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The Shell Game of the Economic Elites Hamilton Project
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Posted on Aug 9, 2016
By Paul Street
Robert Rubin. (Wikimedia
Commons(https://upload.wikimedia.org/wikipedia/commons/d/db/Robert_Rubin,_US
_Treasury_Secretary_(1995-99)_(8738198855).jpg) )
Beneath the marionette theater of American electoral and parliamentary
democracy, policy is made by a deep
state(http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/)
oligarchy of corporate and financial elites. The political actors atop the
great quadrennial campaign carnivals speak in progressive-sounding terms of
their commitment to equality, justice, peace, popular self-rule and the
common good. Behind stage and screen, however, the contenders on both sides
of the nations party duopolytwo wings of the same bird of prey (Upton
Sinclair, 1904)are captive to the nations unelected and interrelated
dictatorships of money and empire.
After candidates who masqueraded as champions of the people get into office,
voters and pundits who believed the politicians election season rhetoric
and imagery express surprise and disappointment at the citizenrys betrayal
by those in whom they placed hope for change. But before the election, these
disillusioned citizens had failed to notice numerous clues to the
candidates plutocratic, imperial and authoritarian essences.
Take Barack Obama, who hopes to burnish his
legacy(http://www.nytimes.com/2015/06/15/world/asia/the-trans-pacific-trade-
deal-and-a-presidents-legacy.html) by securing final congressional passage
of the arch-global-corporatist Trans-Pacific
Partnership(http://www.citizen.org/TPP) (TPP). If achieved, this measure
will be a fitting capstone to what Robert Reich
calls(http://robertreich.org/SavingCapitalism) one of the most
pro-business administrations in America history. Obama has continued the
cringing, Wall Street-directed corporatism of Bill
Clinton(https://www.versobooks.com/books/105-contours-of-descent) , helping
bring the United States to a new Gilded Age in which (as Bernie Sanders said
repeatedly during his presidential campaign) the top 1/10th of the United
States top 1 percent has nearly as much wealth as the nations bottom 90
percentthis while more than a fifth of the nations
children(http://www.nccp.org/publications/pub_1145.html) (including nearly
four of every 10 black children) are growing up beneath the federal
governments notoriously inadequate poverty level. Thanks in no small part
to Obamas chillingly fake-progressive
presidency(http://www.counterpunch.org/2015/06/19/progressive-obama-hes-melt
ing-hes-melting/) , fully 95
percent(http://money.cnn.com/2013/09/15/news/economy/income-inequality-obama
/) of new national income generated during his first term went to the
nations top 0.1 percent. Corporate profits (primarily now financial sector
profits(http://www.theatlantic.com/business/archive/2013/03/how-wall-street-
devoured-corporate-america/273732/) ) have risen to their greatest state in
the U.S. economy since
1929(http://www.nytimes.com/2014/04/05/business/economy/corporate-profits-gr
ow-ever-larger-as-slice-of-economy-as-wages-slide.html) .
The Man Behind the Curtain
Numerous liberals and progressives (including Sanders) have at various times
expressed surprise and disappointment over Obamas stealthy service to
business rule as
usual(http://www.goodreads.com/book/show/17871419-they-rule) . But
cautionary omens were widely available to those willing to look for them
well before he ascended to the White House. I collected dozens of these
unheeded alarms in my early 2008 book, Barack Obama and the Future of
American
Politics(http://www.goodreads.com/book/show/3871106-barack-obama-and-the-fut
ure-of-american-politics) .
One of the many early clues to the coming neoliberal nature of Obamas
presidency came when he affiliated himself from the start with The Hamilton
Project (THP), a key neoliberal Washington, D.C., think tank. THP was
founded with Goldman Sachs funding inside the venerable centrist and
Democratic-leaning Brookings Institution in spring 2006. Its creator was no
less august a figure in the countrys ruling class than Robert Rubin, the
former Goldman Sachs CEO who served as Bill Clintons top senior economic
policy adviser and treasury secretary. A legendary Democratic Party
kingmaker who is often half-jokingly called the wizard behind the
curtain of Democratic economic policy, Rubin is the veritable godfather of
late 20th century and current U.S. neoliberalism. He is co-chair of Wall
Streets Think Tank, the Council on Foreign
Relations(http://monthlyreview.org/product/wall_streets_think_tank/) (CFR),
which formulates Americas grand imperial strategy in accord with the
globalist open door ambitions of the nations leading finance-led
multinational investment firms and corporations. Under Rubins influence,
and in accord with the
Rubinomics(http://www.nytimes.com/2008/11/24/business/worldbusiness/24iht-r
ubin.4.18116856.html) trilogy of balanced budgets, free trade and
financial deregulation, Clinton joined with corporate Democrats and
Republicans to: enact the great job-killing and anti-labor North American
Free Trade Agreement, slash government spending, eliminate restrictions on
interstate banking, repeal the 1933 Glass-Steagall Act (which had separated
commercial from investment banking), and prevent the regulation of toxic
over-the-counter financial derivatives with the so-called Commodity
Futures Modernization Act. All this helped distribute wealth and power
upward and prepare the ground for the financial collapse of 2008.
