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Tuesday, November 13, 2012

American Thermidor Revisited

There has been an American Thermidor:

   There has been an American Thermidor, a counter-revolution, one which is based on the way money and energy relate to one another. The key is not only oil, nor only money, nor only corporate concentration, but how each of these pushes the other along a cycle. Each one maintains the others in place. To understand how, it is important to look at the deficits that America faces.
In the wake of Barack Obama winning a second term in the White House, there is a tide, in part manufactured, in part real, that the cycle of Republican government has been broken by demographics and by personality of the President. While there are things that could be farther from the truth, this isn't particularly close to the truth. There were two theories of Obama, one that he is a progressive giant, the other that he is a liberal Reaganite. With his first order of business being a "Grand Bargain" to slash spending for a small increase in taxes on the wealthy, which theory predicts better?

A summary of the theory: increases in resources prices and static wages lead Americans to use their homes as a casino table, and use tax cuts to offset the lost income. This creates a spiral: the rich demand being richer to stay ahead of the resource barons in other countries, and this means less revenue, which means less ability to change the economy, which means that growth uses more resources, particularly oil. And it starts again. The article praise Rubin in the act of burying him: having cut the Gordian knot of spending by rolling debt to short term, he created a moment where we could have shifted the economy from physical goods to soft goods, from oil based growth, to other kinds. It was Clinton, not Bush, who failed to shift the economy, and Bush exploited that.

Obama has continued the destructive pattern: he started with a "Middle Class Tax Cut," continued with a "Payroll Tax Cut," he has done what he could to prop up housing prices, and privatize everything, shoving wealth upwards. He saved the rich, first.

Why does he do this? One road to a post-Thermidor America is to shift from the sprawlconomy, to a different kind of economy. The other is to extract resources here. The Reagan play is to bail out the rich, check, slow down the economy by austerity, coming soon, and then wait for new extraction to come on-line and bail everything out. The difference between Reagan and George W. Bush is that while Reagan wanted, not a peaceful, but a peacesque route through business, Bush's new extraction was Iraq, and required a war. An actual ground war. This horrified many Reaganites who, burned by Vietnam, wanted a peaceful, though conservative solution.

Bush swapped out waiting for bombing and invading. This is why Webb became a Democrat, and Jude a funder of anti-war causes.

Obama has gone back to the Reaganite architecture: tax cut driven bail out, slow the economy fiscally, while relying on monetary policy to keep enough people afloat, and then go back to waiting.

Oil? You're soaking in it.