders of Obama would say, oh, wait a minute, this was the best he could do with the Republicans. But this is where he started. When you’re in a bargaining situation, you don’t start by going to what you think you’re going to end up with. You’d better, you know, try for a little more. And Obama didn’t do that. His people to do that. So it was clearly much too small to get the economy back onto a growth path. And now we’re seeing the results of that, in that the economy not only failed to pick up employment in a serious way–even though it may have stopped the decline, it failed to pick up employment. And now we’re in the dangers of going down again.
JAY: Right. Now, in the book you point out, even if there’d been a bigger stimulus, it still doesn’t deal with some of the fundamental structural inequality. And, of course, you know, stimulus to a large extent’s just making up for lack of real demand, which has a lot to do with low wages. So talk a little bit more, then, about what you think people should be fighting for.
MACEWAN: Well, I think people should be fighting for changes of the organization of the economy in ways that will lead to a more equal distribution of income, a better distribution of power, a more democratic distribution of power, and shifting this ideology of markets and individualism toward a ideology–back towards an ideology which gives more role to solidarity and caring for each other. And I think that’s possible. I think that we try to give examples in the book of the way that can be done. One of the ways, we think, that is particularly important is fighting for universal social programs–universal child care for small children, for example. Universal health care–that has been talked about, there’s a great support for it among the population, but we don’t get very far in Congress. And I think part of the issue here is recognizing that the benefits of a universal health care program go far beyond simply cheaper health–I mean, not cheaper health, excuse me; less expensive health care and better health care. The benefits that we focus on in the book are: if you provide universal health care, you’re providing something that will lead to an equalization of the distribution of income; that is, everybody gets their health care, which means sort of an equal payment, whether you’re rich or poor, for your health care, which of course is proportionately much more for those at the bottom. But, also, universal programs like public education. Public education is one of our greatest social welfare programs. If we have public health care, it would contribute in the same way, in the sense that it would break down the division of people. One of the great problems with our income equalizing programs, our so-called social safety net, is people who are not doing very well but are not doing poorly enough to get that benefit resent the people who do get it. They say, geez, you know, I can’t afford this, I can’t afford that, look at those other people, they’re getting benefits that I’m not getting, that’s not fair. Nobody talks that way about the public schools.
JAY: That’s because everybody has access to it. I mean, this is a debate that’s gone on in Canada, you know, whether there should be two-tier health care or not. And a majority of people have always opposed it, ’cause as long as everyone has access to the health care insurance, there’s not pressures to get rid of it.
MACEWAN: That’s right. That’s one of the very important things.
JAY: Now, what do you do with the right-wing critique of all of this? And I–sometimes I think people on the left dismiss a piece of this argument which I think resonates with a lot of ordinary people. People do feel very alienated from government, and they do feel particularly alienated, from the fact, which I think is a legitimate fact, that there’s such corporate control of government that they feel that anything that strengthens, quote-unquote, "big government" is strengthening this kind of corporatism. So there’s elements of that I would guess you agree with. But how do you deal with that argument?
MACEWAN: You’ve got a vicious circle of corporate power, control of the government, inequality, and this ideology I talked about. So the question is where you break into that vicious circle and try to change it, and, if you’ll pardon me, to turn it into a virtuous circle. The problem is a tactical one, almost, of where you try to break in. And right now, since there is such wide support for a universal health care program, we see that as a place to break into this vicious circle. Yes, it is true that this may–may give–strengthen government, in the sense of giving a larger role to government, but it gives a smaller role to the big corporations, which we see much more as the root of the problem. After all, we can exercise, at least possibly, some control over what the government does. We do have the forms of democracy in this country which give us some leverage. Yet we can do very little directly to control what corporations do, the large insurance companies that now exercise so much control over our health care system. At worst, even if I would take this idea that corporations have a lot of influence over the government is somehow a fixed thing, at least it wouldn’t be quite so direct as it is now. The corporations directly control our health care system, and they do it in a very bad way. They do it in a way that makes it much more expensive than any other country in the world experiences. They do it in a way that does not provide particularly good health care. So I–while I understand those arguments and the cynicism that lies behind them, I think that they’re not valid, and I think that they can be countered by an explanation and a discussion of the situation right now. We have thorough corporate control of our health care system.
JAY: It flies in the face, to some extent, what I’m about to ask, given the–what appears to be the prevailing mood in the United States. But in a longer-term way, can you really challenge this kind of power without challenging how things are owned?
MACEWAN: Well, in a sense those go together. That is to say, we’re talking about a large share of ownership of the health care system and how it’s run, of moving it to the public sector. It’s not quite what we usually think of in ownership, but it’s very much a control of the operation. The–we–the crucial part of this argument, [it] seems to me, in responding to your question, is that the solutions are not all-or-nothing solutions. You’re right to bring up the issue of ownership. Ultimately that’s terribly important, of course. And you can look at the situation and say, if you don’t have wider public ownership, you’re going to have tensions and problems. I agree with that. I think you’re always going to have tensions and problems. I don’t think there’s a complete solution. But, look, we haven’t always been in the situation we’re in now. We have experienced times in our history, other countries that are thoroughly capitalist countries have experienced times where they have a much more equal distribution of income and wealth than we do, where we’re–they’re more stable. Our own society was more stable, for example, in the ’50s and ’60s, when income was much more equally distributed. So there are improvements that can be made. Those improvements aren’t forever an all-time solution, but they can start a process; they can start a process by which we may be able to get to more lasting solutions and more complete solutions.
JAY: Thanks very much for joining us. And the book again is Economic Collapse, Economic Change: The Roots of the Current Crisis. And thank you for joining us on The Real News Network.
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