Monday, December 29, 1997

No tidings around of comfort and joy

By Molly Ivins

AUSTIN -- This is the only time of year we can talk about "saving the world" without irony, so let's do it. We are about to be called upon to do pretty much just that -- ho-ho-HO! -- so it behooves us to invest some thought in exactly how we are about to invest $100 billion (give or take a couple of billion) in saving the world economy.

As William Greider, one of the few truly well-informed voices in journalism on the global economy, observes in the Dec. 15 issue of The Nation, "The apologists' claim that this is some strange 'Asian flu' -- and thus no concern to Americans -- is both condescending and ludicrously wrong. Americans will pay, dearly and directly, in multiple ways. The contagion of collapsing currencies and stock markets is vivid confirmation of the new interconnectedness that globalizing corporations and financiers have fashioned. But it is also the logical consequence of their reckless, unregulated global system."

I know -- just what you wanted to hear at Christmas time: World currency collapse is upon us. O tidings of comfort and joy.

The first thing to do is understand how we got into the this pickle. The New York Times, which, like everyone else, is about six months to a year behind Greider, concluded on its front page Dec. 22 that what we have here is a global version of the S&L crisis. Unregulated bankers ran amok, and now we're being called upon to pay the tab. Well, yeah, but there are some larger economic fundamentals, as well.

Greider writes: "The widening gap between an expanding productions base worldwide and the inability of consumers to buy all the new output is the central subtext of the present crisis. The multinationals know the reality of overcapacity because they contend with it daily."

What we have here is an enormous version of what Henry Ford figured out back in 1914. Ford unilaterally raised all his workers to $5 a day, a then unheard-of sum, on the sensible grounds that he needed them to be able to buy the cars they were making. An industrialized system cannot flourish or even endure, he said, if the mass of workers can't buy what they produce. This may strike you as a "duh" proposition, but as we all know, the stupidity of bankers is never to be underestimated.

Greider writes: "Insisting on freedom for the exploited workers -- 'bringing the bottom up' instead of knocking higher wages down -- is only one of the many stimulative measures needed to reverse the negative cycle now gaining visible momentum. The Fed, Germany Bundesbank and other central banks need to start dropping interest rates, right now. Governments obsessed with cutting spending to appease bondholders need to re-examine the reigning orthodoxy, right now.

"I think the current turmoil signals an end to the supply-side era that has ruled the world since Reagan's election in 1980. The doctrine was straightforward: Cut taxes (and government) to benefit the wealth holders and corporations so they will make new investments, that is, build new supply, more output. Wage inequalities, we were told, do not matter. Neither does the demand side of the economy. But now the truth has trickled down: This is wrong not just for people, but for economies."

Greider goes on to consider the implications of our trade deficit and what he calls the "debt-soaked condition of the American consumer."

(You knew if you just kept reading long enough I was going to make you feel guilty about overspending on Christmas one more time, didn't you? Don't worry -- if the experts aren't making us feel guilty for overspending, they're trying to make us feel guilty for not spending enough. I say we're not the guilty ones here, the bankers are, so let them eat guilt.)

Greider points out: "Despite the celebrating, the Clinton recovery is distinctive in that the median household income has still not recovered from the last recession and remains below the 1989 level. And household debt is at a dangerously high level -- another reason the reflation of wages is a necessary part of any cure.

"The obvious opening for maximum leverage involves how Congress confronts the bailout packages that the Clinton administration hopes to execute for Southeast Asia, mainly through the IMF and World Bank, but also indirectly from the Treasury and the Federal Reserve."

As Greider also notes, the International Monetary Fund's usual forced-austerity measures (cut wages and public spending, raise interest rates so that endangered banks can clean up their balance sheets) not only induce needless suffering among people who were themselves innocent of excess but they're also pulling in the wrong direction -- further depressing the global system and adding to the problem of inadequate demand.

There is a better way to do this -- by stimulating growth and wages while nations clean up their bad debts -- a way that works better, is fairer and puts us the happy position of being able to help workers all over the globe and do some good for the environment while we're at it. Now all we have to do is convince Congress -- and I think we're goin' to find a lot of Republicans on our side on this one.

And this one is, as they say in California, The Big One.

Creators Syndicate, Inc.