Naomi Klein on "Left Jab" with Mark Walsh & David Goodfriend
Sirius XM Radio, June 27, 2010
Mark Walsh: I think one of the things that's clearly top of mind for you and all of our listeners is the President's appearance up in your home nation of Canada at the G G-20.
Naomi Klein: We had a double bill. There was the G-8, and then it went right into the G-20.
MW: I like that. So, we added 12 important people somewhere in there.
NK: A double bill.
MW: Obviously, a lot of protests out in the street, but I guess every 'G' meeting brings a lot of protests because folks have issues with the economic stability and policies involved, but what's your take on the appearance of our president, what he said to his fellow world leaders and whether the financial reform bill gave him some extra moral or financial authority to follow what the US was doing.
NK: Well actually, I think it's the opposite. The fact that the financial reform bill was so tame limited what the other countries felt they needed to do, and in fact the final communique is tremendously weak. I mean they don't even have a token tax on banks, which is what they were talking about doing. It was going to be a very small tax. The other idea was a tax on financial transactions, which would slow down the fast money and also give some new money for social programs, for climate change and things like that. That's not happening, and you know, you think back to the G-20 summit in London shortly after Obama's inauguration, and there was really big hope about the potential for these countries to cooperate, collaborate, imposing some really tough rules across the board on the financial sector because, let's face it, it is true that the financial houses are very good at pitting governments against each other. I've heard them do it. They say, you know, 'if you impose tougher regulations in the US, we'll move our head offices to London and maybe to France, and if you do it then we'll move to New York, right?
MW: Yeah
NK: So, it makes a lot of sense, actually, when you're dealing with financial regulations and highly global firms to impose rules across the board to all of the big economies at once, and then they have nowhere to go, and to do the same things around closing tax-haven loopholes, things like that. That's not what they did. What they decided to do at this G-20 summit, in my opinion, is stick the bill for the financial crisis on the poor. Basically, the headline for this is 'No tax for the banks,' 'No serious regulations for the banks,' but instead to set a target that all of the countries will slash their deficits in half by 2013, which is a huge commitment. I mean, the US, to cut its deficit in half, that would be a cut of $780 billion. If Canada, my little country, were to do it, it would still be a huge cut for us, of $23.5 billion, and when you remember how this crisis was created, and the failure to impose really any kind of penalty on the banks, let alone impose rules that will prevent this crisis from happening again, it just seems scandalous to me that they would impose these cuts that are going be paid by students, by pensioners, by public sector workers... You know, I just wrote an Op-Ed for the paper tomorrow, and the lead is that my city felt like a crime scene, and I'm not talking about the people who smashed windows and cop cars, I'm talking about the world leaders who just slashed their social safety nets.
David Goodfriend: Man, those are powerful words, Naomi, and I'm looking at an advance copy of your article. I commend it to every one of our listeners. "Sticking the public with the bill for the bankers' crisis" by Naomi Klein. Listen, Naomi, I have to ask you this, though. Mark and I were talking at the beginning of the show about how, back in the 30's, the last time we had to deal with the aftermath of the big financial crisis, we separated, we just structurally separated commercial banking from the regulated, insured deposits, and a lot of us were kind of hoping that's what would happen here. It didn't happen, but something did happen. There was definitely a moving of the needle to inject more government oversight into this sector. Now, is it enough?
NK: I think we know what caused this crisis. It was a combination of a few factors, including the decision to do away with class people and allow the gamblers to also be commercial banks. That hasn't changed. And also the decision not to seriously regulate derivatives, and that hasn't changed. So, I mean there have been some changes in terms of trying to keep the banks from getting as over-leveraged as they did, and that does matter, but I still think that the fundamentals are not strong, to go back to McCain's wording, and the leaders actually know this. In justifying these draconian deficit targets by slashing the deficits in half by 2013, one of the reasons in the final communique given by these leaders is that they have to prepare for another crisis, so they don't even believe that they have prevented future crises, which doesn't instill much confidence.
MW: I agree, but I wonder if we are trying to achieve some Nirvana-like moment where there are no crises. Financial crises occur no matter what, and perhaps, are we not engaged in some odd version of whack-a-mole where we're trying to restrict behavior that happened in the last crisis? Do you think we're always looking in the rearview mirror on this, or am I just being sort of like a Pollyanna on this issue?
NK: I think you are. I think it was Einstein who said that insanity is doing the same thing over and over again expecting different results. I mean, that's what we're doing, and I think there are some really simple things you can do to prevent the kind of contagion that we saw, and it does involve some separating, and no, it's not gonna look exactly the same as it did in the 1930's, but the principles are the same, and if anything, what shocked me throughout the unfolding of the economic crisis is that all of the solutions to the crisis involve more and more merging. This is the way the Treasury tried to prevent another Lehman Bros. collapse-- by allowing the banks to consolidate further, which made absolutely no sense, and that's made fewer, bigger banks, and we've actually gone in the opposite direction, with much, much higher risk. That's not to say that there isn't anything good in these financial regulations, in the same way that it's not true that there isn't anything good in the health care reform package, but does it get to the fundamental problem in either case? No.
