John Pilger on President Obama: Don't believe the hype

Barack Obama is being lauded by liberals but the truth about him is that he represents the worst of the world's power.

My first visit to Texas was in 1968, on the fifth anniversary of the assassination of President John F Kennedy in Dallas. I drove south, following the line of telegraph poles to the small town of Midlothian, where I met Penn Jones Jr, editor of the Midlothian Mirror. Save for his drawl and fine boots, everything about Penn was the antithesis of the Texas stereotype. Having exposed the racists of the John Birch Society, his printing press had been repeatedly firebombed. Week after week, he painstakingly assembled evidence that all but demolished the official version of Kennedy's murder.

This was journalism as it had been before corporate journalism was invented, before the first schools of journalism were set up and a mythology of liberal neutrality was spun around those whose "professionalism" and "objectivity" carried an unspoken obligation to ensure that news and opinion were in tune with an establishment consensus, regardless of the truth. Journalists such as Penn Jones, independent of vested power, indefatigable and principled, often reflect ordinary American attitudes, which have seldom conformed to the stereotypes promoted by the corporate media on both sides of the Atlantic.

Read American Dreams: Lost and Found by the masterly Studs Terkel, who died on 31 October, or scan the surveys that unerringly attribute enlightened views to a majority who believe that "government should care for those who cannot care for themselves" and are prepared to pay higher taxes for universal health care, who support nuclear disarmament and want their troops out of other people's countries.

Returning to Texas, I am struck again by those so unlike the redneck stereotype, in spite of the burden of a form of brainwashing placed on most Americans from a tender age: that theirs is the most superior society in the world, and all means are justified, including the spilling of copious blood, in maintaining that superiority.

That is the subtext of Barack Obama's "oratory". He says he wants to build up US military power; and he threatens to ignite a new war in Pakistan, killing yet more brown-skinned people. That will bring tears, too. Unlike those on election night, these other tears will be unseen in Chicago and London. This is not to doubt the sincerity of much of the response to Obama's election, which happened not because of the unction that has passed for news reporting since 4 November (eg, "liberal Americans smiled and the world smiled with them"), but for the same reasons that millions of angry emails were sent to the White House and Congress when the "bailout" of Wall Street was revealed, and because most Americans are fed up with war.

Two years ago, this anti-war vote installed a Democratic majority in Congress, only to watch the Democrats hand over more money to George W Bush to continue his blood-fest. For his part, the "anti-war" Obama voted to give Bush what he wanted. Yes, Obama's election is historic, a symbol of great change to many. But it is equally true that the American elite has grown adept at using the black middle and management class. The courageous Martin Luther King recognised this when he linked the human rights of black Americans with the human rights of the Vietnamese, then being slaughtered by a "liberal" Democratic administration. And he was shot. In striking contrast, a young black major serving in Vietnam, Colin Powell, was used to "investigate" and whitewash the infamous My Lai massacre. As Bush's secretary of state, Powell was often described as a "liberal" and was considered ideal to lie to the United Nations about Iraq's non-existent weapons of mass destruction. Condaleezza Rice, lauded as a successful black woman, has worked assiduously to deny the Palestinians justice.

Obama's first two crucial appointments represent a denial of the wishes of his supporters on the principal issues on which they voted. The vice-president-elect, Joe Biden, is a proud warmaker and Zionist. Rahm Emanuel, who is to be the all-important White House chief of staff, is a fervent "neoliberal" devoted to the doctrine that led to the present economic collapse and impoverishment of millions. He is also an "Israel-first" Zionist who served in the Israeli army and opposes meaningful justice for the Palestinians - an injustice that is at the root of Muslim people's loathing of the US and the spawning of jihadism.

No serious scrutiny of this is permitted within the histrionics of Obama mania, just as no serious scrutiny of the betrayal of the majority of black South Africans was permitted within the "Mandela moment". This is especially marked in Britain, where America's divine right to "lead" is important to elite British interests. The Observer, which supported Bush's war in Iraq, echoing his fabricated evidence, now announces, without evidence, that "America has restored the world's faith in its ideals". These "ideals", which Obama will swear to uphold, have overseen, since 1945, the destruction of 50 governments, including democracies, and 30 popular liberation movements, causing the deaths of countless men, women and children.

None of this was uttered during the election campaign. Had that been allowed, there might even have been recognition that liberalism as a narrow, supremely arrogant, war-making ideology is destroying liberalism as a reality. Prior to Blair's criminal warmaking, ideology was denied by him and his media mystics. "Blair can be a beacon to the world," declared the Guardian in 1997. "[He is] turning leadership into an art form."

Today, merely insert "Obama". As for historic moments, there is another that has gone unreported but is well under way - liberal democracy's shift towards a corporate dictatorship, managed by people regardless of ethnicity, with the media as its clichéd façade. "True democracy," wrote Penn Jones Jr, the Texas truth-teller, "is constant vigilance: not thinking the way you're meant to think, and keeping your eyes wide open at all times."

John Pilger, renowned investigative journalist and documentary film-maker, is one of only two to have twice won British journalism's top award; his documentaries have won academy awards in both the UK and the US. In a New Statesman survey of the 50 heroes of our time, Pilger came fourth behind Aung San Suu Kyi and Nelson Mandela. "John Pilger," wrote Harold Pinter, "unearths, with steely attention facts, the filthy truth. I salute him."

This article first appeared in the 17 November 2008 issue of the New Statesman, Obamania

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt