“The Big Fail”: Too Many Republicans Responsible For Economic Failure Retain Power And Refuse To Learn From Experience
It’s that time again: the annual meeting of the American Economic Association and affiliates, a sort of medieval fair that serves as a marketplace for bodies (newly minted Ph.D.’s in search of jobs), books and ideas. And this year, as in past meetings, there is one theme dominating discussion: the ongoing economic crisis.
This isn’t how things were supposed to be. If you had polled the economists attending this meeting three years ago, most of them would surely have predicted that by now we’d be talking about how the great slump ended, not why it still continues.
So what went wrong? The answer, mainly, is the triumph of bad ideas.
It’s tempting to argue that the economic failures of recent years prove that economists don’t have the answers. But the truth is actually worse: in reality, standard economics offered good answers, but political leaders — and all too many economists — chose to forget or ignore what they should have known.
The story, at this point, is fairly straightforward. The financial crisis led, through several channels, to a sharp fall in private spending: residential investment plunged as the housing bubble burst; consumers began saving more as the illusory wealth created by the bubble vanished, while the mortgage debt remained. And this fall in private spending led, inevitably, to a global recession.
For an economy is not like a household. A family can decide to spend less and try to earn more. But in the economy as a whole, spending and earning go together: my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall — and unemployment will soar.
So what can be done? A smaller financial shock, like the dot-com bust at the end of the 1990s, can be met by cutting interest rates. But the crisis of 2008 was far bigger, and even cutting rates all the way to zero wasn’t nearly enough.
At that point governments needed to step in, spending to support their economies while the private sector regained its balance. And to some extent that did happen: revenue dropped sharply in the slump, but spending actually rose as programs like unemployment insurance expanded and temporary economic stimulus went into effect. Budget deficits rose, but this was actually a good thing, probably the most important reason we didn’t have a full replay of the Great Depression.
But it all went wrong in 2010. The crisis in Greece was taken, wrongly, as a sign that all governments had better slash spending and deficits right away. Austerity became the order of the day, and supposed experts who should have known better cheered the process on, while the warnings of some (but not enough) economists that austerity would derail recovery were ignored. For example, the president of the European Central Bank confidently asserted that “the idea that austerity measures could trigger stagnation is incorrect.”
Well, someone was incorrect, all right.
Of the papers presented at this meeting, probably the biggest flash came from one by Olivier Blanchard and Daniel Leigh of the International Monetary Fund. Formally, the paper represents the views only of the authors; but Mr. Blanchard, the I.M.F.’s chief economist, isn’t an ordinary researcher, and the paper has been widely taken as a sign that the fund has had a major rethinking of economic policy.
For what the paper concludes is not just that austerity has a depressing effect on weak economies, but that the adverse effect is much stronger than previously believed. The premature turn to austerity, it turns out, was a terrible mistake.
I’ve seen some reporting describing the paper as an admission from the I.M.F. that it doesn’t know what it’s doing. That misses the point; the fund was actually less enthusiastic about austerity than other major players. To the extent that it says it was wrong, it’s also saying that everyone else (except those skeptical economists) was even more wrong. And it deserves credit for being willing to rethink its position in the light of evidence.
The really bad news is how few other players are doing the same. European leaders, having created Depression-level suffering in debtor countries without restoring financial confidence, still insist that the answer is even more pain. The current British government, which killed a promising recovery by turning to austerity, completely refuses to consider the possibility that it made a mistake.
And here in America, Republicans insist that they’ll use a confrontation over the debt ceiling — a deeply illegitimate action in itself — to demand spending cuts that would drive us back into recession.
The truth is that we’ve just experienced a colossal failure of economic policy — and far too many of those responsible for that failure both retain power and refuse to learn from experience.
By: Paul Krugman, Op-Ed Columnist, The New York Times, January 6, 2013
“The Old World Order”: Are We Still Fighting The Civil War?
Politically speaking, we live by caricature. Particularly in the age of satellite TV news and Internet fulmination, the temptation is to melodrama. So I wasn’t terribly surprised to read a recent article in the online magazine Salon arguing that “even though it’s a truism of American public discourse that the Civil War never ended, it’s also literally true.”
Never mind that author Andrew O’Hehir appears to be one of those overheated writers who use the adverb “literally” as an all-purpose intensifier meaning “figuratively.” Salon supposedly has editors. Elsewhere, O’Hehir concedes that the imagined conflict won’t “involve pitched battles in the meadows of Pennsylvania, or hundreds of thousands of dead.”
So it won’t be a war at all then. As a Yankee long resident in the South, maybe I should be grateful for that. O’Hehir also acknowledges that while today’s “fights over abortion and gays and God and guns have a profound moral dimension,” they “don’t quite have the world-historical weight of the slavery question.”