DG: We're talking to Naomi Klein, an award winning journalist, syndicated columnist, and author of the international and New York Times bestseller "The Shock Doctrine and the Rise of Disaster Capitalism."
NK: I think, just mentioning that book, I have to say, it's not a happy day because this is what the Shock Doctrine was about.
MW: Exactly.
NK: It's about how governments use crises to push through their wish-lists of right-wing policies. In Canada we have a very right-wing government, and our Prime Minister came right out of the most extreme think-tank. He doesn't believe in our public health care system, he doesn't believe in anything public. He's a hard-core Milton Freedman disciple, but he only has a minority in parliament, so he hasn't been able to do the radical things he wanted to do, and now he has a crisis that he's able to blame and say 'We have no choice.' Obama plays the good guy at this summit, right? Talking about the need for more stimulus, but the fact is that if you look at what's happening in the states, really that the dirty work of cutting social programs has just been off-loaded onto the states. I mean, 45 states are making these types of brutal cuts that are effecting the elderly, that are effecting students. Obama's just a better politican than Angela Merkel because he knows how to give the blame to others.
DG: Listen, Naomi, one of the central theses of your book is that corporations will use a crisis, as you're explaining now, to justify a kind of consolidation of power. Here in Washington I see this up close and personal over and over and over again. Right now, if you're a company and you're trying to defend your turf, you'll say 'jobs, investment, economic growth: you do this, and you kill them all. You do this health insurance reform, you do this net neutrality, you do this financial services reform, and you will kill investment and jobs.' What is your push-back on that?
NK: What I look at is how these policies play out in the real world, and I think economists tend to get so caught up in their theories - not all of them, but a lot of them - that they're blind to how their theories actually play out in the real world, and I don't know that in every case... the argument is that it's good for business. The argument is often that it's good for society, and that our economy should serve society, but if we were to do what I think we should do for health care, it would have real costs for business.
MW: Some would say that - and I'm one of them - that the cost structure of the United States, and maybe other nations share this exact same thing - it certainly seems so - the cost structure of the Unites States at the state level and the national level is out of whack. The number of fixed cost structures we have from social programs, etc. is huge, huge percentage of the budget, and the revenue we're taking in, the debt we've adopted are now mismatched. So, where does one go, if one is running the government, to go find revenue to fund the entrenched programs or potentially adjust those entrenched programs, and many would suggest that common citizens, when asked, would say, 'Hey, tax the rich more and reduce the defense budget.' Is that too simple a solution?
NK: I think those are very good solutions, very common-sense solutions, and I think the reason why it doesn't happen is those interests are better at fighting back in the sense that they impose real penalties on the politicians that cross them. So I think that the politicians at the G-20 made a cost-benefit analysis when they decided just now, do we tax the banks, we tax the rich, the people who created this crisis, or do we just dump the cost of this crisis on regular people? And they decided that it would be safer for them to go after regular people, which I think is a really important thing for us to understand because in Europe they're better at fighting back on this type of thing. People take to the streets and that hasn't been happening in this country, in part because in part because I think there's such been this sort of love-affair with Obama. It's a little unhealthy in my opinion, and people are always waiting for the turnaround, and he is still so beloved among liberals that the idea of actually taking him on directly feels wrong to a lot of people, but it has to happen. The people who are saying they don't want to pay for this crisis with cuts to Social Security, with cuts to education do have alternatives, and those alternatives are concrete. Things like taxing the banks, taxing financial transactions -
MW: Or reducing the 27% of our annual government budget that goes to the Department of Defense.
DG: Yea, I was gonna jump in here and say that, Naomi. The defense budget is an unbelievably glaring hole in this entire discussion, particularly when you have conservatives treat defense spending as if it's sacrosanct, so they'll say 'there's too much government spending, you gotta cut Medicare,' and I'll say, 'well how 'bout the $700 billion a year, more than the rest of the world combined, that we spend to have a standing army in Europe, a hundred bases overseas we don't need?' I'm just talking about an army in Europe, a leftover from 60 years ago, a leftover from the Cold War. Why can't we cut that?
