Obama, global crisis and a new beginning

OBAMA,
GLOBAL CRISIS AND A NEW BEGINNING

K
Vijayachandran

BARACK
HUSSEIN OBAMA, JR will soon replace President George W Bush: His
country was facing a manifold crisis and Obama won a landslide,
riding on the one-word slogan of CHANGE.

First
and foremost, it was a moral crisis, arising out of the policing role
of US in the unipolar world of a post-Soviet era. CHANGE is the apt
response to a moral crisis anytime, and Obama's voice reverberated
with definite spiritual undertones, as he challenged Clinton in the
primaries. His stature was growing up with every campaign dialogue,
and his adversaries were no match to his bold innovations on the
moral front. Campaign for the 44th Presidency was simply a new
experience for the American people, a clear departure from the filthy
politics they had tolerated for more than a century (see box: Walt
Whitman and the Eighteenth Presidency).

Obama
emerged as the ambassador of the great values and fine traditions of
the New America, symbolised by the anti-slavery campaigns of Ab
Lincoln in 1861 and then the Statue of Liberty, celebrating the first
centenary of the declaration of independence and challenging the old
world, right across the Atlantic. A black President in the White
House will mark a new beginning in History, that was to be buried
alive by Fukuyama & Co, barely two decades ago, at the demise of
Soviet Union and the Socialist camp. In order to block his moral
victory over those, who got rich by trading in twenty-first century
crusades, Obama was branded Socialist and a Muslim terrorist. But,
despite the open support of Castro, and all other fighting leaders of
Latin America, people of USA elected Obama with 52 % popular votes
and more than two-thirds majority in electoral votes.

BOX: WALT
WHITMAN AND

THE EIGHTEENTH
PRESIDENCY

Walt Whitman,
the great poet of nineteenth century America had composed a highly
emotive twenty page campaign document for the eighteenth presidency
in 1856. It reveals the depth of degeneration of American democracy,
in less than hundred years of independence. The powerful campaign
material of the great poet had little impact on that presidential
campaign. But it had paved way for the victory of Abraham Lincoln,
five years later in 1861 on his celebrated anti-slavery platform.
Extracts given below are from the Seven Seas edition of 1956.

* Whence the
delegates of the politicians? Whence the Buchanan and Fillmore
conventions? Not from sturdy American freemen; not from industrious
homes; not from thrifty farms; not from the ranks of fresh-bodied
young men; not from among teachers, poets, savants, learned persons,
beloved persons, temperate persons; not from among ship-builders,
engineers, agriculturists, scythe-swingers, corn-hoers, not from the
race of mechanics ...........

* Whence then do
these nominating dictators of America year after year start out? From
lawyers' offices, secret lodges, back-yards, bed-houses, and
bar-rooms; from out of the custom-houses, marshals' offices,
post-offices, and gambling hells; from the President's house, the
jail, the venereal hospital, the station-house; from unnamed
by-places where devilish disunion is hatched at midnight, from
political hearses, and from the coffins inside........

* I would be much
pleased to see some heroic, shrewed, fully-informed, healthy-bodied,
middle-aged, beard faced, American blacksmith or boatman come down
from the West across the Al-leghanies, and walk into the Presidency,
dressed in a clean suit of working attire, and with the tan all over
his face, breast, and arms; I would certainly vote for that sort of
man, possessing the due requirements, before any other candidate.
.......

These
were record breaking majorities for the Presidency: Even more
important was the large turnout of voters and the total rout of the
party of President Bush. Long queues of voters were reported from all
States, something unprecedented in US politics, usually looked down
by working people and the middle classes. They rose up to make a
moral choice, after a long long time in US history: They could hardly
resist the call of conscience. They were responding to the conscience
of humanity, of the vast majority of people living on planet earth.
Obama could command respect from every country, from every nook and
corner of our global village. It was a moral endorsement for global
change, in the immediate context of a global financial crisis. A sort
of economic, social and political crisis was knocking at the doors of
every nation-state for long, demanding global solutions for the chaos
created by the free market, dictated on by global speculative
finance.

It
may look a mere coincidence that, the Frankenstein of a bubble
economy created by speculative finance broke up just on the eve of US
elections. Signs of economic distress in US economy were visible even
in 2007, much before the presidential primaries took off. However,
even in the latest G-8 meet a few months ago, Bush & Co were
re-assuring the world that, US economy as well as the global economy
led by it was structurally sound, and the only problem was Islamic
terror and a couple of rogue nations with nuclear ambitions. Policy
makers in our own country, led by our present Prime Minister, were
waiting for an invitation from USA to be its strategic partner and
play Pakistan for a change. During his last visit to USA, Manmohan
had even described George Bush as the most loved by the Indian
people.

Manmohan,
as we know, is a light weight in Indian politics: He and his Finance
Minister are better known for their expertise in the professional
management of our economy. However, the report card on our national
economy, presented as part of the last Union budget, was altogether
disappointing: Decline of per capita food production and consumption,
farms starving of power and fertiliser, mass suicides among
peasantry, Rs. 60,000 Crore write-off on agricultural loans, crisis
on electricity and energy fronts, falling demand for white goods,
slow down in all sectors of real economy other than construction,
bulk of economic growth originating from communications, real estate
and finance!

High-wage
islands created by the opening up of national economy to imported
goods and services had stopped expanding, IT bubbles were bursting,
organised sector employment had marginally declined, Rupee was losing
despite the massive inventory of dollars with the RBI, double digit
inflation was on the gallop, trade gap was widening, and most state
governments were bankrupt. It was clear that, the program of reforms
and restructuring has collapsed. However, the coffers of Central
Government were full, thanks to the massive customs collections on
the rapidly increasing imports, galloping service taxes and better
performance of public sector organisations. And, India's Finance
Minister had freed himself from all sorts of development obligations
and public investments in real economy. Chidambaram, like his
predecessors had all the money for the social sector and poverty
alleviation programs, and for the leveraging of public-private
participation in all sorts of fraudulent infrastructure projects.
Sitting on a mountain of cash, they kept on asserting that,
fundamentals of our national economy were sound and the Indian soil
was the most suited for Foreign Investment Institutions (FII): These
gentlemen were part and parcel of the bubble making business, and
hand-in-glove with the global speculating community. The
nonperforming Indian economy, claimed to be the sixth largest, have
possibly made a disproportionately large contribution to the global
crisis.

Every
OECD country kept on asserting, that fundamentals of its national
economy are sound, despite the fears of widespread dislocations due
to global recession and protectionist policies as in the last
century: Numerous colonial wars and the two global wars were the
inevitable consequences of the fundamental economic maladies of
capitalism. There are sharp disagreements on the potential impact of
the present crisis, as well as the economic, social, political and
moral costs of the massive interventions made by governments, in
order to preempt a total collapse of global finance. In common
parlance, these simple write offs had meant, privatisation of profits
and nationalisation of losses: Swindlers were granted anticipatory
bailouts, even before registering the FIR!

The
blame-game is on, in full swing within the ruling elites and the
international fora, but basic facts needed for rational solutions
are, reportedly, not forthcoming. However, it is generally agreed
that, forces beyond the national governments had taken over the
global economy under the free market regime, which was presided over
by the IBRD-IMF-WTO combine. Bringing this combine under the
democratic control of the UN body is the only rational solution: A
sustainable and truly functional global financial system will be
possible only under a system of global governance and widest possible
democracy. The more powerful among the nation states refuse to go by
the consensus views of humanity at large: They keep debating and
bargaining on, how to minimise the consequent losses to their own
national economies. It is likely to be the beginnings of another cold
war among the more developed states, and the less organised ones are
bound to play losers, and trail behind the stronger: A scene, not
unfamiliar in global history.

