Thursday, November 18, 2010

History and Economics, Tea Party Style

A recent profile of Utah Tea Party leader David Kirkham in the New York Times (“D.I.Y. Populism, Left and Right”, by Matt Bai, October 31, 2010) offers a telling detail of how Kirkham came by his worldview.

In the mid-90s, Bai writes, Kirkham visited Poland.  He was deeply affected when “the government laid off 20,000 workers, and Mr. Kirkham watched the men file out the door robotically, their faces ashen, their lives in shards. This is what happens, Mr. Kirkham thought, when the state controls the economy.”

Now the Soviet-bloc economies had many grave and well-known faults, but mass layoffs were rarely one of them. On the contrary, many Western economists and politicians criticized Communist governments for their guarantee of lifetime employment and refusal to embrace the efficiencies of a “flexible” labor market, where employers could hire and fire at will.

That changed in 1989 when the anti-communist organization Solidarity defeated the Communist Party in democratic elections. Economies in Poland and soon across Eastern Europe morphed abruptly into free-wheeling capitalist ones. In the early 90s, the new Polish government began a course of economic “shock therapy” designed by conservative Finance Minister Leszek Balcerowicz and hewing to policies proposed by the Reagan and first Bush administrations and the International Monetary Fund. Many industries were privatized and forced to compete on global markets, while formerly controlled prices were allowed to rise. As a result, many Polish workers lost their jobs and suffered serious economic hardship.

This is the backstory behind those ashen faces Kirkham saw if he was in Poland in the mid-90s.

The Tea Party leader comes off as a committed and talented man. But as a wealthy businessman who builds $100,000 Shelby Cobras at his factory in Provo, he’s a bit of a stretch as a champion of oppressed workers there or here. And it’s clear that his conception of socialism and attribution of it to President Obama are based on multi-layered confusion that leaves him 180 degrees off course.

Today, there is no such thing as pure capitalism or socialism: the interplay between corporate power and public control of economies has led to a wide range of hybrids. If Kirkham had talked to ordinary people around other parts of Europe, Asia, Africa or Latin America (and let’s not forget Canada), he would have heard many permutations of what they call socialism being advocated. And if he made the effort to actually understand what they were talking about, he might have realized that President Obama’s policies, along with our whole economic system, are far towards the market end of the global spectrum.

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