PAUL JAY: Welcome back to The Real News Network.
I'm Paul Jay in Baltimore.
And we're continuing our discussion in light of the 80th anniversary of the inauguration
of Franklin Delano Roosevelt and what does the New Deal mean for today.
Now joining us again, first of all: Leo Panitch is the Canada Research Chair in Comparative
Political Economy and a distinguished research professor of political science at York University
in Toronto.
He's the author of Global Capitalism and the American Empire and The Making of Global Capitalism.
And also joining us again, James Galbraith.
James K. Galbraith is the Lloyd M. Bentsen Chair in Government and Business Relations
at the LBJ School of Public Affairs at the University of Texas at Austin.
He's the author of The Predator State and Inequality and Instability: A Study of the
World Economy Just Before the Crisis.
Thank you both for joining us.
So, James, let me start with you.
Let's imagine that, I don't know, the conditions for the New Deal, as we talked about in the
previous segment, to some extent do get--re-create themselves.
At the very least, there is a mass mobilization, there is a radicalization of workers and general
population.
People are ready to vote for and embrace, at least a majority of people--maybe it's
52 or 53 percent, but enough to elect control of both houses, elect a president that's willing
to create this kind of new New Deal or even further than that.
But what would it look like?
So, in other words, what would you do if you ran Washington, James?
JAMES K. GALBRAITH: Well, let me start with some fairly modest propositions.
What you've proposed is a very all-embracing question, and I would like to approach it
in small stages.
I think to begin with, compared to where we are now, we need to fundamentally reframe
the way we think about core social insurance programs.
Right now there is a dialog of assault on those programs.
That is to say, they are referred to in a disparaging way as entitlements, and they're
treated as part of a financial problem for the government, none of which is in fact the
case.
The reality is that socially provided insurance--and I'm talking about Social Security, Medicare,
Medicaid, unemployment insurance, the core programs that stabilize people's incomes when
they're in trouble--are very efficiently provided by the public sector, much more efficiently
than by the private sector, because the private sector is in the business of cherry-picking--getting
the best cases and screening out the rest, and the public sector doesn't do that.
So its costs are much lower, and it can run those programs efficiently and effectively
and keep a lot of--keep practically the whole working population from the worst-case outcomes.
There's extraordinary actual success, and it needs to be treated as such and preserved,
not rolling back those programs, but actually taking opportunities to increase their span
as appropriate.
That's something, it seems to me, that we ought all to consolidate, to agree on, and
to make a core part of a reformed program.
Secondly, I think we need to talk about wages.
And in particular, the big, lagging piece of the old New Deal framework right now is
the minimum wage.
Minimum wage was enacted in 1935, and it reached a peak in value in the late 1960s and has
largely fallen since then.
And I know the president--and there's a debate over this now--the president has offered $9
an hour, his proposal.
That's a step in the right direction, but it's much too low.
We ought to be talking about a minimum wage on the order of $12 an hour.
And this would very greatly change the conditions of work at the low end of the labor force.
It would boost people's incomes who work for a living and improve the purchasing power
of that population, which would be very good for the small business community that serves
them in many ways.
So while businesses would lose something in some cases on their payrolls, they would make
it back on their revenues.
This has actually been tried in other countries, in the U.K. most recently, and it's basically
become noncontroversial where it's applied.
But it still engages an enormous amount of conservative resistance, and that's something
that we ought to tackle, because in fact increasing the minimum wage is a very popular idea, and
it's a very popular idea because it's a very sensible idea.
Okay, third area where we need to change our thinking has to do with the notion of the
role of regulation of the economy.
The basic reality of our economy is that very little of it would exist without an underpinning
of federal regulation.
And we are going to see the effects of cutting back on that as the sequestration process
now underway unfolds.
We're going to see--for example, we're going to realize that every meat plant in the country
has a federal inspector, and if the meat is not inspected, it will not be delivered and
it will not be on the shelves.
And that kind of thing is going to percolate through into people's consciousness.
And it seems to me that a progressive program can take advantage of this moment to teach
the importance of having effective autonomous regulation in a whole spectrum, from the mechanical
equipment, transportation, air traffic control, and finance.
And that strikes me as being a kind of comprehensive learning opportunity that we now have.
Okay.
So you do those things, and you have, I think, done a great deal to change the climate in
the country about how people think about the role of the public sector in relation to the
private sector.
And then I would say you have to then tackle the strategic problems that you face.
