Paul Krugman is worried about democracy

Paul Krugman is sad. Also frustrated. And worried about whether democracy can work if citizens don’t know the truth.

Specifically, on the deficit. For years, Krugman has been arguing against deficit hawks. Now is not the time to worry about the deficit, he said many, many times during the Great Recession. Now is the time for stimulus spending to get the economy moving. A recovering economy is the best cure for rising deficit and debt.

Now the economy is well into a long, frustratingly slow recovery (which Krugman believes would have been stronger and faster with more stimulus spending). That recovery (combined with various tax increases and spending cuts) are bringing the deficit down, fairly dramatically.

At its peak at the end of 2009, the record annual deficit of $1.4 trillion equaled a truly scary 10 percent of GDP. The current fiscal year (which ends in September so this doesn’t require much of a projection) will be $642 billion or four percent of GDP (it’s usually best to measure these things as a percent of GDP). Now that is still a very high deficit by historical standards, but it is also a very, very dramatic drop over the past four years (captured well in this Bloomberg/Business Week graphic.)

And Krugman is feeling kinda vindicated. Except he’s bothered that so many people haven’t absorbed the good news. He was able to get Google to include a question for him on a fancy survey. Here’s what happened:

“So we asked whether the deficit has gone up or down since January 2010. And the results were even worse than in 1996: A majority of those who replied said the deficit has gone up, with more than 40 percent saying that it has gone up a lot. Only 12 percent answered correctly that it has gone down a lot.”

In his column, Krugman cites evidence that various Republicans (he cites Eric Cantor and Rand Paul specifically) continue to talk about large, scary, growing deficits, notes with horror that Politifact rated Cantor’s statement as “half true”, and adds that the supposedly less partisan figures like Simpson and Bowles of Simpson-Bowles Deficit Commission fame continue to warn about the danger of the deficit.

Krugman puts the whole problem in a frame of the shortcomings of democracy. He doesn’t want to blame the public. They have busy lives and are going to believe what they’re told. But if the truth that should inform public discussion on important issues doesn’t break through, he fears for democracy:

“Put it all together, and it’s a discouraging picture. We have an ill-informed or misinformed electorate, politicians who gleefully add to the misinformation and watchdogs who are afraid to bark. And to the extent that there are widely respected, not-too-partisan players, they seem to be fostering, not fixing, the public’s false impressions.

I feel Krugman’s pain. I’ve spent years trying to understand the power of selective perception and confirmation bias that enables people to continue believing what they like to believe whether or not the latest (or any) facts are on their side. And it’s hard not to believe that this problem is getting worse with various developments in the media landscape making it easier and easier for partisans and ideologues to get more and more of their “information” from sources that they know will always confirm their biases.

I would also add that Krugman could afford to tone down his own triumphalism. The deficit is going down. The debt (which is the accumulation of all the past deficits and is the amount on which the government has to pay interest and which I consider to be the ultimately most important way of measuring the fiscal problem) is still going up and growing faster than the GDP.

Krugman closes with a question, an answer and doubt:

“So what should we be doing? Keep pounding away at the truth, I guess, and hope it breaks through. But it’s hard not to wonder how this system is supposed to work.”

At such moments, I usually return to two fairly famous quotes from that famous elitist Winston Churchill that capture the absurdity of democracy.

Quote 1:

“The best argument against democracy is a five-minute conversation with the average voter.”

Quote 2:

“Democracy is the worst form of government, except all the others that have been tried.”

Comments (38)

  1. Submitted by Dennis Tester on 08/16/2013 - 11:06 am.

    Paul Krugman also believes in the perpetual motion machine

    He believes you stimulate the private economy with government spending with funds taken out of the private economy via taxes. Thinking people realize that we would be better off by eliminating the middleman (the government) and just let the private economy drive the private economy, directly.

    • Submitted by Lance Groth on 08/16/2013 - 03:42 pm.

