Monday, June 15, 2015

Obama's TPP/Asia Pivot Waterloo + Organized Labor Proof of Life + Bad News for Saudis/ISIS + Greek Default and Peak Neoliberalism

There is quite a bit of good news this Monday morning. Dire assessments of Obama's "lame duckery" continue to roll in (Peter Baker, "The Trans-Pacific Partnership and a President’s Legacy") following Friday's failed vote in the House of Representative on trade-promotion authority (Jonathan Weisman, "House Rejects Trade Measure, Rebuffing Obama’s Dramatic Appeal"). Obama's Asia pivot is being declared DOA. This is from Baker's frontpage piece this morning:
The administration tried making a foreign policy argument over the last few weeks, maintaining that if the United States does not seal the trade pact, it will be leaving the field to China, which has been exerting its clout in recent years, whether by investing in energy supplies in Africa and the Middle East or by asserting claims over disputed waters and islands. 
But some on the left argue that the administration is using China to scare lawmakers and exaggerating the competition. “I just don’t buy this China boogeyman stuff,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former economic adviser to Vice President Joseph R. Biden Jr. “If anything, I see China as being more inward looking, devoting less resources to mercantile-type trade and more to internal investment, consumption and developing human capital.” 
Supporters of the trade pact hope to hold a new vote this week on the part of the trade package rejected by the House on Friday but will need to secure 90 more votes. Representative Paul D. Ryan, the Wisconsin Republican who has worked with the White House to secure trade negotiating authority, said on Sunday that if Mr. Obama wanted to avoid being a “very lame-duck president,” he would have to win over members of his own party. 
“I think that this can be salvaged because I think people are going to realize just how big the consequences are for American leadership,” Mr. Ryan said on “Fox News Sunday.” 
But there was little indication over the weekend that many minds had been changed on the political left. “We need to regroup and come up with a trade policy which demands that corporate America start investing in this country rather than in countries all over the world,” Senator Bernie Sanders of Vermont, a candidate for the Democratic presidential nomination, said on “Face the Nation” on CBS.
“There is no Asia pivot without an economic component, and that component is tied up in T.P.P.,” said Walter Lohman, director of the Asian studies program at the Heritage Foundation. The challenge for Mr. Obama, he added, is that no matter how important the trade pact may be to his foreign policy, Congress will consider it through an economic lens. “Geopolitics gets it very few votes.”
As I said, good news. Good news too that organized labor figured out how to do things properly on this one, both by working in concert with citizen groups and environmentalists, as well as playing hardball with two-faced Dems. This is from Noam Sheiber's weekend story, "Labor’s Might Seen in Failure of Trade Deal as Unions Allied to Thwart It":
Labor’s smartest move was lining up opposition to the president’s trade agenda as early as 2013, when the fight was still a distant prospect. “They did a good job getting out and defining T.P.A. early among Democratic House members, really peeling off an enormous number of folks who didn’t have long history or an understanding of the issue, prior to the White House engaging,” said Simon Rosenberg, president of the advocacy group NDN and a supporter of Mr. Obama’s effort. 
Mr. Rosenberg pointed in particular to a letter labor activists helped circulate late that year, which roughly 150 House Democrats signed. “It was a letter that was going to make it hard to vote for T.P.A. once you signed it,” Mr. Rosenberg said.

This time around, not only did the firefighters make a considerable investment — producing ads and paying to broadcast them in five congressional districts — but Mr. Schaitberger personally led the effort within the A.F.L-C.I.O. executive council to freeze all donations to members of Congress by the political action committees of the federation and affiliated unions until after the vote on trade promotion authority. (Mr. Schaitberger, who developed the motion, credits Mr. Trumka with helping create almost unanimous support for it.) 
Mr. Schaitberger acknowledged some apprehension within the labor movement about denying money even to longtime congressional allies, but he argued that it had been the most effective way to persuade friendly members of Congress to pressure wavering Democratic lawmakers. “We wanted to encourage those members to use their influence, their passion for our position, to move some of their colleagues,” he said.
A win for labor, a blow to the Asia pivot, why not add a story about workers at Gawker Media voting to join a union? Rachel Swarns reports in "At Gawker Media, New Economy Workers Strive to Form a New Kind of Union" that
. . . Last year, about 22 percent of recent college graduates were either working part time or unemployed, compared with about 15 percent in 2007, according to the Federal Reserve Bank of San Francisco.
That may be one reason young adults view unions more favorably than other age groups. In March, a national survey of 1,500 adults conducted by the Pew Research Center found that 55 percent of those ages 18 to 29 view unions positively, while 29 percent view them unfavorably.
Overseas, peace talks on Yemen begin in Geneva today. The Houthis continue to roll up victories despite the Saudi-led terror bombing. The Kurdish fighters are battering Islamic State in northern Syria, threatening to capture the main ISIS supply route from Turkey to Raqqa. All good news.

Plus, we are now approaching the decisive moment in the Greek-troika debt negotiations. A default by Greece seems unavoidable. Yves Smith of Naked Capitalism is terming this "Peak Neoliberalism":
The resolution of the Greece/creditor deadlock may also mark Peak Neoliberalism. It’s possible, but only remotely so, that Greece and its creditor overlords will back off from their collision. But as we’ve said for years, Germany is wedded to incompatible goals, namely running large trade surpluses but not financing its trade partners. It is destined to burn them down if it fails to find a new course of action. Greece is also wedded to incompatible goals, namely getting a real break from austerity while staying in the Eurozone. 
On the current trajectory, Greece will suffer horribly under a default or Grexit. The creditors have the incentive and the means to make either one more painful than continued austerity so as to force Greek citizens to capitulate and vote in a more compliant government. There is a bloody-minded faction that includes Finland, Latvia, Spain, as well as some ECB governors that is eager to punish Greece and sees that as necessary to preserve the Eurozone. We’ll see soon enough whether these austerity radicals that we call the ultras persuade enough key players to put their plans into action. 
But even in a less punitive scenario, a default or Grexit will do very serious damage to an already fragile and deeply depressed economy. Those who assert that Greece will bounce back quickly don’t have an economy this close to being a failed state as a comparable. 
Our view has been that the most likely scenario is a default in the Eurozone, and that the authorities have likely underestimated the damage if the impasse ultimately leads to a Grexit. Even if they are correct that financial contagion is contained, political contagion over the next few years is another matter entirely. 
But on a bigger frame, no matter how badly things turn out for Greece, the institutions at the core of the European project will emerge with their image badly damaged. The dirty secret has long been that the program of European integration was designed to produce rule by technocrats. Those technocrats, by being captive to bad ideology, have failed to deliver on the basic obligation of government: to provide for the safety and well-being of their populace. In a capitalist society, that means producing enough decently remunerated jobs. 
However, even if neoliberalism winds up receding as a result of the brutal Greek negotiations, it’s naive to assume that the exposure of the bankruptcy of neoliberalism means a return to the old European model of more social welfare and (at least in theory) democratic accountability. Ironically, the train wreck we are seeing now can be presented as a prime example of the dangers of democratic rule: a democratically elected government in Greece demanding better treatment from its jailer/creditors, when the most of the debt is held by democratically elected governments who are not willing to give Greece the breaks it wants. And as we’ve stressed from the outset, the fact that the two sides can’t come to agreement is that Syriza’s red line of pensions is also a red line to voters in the states that have provided funding to Greece. 
Thus even if the Greek denouement does represent Peak Neoliberalism, that does not mean that social democracy will emerge victorious. It simply means we will grope towards a new political order. Only if citizens are vigilant and engaged do they have a hope of coming out as winners.
All very true. But what Smith chooses not to underline is that there is no alternative to scrapping neoliberalism. Yes, the way forward to a new political dispensation is not clear because the neoliberal paradigm is still completely dominant; but a perception that it is bankrupt is now broadly taking root in popular consciousness. With this in mind, tomorrow some thoughts on Hillary Clinton's quixotic makeover as a New Deal populist and a working-class suffragette.

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