Tuesday, August 02, 2011

Krugman loses hope – without cause

The US has just gone through one of its periodic bargaining sessions, involving the President, the House and the Senate. Much ado about nothing occurred, and then a deal was cut and disaster averted.

Meanwhile, back at the ranch, progressives are bemoaning the death of liberalism, the death of democratic principles, the death of hope, and the death of the Obama presidency.
Paul Krugman

In the forefront of the wake strides PaulKrugman, who in Cassandra tones has proclaimed the end of the world as we know it:

A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.


Such handwringing, such bewailing the coming of the end!

These people are right to be concerned, to be shattered by the Tea Party.

But their forecasts of doom are overdone.

Remember, the right in America has spent decades building up their strength. They have listened to the Lutzes about framing, and consistently out-frame the Dems every time there is a dispute. They have spend the money needed to establish conservative think tanks, and these are very effective. They have flocked in their thousands to gatherings, filling the coffers of politicians. They have turned to the rantings on Fox and the incoherent babblings right wing nuts on talk radio for sustenance.

And the left has pontificated but done little of practical consequences (Howard Dean excepted – he actually made things  happen for a while).

So these bemoaners should first ask themselves if they are not to blame for the poor performance of progressive forces in the USA.

I think they share the blame for the clear weakness of the left.

Apart from that, progressives have to be clear-eyed when examining political reality in the USA. While many of the chatterin and twittering classes think and speak left, the centre of gravity of the country is decidedly conservative. Even the so-called uncommitted group (the "independents") list to the right.

So if this is your market, your source of power, what makes you think that you will win clean, clear and principled victories?

That is only possible if you win the presidency and control both houses.

This the Dems no longer do.

The House of Representatives is ruled by the Republicans, and they have a huge whack of far right wing, dogmatic, united and zealous Tea Partiers making that party list so far to the right at the moment that it is almost overturning.

What has just happened?

The president, the House and the Senate have agreed to reduce the expenditure of a reckless and out of control federal government by relatively token amounts, considering the size of the debt load the taxpayers carry.

And the debate now has shifted to living within your means.

This is refreshing for those of us outside the US who have watched the reckless rush to use credit to buy things to consume today on the strength of a promise to pay back from future earnings. That has to always seemed a little bit nuts to us.

What Krugman and his ilk miss is that what is happening in the USA right now is the coming home of chickens past. The US economy and its federal  government are adjusting to the fact that the main drivers of the country's economy have been gutted, leaving behind a dangerous vacuum.

The political and economic elite have united in a silent conspiracy to place the returns to shareholders in American companies above the health of the nation. They have refused to consider that large corporations owe a duty to stakeholders other than shareholders – to their nation and to their communities. Unlike the states in the European Union, which realized this forty years ago and started taking steps to ensure all stakeholders were taken into consideration, the American elites aided and abetted in the shameful stripping of their industrial power, without replacing the jobs that were outsourced to cheaper labour with other jobs of equal value to the workers and companies.

This concerted plundering of America's strength is the real problem, not the nonsense about the debt ceiling and some modest cuts.

The only positive thing happening right now is the way that one of the television channels has struck out on their own, and started focusing on the gutting of America.

There is hope. Pehaps the Klugmans of the world should watch that company's programs for a few months, and really really listen to what a handful of prophets are saying.

And then perhaps America might start rebuilding itself.

In the meantime, let the Tea Party do what it said it would do, and more strength to them. At least they have been clear about the hacking and slashing they want to do.

I have a lot more faith in America's incredible intrinsic power, in her people, and in her ability to rebound.

She will recover.


  1. Paul Krugman is absolutely correct. There is no such thingas the confidence fairy. Markets took a tumble this morning.

    The tea-party is running the insane assylum.

    Obama is obviously one of them.

  2. I think the concern most people have is that a fragile recovery may not be the best time to make deep spending cuts (although you have to wonder... it has to happen sometime, so if not now, when?)

    ck - This is old news to the stock market - it reacted Friday, and to some degree yesterday. Its down today on a weakening global economy and some bad economic reports. (I trade futures so its incumbent on me to keep track of this stuff.)

  3. "Unlike the states in the European Union, which realized this forty years ago and started taking steps to ensure all stakeholders were taken into consideration",

    Ah, Europe, excellent example.


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