      False proposition

      There are 3 legs to the stool – businesses, consumers and the public sector. Since the start of the Great Recession, we have seen that businesses have been sitting on piles of cash, understandably unwilling to spend in the absence of sufficient demand. Consumers, for obvious reasons, were also unable or unwilling to spend. When two of the three legs are failing to do their part to keep the economy propped up, thinking people realize that it falls to government to target spending to areas that will stimulate the economy. Kicking out the last remaining leg is hardly helpful, unless one prefers a total crash.

      Whether the spending is targeted correctly is a separate issue. Sadly, logic is always trumped by politics, so the spending is often poorly targeted, but blame for that falls primarily on an obstreperous, do-nothing Congress.

      • Submitted by Dennis Tester on 08/16/2013 - 06:34 pm.

        “falls to government to target spending”

        with who’s money? And what genius gets to decide how to spend it?

        Let the markets work.

      • Submitted by Peder DeFor on 08/17/2013 - 01:44 pm.

        ‘Do Nothing Congress’

        It really is a shame that the large stimulus that was spent in 2009 was so badly apportioned by a later Republican congress, huh? Oh wait, that’s not quite possible. In truth the politics of the Dem majorities decided where it would go so you can blame the poor targeting on them.
        Setting your confusing timeline, is it even a little possible for a political body like Congress to decide how to spend money in a non-political way? And if it isn’t, isn’t that a knock against the entire theory? Or are you saying that we should just accept the pork if it means that we get to put more money out there?

    • Submitted by Lance Groth on 08/16/2013 - 03:52 pm.

      Europe

      I might add, that the example of Europe shows us that austerity during a recession is exactly the wrong thing to do; it only makes things worse. Thinking people learn from real world experience.

  2. Submitted by Rich Crose on 08/16/2013 - 11:46 am.

    The Frustrating Life of a Catcher

    “Anyway, I keep picturing all these little kids playing some game in this big field of rye and all. Thousands of little kids, and nobody’s around – nobody big, I mean – except me. And I’m standing on the edge of some crazy cliff. What I have to do, I have to catch everybody if they start to go over the cliff – I mean if they’re running and they don’t look where they’re going I have to come out from somewhere and catch them. That’s all I do all day. I’d just be the catcher in the rye and all. I know it’s crazy, but that’s the only thing I’d really like to be.”
    ― J.D. Salinger

  3. Submitted by Tim Milner on 08/16/2013 - 12:19 pm.

    I think the average American

    does not differentiate the meaning between deficit (the amount borrowed and spent above revenues received in a given budget year) and debt (the total financial obligation the US has for all it’s deficit spending) When either word is use, I think they immediately jumped to the amount the US owes.

    I agree that the deficit coming down is a good thing – but there is still a long way to go as we are going to need years of surplus to make even a minor dent into the debt. It’s the overall debt that scares me – especially when you consider that a large proportion of that debt is held by less than friendly countries. (China for one)

    • Submitted by Peder DeFor on 08/16/2013 - 03:37 pm.

      Deficit and Debt

      I was going to make the same point. There is certainly confusion amongst some between the two. I’d also suggest that 2010 is a weird starting time for a poll question. I wouldn’t be surprised if poll respondents thought that the question was a comparison between pre-recession and current levels. In short, this is a flimsy structure to condemn his opponents.

    • Submitted by Tom Lynch on 08/16/2013 - 06:23 pm.

      Let me calm your fears

      Over 70% of the Debt is owned by the American people and its government. China owns about 8% of the Debt.

      Running surpluses certainly isn’t necessary to lessen the Debt. We had a huge National Debt after WWII. It went down under every president from Truman to Carter. And then the country got Reaganed. In the nearly 40 years from the end of WWII until Reagan, the U.S. only had surpluses a half dozen times. Yet the Debt as a percent of GDP fell from 122% of GDP to 24% of GDP by 1974. And remained stable until exploding defense spending and substantial tax cuts in the early 1980s sent the deficits and National Debt skyrocketing.

      How did the Debt go down without running surpluses? The economy grew at a faster rate than our deficits. Stronger economic growth even while running deficits will reduce the National Debt.

