Home > Uncategorized > “Nothing will fundamentally change”

“Nothing will fundamentally change”

from David Ruccio

Three and a half weeks ago, Bernie Sanders became the last challenger to drop out of the race, thus clearing the way for Joe Biden to become the Democratic nominee on the November presidential ballot.

Since then, the novel coronavirus has engulfed the country (and, of course, the world), the U.S. economy has mostly come to a standstill, and tens of million American workers have joined the ranks of the unemployed, while “essential” workers are forced to commute to and labor in perilous conditions and jobless families have found it necessary to walk or take to their cars to wait in line by the thousands outside food banks.

Biden therefore has to find a way of presenting a progressive alternative to Trump by articulating some clear ideas, and perhaps eventually a detailed plan, to confront the most dramatic economic and social crises to face the United States since the first Great Depression.

Given the fact that Biden was the first choice of the conservative Democratic establishment, which breathed a sigh of relief when he and not Sanders (or, for that matter, Elizabeth Warren) became the presumptive nominee, he was quickly warned that he needed to pay attention to and incorporate ideas from progressive movements inside and outside the party.

Just hours after Sanders ended his campaign, seven groups made up of young left-wing activists—the Alliance for Youth Action, Justice Democrats, the March for Our Lives Action Fund, NextGen America, Student Action, the Sunrise Movement, and United We Dream Action—sent an open letter to Biden with a set of demands spanning policy and personnel to earn their support in the general election against Donald Trump.

Messaging around a “return to normalcy” does not and has not earned the support and trust of voters from our generation. For so many young people, going back to the way things were “before Trump” isn’t a motivating enough reason to cast a ballot in November. And now, the coronavirus pandemic has exposed not only the failure of Trump, but how decades of policymaking has failed to create a robust social safety net for the vast majority of Americans.

And then, a few weeks later, Bloomberg revealed that one of Biden’s economic advisers was none other than. . .Larry Summers.

As it turns out, Summers was the first name on the “Biden Do Not Reappoint” (or, alternatively, Do Not Resuscitate) list published last month by Robert Kuttner, who wrote that Summers in 2009 “not only lowballed the necessary economic stimulus and ended it prematurely, but he successfully fought for rescuing the biggest banks rather than taking them into temporary receivership.”

The response to Bloomberg’s scoop was quick and equally categorical. In a joint statement, two of the organizations that signed the open letter—Justice Democrats and the Sunrise Movement—announced they were launching a petition asking Biden to disavow Summers, whom the groups noted has a long history of advocating for harmful economic policies and a record of bigoted statements. And David Sirota, senior adviser and speechwriter on the Sanders campaign, tweeted that Biden “has chosen as his economic adviser the main Democratic proponent of the China PNTR deal and Wall Street deregulation. Apparently, Biden may really have meant it when he said ‘nothing will fundamentally change’.”

What is it about Summers that provokes such ire from progressive individuals and movements?

Perhaps the best place to begin is the piece that Michael Hirsh published in the National Journal back in 2013, when Barack Obama was considering Summers as the replacement for Federal Reserve Board Chairman Ben Bernanke. Hirsh noted that while “on paper, Summers is a superb candidate to succeed Bernanke in a post that the brilliant 58-year-old Harvard professor has pined for since his earliest days in Washington, he was “a very risky choice for chairman.”*

Why? Hirsh presented two main reasons: First, Summers often used his power and intellectual arrogance “to bully opponents into silence, even when they have been proved right.” Second, he had committed “a lot of errors in the past 20 years”—from his moves to deregulate Wall Street in the administration of Bill Clinton to the too-tepid response to the Second Great Depression under Obama—and “yet in no instance has Summers ever been known to publicly acknowledge a mistake.”**

Hirsh’s article played an important role—in addition to opposition from four Democrats on the Senate Banking Committee—in forcing Summers to withdraw his name from consideration for the post.***

As regular readers know, I have had my own running battle with Summers and his economic views on this blog. For example, I challenged him on the idea that inequality is necessary consequence of entrepreneurship; that capitalism has no inherent flaws and the problems of unemployment, inequality, and so on “can be addressed with proper fiscal and monetary policies”; that Summers, unlike most academics, has been very well paid to play on behalf of those who have a big stake in what’s being debated inside and outside the academy; that his “belated, poorly thought-out, population-driven ‘discovery’ of the possibility of secular stagnation” received undeserved accolades from other mainstream economists; that the cure for secular stagnation does not reveal a flaw in capitalism but instead has an easy fix, an increase in government-financed infrastructure spending; and finally that workers’ compensation depends on productivity growth and therefore it’s not necessary—and perhaps even counter-productive—to shift attention from growth to solving the problem of inequality.

More recently, Summers joined fellow Harvard economist Gregory Mankiw in criticizing the kind of wealth taxes that were proposed by Sanders and Warren (as scored by Emmanuel Saez and Gabriel Zucman)—because, among other things, wealthy people can avail themselves of many ways to avoid such taxes (thus reducing the projected revenues) and because closing loopholes would “involve placing limits on the ability to be charitable or to establish trusts for the benefits of grandchildren.”****

The fact is, Summers continues to represent, from his perch at Harvard, both the theoretical blinders and bullying stance of mainstream economics as well as the rush to return to “business as usual” within the Democratic Party.

If Biden wants to signal to wealthy donors and large corporations and banks that, if he somehow manages to defeat Trump in November, “nothing will fundamentally change,” then he really can’t do better than to stick with Summers.


*Back in 2013, my own choice, for what it’s worth, was Federal Reserve Governor Sarah Raskin.

**As I wrote in 2009, those characteristics (which Cornel West described as “a braininess that lacks wisdom and vision” and “a smartness that lacks a sensitivity to the poor and the marginal”) are a good description of most mainstream economists I have come across over the years.

***Kuttner, in a more recent piece, wrote that “After Summers personally complained to David Bradley, then the publisher of Atlantic Media, which owned National Journal, Hirsh was advised to seek other work—he ended up moving to Politico and then to Foreign Policy, though no errors were ever found in the Summers piece and no correction was ever issued.”

****If readers want to follow the debate, here is a link to the rejoinder by Saez and Zucman (pdf) and a follow-up response by Summers and his coauthor Natasha Sarin.

  1. Patrick Newman
    April 28, 2020 at 12:06 pm

    Summers would be very in place in the British Conservative Party and would not be unwelcome in the Institute of Economic Affairs (Right Wing pressure group). If ‘Sleepy Joe’ wants awake from his slumbers and energise the Democratic Party he could do no better (apart from withdrawing his candidature in favour of Sanders) than choosing Elizabeth Warren as his running mate.

    • April 28, 2020 at 4:32 pm

      I agree that, to have a chance of winning the election, Biden needs to bring in the person of Warren and the program of Sanders. And not the other way round!

      • Meta Capitalism
        April 29, 2020 at 1:40 pm

        Warren knows her business as in what needs done. She should be his pick.

      • Craig
        April 30, 2020 at 6:22 am

        Nothing will happen unless a mass socio-economic and political movement is started that shows everyone the universal benefits, that’s to both individual and commercial agents, and so herds the entirety of the political apparatus toward the new paradigm. Politics is a complete sell out and side show until such movements push them into relevance. Anyone who doesn’t see that does not know history and is a dunce.

      • Robert Locke
        April 30, 2020 at 8:32 am

        Don’t look for answers in the US and in American politics, look to Europe and especially social democracy.

      • Meta Capitalism
        May 1, 2020 at 9:07 am

        Agree Robert.

      • Craig
        April 30, 2020 at 6:44 pm

        If we shake off the old monetary and economic paradigm aspects of both capitalism and socialism such a movement would work anywhere. In other words ditch domination and instability via Debt Only and Theft as in re-distributive taxation which still leaves Debt Only on the throne.

        Steve Keen is inching slowly toward realizing that double entry bookkeeping/Accounting is the infrastructure that the entirety of the economy is embedded in and that hence a strategically implemented accounting operation at a paradigmatically powerful point in the economic/productive process could solve our economic, monetary and ecological problems.

        That operation is a 50% discount-credit/rebate-debit price and monetary policy at the point of retail sale…and I have been advocating it for over 4 years.

      • Craig
        May 1, 2020 at 12:34 am

        Copernicus was made whole by Kepler and Galileo provided the temporal universe observations and empirical evidence to confirm the new paradigm. It’s the normal process of paradigm change.

  2. Grayce
    April 28, 2020 at 2:52 pm

    This election will be less about left and right. Trump never really acted from Conservative principles, but from personality. His message was “THEY don’t care about you but I do.” He dismissed prior administrations, fake news, fake science and lately fake crisis while retweeting “Liberate (cities)” as if THEY were forbidding all ten amendments that spell freedom. The Biden message has to be gut-level. The trust erosion is an open door.Trump did not know how to engage a nation, but showed loyalty only to his fans. This is an Achilles heel. The VP choice on principle, trustworthiness, inclusion and All-American values could hijack the hat. It just takes lower case letters: mAga.

  3. Ikonoclast
    April 28, 2020 at 11:24 pm

    If the USA persists on its current path it will collapse. It will collapse economically, it will collapse socially, it will collapse politically. In short, it will disintegrate and fall apart. Americans have to decide what they want. Do they want 600 plus billionaires and counting or do they want a surviving and viable nation? They cannot have both.

    The USA is a kleptocracy and a kakistocracy. These are two sides of the one system. In a kleptocracy corrupt leaders use their power to exploit the people and resources of the nation in order to extend their own wealth and political powers. Kakistocracy is government that is run by the least qualified and most unscrupulous of citizens. Donald Trump fits the bill on both counts but he is just the tip of the iceberg. The entire corporate and government structure of the USA is corrupt to the core. The Republican / Democrat power duopoly is entirely corrupt. They receive all their funding from the rich and they do the bidding of the rich.

    If Americans are too foolish, too credulous, and too filled with false consciousness, laziness and selfishness to turn out and vote to really change their nation (which means voting for candidates other than Republican and Democrats) then they will continue to get collpase. When Americans talk about “freedom” they mostly mean the freedom to be selfish. There is little in the American way that is about helping their follow man.

    The USA is terminally corrupt and selfish. Most Americans have no idea how to change their system. Few even recognize it needs changing. I am no promoter of China. It is run by an authoritariansparty and a dictator. However, socially and economically it is maintaining cohesion during the COVID-19 crisis and weathering it far better than the West. What I see happening right now is the collapse of the West. The collapse is due to the greed and corruption of last stage capitalism of its crony, kleptocratic, kakistocractic nature.

    What we need is democratic socialism. True democratic socialism is nothing like the Chinese system. One, the Chinese system is not democratic. Two, the Chinese economic system is now simply state Party crony capitalism rather than the corporate crony capitalism of the USA. The difference with the Chinese model is that competing capitals are disciplined in the national interest or at least in the Party interest. In the US model competing capitals act in Veblenian mode where business sabotages industry and the nation.

    China has fooled the USA comprehensively. Just as one can fight fire with fire (if one knows what one is doing) one can also fight capitalism with capitalism. By adopting state party capitalism, China has been able to use global labor arbitrage and currency manipulation to move much of USA’s and the world’s manufacturing base to China. American competing capitals were greedy enough to aid this strategy as it made them richer while making the whole USA relatively poorer and large pockets of the USA absolutely poorer.

    While the nominal dollars flow back to the USA and while they can buy overseas products with these nominal dollars, well off Americans believe themselves richer while failing to see the hollowing out of their country’s manufacturing and productive base. When this process goes too far as it has now we see what happens in a global crisis like the pandemic. The nominal dollars are of no use when real stocks are low. In this case, masks, personal protective equipment, ventilators, treatments, pharmaceuticals and capacity to manufacture same are all lacking. Also, adequate hospitals and trained staff are also lacking.

    Nations which do manufacture (mainly and soon to be solely China under BAU) will first retain all requirements for themselves and only release the remainder (if any) if it suits their realpolitik goals.