Rubin left the Clinton administration in 1999, with Clinton hailing him as
the greatest Secretary of the
Treasury(https://books.google.com/books?id=jPoWCAAAQBAJ&pg=PT114&lpg=PT114&d
q=rubin+and+the+greatest+secretary+of+the+treasury+since+alexander+hamilton&
source=bl&ots=j8PS2pwhXs&sig=MnVwoYei7nqNXr8G0R5kOK5_oO4&hl=en&sa=X&ved=0ahU
KEwjIma7_kK3OAhVH5yYKHWFEBDYQ6AEINjAE#v=onepage&q=rubin%20and%20the%20greate
st%20secretary%20of%20the%20treasury%20since%20alexander%20hamilton&f=false)
since Alexander Hamilton. Rubin exited to join Citigroup, the primary
benefactor of the Glass-Steagall repeal, making him what American
Banker(http://www.americanbanker.com/news/law-regulation/the-long-shadow-of-
robert-rubin-1071601-1.html?utm_medium=email&ET=americanbanker%3Ae97638%3Aa%
3A&utm_campaign=-dec%2011%202014&utm_source=newsletter&st=email) calls
Exhibit A when progressives talk about the revolving door between banks
and Washington. His formal return to the private sector hardly meant a full
retreat from national politics and policy, however. Along with top positions
at the CFR and Brookings, Rubin helped organize financial backing for
Obamas presidential campaign. As Greg Palast
notes(http://www.gregpalast.com/billionaire-bankster-breaks-into-obamas-cabi
net/) , Rubin opened the doors to finance industry vaults for Obama.
Extraordinarily for a Democrat, Obama in 2008 raised three times as much
from bankers as his Republican opponent.
Rubin also served as a top informal Obama adviser and placed a number of his
protégés in high-ranking positions in the Obama administration. Rubins
Obama appointees included Timothy Geithner (Obamas first treasury
secretary), Peter Orszag (Obamas first Office of Management and Budget
director), and Larry Summers (first chief economic adviser).
Following in his mentors revolving-door footsteps, Geithner has since moved
on to the presidency of Warburg Pincus, a leading Wall Street equity firm.
Orszag went on to become a Citigroup executive and a merger-and-acquisitions
director at Lazard, an investment bank once used by the legendary
junk-bond-wielding corporate raider Carl Icahn. Summers became director of
the National Economic
Council(https://en.wikipedia.org/wiki/United_States_National_Economic_Counci
l) for President Obama and now is Charles W. Eliot
professor(https://www.hks.harvard.edu/about/faculty-staff-directory/lawrence
-summers) and president emeritus at Harvard University.
A New Kind of Third-Way Neoliberalism
THPs post-ideological founding document (smart neoliberals have long
claimed to have transcended ideology in the name of technocratic pragmatism)
was crafted by Rubin and Orszag. Beneath standard boilerplate on its
commitment to broad-based economic growth, individual opportunity and
an effective role for government in making needed investments, THP has
remained steadfastly devotedin the words of the left political economist
Jamie
Peck(https://global.oup.com/academic/product/constructions-of-neoliberal-rea
son-9780199580576?cc=us&lang=en&) to fiscal discipline and free trade, to
market-oriented approaches, and to strategies for attacking inequality that
are attached from new [social-democratic] entitlement commitments.
Rubins THP has spent the last decade advocating what leading international
relations scholars Bastiaan van Apeldoorn and Nana de
Graaf(https://www.amazon.com/American-Grand-Strategy-Corporate-Networks/dp/0
415844983) call a new kind of Third Way neoliberalism (reviving that of
Bill Clinton) in the context of an economy characterized by growing
inequality. The latter, Apeldoorn and de Graaff note, worried a part of
Americas (corporate) elite because of how it might harm social and
political stability and because of the protectionist backlash it might
create. These ruling-class fears had some real basis in the wake of the
populist and left-led Occupy Wall Street movement, the nominally socialist
Sanders(http://www.counterpunch.org/2015/11/06/defending-socialism-foner-and
-sanders-v-eugene-debs/) campaign, and the right-wing Donald Trump
phenomenon.