Developed
countries have thus declared individual bailout plans: Following
their example, India has taken measures to release massive funds for
easing up the liquidity problem in investment markets, aggravated by
massive withdrawals by the FIIs. India had, reportedly, asked for
global action at UN level and had even blamed the UN Secretary
General for inaction. However, there was no follow-up initiative and
India did not even send an official observer in the global
consultations organised by the UN: Prabhat Patnaik, Vice Chairman of
Kerala Planning Board, was invited to these consultations in his
personal capacity.

Indian
officials were active in the G-20 meet at Sao Polo on 8th and 9th
November. G-20 consists of major industrial countries including
India, China and a few other developing countries; European Union,
IMF and World Bank are permanent special invitees. G-20 has made a
consensus declaration on 10th November which reads: "The
current financial crisis is largely a result of excessive risk taking
and faulty risk management practices in financial markets,
inconsistent macroeconomic policies, which gave rise to domestic and
external imbalances , as well as deficiencies in financial regulation
and supervision in some advanced countries." IBRD-IMF
combine is proposed to be armed with more powerful regulatory teeth
and there is the promise of making them a little more amenable to
developing countries. President Bush has called a G-20 Summit on 15th
November. Indian Prime Minister is participating in this Washington
Summit, which is likely to endorse the official level consensus
reached at Sao Polo: Obama advisors have declined to be associated
with this Bush initiative.

China
has, in the meanwhile, unilaterally declared a unique package, nearly
a week ahead of the G-20 Summit. The program announced from Beijing
on 8th November, is distinctly different from the bailout packages by
OECD countries. They call it a stimulus package: An estimated 4
trillion yuan (470 billion US$) would be spent by the end of 2010 to
finance ten programs, including affordable housing, rural
infrastructure, transport, environment, technology innovation and,
post-disaster construction. According to Chinese planners, the
stimulus package will help the country to promote stable growth of
the domestic and world economies.

This
reminds us of Patnaik's prescriptions in the UN meet. He had called
for direct fiscal action by governments across the world: "Control
over cross-border capital flows is essential, for otherwise
governments will continue to remain prisoners to the caprices of
globally-mobile speculative finance capital. The sectors where
government spending will go up will of course vary from country to
country, but the general objective of such spending must be the
reversal of the squeeze on the living standards of ordinary people
everywhere in the world that has been a feature of the world economy
in the last several years. ...in India, China and other third world
countries, in addition to welfare state measures, larger government
expenditure has to be oriented towards a substantial increase in
agricultural, especially food grains, output." The stimulus
package of China is far far beyond the prescriptions of Patnaik. And,
India with its vast possibilities and resources in the public sector
is waiting for the stimulus signal from G-20 Summit, possibly for the
re-launch of the reforms under a new IBRD-IMF combine.

Patnaik
has not envisaged any role for UNO even in this hour of acute global
crisis, though he stresses the need for liberating cross-country
finance flows from the stranglehold of financial speculators. He
concluded his UN speech with the following words: ... the new
paradigm must entail a foodgrain-led growth strategy, sustained
through larger government spending towards this end, which
simultaneously rids the world of both depression and financial and
food crises. The trade and financial arrangements of the world
economy have to be oriented towards achieving this rather than being
made to conform to some a priori free market principles that have the
effect of pushing the world economy into financial crises and slumps,
and the peasantry and small producers of the world into destitution
both during the booms and also, additionally, during the slumps."
That has little to do with the Marxian dreams around a brave new
world and the second industrial revolution, triggered by nano
technologies!

Revolutions
are nobody's monopoly! Obama is likely to dream a far more inspiring
world view, though he continues to be a clean slate in terms of
ideology, as commented on by Noam Chomsky. He is an international by
birth, a non-intellectual type, who has put on motion a great people
and the most advanced nation-state of our times, under the one-word
slogan of CHANGE! Despite the hard facts on money power and the
Military Industrial Complex that rule over USA, Obama sounds far more
genuine and convincing, than Gorbachev who had failed in his mission
of an integrated inter-dependant world, based on the slogans of
Perestroika and Glasnost.

12-11-2008