Sunday, October 30. 2011
Some scattered links I squirreled away during the previous few days:
Ari Berman: How the Austerity Class Rules Washington:
Groups like the CRFB and the Concord Coalition, founded by former
Congress members in the 1980s and '90s, have long presented themselves
as nonpartisan, penny-pinching critics of wasteful government spending,
when really they are anti-government, pro-corporate ideologues whose
boards are filled with K Street lobbyists and financial executives.
The goal of much of the austerity class is to see government funds
redirected to the private sector. (Their ideology, which accepts the
accumulation of private debt but opposes government debt, explains why
the austerity class ignored the massive housing and credit bubble,
which more than any single factor contributed to an explosion of debt
The austerity class's reach has expanded in the Obama era, boosted
by leaders of both parties and an influx of new funding. After consistently
approving massive deficit spending under the Bush administration,
Republicans suddenly found true religion under Obama (ironically, at
a time when precisely the opposite of austerity was most needed).
And within the Democratic Party, what Nobel laureate economist Joe
Stiglitz calls "deficit fetishism" is viewed as the gold standard for
responsible economics. Democrats revered Bill Clinton's balancing of
the budget as good policy and good politics, not to mention a shrewd
way to tap Wall Street's endless fundraising stream.
Obama and his main economic advisers (Tim Geithner, Orszag, Larry
Summers) were devotees of former Clinton Treasury Secretary and Goldman
Sachs/Citigroup alum Rubin, who co-founded the pro-Wall Street Hamilton
Project think tank at the Brookings Institution in 2006. The Hamiltonians
had warned of "the adverse consequences of sustained large budget deficits"
during the Bush administration and advocated "painful adjustments," namely
cuts to social insurance programs like Social Security and Medicare in
exchange for more liberal policies like tax increases and healthcare
reform. Obama entered office with the Hamilton plan in his back pocket.
John Cassidy: Where Is the New Keynes? Short piece, asks what new
economic insights have been gleaned from the Great Recession; answers
not much, but it has led to rediscovering some things economists used
to know, mostly rooted in Keynes. In particular, lists six areas:
- Finance matters: cf. Hyman Minsky and Wynne Godley
- Credit busts are different from ordinary recessions: cf.
Carmen Reinhart and Ken Rogoff
- Positive feedback and multiple equilibria have to be taken
seriously: yes, markets can screw up; cf. Markus Brunnermeier,
Paul De Grauwe, Paul Krugman
- Espeically in financial markets, self-regarding rational
behavior isn't necessarily socially optimal: cf. Cassidy's own
book, How Markets Fail: The Logic of Economic Calamities;
I would add Yves Smith's Econned and John Quiggin's Zombie
- Monetary policy doesn't always work very well: e.g.,
Japan's "lost decade"; cf. Paul Krugman, whose The Return of
Depression Economics beat this one by a decade, precisely
because it was based on Japan
- Fiscal stimulus programs don't provide a panacea for deep
recessions, but the alternatives -- do-nothing policies or austerity --
are much worse: compare Obama's inadequate stimulus (or more
effective ones in Germany and China) with Britain's austerity mania.
Peter Daou: Vindicated by New Polls, Progressive Bloggers and Activists
Will Determine President Obama's Political Fate:
Interesting thesis, hard to believe given how completely mainstream media
ignores us on matters we actually care about:
The defining conflict of the Obama presidency is not between the White
House and Republicans. It's not between the White House and the Tea Party.
It's between President Obama and the left, specifically between Obama and
progressive opinion-makers and online activists.
It's no coincidence that the angriest barbs from this White House have
been directed at the netroots. And it's no surprise that the media and
political establishment -- along with a vitriolic cadre of Obama supporters --
are mortified by the principled left, simultaneously dismissing them as bit
players and accusing them of being ingrates who are damaging Obama's
reelection prospects (hint: you can't be both).
I've repeated a version of this thesis for years: a handful of influential
progressive opinion-makers are canaries in the coal mine, propounding and
presaging views and arguments later adopted by rank and file Democrats.
[ . . . ]
Recent polls (including Gallup, which shows a double-digit decline
among liberals) indicate significant erosion of support for Obama among
groups who propelled him to victory in 2008, reinforcing the idea that
reality is catching up with netroots criticism. This crumbling of support
is typically attributed by pundits to the poor economy, but the problem
is more complicated: it's the poor economy coupled with the sense (fair
or unfair) that Barack Obama has no convictions, no moral center, nothing
for which he will take an unwavering stand.
That perception of a lack of convictions can't be attributed solely
to attacks from the right, since they can be discounted as partisan. It's
when the left makes that argument that conventional wisdom congeals.
I think the explanation here goes something like this: most Americans
hate politics, and distrust politicians. Because they hate politics they
don't consider political arguments carefully, so they ignore what the
left blogosphere has to offer: a serious discussion of issues and
policies that concern the welfare of most Americans. Instead, they
wind up voting based on a sense of identity -- which candidate,
which party, makes them feel best about themselves. (This is why
the right focuses on identity issues rather than policies; that
and the fact that most of their favored policies are so injurious
to most people they want to keep them under wraps, disguised with
all sorts of misleading rhetoric.) Obama won in 2008 because he
got votes both from the left and from a lot of people who naively
identified with him, in large part because he seemed to rise above
the usual political squalor. However, with the left blogosphere --
for no reason other than they care about issues -- impugns Obama's
principles and/or skills, a lot of that lustre rubs off, revealing
Obama as just another two-faced, corrupt politician. In 2010 the
dynamic was that the Republicans gained almost exclusively because
so many of Obama's 2008 voters didn't show up: they had lost faith,
they hadn't seen (or understood) results, and Obama did a piss poor
job of reminding them how important their support was. I'm doubtful
that the bloggers had much to do with the Democrats' debacle, but
Occupy Wall Street amplifies the effect by getting the rejection
of Obama on the nightly news even when the issues are scrambled or
flat out ignored.
Related to this, see
Peter Frase: The Partisan and the Political. He's arguing not only
that the two are different things, but that it's possible to simultaneously
have partisanship become more polarized while real political differences
have been reduced, even to the point of identity. Moreover, he's arguing
that now is such a time. This may come as a surprise to people who take
what the Republicans say seriously, but not to those who are dismayed at
the lack of change Obama has affected from Bush's policies -- not just
on things like foreign policy which seem to be controlled by some mystery
cabal but on things like taxes (which Obama has cut) and undocumented
workers (which Obama has more effectively prosecuted). Frase has several
points, the most important being how fretting over partisanship is used
to cover up real policy debates. But it also starts to make the argument
that the 2012 presidential election doesn't matter because the candidates
will wind up supporting the same status quo. I'm not endorsing this, but
I expect we'll be hearing more of it.
Paul Woodward: Inequality in America Is Even Worse Than You Thought:
Justin Elliot, but the chart is bigger and easier to read here.
The US Social Justice rank among the top 31 economies is 27th, slightly
better than Greece, Chile, Mexico, and Turkey. The greater the level
of, and tolerance for, inequality in a country, the worse the powers
(both public and private) treat its people.