Since its formation, THP has been directed by a succession of elite
neoliberal economists who have been groomed by Rubin and served in top
federal policy positions. The list includes Orszag, Jason Furman (chair of
Obamas Council of Economic Advisers [CEA] since 2013), Doug Elmendorf (a
former Clinton treasury staffer who headed the Congressional Budget Office
from 2009 to 2015), and Michael Greenstone (chief economist for Obamas CEA
and currently the Milton Friedman professor of economics at the University
of Chicago). Goldman Sachs personnel and veterans are prominent across THPs
Advisory Council(http://www.hamiltonproject.org/about/advisory_council/) .
Pre-emptively Pacifying Wall Street
As an Illinois U.S. senator, Obama was the keynote speaker at THPs opening
event(https://www.youtube.com/watch?v=P-5Y74FrDCc) in April 2006. Beginning
with a special nod of thanks to the wizard (who sat two chairs to his
right), Obama offered curious praise to Rubin, Orszag and other Clinton
administration veterans in the room. He lauded them for having taken on
entrenched interests to put us on the pathway to a prosperity we are still
enjoying. Obama called the new body a breath of fresh air, a welcome
nonpartisan and non-ideological agent of economic modernization. He hailed
THP for seeking 21st century solutions and a practical handle on what
actually works in a national capital plagued by tired ideologies of right
and left. It was a classic triangulating Third Way speech. Obamas
carefully clipped words functioned to preemptively pacify Wall Street
before declaring his presidential ambitions (per Peck)ambitions Obama had
been harboring from the start of his U.S. Senate careerindeed, long before
that.
Obamas deference to Rubin made perfect Machiavellian sense. As Harold
Myerson noted in a Washington Post
column(http://www.washingtonpost.com/wp-dyn/content/article/2006/04/18/AR200
6041801176.html) on THPs rollout, Rubin has
become a seal of good
housekeeping for Democratic candidates seeking money from Wall Street. When
Bob Rubin talks, Democratic pols dont just listen; they scramble for
front-row seats and make a show of taking notes. The junior senator from
Illinois went on to set new presidential campaign fundraising
records(http://www.npr.org/templates/story/story.php?storyId=97843649) with
help from Rubin and other Wall Street-connected kingmakers.
Warm-Hearted but Cool-Headed
Over the last decade, THP has helped define the philosophical core of
Obamanomics (Peck) by producing a small library of issue briefs and policy
papers. These documents have matched Obamas political persona by striving
to be, in Orszags words, warm-hearted but cool-headed. Theres a useful
translation for Orszags phrase: outwardly progressive and socially
concerned but substantively neoliberal and Wall Street friendly.
A consistent neoliberal formula holds across THPs policy
literature(http://www.hamiltonproject.org/papers/) . Analysts tackle topics
of concern to warm-hearted progressivespoverty, household expenditures,
joblessness, automation, inequality, health care access, barriers to
employment, declining social safety nets, over-incarceration, environmental
hazards and more. These subjects are often examined with sophisticated
empirical rigor but always in cool-headed (wealth- and power-serving) ways
that stop short of any serious confrontation with underlying causes of
unequal growth and regressive distribution rooted in the rule of the
nations corporate and financial elite and the profit system that the
reigning stratum sits atop.
A typical THP brief from last June is titled Where Does All the Money Go:
Shifts in Household Spending Over the Past 30
Years(http://www.hamiltonproject.org/papers/where_does_all_the_money_go_shif
ts_in_household_spending_over_the_past_30_y) It shows that real
consumption fell in lower-income households and that a rising share of those
households expenditures shifted to meeting basic needs between 1984 and
2014. The study says nothing about the rising percentage of ordinary
Americans budgets spent to meet the escalating costs of debt service
payments to the nations leading financial institutionsto the creditor
class headquartered on Wall Street. It does not mention how U.S. households
outstanding debt rose from 83 percent of their disposable income in 1991 to
a remarkable 130
percent(http://www.frbsf.org/education/publications/doctor-econ/2009/july/co
nsumer-debt-household-income/) on the eve of the Great Recessionthis
courtesy of the nations oversized financial sector. The authors conclude
with milquetoast recommendations for the maintenance of minimal safety-net
protections.