      BTW, there has been only one year in the history of the United States that we haven’t had any National Debt. It was under Andrew Jackson in the 1830s. A few years later the country was hit with one of its worst depressions.

  4. Submitted by Lance Groth on 08/16/2013 - 01:31 pm.

    Downside of the Web

    One of the unfortunate effects of a webified world is that any fool can post any nonsense he chooses, cloaked in superficial trappings of authority that lend it an aura of “truthiness”, and they almost always do. Fools aside, and even worse, those with intent to deceive have the perfect vehicle available with which to do so, and with the greatest of ease. This results in a kind of swamp of error, disinformation and outright lies that did not exist pre-internet outside of the pages of the National Enquirer. In those days, everyone knew that the barfly on his customary stool was not to be taken seriously, but this is not so easy to discern on the Web without fact-checking due diligence that most have neither the time nor inclination to pursue. Those engaged in political brush wars would prefer that no one did.

    As I like to say, the Web is largely a sewer, and one should be cautious about swimming in sewers.

    I don’t know how to fix this, other than to do a better job of educating our kids, instilling in them a respect for fact and truth, and above all teaching them how to engage in critical thinking. This would be a long term project, and so I am afraid we are stuck with an electorate who all too often have no idea what it is that they are arguing about and on which they base their voting choices. It doesn’t bode well.

    I’d bet old Winston would double-down on quote #1 after a quick look at today’s situation.

  5. Submitted by Peder DeFor on 08/16/2013 - 03:44 pm.

    Two Quick Points Here

    Our deficits are surely down because spending has been kept in check. To argue that we should up spending because we’re down to $600 billion is crazy. It’s like saying ‘Honey, we sacrificed to pay off the credit cards! Let’s celebrate by charging a cruise!’.
    Second point, yesterday we learned that the NSA is indeed breaking the law on a regular basis. Either the President has lied to us or the NSA has been lying to him. This is surely a more important problem than whether the average voter can parse a confusing poll question. Of course, pointing that out won’t let Krugman bash Republicans, so it isn’t very useful to him…

    • Submitted by Raj Maddali on 08/17/2013 - 12:05 pm.

      More quick points

      Economic growth in the US as against stagnation in austerity mandated Europe ( a path recommended by conservatives) has contributed to dropping deficits.

      Wonder where are all those who criticized the deficit spending at the beginning of Obamas term to jump start the economy. Maybe they moved to Britain.

      • Submitted by Peder DeFor on 08/18/2013 - 03:21 pm.

        Austerity

        According to this report: http://cei.org/onpoint/true-story-european-austerity
        there are only a few countries that have tried actual austerity, that is reduced spending and reduced taxes. That group has outperformed the other countries by a significant margin.
        Having said that, there are some pretty inherent difficulties with comparing the US with Europe as a whole. European countries each have different laws and regulations. Different cultures and different events that effect their overall economies. I mean, it’s possible to learn some things from how a small country like Belgium does things, but you can’t meaningfully replicate Belgian law on a country our size.
        I’d argue that the tax and spending discussions ignore a much larger problem that we have, over-regulation. If you can show cases where countries dramatically expanded their regulatory states and gained paradise because of it, I’d be interested to see that.

  6. Submitted by Ray Schoch on 08/16/2013 - 06:56 pm.

    Just think

    …how much air time local television stations — the primary source of information for many, many people — have devoted to distinguishing between “deficit” and “debt.” Or, for that matter, how much air time they’ve devoted to the economic stories (and arguments) behind either one of those terms.
    Meanwhile, though “big 3” network television is increasingly awful as a source of information, the web can be, and often is, even more saturated with misinformation. Amen to the commentary about self-selection of websites as vehicles for confirming existing views.

    Mr. Krugman strikes me as less partisan in the strict sense — he bashes plenty of Democrats, too — than he is a fervent Keynesian economist, and a political liberal in a fairly broad sense. That certainly makes him an anathema to just about everyone claiming to be “right of center,” even if the “center” has drifted significantly to the right over the past generation.

