American approach to governance on the line

On Monday, I wrote a long post here on the two big (and escalating) crises that Washington currently faces: the financial meltdown and the roiling escalation in Af-Pakistan. It was a bit rambly. The main thing that linked the two crises in the post was just their size.
I’ve thought more about the whole topic since. Another crucial thing that links these two crises– as well as most of the other big crises the US has faced in recent years– is that they reveal the degree to which the American theory and practice of governance fails to meet the needs of human communities in today’s complex and interconnected world.
Other examples of what I’m talking about include Washington’s failure to have anything like a workable plan for the reconstruction of post-2003 Iraq, and the parallel failure to have workable plans for reconstruction in New Orleans and the Mississippi Gulf Coast in 2005, or in Galveston, TX today.
I think the key weakness in the American approach to governance is the active dislike and distrust of central government that has run through the whole history of the European settlers here, since the beginning of the colonial settler project. Those original settlers came here, the national myth tells us, because they were fleeing repressive governments back home in Europe. Well, some were doing that, and some merely came along for the free land and bounty that they could get their hands on here. (But they all shared the myth.) … And then, as the east coast became populated, numerous hardy, dissident, and/or land-hungry souls set out westward. And though those west-heading settlers were always well protected by the US Cavalry as they laid claim to more and more “free” land, they still maintained the myth of the “rugged individualist”, perhaps as way of erasing the uneasy memory of the fact that their bounty had, in fact, come to them in good measure from the public trough.
… Americans have nearly always had a robust culture of churches, private associations, and non-governmental groups banding together to look after people’s needs. But they have nearly always also had an exaggerated distrust of the role that governments can and should play, especially in difficult times. FDR, and those later champions of the ‘Great Society’, Presidents LBJ and Nixon, were small blips on the screen of a national picture otherwise dominated by the image of the rugged individualist, pulling him- or herself up “by his or her own bootstraps.”
George Bush’s gutting of the capabilities of the federal government over the past eight years tried to make that picture more real than ever.
… I grew up in England at a time of some non-trivial economic disruption there. The thing I’m missing here in the US today, that I would expect and hope to hear more of, is leaders from different walks of life– including political leaders– talking publicly about how “we are all in the current crisis together”, and “we need to take extraordinary steps to help the most vulnerable among us in these difficult times,” and so on.
I haven’t heard anything of that, yet.
Well, I guess this is only to be expected from a country in which medical care has been deeply marketized, where the materially rich are treated like demi-gods, and where the most common assumption in the mainstream media is that people are concerned about the economy primarily as investors, rather than as working families with pressing social and economic needs.
It would be great if the current crisis could lead to a new, richer understanding here of the intimate relationship between the situation of society (“the public good”) and the situation of the individual citizens.
Now that the federal government has agreed to bail out Bear Sterns, Fannie Mae, Freddie Mac, and the giant insurer AIG, surely we need a deep reconsideration of these issues? In the 21st century, it is quite insane to imagine that we might all live like ruggedly individualist frontiers-people! Our lives are inter-connected with, and interdependent on, the lives of the rest of the country’s citizenry in so many different ways.
So now, we need a new, more explicit and more just social compact, a new view of the role of government in society, and new systems to ensure the accountability of central government to the citizens. Yes, that will certainly involve getting money out of the political system as far as is humanly possible. But it should also involve a real commitment to universal health care, a range of new Keynesian-style public-works projects aimed at renewing the national infrastructure… and a new , much better relationship with the other nations of the world.
The “American way” isn’t looking so good these days– to outsiders, or to many Americans. We can do better.

3 thoughts on “American approach to governance on the line”

  1. This morning’s Financial Times has an interesting comment.
    http://www.ft.com/cms/s/0/dd9aa390-84d6-11dd-b148-0000779fd18c,dwp_uuid=11f94e6e-7e94-11dd-b1af-000077b07658.html
    It speculates that the cost of sorting out the financial mess might be between 1000 and 2000 billion Dollars.
    This is what Joe Stiglitz thinks the Iraq war will eventually cost.
    It remarks in passing that this cost will put a lot of America’s military ambitions on hold.
    A large expansion in debt will impose enormous fiscal costs on the US, ultimately hitting growth through a combination of higher taxes and lower spending. It will certainly make it harder for the US to maintain its military dominance, which has been one of the linchpins of the dollar.

  2. Maybe it’s time to wrap up the American experiment once and for all and just split up into separate states/nations. Certainly the Democrats and Republicans haven’t a clue about what to do about anything so they aren’t going to fix it. It’ll crash sooner or later, so why not just move ahead now? It would save us trillions of dollars, and by disbanding the American military would also save millions of lives. We’d all be safer and infinitely more prosperous. Just a thought.

  3. Yes, as with Frank, I’d already put out the idea on various blog comments the idea that the costs of the crash were going to be of the same order as those of the Iraq war. Evidently accumulated in just a week or two.
    As to whether the US can cope with the costs of two Iraq wars, I am not a financier, and I couldn’t say. However no specialist has yet attempted the calculation. The obvious thought is no, but it is not impossible that the US may be able to ship most of the losses out through devaluation of the dollar (with increasing expressions of dissatisfaction from China etc.) and the sale of increasingly discounted Treasury bonds.

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