Paul Krugman in what may be his finest blog post articulates a fear I have had but been unable to properly express:
But watching the failure of policy over the past three years, I find myself believing, more and more, that this failure has deep roots - that we were in some sense doomed to go through this. Specifically, I now suspect that the kind of moderate economic policy regime Brad and I both support - a regime that by and large lets markets work, but in which the government is ready both to rein in excesses and fight slumps - is inherently unstable. It's something that can last for a generation or so, but not much longer.
By "unstable" I don't just mean Minsky-type financial instability, although that's part of it. Equally crucial are the regime's intellectual and political instability.
The failure here is not the policies themselves, but the 2nd and 3rd order intellectual and social structures that maintain sufficient social support for the policies of curtailed capitalism and the state enforcement of broad social mobility and equality. In this sense, I say the New Deal did fail, because it failed to sustain itself much past the generation of people who lived through the crisis that made it possible. It is getting harder to protect Social Security because with each passing year there are less people with living memory of what life was like without it. Those people were generally immune to the propaganda, but those of us left behind lack that personal connection to seeing retired people reduced to begging and literally dying in gutters and under bridges.
That's what we have to account for if and when we create the conditions to implement a New New Deal. How to make the liberal consensus not only strong enough to do it, but self sustaining?
The kindest thing we can do now is pretend the whole thing never happened.
But the bulk of the post highlighted something else that's just important in its own way:
[A]nyone can come up with some good deficit-reduction ideas; I can come up with a dozen even before I've had my morning coffee. Brainstorming is easy.
What the commission was supposed to do was something much harder: it was supposed to produce a package that Congress would give an up and down vote. To do this, it would have to produce something much better than a package with some good stuff buried in among the bad stuff; it would have to produce a package good enough to accept as is.
And it didn't do that. Instead, it produced a package that may have had some good things in it, but also, remarkably, introduced a whole slew of new bad ideas that weren't even in the debate before. A 21 percent of GDP limit on revenues? Cutting the top marginal rate to 23 percent? Sharp reductions in the government work force without, as far as anyone can tell, a commensurate reduction in the work to be done? Instead of cutting through the fog, the commission brought out an extra smoke machine.
Krugman sees the Catfood Commission quite clearly at one level. That last line put it perfectly. However, Krugman misses it completely at another level: He thinks it's a bug, when of course, it's a feature. What better way to advance rightwing ideas no one was even seriously thinking about during a Democratic Administration and a Democratic Congress? Rightwing ideas such as those Krugman just enumerated in that very same paragraph.
Sure, they have only the vaguest relationship to deficit reduction, and introducing them like this out of the blue does nothing to fulfill the supposed purpose cover story of Catfood Commission. So what? The cover story was only essential for getting the Commission launched. It remains useful of course, for continuing to bludgeon folks with the co-chairs' failed potpouri. But no one has to take it seriously when it no longer suits them--any more than deficit chickenhawks have to take themselves seriously when it's time to cut taxes on the rich & the super-rich.
If this is confusing to anyone, that's precisely the point. Conservative economic policies aren't supposed to make sense. They're supposed to make dollars. Billions and billions of them. Policies that make sense and/or honest deliberative processes that remain grounded broadly supported public principles will almost invariably emerge with a strong "liberal bias", the same way that majorities of self-identified conservatives will support a majority of welfare state programs. Confusion must be introduced at multiple points at multiple levels in order to come out with any sort of "acceptable" conservative policies.
It is, in fact, the same principle of sowing doubt and confusion that Naomi Oreskes and Erik Conway document in their recent book, Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, but with one crucial difference: In science, the standards of conduct and proper procedure are far better established, and the so the generation of spurious doubt and confusion is much more obvious, and much more clearly identifiable. But the game is fundamentally, at bottom, still the same. Create confusion, create uncertainty, create delay, introduce false issues, introduce false solutions, shift the debate, introduce wild accusations, etc., etc., etc.
Many had hoped that Obama would be like FDR, a Democratic President with a Democratic Congress, cleaning up the mess made by Republicans and ushering in a new era of Democratic dominance. This was true even of folks like me, who were not so sure about Obama himself, but felt that the sheer necessities of the time would "force greatness onto him." Instead, what we see is almost the exact opposite. It's far more like LBJ in Vietnam--ignoring reality, running scared of GOP attacks, splitting his own party, and ending its long period of dominance.
