Monday, March 18, 2013

Power is not What it Used to Be.

Moisés Naím (¿Qué le está pasando a los poderosos? El País, March 17; Corporate Power is Decaying, get Used to it, February 21) finds that traditional power structures are shifting.

Political, military, technocratic and religious leaders, Naím observes, have seen their power curtailed:
"In his first speech before the Congress, in 2009, president Obama proposed an ambitious budget with energy, health and education investment.
" 'This is America', Obama proclaimed. 'Here we don't go for what's easy'.
"Four years later, even what was easy has become impossible.
" 'Let's agree, here and now, to keep the Government operating, paying its bills on time, and to protect the US credit', begged Obama to the Congress a few weeks ago. Evidently, the president of a superpower must not feel very powerful"
. (My translation, from Spanish)
Naím should know. The former Venezuelan economics professor ("IESA, Venezuela's main business school"), minister (1989 to 1990), and Venezuelan Central Bank director; currently El País columnist, author, founder and chairman of the board of the Group of 50 and senior associate in the International Economics Program of the Carnegie Endowment for International Peace, was one of the minds behind Carlos Andrés Pérez's 1989 "Gran Viraje" (great turnaround) Washington Consensus inspired package of shock economic measures, negotiated with the IMF. (See here, here and here)

Coming after years of repeated, painful and ultimately fruitless macroeconomic adjustments instigated by the IMF, plus an apparently endless stream of corruption scandals and the odd massacre, the newly elected Acción Democrática party (social democrat) government, headed by Pérez, was never going to have an easy job.

Their task was made all the more difficult by Pérez himself, who, during the 1988 election campaign adopted an unusually strident populist rhetoric, appealing to the impoverished urban proletariat, largely non-white.

Pérez, well-known for his personal links to the so-called "12 Apostles" group of businessmen, promised to reverse the "stabilization" reforms already adopted. Further, Pérez denounced the IMF as the "neutron bomb that kills people but leaves buildings standing".

Pérez's main opponent, Eduardo Fernández (Partido Social Cristiano Copei, Christian democrat) stuck to the conservative IMF mantra. While appealing openly to the business elites, the Fernández package was sold to the relatively sheltered middle-income sections of the population, mostly Caucasian, as the "responsible", solution to the by then already chronic crisis.

It was predictable, then, that Pérez's surprising announcement, in January 23, 1989 of his ironically titled "Great Turnaround", in agreement with the IMF after being elected (53% of the valid votes, against Fernández's 40%), on a radically anti-IMF platform, would cause, let's say some "discomfort" among Pérez's constituents, leading to a chain-reaction: indignation about the "turnaround" led to nation-wide rioting (known as the Sacudón of February, 27, 1989, about which I've written), the breach of the public order led to bloody, brutal repression, which further fueled anger and generated generalized discontent shown in continuous public manifestations; the loss of public legitimacy led to two failed military putsch attempts, followed by Pérez's impeachment (August 31, 1993) and eventual conviction on corruption charges, to the eventual collapse of the political status quo and to Hugo Chávez's election.

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While Naím shows insight in noticing this shift in political power, it's not clear, however, that he understands the ultimate causes of the shift he describes.

It's not clear, for instance, that this shift is due to "Twitter and Facebook", as Naím suggests; or that "an impatient, better informed middle-class, with more aspirations, is making the exercise of power more difficult", as he claims.

To me, it looks more like the arrogant and greedy elites sometimes push their luck beyond the breaking point. That, of course, is too plain an explanation to justify a book.

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Another day I'll have to address Naím's twin claim: that the corporate boardroom has also lost power.

By those extraordinary coincidences, the ABC's Four Corners is broadcasting tonight the PBS Frontline's "The Untouchables":
"In this investigation we hear from industry whistleblowers who were forced to approve loans they felt would almost certainly fail.
"It's over four years since the global financial crisis began. We now know the crisis that took the world to the brink of financial meltdown - throwing millions of people out of work and devastating entire communities - began on Wall Street.
"In the wake of the crisis, the newly elected President Barack Obama promised to make greedy bankers pay for their crimes. Four years on, not a single senior Wall Street executive has faced criminal prosecution. The question is why? Are they simply too big to jail?"
Hopefully, that could give me some argument to reply to Naím's "boardroom" claim.

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