    Perhaps for slightly different reasons, I’m inclined to agree with Lance Groth: Sir Winston would be even more dismayed by that 5-minute conversation if it were held today, regardless of the local TV affiliate the interviewee might watch on a regular basis.

  7. Submitted by Ron Gotzman on 08/16/2013 - 09:32 pm.

    There he goes again…

    Krugman, in 2004 called the Bush deficits “enormous.” He also stated “We have a world-class budget deficit, not just as in absolute terms, of course — it’s the biggest budget deficit in the history of the world — but it’s a budget deficit that, as a share of GDP, is right up there.”

    In October 2004, krugman also criticized the Bush unemployment rate of 5.5 percent. He also called the economy “weak,” with “job creation … essentially nonexistent.”

    Mr. Krugman is a politician first and economist second.

    • Submitted by Paul Udstrand on 08/17/2013 - 10:20 am.

      Context…

      In 2004 Krugman was simply acknowledging the deficit and pointing out that the supposedly deficit-hawk Republicans were growing the deficit and the debt by historically high record amounts. He was NOT arguing that deficits were bad at the time. He was simply exposing the hypocrisy of Republican rhetoric that had condemned deficits and debts while growing them by the trillions… i.e. starting two wars while cutting revenues. The Republican budgets and consequent deficits and debts are a matter of settled history now, but some of us noticed what was happening at the time.

    • Submitted by Raj Maddali on 08/17/2013 - 12:01 pm.

      Wrong – Krugman criticized the debt levels

      Bush was creating debt levels (thru tax cuts) when interest rates were rising and the fed was acting by raising them further. Thats a big difference from deficit spending when we had a collapsing economy and near zero interest rates.

      Funny how conservative lambasted Krugman for advocating deficit spending to get us out of the mess by warning that interest rates would hit the ceiling. In reality they were wrong on both counts. The economy grew faster than austerity ridden Europe and interest rates hit rock bottom.

      • Submitted by Paul Udstrand on 08/19/2013 - 08:00 am.

        Wrong….again

        Raj,

        You’re confusing debt with deficit, read the thread. Krugman has been consistent on this regardless of party. He’s consistently criticized both Bush and Obama for delivering small stimulus packages. He always said Obama’s stimulus should have twice as large.

  8. Submitted by Jon Kingstad on 08/16/2013 - 10:17 pm.

    If the average voter

    believes, as I believe many do, that balancing the national budget, long term or short term, is equivalent to the family budget or balancing his or her checkbook, then we have a lot of work to do.

    But I’m not convinced that people believe that. I think many people are aware at some level that money is “fiat” or printed paper money but that the government’s full faith and credit is fundamentally sound. The experience of history shows that once people cease to believe in that, the “jig is up.”

    I take Krugman to be one of those who are trying to encourage people to keep that faith, even while, there are many forces, like our right wing Congress and their supporters, who are in favor of discrediting the government’s full faith and credit for their own selfish purposes. I don’t think people are ready to cut their own throats in that sense. I agree with Paul Krugman and virtually every, if not every, column he writes. I’ve bought and read his books. I’m a “Krugmanite” at some level and not ashamed to say so. But at at some level, his despair gives credibility to their greed and cynicism.

    I’m also not a particular fan of J.P. Morgan, one of the more notorious operators to have helped himself to pelf at the public expense more than once. Morgan is one of the antiheroes of American history. He certainly is one of the “Merchants of Death” who profited by the nation”s involvement in two world wars while millions were injured or killed.

    But one quote attributed to Morgan seems to stick with me: “I”m bullish on America.”

    Said in one of America’s darker hours financially speaking.

    I’d like to see more of Morgan’s “bullishness” in Krugman.