In Quick Hits, doubledown points to an AFP story, "Obama vows to 'redouble' efforts toward bipartisanship".
A reality-based President might want to redouble efforts to solve realworld problems, such as, oh, I dunno, maybe the worst recession since the Great Depression?
A delusional President? Not so much.
Let's review how we got here, shall we? Skip the whole part where Republicans and neo-liberal Dems destroyed the economy, and let's concentrate on how "bipartisanship" and the often futile quest for it completely crippled any chance of a true recovery. It's painful, I know, but a review is certainly in order to remind folks of just how much effort there was for a "bipartisan" solution, and just how much this involved ignoring both reality, and those terribly extreme economists who continued paying attention to it.
Weeks before Obama's inauguration, on January 5, 2009, Politico reported ("Big tax cuts in the works"):
Aiming to foster bipartisan support for his record-setting economic stimulus, President-elect Barack Obama plans to propose huge tax cuts for businesses and middle-class workers that will total about 40 percent of the package, or up to $310 billion, congressional officials said.
The revelation is part of an intricately orchestrated rollout of the plan that includes an appearance by Obama on Capitol Hill on Monday and a major speech about the economy later in the week.
Obama plans to ask Congress for a stimulus package of $675 billion to $775 billion, so the planned tax cuts will total about $270 billion to $310 billion, the officials said.
Obama strategists say he wants to get 80 or more votes in the 100-member Senate, and the emphasis on tax cuts is a way to defuse conservative criticism and enlist Republican support.
But officials say the tax cuts will be based on historical and empirical evidence of what works, not ideology. Rather, the targeted tax cuts will be designed to stimulate job growth in the private sector and help middle class families, the officials said.
So three things: (1) Obama wanted to gain broad bipartisan support, (2) So he included massive tax cuts--40% of his proposed stimulus package, (3) which he claimed would be based on what works.
How'd that work out?
He did include massive tax cuts. But they weren't based on what works, because tax cuts don't work (they average about 2/3rds the effectiveness of government spending). And he didn't get broad bipartisan support, he had to grovel and sell out school kids just to get a measly three GOP votes in the Senate (and none in the House.)
None of this was really a surprise. Paul Krugman, for one, immediately pointed out the inadequacy of the plan (more on this below), while it only took a couple of days after the inauguration for senators to unveil their opposition. From the very beginning Republicans were hostile, as were Blue Dog Dems like Evan Bayh. As Time reported on January 22, 2009 ("Economic Stimulus Plan Hits Bipartisan Obstacles":
Two years ago, a post-Bush Republican Party that couldn't find itself on Google Maps was thoroughly thrashed for the second time in as many elections. The GOP had lost over 50 House seats over two election cycles, scores of state legislative chambers, governorships, US Senate seats, and the presidency to a guy named Barack Hussein Obama.
The latter, something most observers thought wouldn't happen in the United States until some time between the next arrival of Haley's Comet and when Kevin Costner evolves into a fish-humanoid hybrid to live on an Earth covered by H20.
It's amazing what can happen, however, when you have a Democratic president who doesn't live up to many of his core progressive promises, who blames his base for asking him to, and whose communications people, to quote Democratic National Committeeman and CNN Contributor Robert Zimmerman, "... couldn't sell cocaine to Charlie Sheen."
The results were on display this past Tuesday, when an American public tired of being unemployed, scared about their future, and looking for some kind of leadership, handed over the US House - in stunning fashion - to a coterie of cranks who have to put corks on the end of their forks not to jab their own eyes while eating. Think Steve Martin's Ruprecht from Dirty Rotten Scoundrels, and you get the basic picture of some of the Tea Party proxies we elected to Congress last week.
My former colleague Peter Diamond, along with Dale Mortenson and Chris Pissarides, has won the Nobel. Richly deserved. The prize is for work on frictions in markets, which is very important stuff; but Peter, an incredibly profound thinker, has done much much more.
And yes, this is the same Peter Diamond whose nomination to the Fed board has been held up because of Republican doubts about his qualifications.
Here's Krugman's earlier post on the blocking of Diamond:
Peter Diamond, Macro Maven This is disgusting: Senate Republicans holding up Peter Diamond's nomination to the Federal Reserve Board on the grounds that he may not be qualified to make monetary policy. Aside from the fact that the same Senators cheerfully confirmed Bush nominees who didn't know much about economics of any kind, this is especially stupid right now.
