Now that everything has fallen apart — a society faced by inconvenient demographic shifts, global forces that change industry by the quarter, finances in supposed dire straits — it is paramount to examine what exactly led us in this direction. I find two books, by the same author, to be incredibly instrumental in pointing us in the right direction while at the same time making sure we don’t go in the same direction that got us here.
The falling apart of our finances necessarily invokes the political question of how we are going to put ourselves back together and what to do regarding the relationship between expenditures and revenues at all levels of government. In this case, we can look to the works of Paul Krugman, professor of economics at Princeton and 2008 Nobel Prize laureate. He is the author of “The Great Unraveling,” about the decomposition of our fiscal house and the context around when the budget surplus turned into a budget deficit, and “The Return of Depression Economics,” a primer on dealing with balance-sheet recessions.
Krugman speaks about these two topics elsewhere as well, but these books are brilliantly written and constructed not only of economic clarity and rationalism, but of political analysis and moral philosophy.
“The Great Unraveling” reveals to us how the same irrational defense of tax cuts for the wealthy is packaged and sold as virtuous, though pushing the cost of government down the income ladder. I have to ask Republican politerati and conservative punditry: How can you continue to offer such a brazen endorsement of the folk economics that the defunct “school” that supply-side economics is known to be?
Didn’t work then, won’t work now
The point is that the same tired method of tax cuts to spur economic growth didn’t work in the ’80s, didn’t work in at the turn of the century (and were sold on false premises to boot), and will not help “restore business and consumer confidence” in the face of all the social, economic, and political disarray before us.
On the other hand, “The Return of Depression Economics” details how the Collapse of 2008 was like many different crises happening all at once, a particularly difficult context to grasp.
Krugman offers his liberal analysis (the name of his column at The New York Times is the title of another book of his, “The Conscience of a Liberal”) not as Democratic political posturing, but because he believes in the central American notions of advanced equality and ethical democracy.
His rigorous study and Nobel Prize speak to his identity as a citizen before a politician. He remains outside of the Beltway. His outsider viewpoint gives him a perspective that is both hopelessly idealistic and scathingly critical. It is necessary for all of us, however, to adopt more rationale into our political discourse. Only then will the devices that can fix the economy actually be seen as not idealistic or partisan, but as completely rational and almost scientific.
A narrowed definition of fiscal responsibility
The context around the budget debate is dominated by an ethos that says that we have a “spending problem.” In order to assume that we have a spending problem, however, one needs to necessarily adopt the simultaneous notion of there being a revenue “problem.” This is simple logic. There would be no budget constraints with infinite money. Focusing on the government balance sheet as just a “spending problem” narrows the definition of fiscal responsibility, and is deleterious to our entire political discourse.
There is no need to point out that this position is necessarily reactionary — the entire notion of capping government spending at 18 percent of GDP takes all of American civil society back to 1966, while facing a 2011 global economy. This speaks less to the Republicans’ vision of what government’s role in forming a successful economy and country is, and more to their desire to take the social contract back 45 years.
It’s not always charisma we need to lead us, but smarts. And in this regard, more power to Professor Krugman!