  9. Submitted by Jay Willemssen on 08/16/2013 - 11:06 pm.

    The federal deficit – Clinton, Bush, and Obama

    Rather easy to see the reality.

    http://i.imgur.com/pdwi9Py.png

  10. Submitted by Paul Udstrand on 08/17/2013 - 10:46 am.

    The Chicago School has collapsed

    But it’s ghost is nearly destroying our nation. The trickle-down austerity economies prescribed by the free market Chicago economists (i.e. Milton Friedman et al) have had several chances to prove themselves over the last 5 decades and from Chile to Japan they’ve produced nothing but lopsided economies that convulse with recessions on a regular basis; culminating a huge world-wide recession that was supposed to be impossible in the modern world.

    Even Wall Street agrees that government spending is good for the economy yet ideological blindmen continue to declare that governments are the problem.

    Economies are not natural phenomena, they are what we make them to be. The notion that a lopsided economy that delivers 90% of its value to the top 5% or less of the population promotes “freedom” and prosperity for ALL is simply absurd. What part of “5%” do you not understand? For hundreds of years lopsided economies have created untold human suffering, political instability, and violent class struggle. This is settled history, there is nothing to debate here. Every time you create a lopsided economy this is what happens.

    Krugman’s observation gest at the fundamental problem of democracy, if the people decide, what happens when the people decide stupidly? How does a nation of supposedly intelligent and educated voters fall for a “small govment” ponzi scheme in the first place? Look, even the Democrats bought into this, remember it was Clinton who obliterated the post depression safeguards in our financial sector. And it was Clinton who turned Ayn Rand disciple (Greenspan) into an untouchable soothsayer. In the late 90s when several people tried to sound the alarm and wanted to regulate the most obvious financial sector abuses and insanities it was Clinton who shut them down via Alan Greenspan.

    We have to ask how so many people could by into such an obvious delusion for so many years. We have to figure out why and how that happened, and our survival as nation depends on figuring out a way to prevent it in the future.

  11. Submitted by Jay Willemssen on 08/17/2013 - 01:02 pm.

    US Federal Net Interest Payments as Share of GDP

    This is an illustration of the actual cost of the national debt over time, from 1947 to today.

    http://i.imgur.com/meolCev.png

    The risk of a large pool of debt is high interest rates.

    The only thing that would drive up interest rates to prohibitive levels would be extreme inflation (by US standards, meaning over 10%). And “extreme” inflation in the US in the postwar period has only been as a result of oil shocks. Since oil is already at $100, it’s unlikely to be repeated as from 1973-4 and 1979-81. US annual inflation hasn’t exceeded 4% since 1991.

    Low unemployment can also be somewhat inflationary, but the income inequality trends over the past 4 decades don’t make that likely. Also, low unemployment will generally lower deficits from increased revenue.

  12. Submitted by Jay Willemssen on 08/17/2013 - 07:43 pm.

    Real Dollar US Annual Federal Budget Deficit Per Capita

    Here is a chart of deficit data, adjusted for inflation and population, over the past 2 decades.

    http://i.imgur.com/aCmoGas.png

    The Treasury Department has published the US debt to the penny every business day since 1993.

    One can take each month’s average nominal debt, adjust it for inflation, then subtract the amount from a year prior and divide it by the average resident population for that period. This cuts through a lot of confusing or deceptive accounting that’s possible with OMB and CBO deficit figures.

    Linear trend lines have been added to track the general trend in each period.

    Sources:
    http://1.usa.gov/12etlZI
    http://1.usa.gov/1afULTO
    http://1.usa.gov/18CR32C

  13. Submitted by Paul Udstrand on 08/18/2013 - 10:24 am.

    Debt and deficits are only a problem if you don’t pay

    Yes, we had huge debts and deficits after WWII, but we paid for them, we had 94% tax brackets in 1950. You don’t have to zero debts and deficits, in fact there’s some evidence that zero federal debt and deficit spending actually drags the economy. However, you can’t cut revenue, and expect deficits and debt will decrease. Nor can you expect economic growth will accelerate simply because you reduce taxes, and cut government spending, THAT’s magical thinking i.e. cut taxes and wait for the magic to happen.