Um, not quite, no.
But then as O’Hehir also categorizes Michigan as a “border state” for the sin of having a Republican governor, it’s hard to know what Democrats there should do. I suppose fleeing across the border into Ontario would be an option.
Is it possible to publish anything more half-baked and foolish? Oh, absolutely. Here in Arkansas, we had more than our share of cartoon-think before the 2012 election. Three would-be Republican state legislators wrote manifestoes in favor of the old Confederacy.
One Rep. Jon Hubbard of Jonesboro delivered himself of a self-published book arguing that “the institution of slavery that the black race has long believed to be an abomination upon its people may actually have been a blessing in disguise.”
Fellow GOP candidate Charles Fuqua of Batesville—like Jonesboro, a college town—self-produced an e-book entitled God’s Law: The Only Political Solution. In it, he not only called for expelling all Muslims from the United States, but returning to the Biblical practice of stoning disobedient children to death.
Not many stonings, Fuqua thought, would be necessary to restore sexual morality and good table manners among American youth.
Then there was Rep. Loy Mauch of Bismarck. An ardent secessionist, Mauch had written a series of letters to the Arkansas Democrat-Gazette arguing that since Jesus never condemned slavery, it had Biblical sanction.
Mauch also condemned Abraham Lincoln as a “fake neurotic Northern war criminal,” frequently likened him to Hitler, and deemed the rebel flag “a symbol of Christian liberty vs. the new world order.”
Comparing Hubbard’s views to those of Robert E. Lee and John C. Calhoun, New York Times columnist Charles Blow expressed alarm at “the tendency of some people to romanticize and empathize with the Confederacy.”
Ah, but here’s the rest of the story, which Blow barely mentioned: All three “Arkansaw lunkheads,” as Huck Finn might have called them, were not only repudiated by the state Republican Party, but lost badly to Democratic opponents last November in what was otherwise a big year for the GOP here.
Unimpeded by the burdens of office, they can now get back to self-publishing their neo-Confederate hearts out.
The point’s simple: these fools certainly weren’t elected due to their crackpot fulminations, or even in spite of them. Their views were simply unknown. As soon as they became an issue, they became an embarrassment. Now they’re ex-state legislators. The end.
This is not to deny that there’s a strong regional component to the nation’s current political impasse. The New Republic’s John R. Judis did the numbers on the recent “fiscal cliff” vote in the U.S. House of Representatives. Altogether, 85 Republicans voted for the Senate’s resolution, 151 against.
Broken down by region, however, the differences were stark. Republicans outside the South actually voted for the bipartisan compromise, 62-36.
GOP congressmen representing the old Confederacy voted against, 83-10—including unanimous opposition from Alabama, Mississippi, Georgia, Virginia, Tennessee, and South Carolina. But for Florida, opposition would have been nearly unanimous.
For all the good it did them. Because the Old South is visibly shrinking. Florida and Virginia are already gone; given demographic trends, Texas is on its way. Even Arkansas, which voted for Bill Clinton something like eight times, seems unlikely to become a one-party state.
As for the rest, Mike Tomasky correctly observes that “over time…the South will make itself less relevant and powerful if it keeps behaving this way. As it becomes more of a one-party state [sic] it becomes less of a factor.”
From that perspective, few recent political events have been as telling as the outrage of northeastern Republicans Rep. Peter King and New Jersey governor Chris Christie at the House’s foot-dragging on Hurricane Sandy relief. A few more stunts like that, and the GOP could end up as fragmented and futile as Alabama governor George Wallace’s American Independent Party.
No Civil War necessary.
By: Gene Lyons, The National Memo, January 9, 2013
“Dumb And Dumber”: Congress Is Awful Because Members Spend All Day Long Talking To Rich People
Members of Congress don’t know anything about “the issues” and they spend all their time fundraising, according to both a new Huffington Post story and “an easy inference to make after observing Congress for almost any length of time.”
The HuffPo’s Ryan Grim and Sabrina Siddiqui obtained a PowerPoint presentation given to incoming Democratic freshmen legislators by the Democratic Congressional Campaign Committee, and the DCCC’s recommended schedule for House members includes four hours spent on the phone begging rich people for money and one hour spent begging rich person for money in person. This is the daily schedule.
As Kevin Drum notes, this leaves no time for studying or homework. Members rarely know much about anything, policy-wise. An unnamed member confirmed to HuffPo that these guys basically are exactly as ill-informed as you feared:
One member of Congress said that the fundraising takes up so much time that members don’t even have time to become experts on bills they sponsor. “One thing that’s always been striking to me is even the members playing a leading role on specific issues actually could not talk about the issues,” said the member, who didn’t want to be quoted by name. “They didn’t have enough knowledge on their own issues to talk about them at length. I’m probably guilty of that.” He recalled one meeting early in his career, where he brought several members together to try to hash out a compromise, just as he had done earlier as a state legislator.
