If we let wealth continue to concentrate — and corrupt every element of our contemporary societies — we’ll all end up crying ‘96 tears.’
Aging baby boomers may remember, from way back in 1966, a one-hit-wonder rock band that sported an all-time great of a name. That band — Question Mark and the Mysterians — may now have a worthy rival on the name front. Make way for Reinhart-Rogoff and the Austerians.
Harvard economists Carmen Reinhart and Kenneth Rogoff don’t make smash records. They write learned economic papers that make austerians happy — and help smash the life prospects of average working families.
Austerians preach the absolute necessity of whacking away at government spending for public services. We must, these champions of austerity solemnly intone, discipline ourselves to reduce government deficit and debt, no matter the pain austerity may bring us.
And austerity does bring pain. People lose access to basic services. People lose jobs. People even go hungry. But some people — extremely affluent people — don’t mind austerity at all.
These affluents don’t send their kids to public schools. They don’t spend weekend afternoons at public parks. They never step aboard public transit. These wealthy don’t need public services and resent having to pay taxes to support them.
Austerity works for these affluents. Cutbacks in public services won’t, by and large, bring any discomfort to their daily lives.
And if austerity should create some unanticipated discomfort, they can always get their friends in high places to intervene — as Americans saw last week when lawmakers rushed to undo recent austerity cutbacks in the Federal Aviation Administration budget that had affluent people cooling their heels in airports.
Austerity cutbacks, notes Center for Economic and Policy Research economist Dean Baker, promise even greater payoffs — for the rich — down the road. The austerity push for cuts in programs like Social Security, he points out, “opens the door for lowering tax rates on the wealthy in the future.”
“If these sorts of social commitments can be reduced,” Baker writes, “then the wealthy can look forward to being able to keep more of their income.”
All this may help explain why pollsters have found, as economist Paul Krugman pointed out last Friday, that wealthy Americans “by a large majority” consider budget deficits “the most important problem we face.”
America’s wealthy make their personal predilection for austerity equally plain to the politicians who seek their favor. These pols, for their part, want to be helpful to their deep-pocketed patrons. But these pols, Dean Baker reminds us, also have needs of their own. They need “evidence” they can use to show the general public that “austerity serves the general good and not just the rich.”
Three years ago, Harvard’s Reinhart and Rogoff supplied that “evidence,” via an academic paper that purported to show a clear and imminent danger whenever government debt hits a particular percent of Gross Domestic Product.
This Reinhart-Rogoff paper rushed to the “top of the charts” in elite public policy circles. Austerians worldwide waved the paper at every opportunity. They cited Reinhart and Rogoff’s work as an unassailable justification for cutting government spending quick and cutting government spending deep.
Reinhart and Rogoff made no meaningful move to discourage the austerians. They basked instead in their global celebrity — until earlier this month when a team of unorthodox economists at the University of Massachusetts exposed the Reinhart-Rogoff paper as essentially a sloppy scholarly fraud.
This Massachusetts work quickly went viral. By last week, Reinhart and Rogoff’s Excel spreadsheet errors had become fodder for late-night TV comics.
End of story? Not quite. We have much more here than a spectacularly failed attempt to make the case for a doctrine that suits the sensibilities of the richest among us. We have powerful proof that inequality corrupts every corner of contemporary societies, even — and especially — our ivory towers.
The academic peers of Reinhart and Rogoff, the scholars who hold the nation’s most prestigious endowed chairs in economics, never once made any effort to check out the Harvard pair’s findings. The unraveling of their bogus case for austerity started with the digging of a skeptical grad student.
The lesson in all this? In a staggeringly unequal society, as Paul Krugman summed up last week, “what the top 1 percent wants becomes what economic science says we must do.”
The rest of us, of course, don’t have to listen.
Labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970, has just been published.