The election always was going to be about the economy. Mid-terms, in particular, usually are. Health care, Afghanistan, human and civil rights, the environment and a host of other critically important issues diminish in political importance when unemployment, under-employment, and foreclosures are devastating people's lives. Most people don't have time to delve into the intricacies of policy, they just want solutions. They still despise and blame Bush, but they expected Democrats to make things significantly better. The Democrats succeeded in preventing things from getting much worse, but when it comes to the politics, that's not good enough.
This election was telegraphed just months after President Obama took office. People were desperate for transformational change, but on the economy they got just a nuanced version of the same basic approach we've seen since the Reagan era, the same basic approach that the Bush meltdown should have ended. That was a historic opportunity for paradigmatic change, and we had a uniquely talented thinker and teacher in the White House to lead that paradigmatic change. Instead, we got bank bailouts, tax cuts, and an inadequate stimulus that the very same few economists who had predicted the economic meltdown warned was an inadequate stimulus. Calls for a second stimulus were ignored. Every small blip of economic improvement was sold as significant, and Wall Street firms made record profits and paid staggering bonuses, but unemployment and under-employment and foreclosures continued to devastate people's lives. The moment passed. The opportunity passed. Political extremism gained a foothold, Democrats lost their footing, and a Republican Party that had been left for dead not even two years earlier, and that still isn't even widely liked, came roaring back to power.
The day of the election, Michael Lind put things into historical and global perspective. Just as the Bush meltdown was final proof of the literal bankruptcy of the Friedman/Chicago School/Reaganomics economic model, the Obama mid-term meltdown is final proof that once-liberal political parties have lost their way and their political purpose. If they cannot return to their own values and their own political and economic roots, it may be they, rather than the conservative parties, that slide into irrelevance and oblivion.
The backlash against Barack Obama and the contemporary Democratic Party is part of a global wave of popular disapproval of social democratic parties that abandoned their traditional working-class constituents in order to woo bankers and professionals.
Parties or coalitions of the left hang on to control in Norway, Spain and Austria. But every major country in Europe -- Britain, France, Germany and Italy -- is now ruled by the center-right. From the Baltic to the Mediterranean, social democratic parties are crumbling.
In this country, the neoliberal cult of an unregulated self-correcting free market began to creep into Democratic policy-making during the Carter presidency, and it accelerated with the Clinton presidency, which Obama's has come to emulate. The problem with neoliberalism was concisely summarized by Joseph Stiglitz, in 2008:
The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.
For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.
A phenomenon from which the United States has not been immune, with an income gap steadily growing and now greater than ever before recorded. And as Stiglitz continued:
Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.
But there was no lesson learned. The Obama economic team seriously underestimated the severity of the crisis they inherited, and were ideologically incapable of perceiving it as the transformative moment it should have been. A depression may have been averted, but a real recovery did not begin. And as Paul Krugman explained, the morning after the election:
What actually happened, of course, was that Obama failed to do enough to boost the economy, plus totally failing to tap into populist outrage at Wall Street. And now we’re in the trap I worried about from the beginning: by failing to do enough when he had political capital, he lost that capital, and now we’re stuck.
But if there is any silver lining, it is this:
But he did have help in getting it wrong: at every stage there was a faction of Democrats standing in the way of strong action, demanding that Obama do less, avoid spending money, and so on. In so doing, they shot themselves in the face: half of the Blue Dogs lost their seats.
Which means the Blue Dogs no longer can be blamed for Democrats failing even to try a different approach. It's a given that the Republicans will fight any effort to improve the economy or change the very nature of the system, but President Clinton revived his presidency after the 1994 debacle precisely by being seen standing up to the excesses of the Gingrich Congress. When Gingrich shut down the government, Clinton's re-election was all but assured. Politically, things quickly can turn around. The Republicans remain more unpopular than the Democrats, and it would be great politics for the Democrats now to return to their populist roots. But this is about much more than politics and it's about much more than the political fortunes of President Obama and other individual Democrats. As long as we continue to use the same basic economic approach, wealth will continue to be concentrated in the hands of an ever diminishing few, more and more people will suffer, and extremism will continue to grow. And democracy itself is not the only thing that's at stake.