“Staff members were all twitching at the discussion, because their principals were saying things that were just flat-wrong or uninformed or wondering aloud about what the industry practices really were,” he recalled. “The staff members of course had a pretty good idea. … The members were sitting around the table having a remarkably uninformed and unproductive discussion.”
This, as much as anything else, is why our Congress is both dysfunctional — legislators have no clue what they’re voting for or against most of the time — and so attentive to the priorities of the very wealthy.
Newt Gingrich completely dismantled the internal institutions that used to provide Congress with objective information and research, both because that information frequently contradicted conservative dogma and because he knew that doing so would force Congress to rely on outside (ideological) organizations for information, which would strengthen the corporate-funded policy shops and think tanks that powered the conservative movement. Now nearly everything Congress “knows” about policy comes directly from self-interested, industry-funded groups. Simultaneously, as Lorelei Kelly recently wrote, congressional staff began shrinking, which means expertise was, once again, outsourced — now, increasingly, lobbyists perform the educational function that well-versed staffers used to.
So: the constituents members of Congress have the most direct contact with, and the ones they see themselves as reliant upon to remain in office, are the ones who have the ability to write massive checks. And the people the members talk to to understand the issues are either think tank ideologues or paid representatives of industry or both.
The result is Congress as it’s been since the second Clinton term: Hundreds of dim bulbs, a couple of brilliant-but-evil guys, and a handful of dedicated and intelligent people who frequently do weird and inexplicable things like “voting for the horrible 2005 bankruptcy bill.”
The annoying thing is that the solutions to these problems are incredible simple: public financing of elections and huge increases in congressional staff budgets. But you might notice that both of those solutions involve spending more money on the government, making them non-starters in our age of bipartisan agreement that government spending is unseemly.
The alternative to constant fundraising by the members is for outside groups to take care of it for them, which is a model conservatives already sort of practice. In their “Behind the Caucus” column on Rep. Tom Cotton, an Arkansas freshman who will vote against raising the debt ceiling because he explicitly wants the United States to default, Politico’s Mike Allen and Jim VandeHei explain that Cotton won his primary because the ultra-conservative Club for Growth simply sent Cotton “a FedEx envelope full of checks that he didn’t ask for.” And that certainly saves some time. Allen and VandeHeil also note that Cotton, and his peers, explain why we are probably about to induce a recession for no reason:
Many in the media — us included — often underestimate just how conservative and how impervious to criticism and leadership browbeating these members are when appraising the chances for change in the next two years.
Hey, Mike and Jim, that’s what we’ve been saying for a while now. We’re screwed, because the people who spent thousands getting Cotton elected are the ones explaining the issues to him and his dumber peers.
By: Alex Pareene, Salon, January 9, 2013
“Unpleasant Details”: Three Ways Sensible Gun Control Could Have Prevented Aurora Shootings
If the mass shooting this summer during a midnight screening of The Dark Knight Rises has receded in the public’s memory given the recent horror in Newtown, Connecticut, court proceedings in Centennial, Colorado, this week have thrust it back into view.
We’ve learned heretofore unknown and certainly unpleasant details from the day of the shooting. Prosecutors played a tape in which a panicked moviegoer calls 911, but the dispatcher can’t hear him over the sound of gunshots—30 of them in 27 seconds. An officer testified that, when there weren’t enough ambulances around, he crammed victims into the back of his patrol car. They were so badly injured that he testified he could hear blood “sloshing around” on the floor of his car when he made turns.
Other details that we heard piecemeal before have been confirmed: about the types of weapons Holmes used and his efforts to obtain them.
Crucially, looking at the evidence presented by prosecutors this week, it’s easy to see several points at which sensible gun control legislation could have stopped the slaughter. Here are the three most obvious ones:
Tracking large-scale ammunition purchases. Steve Beggs, an agent for the Bureau of Alcohol, Tobacco, and Firearms, testified that Holmes went on a buying spree starting May 10, 2012. By July 14, he had bought 6,300 rounds of ammunition, two pistols, a .223 caliber Smith & Wesson AR-15 assault weapon, a shotgun, body armor, bomb-making materials and handcuffs.
The large-scale bullet purchases are the big red flag here. Nobody is monitoring bulk ammunition purchases: Some states, like Illinois, Massachusetts and New Jersey, have limits on the amount you can buy and ask that dealers track their sales for law enforcement, but Colorado has no such rules. And the ones that do exist can easily be evaded by buying ammunition online anyhow, which is what Holmes did.