    This crisis has shown the fundamental idiocy of neoliberal capitalism and how it fails to even the dictatorial state capitalism of China, which though far from acceptable in many ways, can take concerted statist action when necessary. Democratic socialism would be far more equitable and effective than both the American and Chinese systems. However, I give the USA about 1% chance of reforming itself and about 99% of collapsing into anarchy. Obviously, this will collapse the world system, and even China. I think we have very little hope. We have to keep trying of course but there is little hope now with these problems looming plus climate catastrophe and the sixth mass extinction. All because the world went on a final orgy of consumption fro 1990 onward under the auspices of neoliberalism (market fundamentalist capitalism).

  4. April 29, 2020 at 5:31 pm

    Nothing will fundamentally change while bankers (or their stooges in government) still control the issue of money. As an honest banker, Josiah Stamp, put it almost a hundred years ago:

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. … If you want to remain slaves of the bankers and pay for the costs of your own slavery, let them continue to create money and control the nations credit.”

    Ekonoclast adds to this the thought of the US bankers’ dollar being the world’s reserve currency: “While the nominal dollars flow back to the USA and while they can buy overseas products with these nominal dollars, well off Americans believe themselves richer while failing to see the hollowing out of their country’s manufacturing and productive base”.

    Stamp warns not just the bankers but all of us: “It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities”.

    David Ruccio’s Keynesian “fix” doesn’t resolve this problem: ” The cure for secular stagnation does not reveal a flaw in capitalism but instead has an easy fix, an increase in government-financed infrastructure spending”.

    The cure offered by my “Complex Truth and Honest Money” advances from simple supply and demand (via a Simple Circuit of consumption feeding production and distribution of the next cycle’s consumption) to a minimally Complex System with development added via feedback circuits from each of the basic functions. The development of money added a parasitic FIRE sub-system creating, safeguarding and controlling the distribution of money (i.e. not goods).

    With this one can see how today’s Ponzi money system works; and how – as the nature of money has changed – its pretended “value” has become not just wrong but dishonest. Logic finds it reduced to an abstraction (mere accounting information) and Empirical study shows how it is only justified after the event (e.g. by conquest, by governments “borrowing” by selling bonds to bankers, and central banks creating post hoc any legally required reserves. C.f. R A Werner, https://core.ac.uk/download/pdf/82032791.pdf, summed in his conclusion at 5.4.1).

    Honestly, if banks can generate debts by issuing credits (IOUs), so can any of us; which is logically what we do when we pay for real goods by credit card interest free, writing off our own debts (not the bank’s) when we are credited for work done. Banks don’t create the credit, they simply keep our accounts and advise us on our credit worthiness. Local banking? C.f.

    Let us reserve the word ‘money’ for the hard stuff, pre-accounted for honestly by withdrawal using a credit card. Savings aren’t lost by this; they accumulate in one’s credit limit and are there if and when you actually need them. Nor are real possessions: only shares of ‘nothing’ and dishonest claims to authority based by them. Ruining our world with “conspicuous consumption” has become disgusting. The honourable aim is complex: both to live more frugally yet, by giving each other credit where credit is due or needed, to always have enough.

  5. yok
    May 1, 2020 at 12:35 am

    It’s why I won’t vote for Biden

  6. Ken Zimmerman
    May 11, 2020 at 9:45 am

    A group with which I’m involved spent the last year interviewing and re-interviewing hundreds of Americans from across the country, in all situations, doing all sorts of work, with many varieties of political, religious, and economic beliefs and desires. That most of the interviews were via phone or google allowed us to complete the work even after CV-19 struck. As always there are ideologues: republican, democratic, conservative, liberal, socialist, and of course fascist. Significant majorities want: normalcy (77%) (no more political or economic changes with no good reason–most commonly cited is no more trade tariffs); get their pet projects in place (most frequent–end (31%)/expand ((44%) abortion access, expand affordable health care (79%), control impact of government/corporations on my life (87%)); get me a job (48%) or money (50%) so I can have a regular life; return Trump to POTUS (28%), like Trump but don’t support him for POTUS (20%); oppose Trump for POTUS 52%; Trump for POTUS is a nonstarter. (right now the latter groupings overlap) (all results preliminary right now)

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