Why? Because right now one of the hot topics is whether the apparent shift in the Beveridge curve signals a rise in structural unemployment - and Diamond wrote the seminal paper on the whole subject - the top result on Google scholar.
Diamond is exactly the man we need - which, given the way things have been going lately, probably means he won't get confirmed.
Update: Some commenters note, correctly, that there's an ongoing dispute over what the rise in vacancies without a corresponding fall in unemployment means. But that's precisely the point: we want Peter Diamond, who pioneered the whole study of this subject, in the Fed, where he can help make sense of the situation.
But there's really not that much new about this. Republicans have long had contempt for science, and for the Nobel Prize (whether or not you count economics as a "science"). All that's different now is that they fillibuster everyone in sight. But the Nobel prize is purely an incidental matter so far as that's concerned.
Paul Krugman had a typically restrained response to a profile by one of the dumbest Versailles scribes around. In fact, it was more than just restrained, it took the opportunity to make a very telling point... or two:
One thing I'd note, however: there's a hint in Kurtz's article of an attitude one sees all the time - namely, that there's something inauthentic about people who complain about current policies and the state of the economy when they are personally doing well.
This brings to mind a review I once read of a bad movie in which Mel Gibson played a Revolutionary War patriot. The film made a point of showing the Gibson character as being apolitical - until the British did him personal harm; that's when he got involved. As the reviewer pointed out, this gets the notion of patriotism all wrong - you're supposed to care about the cause regardless of your personal interests. In fact, there's something especially laudable if you oppose a regime even though you were doing fine under that regime.
Of course the fact that conservative icon Mel Gibson has no idea what patriotism is about should hardly be surprising, much less shocking. But what is distressing is how dimly even most liberals are aware of what's wrong with it. However, it's actually part of a much wider phenomena, which Salon's Heather Havrilesky mused upon in a recent column, "Will 'The Event' just get 'Lost'?", where she writes:
Similarly, though, pretty much every single character on "The Event" seems to want something so bad they could kill for it, from the mysterious lady locked in the government facility at Mount Inostranka in Alaska to the scared pilot who hijacks a plane because he's afraid some masked strangers are going to execute his two daughters. The big trouble with "The Event" isn't that the stakes aren't high enough (they're sky-high) or that the characters don't have clear motives for taking the desperate measures that they take. The real problem is, we don't care because there clearly isn't any larger meaning guiding the action, and the only thing we know about each character is that he/she totally loves his/her fiancé/wife/husband/children sooo much that he/she would do anything to keep them safe.
In a country where many viewers don't have a lot of thoughtful or idealistic notions outside of a "love of family" -- worthy though this love obviously is -- this is what passes for character development and premise, over and over again. Even on the most popular TV shows and movies out there, this is often the one humanizing factor, the one guiding principle, the one very simple central thrust of the entire narrative. Even in a smart psychological thriller like "Inception," what do you ever know about Leo DiCaprio's character, other than that he loves his wife and wants to get back to his kids? What should merely be a character's motive stands in for almost everything else, so that all we get is an enormous layer cake of action, all balancing on the faces of two young children. By the time we see the kids' faces, I half expect them to be hideous monsters or extraterrestrials. (If only.)
What Havrileskyis describing is the minimal self of neo-liberalism, for whom all higher things have either been commodofied, or reduced to single-minded love of family. Given this, there simple is no possible foundaiton for a truly democratic politics of any sort, much less for actual patriotism.
And that realization adds a much deeper level of resonance and pathos to Krugman's conclusion:
So, let's see: letting the high-end tax cuts expire on schedule is good economics; picking a fight with Republicans over the issue appears, from all the polls, to be very good politics - and that's despite what has so far been an incredibly lame effort to explain the issues.
Besides, Democrats should be inclined to take risks in any case: if nothing shakes up the game, they lose the House and possibly the Senate, if they shake things up, they might hold on.
And yet, it's still not clear whether they'll force a vote on a middle-class-only tax break?
You really have to wonder about these people.
Particularly when one reads TPM's account of the meeting that Speaker Pelosi held yesterday:
Pelosi Implores Dems On Tax Cuts: 'Who Do You Stand With?'