The federal government should be able to track bulk ammunition sales—there is clearly a controlling public interest when somebody is assembling an arsenal that could support a small militia. If authorities had even briefly question Holmes about why he was stockpiling so many weapons, it’s almost a certainty they would have noticed his extremely bizarre behavior: He was reportedly almost incoherent in the weeks leading up to the attack. The White House is said to be considering a national database to track the sale and movement of weapons, and it should absolutely include ammunition, too.
Online sales of ammunition should also be banned or highly regulated, since they create an easy way for people to stockpile dangerous weapons without ever showing their face. A 1999 bill in Congress to regulate the online sale of ammunition was never adopted, but should be now.
Better mental health screenings for weapons purchases. Holmes was not only stockpiling weapons but, as noted, exhibiting excessively strange behavior. He left a voicemail at a local gun range asking if he could join, but the message was reportedly incomprehensible. “It was this very guttural, very heavy bass, deep voice that was rambling incoherently,” the owner of the range told The New York Times. “It was bizarre on a good day, freakish on others.” Only weeks before his rampage, Holmes’ psychiatrist was alerting police at his university about his behavior—a drastic step for any mental health professional to take.
Yet, Holmes was able to obtain his weapons with ease. Note this exchange during yesterday’s court proceedings:
Holmes’ defense attorney Tamara Brady asked [ATF agent] Beggs if there is a legal process to keep from selling these items legally in Colorado to a “severely mentally ill person.” Beggs answered that there is not.
Biden’s task force on gun control has reportedly been exploring the idea of mandating state participation in the mental-health database and stronger mental-health screenings for gun purchasers—areas in which it might find common ground with the NRA. Those measures should certainly be part of the final package.
Banning assault weapons and large capacity magazines. Holmes used a .223 caliber assault rifle during the attack, which as noted was heard firing 30 shots in 27 seconds. Holmes also bought ammunition drums larger than the standard 30-round high-capacity clip, including one that held up to 100 rounds.
According to details disclosed in court, at most 90 seconds elapsed between the first 911 call and police intervention in the movie theatre, yet Holmes was able to shoot 71 people. Many gun-control advocates rightly find this to be an unacceptable level of firepower, and Biden’s group will almost certainly propose an assault weapons ban and high-capacity clips. In the Senate, Dianne Feinstein is moving towards strong legislation that would do the same.
What’s important is that, unlike the 1994 ban, the new laws should make all assault weapons illegal—the language should be strong enough that gun manufacturers can’t evade the ban with minor alterations to their weapons. Feinstein’s bill would make only one military characteristic illegal, whereas the 1994 ban had the threshold at two.
By: George Zornick, The Nation, January 9, 2013
“An Inane Idea”: With A Trillion Dollar Coin, President Obama Can Fight Dumb With Silly
A trillion dollar platinum coin? Really? Has our politics really reached a point where such an obviously inane idea is gaining traction? Well, yes. When your capitol has become Clowntown, U.S.A., you sometimes need to fight bad ideas with silly ones.
The idea, if you haven’t heard, is for President Obama to defuse the forthcoming debt ceiling crisis Republicans are busily manufacturing by directing the Treasury to mint a platinum coin worth $1 trillion. With an extra trillion on the books, the debt ceiling would no longer be an issue. While the Federal Reserve ordinarily is in charge of printing money, there’s a law on the books allowing the Treasury secretary to produce platinum coinage of whatever value s/he sees fit.
Sure, the purpose of the law was to permit the Treasury to issue commemorative coins. But so what? The purpose of the debt ceiling wasn’t to give one party the leverage for a global, economic hostage crisis. Were the debt ceiling not raised, the Washington Post’s Ezra Klein writes, “the damage to the economy would be tremendous, and it would occur at every level, from individuals looking for a loan to buy a house to hedge funders trying to play the markets.” His full article on what happens if we breach the debt ceiling is worth a read.
So when one political party is acting like a political version of a James Bond villain (“Give in to my demands or I will wreck the world economy!”) maybe the answer is for the president to channel his inner Dr. Evil (“One trillion dollars.”)
Again, it all sounds silly but some very serious folks are lining up behind it, including the New York Times’s Paul Krugman, who has a Nobel Prize lying around his office. New York Rep. Jerrold Nadler is also a fan. And despite some suggestions that none of this is legal because it’s not what the law was intended for, Philip Diehl, a former director of the Mint, told Klein that it’s perfectly legal.
So is it a silly idea? Yes. But Republican extremists have brought us into an age of political asymmetrical warfare, passing off crazy, dangerous ideas as serious. Why should the president unilaterally disarm on that front?
By: Robert Schlesinger, U. S. News and World Report, January 9, 2013
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