The same basic moral and political shortfall is evident in another recent
THP policy
paper(http://www.hamiltonproject.org/papers/the_changing_landscape_of_americ
an_life_expectancy) that reflects on data showing that the life expectancy
of low-income whites has fallen dramatically in the U.S. in recent years.
The paper makes mild calls for improved educational opportunities and
increased access to health careincluding mental health care. It makes no
reference to how the U.S. working class has been subjected to a relentless
top-down and Wall Street-led class
war(http://www.nytimes.com/2006/11/26/business/yourmoney/26every.html) on
its livelihoods, unions, job and workplace protections, and living
standards. The authors do not mention how American workers in the long
neoliberal era (1973-present) have been subjected to unprecedented (for U.S.
workers) labor market
competition(https://www.theguardian.com/commentisfree/cifamerica/2011/jan/17
/economics-globalrecession) with the global proletariat, including
immigrant workers and workers across the low-wage global periphery, to which
U.S. capital has relocated much of its manufacturing in pursuit of cheap
labor. They dont reflect seriously on how the neoliberal and global
policies advanced by Wall Street and corporate America have turned millions
upon millions of once productively employed white and nonwhite
working-class people into surplus
Americans(https://www.goodreads.com/book/show/15095526-the-surplus-american)
.
The same modus operandistrong empirical work on matters related to rising
American inequality and poverty combined with mildly ameliorative policy
recommendations that sidestep the finance-led capitalist elephant in the
national roomis evident in the rest of THPs voluminous output. The topics
range in subject matter, but the basic banker-pleasing blueprint holds.
Outwardly, concerned- and liberal-sounding policy researchers are careful
not to ruffle ruling-class feathers. They make no calls for genuinely
progressive taxation, serious regulation of the financial sector, major
public jobs programs, a rollback of the gigantic Pentagon budget to fund
expanded public welfare, or the passage of legislation to re-legalize union
organizing to help spark a re-expansion of what the disgraced former
presidential candidate John Edwards once rightly called the greatest
anti-poverty program in American historythe labor movement.
The Skills Gap Trope
A recurrent theme in THPs impressive corpus of work is the skills gap
explanation of American workers economic insecurity and inequality (see
this
study(http://www.hamiltonproject.org/papers/raising_job_quality_and_skills_f
or_american_workers_creating_more-effe) for one among many examples).
According to this thesis, the national plagues of unemployment,
underemployment and inadequate wages are mainly about American workers lack
of adequate training for the supposed plethora of high-skills jobs that
would be available to them if only they were properly instructed and
certified. The skills gap thesis is invalidated by numerous facts its many
establishment champions ignore (see this useful
critique(http://inthesetimes.com/working/entry/12154/alleged_skills_gap_take
s_spotlight_off_massive_job_shortage) ). It continues nonetheless to hold a
prominent place in elite corporate, financial, academic and policy circles
for a simple reason. As University of Wisconsin-Milwaukee urban policy
researcher Marc Levine
notes(http://www.progressive.org/news/2013/03/181508/skills-gap-myth) :
Theres a strong ideological component behind the skills gap trope: it
diverts attention (and policies) from the deep inequalities and market
fundamentalism that have undermined U.S. working and living standards. As
the political economist Gordon Lafer noted in his book The Job Training
Charade(http://www.cornellpress.cornell.edu/book/?GCOI=80140100040300) :
Workers are encouraged not to blame corporate profits, the export of jobs
abroad, or eroding wage standardsthat is, anything that they can fightbut
rather to look inward for the source of their misfortune and the seeds of
their resurrection.
The Real (Alexander) Hamilton Program versus Rubin-Era Hamiltonism
Mention the Hamilton Project (or any other elite U.S. or global think
tank) to most Americans and you will receive blank stares. You might hear a
reference or two to the recent, spectacularly successful Broadway musical
Hamiltonan Obama-lauded, multicultural
paean(http://www.counterpunch.org/2016/06/24/miranda-obama-and-hamilton-an-o
rwellian-menage-a-trois-for-the-neoliberal-age/) to leading U.S. founder
Alexander Hamiltons purported embodiment of the American dreams of
immigrant striving and upward mobility.