Christina Bellantoni | September 14, 2010, 10:50PM
Speaker Nancy Pelosi tonight implored House Democrats in a private meeting to consider a pre-election vote on extending the Bush-era tax cuts for the middle class while letting those for the rich expire, framing the debate in partisan terms.
Rep. Sheila Jackson Lee told TPM after the caucus that Pelosi ended the meeting with a "resounding" and impassioned speech that fired up the Democrats and might even have brought more on board for a vote.
"She made it clear it's a black and white issue of who do you stand with," Lee told TPM. "It's the middle class and they need to know we are pushing for them. We have to say it over and over again. They've gotta see it, smell it, sense it, taste it."
Lee (D-TX) said that Democrats should be as consistent as President Obama has been, and attempt to define the Republicans as favoring the rich.
As we highlighted earlier, Democratic leaders were in temperature-taking mode tonight. They laid out several options for voting now, but tried to listen to members to get the discussion started since everyone had only been back in town for five hours.
Pollster Stan Greenberg also presented the caucus with some data showing the tax cuts issue helps energize the base, a stat members responded to well, a Democratic aide present during the meeting told TPM. The aide said some members suggested that tax cuts could be moved quickly, or that it wasn't an issue for them back home, but that most members were supportive of Pelosi's position.
TPM spoke with several Democratic members on background and they confirmed that there was not a clear consensus to emerge out of the meeting. Most said they think leadership will put forward a vote to extend the middle class tax cuts only, but perhaps allow for a procedural vote that would satisfy those members who want to at least be on the record for extending the cuts for every income bracket.
The most plausible explanation for all this is that Democrats are afraid that even the mere mention of taxes means their doom. As if the GOP won't mention taxes if the Dems don't pick a fight? What kind of crazy is that?
It's fear-based crazy, that's what. And since the GOP is the party of fear, as long as the Dems are coming from fear, they are playing on GOP's home turf, by the GOP's own rules. As I've been trying to explain recently, there's a very clear clash of civilizations going on here: A fear-based, top-down anti-modernist "civilization" (if you can call it that) vs. a reality-based, bottom-up modernist and post-modernists civilization. THe Dems have been scared out of their wits by the GOP, thus abandoning the civilization that they're supposed to be defending. Not all the Dems, mind you. But enough of them to cripple the party as a whole. And that's what we're seeing play out here. It's really just as simple as that.
"We have nothing to fear, but fear itself." -- Franklin Delano Roosevelt.
The latest OECD report of composite leading indicators (CLIs) show that the global recovery shows signs of stalling. Note that CLIs do not reflect current business activities. They are aggregates of leading indicators that attempt to indicate turning points in economic activity approximately six months in advance.
Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated. Against this background and according to the OECD short-term forecasting models, growth could slow in the G7 economies to an annualised rate of about 1½ per cent in the second half of the year
So here's how I see it: what we're really seeing here is a sort of intellectual Wile E. Coyote moment. Back in May, the OECD was responding to social pressure, not economic logic. All the right people wanted austerity now now now, because, well, because, and the OECD went along. Now a bit of bad economic news has led the organization to look down, and realize that there's nothing supporting its position. But there never was.
From the press press release:
OECD composite leading indicators show signs of possible peak in expansion OECD composite leading indicators (CLIs) for July 2010 point to clearer signs of a moderation in the pace of expansion compared to last month's assessment. The CLI for the OECD area decreased by 0.1 point in July 2010.
In Canada, France, Italy, the United Kingdom, China and India there are stronger signals of a slower pace of economic growth in coming months than was anticipated in last month's release. Stronger signals that the expansion may lose momentum have emerged in Japan, the United States and Brazil. Tentative signals have also emerged that the expansion phases of Germany and Russia may soon peak.
The OECD Development Centre's Asian Business Cycle Indicators (ABCIs) show that the recovery of ASEAN economies keeps on track with some signs of moderation.
Here are some charts, showing coming peaks in major sections of the world economy, and even a downturn in China:
Yesterday, in response to my diary, "The incredible dishonesty of Megan McArdle", I received an email advising me to look at a blog post at the Tax Policy Center, "in defense of her [McArdle's] position against Krugman, and in defense of Rep. Ryan's Roadmap (which I like, but obviously has flaws)", which he later characterized as "TPC's opinion".
