Paul Krugman is now -- very carefully - edging
his way out of his previous boxed-in corner when
extolling Keynesian-type money-printing. I've
noticed signs of this in his last two or three
op-eds. It's going to be interesting to see where
he's going to end up and how he gets there. He
doesn't want to be frog-marched down the road as
will undoubtedly happen to Bernanke before the year is out.
Keith
At 14:57 09/05/2011, you wrote:
Content-Type: multipart/alternative;
boundary="----=_NextPart_000_0012_01CC0E2F.92A747F0"
Content-Language: en-us
From Steve Kurtz.
From: [email protected]
[mailto:[email protected]] On Behalf Of Steve Kurtz
Sent: Monday, May 09, 2011 9:19 AM
To: undisclosed-recipients:
Subject: [Ottawadissenters] The Unwisdom of Elites - NYTimes.com
On this topic I largely agree with Krugman. I
don't agree on Keynesian theory/practice, nor on growth as a good thing.
<http://www.nytimes.com/>
The New York Times
May 8, 2011
The Unwisdom of Elites
By
<http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per>PAUL
KRUGMAN
The past three years have been a disaster for
most Western economies. The United States has
mass long-term unemployment for the first time
since the 1930s. Meanwhile, Europes single
currency is coming apart at the seams. How did it all go so wrong?
Well, what Ive been hearing with growing
frequency from members of the policy elite
self-appointed wise men, officials, and pundits
in good standing is the claim that its mostly
the publics fault. The idea is that we got into
this mess because voters wanted something for
nothing, and weak-minded politicians catered to the electorates foolishness.
So this seems like a good time to point out that
this blame-the-public view isnt just self-serving, its dead wrong.
The fact is that what were experiencing right
now is a top-down disaster. The policies that
got us into this mess werent responses to
public demand. They were, with few exceptions,
policies championed by small groups of
influential people in many cases, the same
people now lecturing the rest of us on the need
to get serious. And by trying to shift the blame
to the general populace, elites are ducking some
much-needed reflection on their own catastrophic mistakes.
Let me focus mainly on what happened in the
United States, then say a few words about Europe.
These days Americans get constant lectures about
the need to reduce the budget deficit. That
focus in itself represents distorted priorities,
since our immediate concern should be job
creation. But suppose we restrict ourselves to
talking about the deficit, and ask: What
happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there
were the Bush tax cuts, which added roughly $2
trillion to the national debt over the last
decade. Second, there were the wars in Iraq and
Afghanistan, which added an additional $1.1
trillion or so. And third was the Great
Recession, which led both to a collapse in
revenue and to a sharp rise in spending on
unemployment insurance and other safety-net programs.
So who was responsible for these budget busters?
It wasnt the man in the street.
President George W. Bush cut taxes in the
service of his partys ideology, not in response
to a groundswell of popular demand and the
bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because
that was something he and his advisers wanted to
do, not because Americans were clamoring for war
against a regime that had nothing to do with
9/11. In fact, it took a highly deceptive sales
campaign to get Americans to support the
invasion, and even so, voters were never as
solidly behind the war as Americas political and pundit elite.
Finally, the Great Recession was brought on by a
runaway financial sector, empowered by reckless
deregulation. And who was responsible for that
deregulation? Powerful people in Washington with
close ties to the financial industry, thats
who. Let me give a particular shout-out to Alan
Greenspan, who played a crucial role both in
financial deregulation and in the passage of the
Bush tax cuts and who is now, of course, among
those hectoring us about the deficit.
So it was the bad judgment of the elite, not the
greediness of the common man, that caused
Americas deficit. And much the same is true of the European crisis.
Needless to say, thats not what you hear from
European policy makers. The official story in
Europe these days is that governments of
troubled nations catered too much to the masses,
promising too much to voters while collecting
too little in taxes. And that is, to be fair, a
reasonably accurate story for Greece. But its
not at all what happened in Ireland and Spain,
both of which had low debt and budget surpluses on the eve of the crisis.
The real story of Europes crisis is that
leaders created a single currency, the euro,
without creating the institutions that were
needed to cope with booms and busts within the
euro zone. And the drive for a single European
currency was the ultimate top-down project, an
elite vision imposed on highly reluctant voters.
Does any of this matter? Why should we be
concerned about the effort to shift the blame
for bad policies onto the general public?
One answer is simple accountability. People who
advocated budget-busting policies during the
Bush years shouldnt be allowed to pass
themselves off as deficit hawks; people who
<http://krugman.blogs.nytimes.com/2010/12/19/ireland-the-model/>praised
Ireland as a role model shouldnt be giving
lectures on responsible government.
But the larger answer, Id argue, is that by
making up stories about our current predicament
that absolve the people who put us here there,
we cut off any chance to learn from the crisis.
We need to place the blame where it belongs, to
chasten our policy elites. Otherwise, theyll do
even more damage in the years ahead.
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