What's behind the bailout? by Ornaith O'Dowd, NYC

The passage of the bailout in Congress has, thus far, failed to calm the markets: the Dow fell below 10,000 today, and world markets followed a similar pattern, as investors worried that global recession was inevitable. The bailout, even if it works (whatever that means, since there are no clear criteria to measure its success), will not prevent the intensification of this economic crisis. What now?
I have heard comparisons between the bailout and the passage of the PATRIOT Act in the aftermath of 9/11, when sinister forces on the right used fear and panic to rush through a long list of extreme measures. The PATRIOT Act ushered in an era of Constitution-wrecking, torture, war, and repression. What era is being ushered in by the bailout?
As Naomi Klein has been pointing out recently, it is a mistake to think that the current upheavals signal any kind of collapse of capitalism. I do think that the contradictions, dangers, and injustices of the capitalist system have been laid bare in a remarkable way, but I share Klein's view that the (economic) right is preparing to profit-- in more than one way-- from the crisis.
First, the bailout will, as far as possible, protect the interests of the capitalist class, insulating them from the worst consequences of their ventures. As an indication of how the scheme will be run, note that Paulson has appointed another former Goldman Sachs executive, Neal Kashkari, to administer the $700 billion extravaganza. The bailout's provisions on executive pay are full of loopholes; in any case, it's largely a sideshow to distract the public's attention from the structural injustices of the system. They will weather the storm; working people, as usual, will pay.
Second, unless radical change occurs in Washington, for which I don't advise holding your breath, the bailout may have more sinister effects: it may be used to justify spending cuts that will hurt the poorest; it will do nothing to prevent, and may even encourage, the present consolidation in the banking system, leaving a handful of banks dominating the market; it may serve as a prelude to further anti-worker, pro-capitalist measures, all under the guise of meltdown prevention.
What will we be asked to agree to next, on pain of precipitating economic collapse? I want to say a little about this move, because I think it is enormously significant. Discussions about the bailout often run roughly as follows:
"I don't think working people should bail out these Wall Street fat cats who gambled and lost. Let them deal with it."
"But if you let them deal with it, the system will collapse, credit will freeze up completely-- with dire consequences for small-business owners and consumers as well as the fat cats, there will be a stock market collapse-- there goes your retirement, and there will be a disastrous depression."
There are two ways to respond here. The first is to posit alternative models of government intervention; for example, Sen. Bernie Sanders' proposal to fund the bailout by imposing extra taxes on the rich, or the various "trickle-up" proposals involving help for homeowners facing foreclosure, healthcare reform (which will help those struggling with medical debt, a major cause of inability to meet mortgage payments), and public works to provide employment and thus stimulate the (real) economy.
The second, much less discussed, is to look at underlying structures. Let's say, for the sake of argument, that the dire threats described above are credible: must we acquiesce and admit the necessity of whatever the bankers and the markets demand? Well, only if we accept a system that allows their demands to determine so much. Why should people's retirement plans depend on a clique of speculators? Why should we need to borrow money to get an education or have a home? Why should the health of an economy be measured by stock market numbers and not by the meeting of human needs? If these sound like naive questions, we should ask why. Even in the midst of a deep crisis, few are pausing to look at the underlying ideas that have caused it. It's not just deregulation, it's capitalism itself; it's the conventional understanding of the concept of "economics" or "economies". What is economic activity for? What is economic success? The conventional wisdom is that such things involve measures such as GNP, stock market indexes, and corporate profits. But why accept this "wisdom" without question? It hasn't worked-- at least not for us, for working people. It tells us, when times are "good" (i.e. rising profits for corporations, rising costs for working people), that the country cannot afford to give us health care or decent public education, and it tells us, when times are bad, that the country cannot afford to give us health care or decent public education-- and by the way, can we give some of our money to the poor folks on Wall Street? Any system that dispenses such wisdom should be considered deeply suspect.
This is a time for urgent and deep reflection, for radicalism in the true sense of the word. If we are not ready with our arguments and analysis, the pro-capitalists will dominate the discussion at a time when, one might say, the mask is slipping and people are getting a real sense of the brutal unfairness of the system. Are we ready?