Sunday 12 February 2017

How Blair and Clinton created the conditions for Brexit and Trump.

It's easy to look around for explanations of how Britain and America got themselves into such trouble that the public ended up lashing out with wildly self-destructive "fuck you" protest votes against the perceived political establishment.

One of the most common explanations for Brexit has been the way that senior Tories and the right-wing propaganda rags systematically blamed things like immigration and the EU for the appalling social consequences of three decades of unconstrained hard-right Thatcherite economic dogma followed up by the ideologically driven devastation of George Osborne's even more radically right-wing "let's cut our way to growth" austerity agenda.

There is a similar popular explanation for the rise of Donald Trump; that working Americans felt that they have been forgotten and left behind by the political class.

Both explanations have reason of course. It's a testament to the subservient "mustn't grumble" attitude of the British that they've endured a post-crisis wage slump only matched in severity by debt-stricken Greece in all the developed world without widespread strikes and civil disobedience grinding the country to a halt. However when the opportunity to opportunity to say a huge "fuck you" to the political establishment just by marking a piece of paper came along, of course huge numbers of people did it.

American workers haven't had it anywhere near as bad as the British because they managed a 6.4% real increase in wages under Barack Obama's stewardship as compared to the 10.4% collapse that was mainly overseen by David Cameron. They've still got the right to be furious though. A look at the appalling way the wealth of middle income American workers has been hollowed out by the super-rich provides a powerful explanation of how people could end up so angry at the political establishment that voting for a lying, bullying narcissist like Donald Trump actually started to look like a good idea.

The Trump vote looks even more understandable in light of the way the genuine anti-establishment Democratic Party firebrand Bernie Sanders was forced out of the Presidential race by establishment Democrats who colluded to ensure a victory for Hillary Clinton.

Both of these explanations are plausible enough, but it remains necessary to offer some kind of explanation of how the British and American political landscapes deteriorated to such an extent that either scenario even became possible.

In my view the ruptures in British and American politics happened in the 1990s with the accession of Bill Clinton in 1993 and Tony Blair in 1997. These were men who inherited the Democratic Party of Franklin D. Roosevelt and the Labour Party of Clement Attlee, but instead of pursuing the kind of prosperity yielding democratic socialism of their predecessors they adopted a "third way" strategy.

Clinton and Blair held onto power by slightly slowing down the radical and destructive right-wing neoliberalisation agenda rather than actively working to reverse the worst of the damage. Of course they seemed like an improvement after the chaotic crisis-ridden 1980s, but both men slowly continued the progress of the right-wing zealotry introduced by Margaret Thatcher and Ronald Reagan.

One of Clinton's most overt moves towards hard-right economic dogma was a piece of legislation called the Commodity Futures Modernization Act of 2000 which exempted all manner of derivatives trading from financial regulation. a move that unleashed the frenzy of speculative derivative trading that resulted in the 2007-08 global financial sector insolvency crisis.

Aside from the extraordinarily dodgy PFI privatisation scams and the commodification of the higher education system through the introduction of student fees (aspiration taxes), one of Tory Blair's most blatant rightward lurches saw the de facto privatisation of the Bank of England and the establishment of what turned out to be an astoundingly weak tripartite system of financial sector regulation.

Instead of attempting to push back against the forces of hyper-speculative financialised capitalism, these men actively enabled it while trying to alleviate the worst of the social and economic damage through slightly increased public spending and investment.

Both of these men ignored the forewarnings of the greatest 20th Century economist John Maynard Keynes, who cautioned that "speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done".

Blair and Clinton ignored the danger of hyper-speculation as a result of hubris. They were young men filled with over-confident faith in their own abilities to tame the forces of free-market capitalism. They thought they had figured out a magical and infallible centrist position that allowed them to blend hard-right Thatcherism/Reaganomics with democratic socialist style spending and investment.

Clinton's tenure came to an end long before Tony Blair's New Labour movement capitulated under the stewardship of Gordon Brown in 2010, but both men laid the groundwork for the 2007-08 financial sector insolvency crisis through their active enablement of hyper-speculative financialised capitalism.

had Clinton and Blair adopted more traditional democratic socialism, undone some of the most bonkers elements of Thatcherism/Reaganomics, and avoided reckless financial market deregulations, the 2007-08 financial sector insolvency crisis would not have happened in the same way, and had it happened differently, the traditional left-wing parties could have pointed the finger of culpability squarely at the free-market fanaticism of the Tory party and the Republicans.

Instead the traditional left-wing parties in Britain and the United States were left looking jointly culpable for the global economic crash, which is entirely fair, because that's exactly what they were.

The reason that so many people rebelled against the political establishment is because they rightly believed that the traditional left and right parties are more or less the same, and the two men most at fault for that perception are Bill Clinton and Tony Blair.

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