Krugman: ‘I’d Like to Believe That Ideas and Evidence Matter’

Austerity Survivial Guide

Paul Krugman reflects on the meltdown of the putative policy arguments in favor of austerity, and asks whether it will matter to those in power.

Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.

And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

I hope not; I’d like to believe that ideas and evidence matter, at least a bit. Otherwise, what am I doing with my life? But I guess we’ll see just how much cynicism is justified.

Meanwhile, last night the U.S. Senate unanimously passed a bill aimed at exempting rich people who fly a lot from the consequences of the sequester. The House is expected to follow suit today.

Brian Beutler on TPM:

[I]t sets a precedent that sequestration’s problems — particularly those that impact the wealthy — can be fixed piecemeal by shimmying money around, instead of by raising revenue to restore finances to important government programs.

UPDATE: 12 Programs Congress Refuses To Save From Automatic Spending Cuts

  1. #1 by cav on April 27, 2013 - 11:42 am

    BRUSSELS — Unemployment has surpassed Great Depression-era levels in Southern Europe. Recession is drifting to the once resilient economies of the north. Even some onetime hawks on government spending say they cannot cut any more.

    After years of insisting that the primary cure for Europe’s malaise is to slash spending, the champions of austerity, most notably Chancellor Angela Merkel of Germany, find themselves under intensified pressure to back off unpopular remedies and find some way to restore faltering growth to the world’s largest economic bloc.

    [snip]
    The flurry of activity comes after an influential academic paper embraced by austerity advocates as evidence that even recessionary economies should cut spending to avoid high debt levels, written by the Harvard scholars Carmen M. Reinhart and Kenneth S. Rogoff, has come under attack for errors that opponents of austerity say helped lead European policy makers astray.

    • #2 by Richard Warnick on April 27, 2013 - 11:50 am

      Germany’s economy relies on exports. Without customers who can afford to buy your stuff… exports are down.

  2. #3 by cav on April 27, 2013 - 2:00 pm

    I’ll swap you a truck-load of Moroccan bananas for a BMW or cluster of solar panels. but who’s going to pick up the shipping in both directions? The banks?

    A mell of a hess we’ve let em create for us. But, they’ve got theirs, so I guess it’s o.k.

  3. #4 by cav on April 27, 2013 - 2:46 pm

    Another take on the Export business – this time from a slightly different perspective than that of the weary Germans.

    http://cabdrollery.blogspot.com/2013/04/coming-to-clothing-store-near-you.html

  4. #5 by cav on April 27, 2013 - 5:08 pm

    The elite’s goal seems to be to decimate the social model that provides the people with health care, pensions and labor protections.

    Once the working population has been reduced to third world poverty, then policymakers will return to a pro-growth strategy, but not before.

    • #6 by Richard Warnick on April 28, 2013 - 11:30 am

      They also want to eliminate public education, public libraries, public lands… privatize it all, so the rich can live like they did in the Gilded Age while the rest of us have almost nothing.

      J. Bradford DeLong: America – land of inequality

      A more equal America would be one in which economic catastrophes like the 2007-whenever Great Recession that robs 1 in 12 usually working Americans of his or her job would be less likely and less destructive.

  5. #7 by cav on April 27, 2013 - 5:37 pm

    Jello Biafra

    “I’ve spoken often about my belief that there should be a maximum wage. I still totally believe there should be. I think a far worse addiction problem in this world than meth or crack or heroin is wealth addiction. And the only way you can cure people’s wealth addiction is to put them in rehab. The problem with wealth addiction is that after you’ve made your first million, what’s the point? You’re so proud of yourself for making that money that you want to play the game again and win and then play it again and win. They act like a bunch of crack addicts.”

    It seems to me the best hope for humanity is to turn the scheduling, production and distribution of the necessities of life over to unselfish computers programmed with fair rational mathematical algorithms, outlaw corporations and nations, and let all free democratic Earthlings individually compete producing and selling everything else. This would eliminate unfair concentrations of power in large corporations and governments, thereby reducing greed, strife, hatred, war, etc., and prevent those at the top in various nations from robbing everyone else blind.

    • #8 by brewski on April 29, 2013 - 10:04 am

      More from Jello Biafra:

  6. #9 by cav on April 28, 2013 - 12:39 pm

    From contributor “Wigwam” at FDL.

    “Reinhart, described glowingly by the New York Times as “the most influential female economist in the world,” was a Senior Fellow at the Peterson Institute for International Economics founded, chaired, and funded by Peterson. Reinhart is listed as participating in many Peterson Institute events, such as their 2012 fiscal summit along with Paul Ryan, Alan Simpson, and Tim Geithner, and numerous other Peterson lectures and events available on YouTube. She is married to economist and author Vincent Reinhart, who does similar work for the American Enterprise Institute, also funded by the Peterson Foundation.

    Kenneth Rogoff is listed on the Advisory Board of the Peterson Institute. The Peterson Institute bankrolled and published a 2011 Rogoff-Reinhart book-length collaboration, “A Decade of Debt,” where the authors apparently used the same flawed data to reach many of the same conclusions and warn ominously of a “debt burden” stretching into 2017 that “will weigh heavily on the public policy agenda of numerous advanced economies and global financial markets for some time to come.”

    Words fail me.

  7. #11 by cav on April 28, 2013 - 3:26 pm

    And I see the ‘turd’ polishing is coming along splendidly- one disaster after another.

  8. #12 by cav on May 3, 2013 - 7:33 am

    Government investigators have found that JPMorgan Chase devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” and that one of its most senior executives gave “false and misleading statements” under oath.

    I love the way those are essentially used as scare quotes.

    Lack of oversight of JP Morgan and other financial services firms and banks led to “destruction of the economy” several years ago, leading to “massive unemployment” and other “disasters”.

    Paraphrasing in that second one of course.

    Lest there be any doubt about where the sympathies of the authors lie however:

    Still, the broad regulatory scrutiny — at least eight federal agencies are investigating the bank — presents a threat to JPMorgan at a time when it is raking in record profits.

    Mr. Dimon acknowledged in a recent letter to shareholders that “unfortunately, we expect we will have more” enforcement actions in “the coming months.” He apologized for letting “our regulators down” and vowed to “do all the work necessary to complete the needed improvements.”

    • #13 by brewski on May 3, 2013 - 4:06 pm

      Remind me again who is the President, who is the Attorney General?

  9. #14 by cav on May 3, 2013 - 9:33 pm

    Mitch McConnell is asking Republicans across the country to engage in DIY Eastwooding – photographing themselves having a drink next to an empty chair representing Barack Obama.

  10. #15 by Richard Warnick on May 9, 2013 - 5:42 pm

    Economist Stephanie Kelton: 10 Reasons Austerity Is a Crock

    When we allow our economy to operate below full employment (as now), we are sacrificing trillions of dollars in lost output and income each year. We can never go back and recover it. It is gone forever. You’ve seen the debt clock? Here’s the lost output clock.

  11. #16 by cav on May 11, 2013 - 12:11 am

    May 10, 2013, 2:50 p.m. EDT
    April budget surplus is U.S.’s biggest in 5 years
    Federal deficit is down 32% so far this fiscal year.

    http://www.marketwatch.com/story/april-budget-surplus-is-uss-biggest-in-5-years-2013-05-10

Comments are closed.

%d bloggers like this: