Sure, we urgently need to repeal the sequester. (You can tell your member of Congress that here.) But it’s even more important to repeal the insane thinking that led to the sequester.
That means repealing the deficit babble that still dominates Washington (and provided the theme for the President’s weekly Saturday address). It means repealing a conservative Republicanism which is based, not on economic philosophy, but on an atavistic hatred for government in any form.
Most of all, it means repealing the politics of deprivation and replacing them with the politics of growth. We’ve learned that contractionary policy based on government cuts is … well, contractionary. And that expansion policy is needed if we want the economy to expand.
The argument shouldn’t be about where we should be cutting, but about where we should be spending more money.
Have You Hugged a Keynesian Today?
Pity the poor Keynesian. This benighted economist has been vilified, ridiculed, and marginalized for decades. What was the Keynesian’s crime? To imagine that the proven economic principles which fueled our post-Depression and postwar growth were still proven economic principles.
The assault on Keynesian thinking went hand in hand with other mythologies of the New Economy: You don’t understand our new theories, the Keynesians and neo-Keynesians were told. You’re mired in the thinking of the past. You don’t understand the information economy. You can’t grasp financial innovation.
And your old models of government action in recessionary times are obsolete because they’re not creative enough. (That’s an especially objectionable word in this context. This is economics, not a university extension course on “Self Expression With Clay.”)
We now know “information economy” is a euphemism for “Internet bubble.” Sure, the Internet has changed the economy, but money still needs to change hands in order for it to be – what’s the word? – economic. If that was better understood, maybe people wouldn’t have been such suckers for the Facebook IPO.
It also turns out that “financial innovation” wasn’t all that innovative. Some of it was just unregulated lending. Some of it was unregulated insurance. And a lot of it was old-fashioned fraud.
Jon Stewart joined the troglodytes when he mocked Paul Krugman for endorsing the “trillion-dollar coin.” And that phrase brings up the next area where we’re being told that old-fashioned economists “just don’t get it”:
(Or, as we think of it, “digital tulips.”)
No Economist Left Behind
There are economists who reject not only Keynes, but half a century’s successful economic policy – and the evidence of their own lying eyes. They cling to austerity even as austerity cuts ravage the European economy and ignore the contractionary effect of government cuts on the American economy. And they reject the overwhelming and growing body of evidence which shows that, yes, you get a terrific growth multiplier from government spending in times like these.
They’re the same economists who ignore the complete discrediting of Carmen Reinhart’s and Ken Rogoff’s pro-austerity “findings,” which took place after world events discredited their forecasts and those of like-minded economists. Some economists seem professionally incapable of incorporating data and real-world experience into their worldviews. (Yes, OECD, we’re looking at you.) They seem unable to execute their profession’s most essential function, that of gathering and interpreting data.
That’s partly because economics schools have been seeded with ideologues of the right, like those science-fiction movies where aliens seed the military and government with simulated humans. Think tanks offer other ideologues comfortable jobs with good tenure. Corporate and government leaders seek out their advice – and pay for it.
And yet, with a charming naïveté, theirs is a profession which continues to believe that all human beings are economic actors at heart … except other economists.
So the mantras of mad austerity continue to be chanted in the halls of power. The President used his weekly national address to push his “compromise” austerity budget, Social Security cuts and all. And as we mentioned yesterday, he even entitled that address “Time to Replace the Sequester with a Balanced Approach to Deficit Reduction.”
It’s as if the White House hadn’t received the memos: That the Reinhart/Rogoff paper’s been discredited. That contractionary policy kills economies … and dreams. That the jobs picture is still lousy, but that Keynesian economics still works so we can create some.
Twelve months ago, at least policy makers could claim to these issues were still unresolved. Not anymore. So, with all due respect, Mr. President: Really? “A Balanced Approach to Deficit Reduction”?
That’s so 2012.
Not that the other party’s a reasonable alternative. Today’s Republicans are to the functions of government what Guy Fawkes was to the Parliament building. They’re there to blow things up, and for other reason.
Whacko-economics – the conversion of self-serving and illusory ideas into an academic-paper format – was just another excuse for destroying the institutions they despise. To them economics is nothing more than a fuse for their incendiary budget cuts, a cover story for their fiscal Gunpowder Plot.
Why aren’t these folks meeting with more resistance from their political opponents? Perhaps it’s because politicians are economic actors, too.
Repeal the Whole Damn Thing
So, yes, repeal the sequester. Repeal deficit babble, from the President or anyone else. Repeal the Visigoth Party’s right to ruin the economy. And repeal Tom Friedman too, just on general principle.
Name and shame each every corrupt Visigoth Republican – which is pretty much all of them. Slam every Democrat who repeats the babble and doesn’t explicitly reject austerity and demand pro-growth spending. That includes any Democrat who won’t sign a pledge to vote against cuts, especially to Social Security, and then keep it. Let them know today that they’ll pay a political price.
Be prepared to organize primary challenges, and to march in the streets again. (It’s about time, isn’t it?)
Grow, Baby, Grow
Above all else, demand growth.
The economic principles which predicted austerity’s failure are the same principles which show us how to grow our way out of this horrible economy – with government spending on infrastructure, education, science, postal services, and a whole host of other functions. That spending should include WPA-like programs of real boldness and vision, as well as the proposals we’ve already seen outlined.
Those programs can be funded through more reasonable taxation levels for the wealthy and corporations – and yes, they can be funded through debt. At a time when investors are essentially paying the government to borrow, it’s irresponsible and insane not to do so.
So yes, let’s repeal the sequester. Then let’s repeal the insanity, so we can get to work building a better economy.