One of the main pillars of Republican thought is that LBJ's spending on social programs and his relatively modest federal deficits caused the hyperinflation and economic stagnation of the 1970s and early 1980s. The problem with this theory which largely goes unopposed is that the much larger deficits of Ronald Reagan in the 1980s and Georhe W. Bush stubbornly failed to cause inflation. LBJ managed to produce a b udget surplus in his last year in office, as well. I f federal deficits cause inflation, this record makes no sense.
In fact, I patiently waited for Regan's deficits to run into hyper inflation and lo and behold, we never had it. The same thing held with George W. Bush. Were larger Republican deficits kept in check by complicit bankers and Wall Street types or was there something else at work here. Well, it turns out that price inflation remarkably correlates with rise in oil prices rather than with federal deficits. Following the Arab-Israeli War OPEC applied an oil embargo to countries considered friendly to Israel. prices zoomed from $3 a barrel in 1971 to over $12 a barrel and the prices at the gas station went above $1 per gallon. A scond shock followed with the Iranian Revolution (1979-80) and the Iraq-Iran War which mostly cut off Iranian exports until Iran started winning in late 1981 or 1982. By 1981, oil prices rose to $35 a barrel.
Reagan exacerabated hyperinflation and stagnation by secretly supporting Iraq as retaliation of the hostage crisis. It was Dick Cheney who first armed Saddam Hussein while working for reagan. But Reagan got the politically credit by deliberately engineering a steep recession (10 straight months with unemployment over 10%) which broke the back of both our own economy and oil demand. Future deficits, which were huge, were paired with falling oil prices (and therefore) falling or stable cost of living stats. This economic malpractice tranferred the blame from the Nixon-Ford era to LBJ and "social programs." Social programs were tarred and feathered semi permanently while the Reagan and George W. Bush tax cuts were deified. Only the tax cuts really didn't produce much growth and the social spending does not appear to be the real cause of infalation. Nonetheless, this is politically effective and has seeped into conventional wisdom.
I've been reading The Shock Doctrine by Naomi Klein, as I mentioned the other day. It's the most horrifying book I've ever read and I'm not even done with it yet. But essentially, the point is that economists of the Milton Friedman school working hand in hand with the US State Department have been engaged in what Klein describes as extraordinarily violent armed robberies all over the globe since the 1970s. From early on, their economic programs have been referred to as aiming for shock and awe.
For all that it happens on paper and in banking transactions, economic shock and awe isn't that different from the kind Bush perpetrated against Iraq in the early days of the invasion. And it's exactly what the Coalition Provisional Authority enacted once they got hold of that country's accounts and law books.
Love it or hate it, MoveOn's BetrayUs ad caught people's attention. It took a stand. It said something deeply contradictory to the conventional wisdom. Powerful reversals of conventional wisdom are absolutely vital for brining about a political realignment.
Here's another powerful example-a short film (just under 7 minutes) summarizing the argument in Naomi Klein's new book, The Shock Doctrine: The Rise of Disaster Capitalism. In it, Klein argues that "free market" ideology is so wildly unpopular that it has only been possible to impose it by force, when the political will to resist is disabled by shock. She draws a direct parallel to the development of shock treatment, and its exploration by the CIA as a tool for brainwashing and reprogramming.
The Shock Doctrine Short Film
A Film by Alfonso Cuarón and Naomi Klein, directed by Jonás Cuarón.
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