Americans who paid attention in well-taught U.S. history surveys may recall
Mr. Hamilton (after whom Rubins Brookings project is named) as the nations
first treasury secretary and a major proponent (along with James Madison and
John Jay) of the U.S. Constitution. Some might recall the essence of
Hamiltons policy agenda under U.S. Presidents George Washington and John
Adams: to make the United States a major commercial and military power ruled
by and for an opulent mercantile, financial and, he hoped, industrial elite.
Hamilton was the early republics captain of the one percent, notes
distinguished U.S. historian Gerald
Horne(http://www.accuracy.org/release/hamilton-captain-of-the-one-percent/)
. A leader of finance capital
he represented the interests of big finance
at the beginning of the United States.
Hamilton pursued his wealth-concentrating agenda in a spirit of open
aristocratic disdain for the egalitarian tendencies of the revolutionary
times in which he lived. Like other top U.S. founders and constitutional
framers, Hamilton was revolted by the democratic leveling sentiments of
the new nations artisans, small farmers and laboring classes. For Hamilton
and others of his rich and well born ilk in the Federalist Party of the
1790s (the Hamiltonian party), freedom rested on deference to authority.
The Federalists, notes distinguished U.S. historian Eric
Foner(https://www.amazon.com/Give-Me-Liberty-American-History/dp/0393920305)
, may have been the only major party in American history forthrightly to
proclaim that democracy and freedom were dangerous in the hands of ordinary
Americans.
The Obamanomics-defining Hamilton Project of the last decade is a
continuation of the original Alexander Hamilton program in its commitment to
capitalism and the free market merged with the limited use of state power to
promote and protect private accumulation. Still, there are two key
differences between the nations founding treasury secretary and the
neoliberal think tank that bears his name today.
The first and most obvious contrast is that contemporary neoliberals
naturally eschew openly anti-democratic and aristocratic language even while
they advance the interests and agenda of the wealthy few. Reflecting
subsequent centuries of popular struggle for political and social rights and
the United States doctrinal sense of itself as a global beacon of
democracy, THP wraps its cool-headed findings and recommendations in the
warm-hearted rhetoric of progressive concern for the many and the poor.
A second difference is suggested by something the venerable left
intellectual Noam Chomsky told Occupy
Boston(http://www.alternet.org/story/152933/noam_chomsky_speaks_to_occupy%3A
_if_we_want_a_chance_at_a_decent_future,_the_movement_here_and_around_the_wo
rld_must_grow) in fall 2011. Before the onset of neoliberal
financialization in the 1970s, Chomsky said, the U.S. had been, with ups
and downs
a developing society, not always in pretty ways, but with
general progress toward industrialization, prosperity and expansion of
rights. Since the triumph of finance, however, the main capital-led trend
has been de-development
a significant shift of the economy from
productive enterpriseproducing things people need or could useto financial
manipulation.
For all Hamiltons authoritarian disdain for the people and commitment to
the upward concentration of wealth, he sought to advance an accumulation of
capital designed to make the United States into a broadly developing and
industrialized state. Todays financial elite and financialized casino
capitalism is all about Wall Street killing the
host(http://michael-hudson.com/2015/09/killing-the-host-the-book/) :
de-industrializing and dismantling productive enterprise in service to a
ruling and largely globalist financial superclass
(http://www.goodreads.com/book/show/2045737.Superclass) that sees no
particularly strong
relationship(http://www.goodreads.com/book/show/17871419-they-rule) between
its bottom line and the strength of the U.S. productive base and the health
of American society.
We can certainly expect the long shadow of Robert Rubin and the
fake-progressive neoliberal vision of his Hamilton Project and other, bigger
corporate elite networks to loom over the expected Clinton 45
administration. The coming heavily Wall Street- and Pentagon-backed
presidency of the arch-neoliberal Hillary Clinton will be no less staffed
than Obamas presidency was with neo-Hamiltonian elites linked to the
multinational and financial sectors and to the usual top policy-planning
institutions.
Paul Street holds a doctorate in U.S. history from Binghamton University. He
is former vice president for research and planning of the Chicago Urban
League. Street is also the author of numerous books, including Racial
Oppression in the Global Metropolis (2007), The Empires New Clothes:
Barack Obama in the Real World of Power (2010), and They Rule: The 1% v.
Democracy (2014), and is a regular contributor to Counterpunch, Z
Magazine/ZNet, Black Agenda Report and teleSUR English. He has taught
American history at several Chicago-area colleges and universities and
currently lives in Iowa City, Iowa.
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