KRUGMAN: "Austerity Stands Exposed as the...Prejudice, Opportunism & Class Interest it Always Was."

[Hissyspit]

Last edited Mon Apr 29, 2013, 02:45 AM - Edit history (1)

http://www.nytimes.com/2013/04/29/opinion/krugman-the-story-of-our-time.html

The Story of Our Time

By PAUL KRUGMAN
Published: April 28, 2013

Those of us who have spent years arguing against premature fiscal austerity have just had a good two weeks. Academic studies that supposedly justified austerity have lost credibility; hard-liners in the European Commission and elsewhere have softened their rhetoric. The tone of the conversation has definitely changed.

- snip -

Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family. Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too.

- snip -

O.K., I’ve just given you a story, but why should you believe it? There are, after all, people who insist that the real problem is on the economy’s supply side: that workers lack the skills they need, or that unemployment insurance has destroyed the incentive to work, or that the looming menace of universal health care is preventing hiring, or whatever. How do we know that they’re wrong?

Well, I could go on at length on this topic, but just look at the predictions the two sides in this debate have made. People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out.

- snip -

What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was. And maybe, just maybe, that sudden exposure will give us a chance to start doing something about the depression we’re in.

MORE[p]

[MannyGoldstein]

1. This is all-out bipartisan war on the 99%

And anyone with a brain understands that at this point.

[Phlem]

2. Sad but true.

I've witnessed a lot of mine and my wife's family's side just hand it over. Grey matter hand over fist turned into the tithing basket surrounded by money.

Tis a lonely life we lead these days.

-p

[rhett o rick]

26. There are a hell of a lot of people that live in total denial. Many of them post in DU. nm

[Cha]

3. K&RRRRRRRRRRRRRRRR

thanks Hissyspit

[DonCoquixote]

4. K and R

This needs to make the greatest page, as it is one of Krugman's best.

[Douglas Carpenter]

5. an excellent article that people should share everywhere

[Hissyspit]

6. Kick nt

[byeya]

7. When a mainstream, establishment economist like Prof Krugman starts talking

class warfare, then you know that the situation is dire. Keynes has been tried and passed; the "free market" of the Austrian school, Friedman, supply side has been tried and has failed. Krugman has enough ethical sense to admit it. The other side is looking for its next grant and honorarium.
Calling Uncle Whiskers! Calling Uncle Whiskers!

[reformist2]

8. So many lies bought and paid for by the 1%, it's no wonder our politics are so muddled.

[Laelth]

9. k&r for Paul Krugman. n/t

-Laelth

[Teamster Jeff]

10. K&R

[raouldukelives]

11. K&R nt

[redqueen]

12. K&R

[gejohnston]

13. kr

[Festivito]

14. Class interest! Class WARFARE it alway was. /nt

[Android3.14]

15. "...doing something about the depression we're in..."

Gee, I thought it was an economic downturn, a double dip (triple? quadruple? an economic frost heave on the late winter road to Hooverville??). Now you start throwing around the D word, Paul. using words that actually mean what they are supposed to mean is just plain terrifying.

[senseandsensibility]

29. I noticed that too, and thought it was significant.

Has he called it that before?

[yodermon]

31. um , "End This Depression Now!", by Paul Krugman

http://www.amazon.com/End-This-Depression-Paul-Krugman/dp/0393088774

[jwirr]

16. "prejudice, opportumism and class interest = rich vs the workers and the poor. It is no longer only

about race or religion.

[drm604]

33. It never was.

Those things were simply used by the 1% to confuse and distract people.

[pangaia]

17. Why should Krugman have to seem like a genius in the wilderness?

And that is meant as a compliment to him.
I greatly admire him.

The interesting thing to me is what he has been saying for so long is SO OBVIOUS to anyone who does even minimal research.

Why should one man have to keep working so hard to get "morans" to see the simple facts?
Why should the poor guy have to seem like a genius in the wilderness?

Of course he is pretty damn smart. :&gt

And what the hell is with Obama that he ignores this guy???
As my grand kids would say.. " I mean, duh, whatever!"

[reformist2]

18. I think that a lot of like-minded experts don't want to speak up. They need to.

As much as we all support Paul Krugman, it would be inaccurate to say he has been a genius with respect to this austerity/stimulus debate. In fact, most economists subscribe to the Keynesian view, Krugman was just their spokesman.

[closeupready]

19. Using Sarah Palin as an icon, people think they'll be rewarded

somehow by conseratives if they represent that they, like some of the unethical members of the 1%, also subscribe to austerity theories.

[bvar22]

20. Paul Krugman & Bill Moyers...

The Last American heroes.