However, the post was not "TPC's opinion". It was the opinion of one economist who works at TPC, one Ted Gayer who served in the Treasury Department and as a senior economist on the President's Council of Economic Advisers (under G.W. Bush), as a visiting scholar at the rightwing American Enterprise Institute from 2004 to 2006, and as a Lone Mountain Fellow at the Property and Environment Research Center, which Sourcewatch identifies as a Montana-base think tank "that specialises in free market environmentalism" and that "links to a long list of the country's most powerful right-wing foundations and organizations committed to deregulation of industry and to the privatization of public assets."
The fact that Gayer now works at the Brookings Institution--and through it at the TPC (a joint project of Brookings and the Urban Institute) is indicative of how successful the right has been in influence economic thinking in Versailles. But his opinion does not have the same status as an institutional analysis, even though his post tries to convery the impression of an official position. It's worth noting precisely because it helps flesh out a fuller picture of how rightwing hegemony works in the field of economics with absolutely nothing factual going for it.
Gayer begins his post in an inherently dishonest fashion:
Given that columnist Paul Krugman relied on Tax Policy Center estimates to level claims that Congressman Paul Ryan is a "flimflam man" and that Ryan's plan to address our fiscal problems is a "fraud," I think a defense of the Congressman is in order.
The clear implication here is that Krugman has misused the TPC estimates in making his argument. Why else intervene? Merely because Gayer is a conservative and he wishes to build up Ryan's cred? That would be my guess--but it's only a guess. What I can say for certain is that Gayer presents no evidence at all that Krugman has misrepresented the TPC data and what it has to say about Ryan's plan. Instead, he is simply echoing the narrative that other have used to obfuscate the nature of Ryan's plan, which Krugman represented quite accurately.
Gayer, in contrast, begins by repeating the very mis-representation of CBO data that Krugman zeroed in on:
I had wanted to write a post today about the pathetic Versailles attempt to manufacture a new generation of "serious" "responsible" conservative politicians on budget matters, referencing what real economists have to say about the likes of Paul Ryan and Mitch Daniels. But in googling around to pick up some dropped threads, I came across an extremely disingenuous attack on Paul Krugman by Megan McArdle at The Atlantic (a followup to an earlier, equally disingenuous attack), and decided I should say something about her first.
The two attacks I just mentioned are attempts to discredit Krugman's attacks on Paul Ryan's so-called "Roadmap for America's Future". The main problem here is that it's not Krugman's attack. Krugman is simply attacking Ryan with the failings of his plan as analyzed by others, most notably, the Tax Policy Center, which produced a devastating critical analysis last March that Ryan has never seriously responded to. Most notably:
In his provocative Roadmap for America's Future, Representative Paul Ryan (R-WI) figures that his broad tax code overhaul would eventually generate about 19 percent of Gross Domestic Product in revenues. But the Ryan plan would produce hundreds of billions of dollars-a-year less than that-about 16.8 percent of GDP-a decade from now, according to new Tax Policy Center estimates. Moreover, the plan would give a huge tax cut to the wealthy, while cutting taxes by little or nothing (and in some cases even raising taxes) for low- and middle-income people.
As a result, Ryan would likely fall far short of meeting his goal of balancing the budget and paying off the national debt by 2080, even if government spending were slashed to 1951 levels as he proposes....
TPC found Ryan's plan generates much less revenue than he projects. If all taxpayers chose the simplified system, it would produce about 16.8 percent of GDP by 2020, far below the 18.6 percent he figures for that year. If taxpayers chose the system most favorable to their situation, the Ryan plan would produce even less revenue-about 16.6 percent of GDP.
What does that mean in dollars? CBO's most realistic projection of revenues (assuming most Bush tax cuts are extended and many middle-class families continue to be exempted from the Alternative Minimum Tax) figures the existing tax system would raise about $4.2 trillion in 2020. By contrast, Ryan's plan would generate about $3.7 trillion, or $500 billion less in that year alone.
While TPC didn't model the Ryan plan beyond 2020, the pattern of revenues it generates suggests it would be decades before it reaches his goal of 19 percent of GDP-very likely sometime after 2040.
Top-bracket taxpayers would overwhelmingly benefit from Ryan's tax cuts. By 2014 people making in excess of $1 million-a-year would enjoy an average tax cut of more than $600,000. To put it another way, their after-tax income would rise by nearly 30 percent.
So, McArdle's game is to avoid the substantive problems identified by the TPC, and try to tangle up Krugman in alleged misrepresentations of how Ryan went about presenting his plan.