NK: Well I don't think we make the argument as forcefully as you're making it right now. I think a lot of liberals are afraid of being called weak on defense, weak on security, and we don't make the argument forcefully enough, and if you don't make the argument forcefully enough then you're not gonna win against these very, very powerful interests. And It's true. It's a dirty fight when you talk about defense spending, and that's why people shy away from it, but I think it's a winning argument, I think it's a popular argument, and the other thing with this puzzle is going after the fossil fuel industry, who also have obscene profits, and I look at what's happening in the Gulf Coast - I just returned from there recently, and I think it's important that we have this principle that a lot of people, at least sane people, are accepting, which is that the polluters should pay for this. But the polluter - the industry as a whole has created all kinds of costs that we have had to absorb, including the cost of adapting to climate change. Unfortunately, in the US you're stuck in having to prove that climate change is happening instead of talking about who should actually bear the burden of these real costs associated with it and it should come from taxing the hell out of the fossil fuel industry, in my opinion.
DG: When Naomi talks like that I wanna kiss her.
MW: Well, on radio it's difficult. We can make the sound, but let me ask you, Naomi, do you think it is too easy, or maybe should I say, is it a gift from God for Progressives to hear Joe Barton sit there and read a script on the floor of the congress at a committee session, apologizing to BP for the, quote, 'shakedown' of BP for $20 billion?
NK: It was good, and I think all of this is really good. This whole idea of a shakedown, the fact that Sarah Palin is still musing on Facebook that, you know, no action is without risk, and she stands behind her 'drill here, drill now,' but once again, I think Progressives in the US are way too timid. I mean, the fact that Newt Gingrich is able to still pose as a neutral expert on television and not be hammered over the fact that he was the one out there selling 'drill here, drill now' with an emphasis on the 'now.' I mean, if these people could have drilled under the convention center at the Republican National Convention, they would have, right? A mantra against caution. I mean, within a week, 11 days before the BP spill, Sarah Palin was in New Orleans, giving a speech to, I think it was the southern leadership [supporting drilling].
DG: Hey, let's be honest. It was just two or so weeks before the BP spill that President Obama himself was calling for open drilling up and down the Atlantic Coast.
MW: Coastal drilling, not the deep sea drilling.
DG: I don't care, it's drilling. It's drilling in water. It's drilling where we go to the beach in Delaware every summer. That place would've been plastered with tar balls someday, too, under that proposed policy.
MW: I wanna drill there right now, baby. I wanna ruin your vacation.
DG: Never! I will defend those dolphins until the day I die.
MW: But let's go back to fossil fuels and our addiction to them. What I heard tonight, as I was coming to the show, a right-wing radio host in Baltimore, Maryland, was hassling Obama with his guest, who was economist Robert Samuelson. They were saying, 'How dare Obama bring up the fact that China is investing in alternative energy. China is still totally dependent on fossil fuel.' And I'm like, 'Well wait a minute, we're all dependent on fossil fuels, so don't say that Obama said something untrue, give Obama credit for saying that China could well steal the jobs and the industrial sector that China seems to be investing in, which is alternative energies.' Now, it could be one percent, two percent today, but it's not gonna be one percent, two percent in the future. Do you think Obama gets enough credit for trying to mandate, or at least encourage America to think of non-fossil fuel energy generation?
NK: I think what's so difficult about that is that these positions are just so out there that we're not having the conversations that we need to have. I mean, having Republicans around is like having a toddler who's just constantly demanding massive amounts of attention and you can't have an adult conversation. So, yeah, I think compared to their position, Obama deserves credit, but compared to what most countries were saying going into Copenhagen, you know, and I covered that summit, the US had the weakest position, and I think it bears a huge amount of responsibility for why that summit didn't end up with agreements with real, legally binding targets for emission cuts that would get us off this disastrous path. So, I think he deserves some credit, but I don't think he's doing enough, and, you know, the speech that he gave from the oval office about the BP spill I think was another lost opportunity.
I mean, he didn't talk about climate change at all, and people are feeling this. They're feeling it and they're waiting for it and I think a lot of the psycho analysis of Obama, why won't he emote enough, why isn't he angry, on some level, it's about the fact, this wanting something more, and I think people focus on the emotion, but it's really about, it's about leadership. And it's about just wanting to be inspired again as they were on the campaign. I mean, Obama made demands of people on the campaign. He said 'I'm gonna talk up to you. I'm gonna imagine that you are not the people that we're constantly saying that you are, but actually that you can be more, and people rose to the occasion, and I think that they can do that on all kinds of issues, but since he was elected he hasn't taken those risks.
DG: We've been talking to Naomi Klein, noted author. And Naomi, it's always great to have you on the show. We really wanna have you back again. You're one of the stars of the Progressive movement, and certainly, if folks are listening and hearing your words, activism. We've gotta get more active. If you don't like it, do something about it. The phone number for Congress is 202-225-3121. The phone number for the White House is 202-456-1414. When you call, your view is recorded, and if enough people call, enough numbers add up, they gotta hear from you. Naomi, thanks for coming on Left Jab.
NK: It was my pleasure.
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