[summerschild]

21. K&R

[Spitfire of ATJ]

22. Question: What would be so horrible about a baseline?

Say you had all of your basic needs covered and being in someone's employment was for things you WANTED and not to survive.

Oh wait,...that's how the Right Wing defines "Communism".

You know,....because the USSR was a Welfare State that proved to be a total failure because we beat them to the moon,...or something.

Oh yeah,...that's right,...they were a failure because Reagan outspent them militarily. Or was it because he sent the CIA over to Afghanistan to support the "Freedom Fighters" and of COURSE if a country is defeated in combat in a foreign occupation that means it will collapse from within. Just look at what happened to England and France and Spain,...they're ALL failed nations. Or was it his magic cowboy hat and his Mighty Mouth saying "Tear down this wall"? (Oh wait, he left his hat at home for that,...must have been his mouth)

I never understood the "Lazy Commie" slur while simultaneously claiming they were a "threat". Bottom line, the people who said it were classic, non-thinking, Archie Bunker WASPs (White Anglo-Saxon Protestants) all wrapped up in their "Protestant Work Ethic" and acting like not working was a SIN. Further, they act like not working should be a CRIME. Forget about "handouts". Join the army, fight in "the Big One" and come home a hero and use the GI Bill to buy a house and get a degree and a wife and have your 2.5 kids and a picket fence and weed free yard and your first coronary at 55 like REAL Americans.

[byeya]

25. One of the best posts I've read - Good one!!

[Warpy]

23. This is the most passionate column I've ever read by Krugman

You can tell how furious he is over the whole thing.

Personally, I take any "scientific paper" from the right that proves right wing economic cant with a pound of salt. I always know that something, somewhere was seriously fudged.

And so is the case with Reinhart-Rogoff. Had their paper been anything but a pile of lies based on cherry picked data and bad math, the citizens of Spain, Greece, Portugal and the UK would be in beds of clover, dining on peeled grapes.

As it is, austerity makes the majority of the population utterly miserable and keeps the economy in depression.

So why is it done? It's done for the simple reason that the rich want to hang onto every single dime they made in the boom years when taxes were skewed their way and the sky was the limit.

The only country in serious, solid recovery is Iceland, which wisely nationalized the banks, jailed the worst of the fraudsters, and kept things moving among the laboring population.

Austerity doesn't work, has never worked, will never work. However, in places where it's been tried long enough, it's produced some very nasty violent revolutions.

[Katashi_itto]

24. K&R

[rhett o rick]

27. It's telling that Pres Obama prefers Bernanke, Summers and Geitner to Krugman.

By the way I expect another bank bailout coming around 2015. Just sayin.

[another_liberal]

34. The next banking crisis is coming soon.

The mega banks are now even bigger and they were allowed to simply return to business as usual. Once again they are pasting together "Investment Instruments" of questionable value and using the profits from their sale to inflate corporate earnings reports, stock prices and bonuses for themselves.

It is all just another house of cards. It will not stand long.

[hughee99]

28. A great article.

I remember a few years ago reading an OP-ED from some economist that thought a $3 trillion deficit over 10 years was a looming threat to the federal government's solvency. If I could remember his name, I'd send him this.

[leftstreet]

30. DURec

[another_liberal]

32. Even if Austerity accomplished what it is intended to do . . .

Even if Austerity accomplished what it is intended to do, it would still be wrong because it singles out the poor, the old and the very young for particular sacrifices while asking next to nothing of the wealthy and comfortable few. Austerity, however, does not accomplish what it is intended to; in fact, as we have seen over and over again, it makes a bad economy even worse, much worse.

The only thing austerity does accomplish is to keep money supply low and inflation nearly nonexistent, so the wealthy don't risk losing any of their hoarded wealth through currency fluctuations. The wealthy and comfortable few just love austerity.

[libdude]

35. Common sense assessment

Much of what Paul Krugman writes is a real stretch for what I possess as intellect but this is really laying the bone bare, as they use to say
The wealthy and privileged and the well connected and their syncophants in every country and age have always possessed the same superior andself-entitled attitude and assessment of themselves. Along with that, they have a disdain and contempt for those not of their class and circumstances. One fact, one truth that as common as their existence is that in most cases their end came at the movement by those they held in such disdain and contempt.
To use a symbol from an old book, Babylon the great has fallen.

[Canuckistanian]

36. K&R

Austerity is madness, based on ZERO evidence that it actually does what it's purported to

[Auntie Bush]

37. Now let's get started building bridges, roads and repairing our infrastructure.

It's about time! We should have started 4 years ago.

[blackspade]

38. Nice essay.

The only issue for me is that Krugman is still a capitalist.
Not that I disagree, but we need to go further than what he advocates.
We need to move beyond capitalism to a new economic system.