Friday, January 7, 2011

Back to the Future: Obama Taps the "MVP" of Bill Clinton's Economic Team

Obama has appointed Gene Sperling, whom Bill Clinton called the "MVP" of his economic team, to head the National Economic Council. The news should bring no joy to the hearts of progressives.

The appointment has drawn some controversy because Sperling was paid almost a million dollars working part-time for Goldman Sachs -- he becomes yet another in a long line of advisors with cozy ties to Wall Street.

But I have to concur with Dean Baker's view that while that certainly looks bad, it's not the primary reason to look at the appointment with skepticism. Baker:

The primary issue is that Sperling thought, and may still think, that the policies that laid the basis for the economic collapse were just fine.

Sperling saw nothing wrong with the stock market bubble that laid the basis for the 2001 recession. The economy did not begin to create jobs again until two and a half years after the beginning of this recession and even then it was only due to the growth of the housing bubble. Gene Sperling also saw nothing wrong with the growth of that bubble. Gene Sperling also saw nothing wrong with the financial deregulation of the Clinton years which, by the way, helped make Goldman Sachs lots of money. And, he saw nothing wrong with the over-valued dollar which gave the United States an enormous trade deficit. This trade deficit undermined the bargaining power of manufacturing workers and helped to redistribute income upward.

In short, Sperling has a horrible track record of supporting policies that were bad for the country and good for Wall Street.

To be fair, I think it's important to acknowledge that Clinton did a number of good things with Sperling's advice. In a 2006 review of Sperling's book, The Pro-Growth Progressive, I noted that "Clinton oversaw an eight-year respite from the [long] assault on working families' wages."

Between 1979 and 1993, the top 20 percent of earners saw their incomes increase by 28.4 percent, while the bottom fifth of the income spread saw theirs drop by 13 percent. But under Clinton, "Those in the bottom fifth saw the largest income growth of 22.5 percent." African Americans enjoyed the highest income growth at 33 percent. By the late 1990s, poverty among blacks and Hispanics was at its lowest point in the history of the republic.

Having said that, I also found that "all of the ideas in The Pro-Growth Progressive are confined by Sperling's uncritical belief in the fundamental soundness of America's socio-economic arrangements, a belief that had [me] hurling the book against the wall."

It started with his title -- are we to believe that there are progressives who are instinctively anti-growth? -- and continued as a through narrative to the end of the book.

There's a fundamental disconnect between Sperling's reality and the reality most Americans live. "The Democratic Party should disband," he writes, "if it ever stops being the party that stands by the little guy, leads the fight against racial and economic disadvantage, sticks by working families when times are tough and takes on those with privilege who don't play by the rules." He doesn't grasp that the Democratic Party has evolved to become a party that, at best, can claim to be slightly less beholden to the corporatocracy than the Republicans.

Sperling has accepted most of the prevailing wisdom inculcated in us by the Chamber of Commerce. He believes the New Economy is a natural phenomenon, he talks about the "inevitability of change" while ignoring the fact that the changes we've seen in the American economy have been shaped by a small number of stakeholders. His test of sound policy is the "most pro-growth alternative" test, which "requires examining how progressive policies can be achieved at every step while maximizing economic growth and minimizing negative unintended consequences for the very workers, employers and investors our policies are designed to empower."

The narrative is: What's good for employers and investors is good for workers. But while one group has been all-too-empowered in the New Economy, the other has been widely disempowered. Nowhere in the book are the words "union-busting." For Sperling, job outsourcing comes from a "management that is facing painful competitive solutions," but he doesn't mention that some of the companies shedding the most jobs do so while posting record profits.

You can read he whole thing here -- the book provided a revealing look at the ideology of a key member of Obama's newly reconfigured team.

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