A language thing: many people have been characterizing my attack on the Ryan roadmap as "ad hominem." I think this represents a devaluation of the term.
As I've always understood it, ad hominem attacks involve attacking the person in general rather than what the person has to say on a specific issue. It means that instead of saying that Professor X seems to have played fast and loose with the data in his latest study, you say that Professor X's mother was a hamster and his father smelt of elderberries; or, to take some non-random examples, you habitually refer to someone as "former Enron consultant Paul Krugman," or invariably bring the size of Al Gore's house into discussions of climate change.
Now, I didn't do anything like that. I did point out that Ryan appears to be faking it in the selling of his plan - and I documented that assertion with specifics on the plan, on how he gamed the CBO process, and on the differences between how he talks about the deficit and what his plan would actually do.
That's not ad hominem; it's just being blunt.
This is not a new thing, but it is not as prominent as another related (usually) rightwing practice: that of redefining "rights", particularly the First Amendment, to mean two nearly opposite things: one for conservatives, and one for everyone else. In fact, Krugman is being far too nice here. Ryan is, quite simply, a charlatan. And Krugman has not been shy about pointing it out. This ought to be the job of any and all beat reporters who deal with Ryan, but then, that's not what the Versailles media is for.
What's happening here is one of the conservatives favorite 5-year-old tactics: "I know you are, but what am I?" Whatever outrageous thing they try to pull, when they get called on it, they turn around and accuse whoever called them on it of doing exactly the same thing.
Duplicistous climate scientists, anyone? Racists at the NAACP? A racist black president?
The good thing about fallacies is that they have names, which makes it easier to identify them, point them out, discuss them in general terms, compare diffeent examples, just generally get a handle on them.
And so, since this new pattern is emerging of using projection to falsely accuse people of fallacious reasoning, we really ought to develop a term for that, as well.
I don't really have a good suggestion for it, so I'll throw it open for comments. But this really is one of the most important things we can do when dealing with rightwing hegemonic warfare. Think of it sort of like generating antibodies. You learn to spot this sort of disease vector at a cellular level, so you don't have to think it all through all over again every time it happens.
...there's only a big mystery here if you imagined that the Great Recession and its aftermath was going to look like a pre-1990 business cycle, rather than be another postmodern cycle like those of 1990 and 2001.
It's worth looking, in particular, at how productivity across the cycle has changed. I don't have time this morning for a proper treatment, but look at this figure:
If you squint a bit, you can see that before 1990, recessions were generally accompanied by a fall in productivity, mainly because businesses would hang on to workers, so as to be prepared to ramp up production quickly once recovery got underway. After 1990, this "labor hoarding" effect basically vanished; if anything, productivity growth seemed to accelerate in times of weak demand. Partly this may have reflected structural changes in the economy; it might also reflect the (correct) perception that recovery from financial-crisis-induced recessions is much slower than recovery from recessions created by tight money, imposed by the Fed to control inflation.
And of course, it could also reflect broader changes in class power relations, and changing attitudes of the business class. Any way you slice it, though, squeezing more out of workers during tough times has just got to bring joy to the Scrouge in every businessman. But I digress...
This gets at a broader point: as I see it, one of the problems with policy in the early months of the Obama administration was that top officials (to be fair, like many Wall Street economists) thought of the Great Recession as 1982 redux, rather than as a mega version of 2001.
"At a time when so many families are tightening their belts, he's going to make sure that the government continues to tighten its own," Obama said. "
We'll never know how differently the politics would have played if Obama, instead of systematically echoing and giving credibility to all the arguments of the people who want to destroy him, had actually stood up for a different economic philosophy. But we do know how his actual strategy has worked, and it hasn't been a success.
Krugman boils it down to its simple essence. But in order to fight it, we need all the insight we can get, which can get rather messy. I'm not going to try and do it all here. I'm only going to highlight one aspect. But in doing so, I hope to illustrate the importance of brining as much insight to bear as possible. Yes, there's a lack of principle, courage and will, as well as plain old common sense. There's not even a sense of poltical self-preservation, as Krugman himself points out.