In 1933, when Roosevelt became president, we were at the beginning of a period of extraordinary
potential because of the arrival of a very cheap, very efficient fuel, namely oil, which
was American in origin.
It was largely--it was being developed in Texas, for the most part.
That period in the world's history has now ended--ended, actually, 40 years ago.
We're now having to face firmly the consequences of not being at--having a thoroughly reliable,
low-cost energy supply.
And we need to disillusion ourself of the--disabuse ourself of the idea that we're necessarily
going to get this from natural gas.
So we need to cope with that change in our circumstances, and that requires thinking
through how we live our lives and building institutions that enables us to live them
well within that constraint.
And also, I say again, that is closely related to the problem of climate change, which we
obviously need to deal with, not for our own sakes.
I think both Leo and I--and perhaps even you, Paul, although you're very young, will be
gone before this becomes a catastrophe, but our children and our grandchildren will be
around.
And we need to act so as to ensure that they don't face, you know, truly grim scenarios
that are out there and that are truly probably the most frightening and, let's say, daunting
challenges that we face.
So we need to pick up on the problems that we have.
And these include unemployment and foreclosures and the debt structure of American households,
and in Europe the completely dysfunctional system of European finance and governance--a
great many things.
But we need to [incompr.]
continue with the institutions that the New Deal gave us that continue to function well
for us, and then think about the problems that we actually face, rather than allowing
ourselves to be detoured and distracted by people raising all kinds of phony issues,
including this whole question of the public deficit and the national debt, which is essentially,
from an economic point of view, a bit of propaganda inconsequential in the real world.
JAY: Right.
Okay.
A long time since I've been called very young.
Anyway, Leo, your vision.
So you've got--you just got elected president of the United States.
You at least have 52, 53 percent public support.
You control both houses.
But you're in today's world, more or less.
What would you do?
LEO PANITCH: I think that what is needed by way of policy in the short-run--I don't disagree
with anything that James said.
But what is needed immediately is to take Obama at his word in the State of the Union
address in terms of the absolute necessity of direct government expenditure on infrastructure
building, and not to then address it with the pittance that he put towards that--really
can't contribute at all, much, his $50 billion towards this.
A good way to begin would be to guarantee the bonds of municipal governments, which
is where most infrastructure spending is located.
This has been proposed by not very radical Stanford lawyers at the Stanford Law School.
It would involve some twigging of the Federal Reserve's responsibilities and legislation.
But if you were able to carry things through Congress, you would have to have a massive
public employment and public infrastructure program.
And the way to do that, given the constitutional division of powers in the United States, would
be indeed for the federal state to guarantee municipal bonds.
Now, let's face it.
If Roosevelt had to try to pack the Supreme Court in the face of what he was trying to
do, imagine what a president would have to do in the face of the Supreme Court today,
in the face of the balance of power inside the American state.
So again I want to stress that while these policies are important--and one could offer
many more.
I mean, for instance, I'd like to see policies that would actually encourage the growth of
trade unionism, and in that way would do what the most effective thing that happened after
1945, which was the ability of unions to push up workers' incomes, which was the main way
demand was sustained in the boom period after '45, much more than direct government expenditure,
although these social service programs were important.
I'd like to see all of that, but I don't think we're going to see that--I think one needs
to be realistic about this--without changes throughout the American state.
And that needs to be put on the agenda.
The reason we have the deficit propaganda--and I entirely agree with James that that's what
it is--is related to the powerful forces that are behind that propaganda.
And, you know, it is related, again, back to the confidence in the banking system, the
demand by bondholders that if there's going to be any question of who's going to get paid,
it's the bondholders who are going to get paid first.
And one needs to remember--and that's why this is also about changing the nature of
trade unionism in the Western countries and elsewhere--that some of those bondholders
are trade union pension funds, including university teachers' pension funds.
So the kinds of changes we need need to begin at the bottom.
They need to be directed certainly at policy, but they--as was the case in the New Deal,
they need to be directed at changing state institutions.
And the current state institutions are not in the game of doing what either James would
like or what I would like.
JAY: Alright.
Well, thank you both for joining us.
This is just the beginning of this discussion, not the end, and we will invite both of these
gentlemen back soon to carry on this conversation.
So, James, Leo, thanks for joining us.
GALBRAITH: Thank you.
PANITCH: Good to be with you, Paul.
JAY: And thank you for joining us on The Real News Network.