The Summer of Fear*

Yglesias in the Washington Post.

So far, the summer of fear has featured a charge, led by Newt Gingrich, Sarah Palin and former New York congressman Rick Lazio, to block the construction of the Cordoba House Islamic cultural center (which is to include a mosque) a few blocks from the site of the World Trade Center. Meanwhile, with frightening speed, we've gone from discussing the prospects for comprehensive immigration reform to watching congressional Republicans call for hearings to reconsider the 14th Amendment's guarantee of citizenship to anyone born in the United States.

Many liberals think they spy simple election-year opportunism. And of course, where there's an election, there's opportunism. But these prominent Republicans wouldn't be doing any of this if xenophobia weren't playing well politically.

Politicians are making hay out of the mosque only because public opinion seems to oppose it. They are reflecting, as well as stoking, a groundswell of public hostility toward outsiders. This hostility is not about the midterms; it is a consequence of the economic downturn, every bit as much as foreclosures and layoffs. When personal incomes stop growing, people become less broad-minded, and suspicion of foreigners and other ethnic groups grows. We have seen this time and again, in this country and in others.

...

Benjamin Friedman, an economist at Harvard whose 2005 book "The Moral Consequences of Economic Growth" argued that growth tends to foster liberal sentiments and open societies, whereas slowdowns undermine them, says this summer's events "are predictable consequences of this kind of sustained economic downturn."

"Manifestations like these have appeared in the U.S. at such times before," he told me, "most obviously in the 1880s and early 1890s," when a sustained period of economic stagnation coincided with the abandonment of the Reconstruction-era commitment to civil rights, the widespread adoption of anti-Chinese legislation and a nationwide wave of lynchings directed not only at blacks, but also Catholics and immigrants.

I watched the Sunday morning news show This Week with Christiane Amanpour and during the roundtable discussion, Financial Times managing editor Gillian Tett mentioned these issues as well. She was impressively concise and substantive as was George Packer.

Tett's book Fool's Gold* is one I've been meaning to read for a while now, as well as Friedman's Moral Consequences of Economic Growth which Yglesias mentions. Also on the list are Nouriel Roubini's Crisis Economics, Raghuram Rajan's Fault Lines and Carmen Reinhart and Kenneth Rogoff's This Time It's Different.

I still have a stack of books from this list*** I haven't got through. Recently, I finished Liaquat Ahamed's Lords of Finance and John Cassidy's How Markets Fail and am currently rereading Doug Henwood's prescient tomb Wall Street. In the recent debates surrounding FinReg there was discussion of breaking up the banks. Thanks to Henwood, I remain convinced that big is not wholly bad. From Wall Street, page 241:

Modern anticorporate antiglobalizers -- like people in and around the San Francisco-based International Forum on Globalization -- seem not to appreciate any of these virtues of capitalist socialization, and have no sense of how to organize social production on any reasonable scale. Big multinationals may be too large on social and political grounds, if not economic ones, but there's no way to sustain an industrial society without something like the corporate form.

Marx's view that corporate capitalism has made possible its own transcendence, by organizing production on a large and sustained scale and simultaneously rendering its owners socially vestigial, has gone somewhat out of fashion, to put it mildly, but is sorely worth recovering. In the light of his interpretation of the corporation as containing the seeds of a postcapitalist future, an analysis of that institutional form is in order -- in the interests not only of understanding but also of transforming.

Just in the last few years, the United States Government has nationalized the nation's largest insurance company, A.I.G., the two largest mortgage companies, Fannie Mae and Freddie Mac, two large auto companies, and backstopped the entire financial system. It's just that there's no inkling of a socialist movement pushing to remove its vestigial ownership and so we continue with trickle-down economics, i.e. socialism for the rich and harsh free markets for the rest.
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***this Alice in Chains video I linked - embedding disabled - at the old blog post best sums up the Great Clusterfuck era we're living through.