But there's also an almost total lack of cognitive functioning. The content may be different, but as far as the formal processes are concerned, this is pure Tea Bag territory--reasoning by associative similiarity: You dress up like a Revolutionary soldier, and voila! the Founding Fathers are automatically your spokesmen! Obama's "reasoning" basically operates on the same level. This goes back to the appearance-based "sequential reasoning" that I first blogged about years ago in "Terri Schiavo: We're Too Smart!"
Sequential thinkers reason "by tracking the world," recognize regularities in sequences of events, but have no abstract understanding of cause and effect. The world they perceive is a world of appearances that has very little organization to it beyond the recurrence of sequences.
Linear thinkers understand cause and effect, limited to a one-direction, one-cause/one-effect model. The world they perceive has logical order and structure, but the structure is invariably hierarchical, causality flows top-down, and the world is divided neatly into cause and effect.
Systematic thinkers understand multi-faceted, multi-linear cause and effect, with mutual cause-and-effect relationships between different elements. The world they perceive is primarily a world of systems and relationships, rather than objects.
Equating the federal budget with family budgets is a classic example of sequential thinking. There is no logical reasoning involved here. There is simply an association between two things that superficially appear to be the same:
"The world they perceive is a world of appearances that has very little organization to it beyond the recurrence of sequences."
That perfectly describes the crazy world of John Boehner and the Tea Baggers last year. And the world of Barack Obama today.
Earlier this week, I cheered Paul Krugman for a trio of direct and confrontational posts. As we're watching Republicans and Democrats lining up to gut Social Security, and the gelling of elite opinion to repeat the mistakes of the Great Depression, I want to quote a few pieces from one of the Depression's best economic histories, J.K. Galbraith's recounting of the period, The Great Crash 1929. As the elites seem determined to create a third depression, it is instructive how familiar Galbraith's recountings are (all added emphasis mine).
Then as now, there was the crushing weight of an orthodoxy of inaction: (pp185-6)
The rejection of both fiscal (tax and expenditure) and monetary policy amounted precisely to a rejection of all affirmative government economic policy. The economic advisers of the day had both the unanimity and the authority to force the leaders of both parties to disavow all the available steps to check deflation and depression. In its own way this was a marked achievement -- a triumph of dogma over thought. The consequences were profound.
Does Washington care about unemployment?
In 1983, Ronald Reagan's Washington regarded high unemployment as a national emergency. Today, with unemployment kissing 10 percent, Barack Obama's Washington scarcely seems perturbed. Why?
....Today, the unemployment rate is kissing 10 percent. Global financial markets are sending us a message that the excess demand for high-quality financial assets is growing again.
Yet, unlike 1983, there is no sense of urgency in Washington.
And it's not just here in America.
Item: Krugman:
The Pain Caucus
.... When the financial crisis first struck, most of the world's policy makers responded appropriately, cutting interest rates and allowing deficits to rise. And by doing the right thing, by applying the lessons learned from the 1930s, they managed to limit the damage: It was terrible, but it wasn't a second Great Depression.
Now, however, demands that governments switch from supporting their economies to punishing them have been proliferating in op-eds, speeches and reports from international organizations. Indeed, the idea that what depressed economies really need is even more suffering seems to be the new conventional wisdom, which John Kenneth Galbraith famously defined as "the ideas which are esteemed at any time for their acceptability."
The extent to which inflicting economic pain has become the accepted thing was driven home to me by the latest report on the economic outlook from the Organization for Economic Cooperation and Development, an influential Paris-based think tank supported by the governments of the world's advanced economies. The O.E.C.D. is a deeply cautious organization; what it says at any given time virtually defines that moment's conventional wisdom. And what the O.E.C.D. is saying right now is that policy makers should stop promoting economic recovery and instead begin raising interest rates and slashing spending.
G20 drops support for fiscal stimulus By Chris Giles and Christian Oliver in Busan
Published: June 5 2010 11:54 | Last updated: June 6 2010 17:25
Finance ministers of the world's leading economies have been so spooked by the sovereign debt crisis that they have decided they can no longer wait until economies are growing strongly before they remove fiscal stimulus.
The meeting of the Group of 20 finance ministers and central bank governors in Busan, South Korea, at the weekend also dropped proposals for a global banking levy, giving countries leeway to do what they thought best for their domestic circumstances.
The communiqué of the meeting made clear the G20 no longer thought expansionary fiscal policy was sustainable or effective in fostering recovery because investors were no longer confident about some countries' public finances.
Item: Spinning off from the a discussion of the later, Digby writes:
