The broad outlines of economic policy are not really that complicated or hard to understand. Don't believe me? Well, just listen to Nobel Prize-winner Joseph Stiglitz as interviewed on Democracy Now! Wednesday, as he sheds light on a series of big topics that have been the subjects of far more heat than light. First, on the newly-hot-again topic of foreclosures:
AMY GOODMAN: Our guest is Joseph Stiglitz, Nobel Prize-winning economist, professor at Columbia University. His book is out in paperback, Freefall: America, Free Markets, and the Sinking of the World Economy.
So, just to summarize, you are for a national moratorium on foreclosures.
JOSEPH STIGLITZ: I think--inevitably, I think we have to be moving towards that. And the reason is very simple. There were such--the bad practices were so rife, the inequities were so rife, the fraudulent behavior was so common, that at this point we don't know what is a valid mortgage and not. And the consequences of throwing somebody out of their home, when they shouldn't be, are hard to reverse. I mean, just imagine what it does to the family--education of the kids are interrupted--what it does to the community. So, when we have to balance the injustices--and life is unfortunately always balancing one side versus the other--and where will their mistakes be easily reversed and where not? My view is, if we keep them in the homes for a little longer, they owe the money--they still owe the money, that doesn't let them off the hook--but what we're saying is we're not going to speed up this process of-where there's the serious risk of an inequity that will not be easily compensated for.
Who can argue with that when it's put so simply and directly? Answer: No one. Which is why there's so much invested in making sure that it's never put so simply and directly. That's sort of the pattern that's established throughout this interview.
Regarding the need for further stimulus, and why the deficit is a red herring just now, he's equally lucid and to-the-point:
AMY GOODMAN: Joe Stiglitz, the deficit, the battle cry of the Tea Party movement, of the Republicans, as well. Robert Rubin has weighed in, says any new stimulus plan is highly likely to be counterproductive. What do you think has to happen? Does the deficit matter? And how do you think it should be dealt with?
JOSEPH STIGLITZ:My view is we cannot afford not to stimulate the economy. So, you know, anybody that says we should go back to austerity or we should not have a second-round stimulus just doesn't understand economics. And let me be very clear about this. If we don't stimulate the economy, the economy is going to get weaker. When the economy gets weaker, tax revenues go down and expenditures go up. Already, more than 40 million Americans are on food stamps. Number of people on Medicaid is reaching record levels. So, revenues go down, expenditures go up, deficits get worse. If you stimulate the economy, then people get jobs, they spend money, tax revenues go up. Now, if we spend the money on investments-investments in education, technology, infrastructure-you grow the economy in the short run from the stimulus, you grow the economy in the long term because of the returns that you get on these investments.
I mean, just think about this from the point of view of a firm. If you are a firm and you could borrow at zero to two-and-a-half percent, which is what the government can borrow, and you have investment opportunities that you owe ten, 15, 20 percent, you would be irresponsible, you would be foolish, not to undertake those investments. So, anybody that says, "I'm going to only look at one side of the balance sheet, the liabilities; I'm not going to look at the other side, the assets," is really not understanding economics. It's that kind of reasoning that got our country in the trouble in the first place, the people who didn't-you know, shortsighted behavior of the banks that got our country in trouble in the first place. And to me, I just view those kinds of statements as totally irresponsible.
Get that? Look what he does in place of the standard, brain-dead, totally misleading analogy with household budget-balancing (which, taken literally, would mean that no one should ever hold a mortgage, right? Or a car loan?) He makes a genuinely appropriate and valid analogy with a business and its investment opportunities vs. costs. Another example that so lucid and on-point that the only way to counter it is to suppress it.
Is it that you don't know what war costs, or that you don't know that it makes us less safe?
We've spent $268 billion on making war on Afghanistan, and using Linda Bilmes and Joseph Stiglitz' analysis of Iraq we need to multiply that by four or five to get a realistic cost including debt, veterans care, energy prices, and lost opportunities. Public investment in most other industries or in tax cuts produces more jobs than investment in military. In fact, military spending is economically, as well as morally, the worst thing Congress can do. And this is economically the worst time in many decades to be doing the worst thing you can do.
Cross-posted at Daily Kos, Docudharma and Firedoglake
Hat tip to Henry Porter and the other diarists who posted on the videos and photos yesterday of the repatriation of service members slain in Afghanistan.
Henry wrote of how enraged he is that war criminals of the previous administration are walking free, of the pain he felt when he encountered a young disabled veteran, and that he finds "a measure of comfort in the hope that unlike his predecessor, this president has the courage, the character , the compassion and the judgment to make his decisions based on the best possible information and advice available to him."
It is not often that we are able to see photos depicting the cost of war to our troops and their families. Few people encounter our disabled veterans. The face of war is rarely seen.
During the war in Vietnam, Walter Cronkite made sure that Mr. and Mrs. America saw plenty of the reality, during the dinner hour.
Sensitivity to the wishes of our soldiers and their families must prevail over other considerations.
And, there are some soldiers and families who have been willing to share images of their sacrifice with us.
Tax time is reason enough to reflect on our budgets, personal and national. How realistic are our expenditures? Do we spend more than we earn? Does our income allow for a few irrational indulgences? Do discretionary dollars exist? Might we consider our ample debt. Does this represent a temporary deficit, easily resolved, or an obligation that cannot be paid promptly. We may wish to rethink our reality. At home, families have taken scissors to credit cards. More than the minimum payment is made. The intention is to lessen liabilities and increase savings. In the month of April, after we pay Uncle Sam, most of us concluded, it is time to clean our own fiscal house. Next, we move to the nation's ledger.
Expenses The largest share of our moneys go to military operations. The terror tax has become a tremendous burden of American household and communities. Yet, few wish to rethink this "duty."
Last week Dr. Benjamin Brewer, who writes "The Doctor's Office" column for the Wall Street Journal, put a face on a disturbing trend in U.S. health care. A lack of insurance and high health care costs are forcing many Americans to miss out on preventive care: people are skipping check-ups, discontinuing medication, even refusing annual screenings like mammograms and colonoscopies.
For example, a patient of Dr. Brewer's had quit smoking in order to afford gas for his 40-mile commute to work. Unfortunately, he still developed pneumonia. The patient refused to let an ER doctor admit him, in fear of the costs, and he decided not to fill an antibiotic prescription, because his insurance had a $50 drug co-pay, which he said he simply couldn't afford.
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