    We are not broke, we have the largest economy in the world, it’s grown by almost $4 trillion in the last 5 years despite the recession. To the extent that deficits and debts are detrimental, we can pay them down, and government stimulus spending in a variety of smart ways would’ve pulled us out of this recession two years ago.

  14. Submitted by Richard Helle on 08/18/2013 - 09:06 pm.

    Krugman is wrong

    A stimulus package now will not do anything but pull even more money out of the economy and put it into the bank accounts of the moneyed class. There is substantial wealth being produced but what is keeping any kind of recovery from being seen is where that wealth is ending up. When workers organize and demand their fair share, wages will rise, demand for goods and services will increase, jobs will be created to fill that demand, taxes will be paid and deficits will disappear.

    • Submitted by Paul Udstrand on 08/19/2013 - 08:43 am.

      Ideology not economics

      It’s amazing that this idea that government spending sucks money out of the economy still has any credibility. We just had a little crash on Wall Street because investors are afraid that lower unemployment might trigger less stimulus spending… Even Wall Street gets it.

      Sometimes the conservative mind has trouble with complexity. Someone here already pointed out the fact that we have ONE economy with several components, not two or three separate economies competing with each other. The private sector and the public sector are two parts of the SAME economy. Taxes and government spending don’t vaporize capital, they redistribute it, much the same way the financial sector does only with different priorities and objectives. It’s amazing to me that this “small govment” magical thinking ( cut taxes or government spending and wait for the magic to happen) still persists to such extent.

      I could go on and on but let’s just consider one example that demolishes the myth of private sector “wealth” creation. You have look no further than our local stadiums and arena’s to see how government spending, not private sector genius alone creates “wealth”. Both the Pohlads and Wilf have seen the value their franchises double and tripple as DIRECT result of massive government spending.

      We could all produce more examples for the rest of the day but upshot is that government spending is NOT a drag on the economy. The idea that government spending is a drag was always an ideological conclusion, it was never based on sound economic observations. It’s truly amazing that such a bizarre notion could gain so much purchase in the field of economics, especially after the post Great Depression recovery.

      • Submitted by Peder DeFor on 08/20/2013 - 08:30 am.

        Pohlad and Wilf Families

        Well of course if the gov’t dumps a bunch of money into someone’s company, then that company is worth more money. That’s basic corporate welfare. The question is whether or not that’s better for the overall economy. Of course, economists have been declaring stadium stimulus to be a poor use of money for some time now.
        I was curious if other liberals would jump in here and point out what a poor example this is. Are we really comfortable with the idea that gov’t works well when we can hand out billions to billionaires? I thought libs were opposed to that and I’m kind of sad to see that isn’t so.

        • Submitted by Paul Udstrand on 08/21/2013 - 08:38 am.

          Actually that’s not the question

          The question is whether or not its good for the economy to have a small percentage of the population accumulating great wealth at the expense of everyone else? The liberal response to that question is typically “no.”

          That doesn’t mean government spending is irrelevant or bad for the economy, it simply means there are better and worse ways to spend taxpayer dollars. The stadium example simply demonstrates the fact that the wealthy, contrary to ideology, rely on government just as much if not more than do the poor.

          Examples of government spending that grow the economy, benefit the nation as a whole, AND help the wealthy are not hard to find. Just start with the Luisiana Purchase and work your way towards the Interstate Freeway System and beyond.

  15. Submitted by Karen Sandness on 08/18/2013 - 11:13 pm.

    Conservatives like to say or imply that the debt is the result

    of excessively generous spending on “welfare” and “entitlements,” but what really threw budgets out of balance under both Reagan and Bush Jr. are 1) tax cuts and 2) excessively generous military spending (higher than the next ten countries combined) and two wars fought “off budget” to the tune of about a billion dollars per year each.

    So for everyone who’s really concerned about the deficit or the debt, those are the places to start. Gradually raise taxes on the upper income brackets till they reach Kennedy-era levels, remove the loopholes that allow major corporations to pay no taxes (and if you believe that “companies will just raise their prices to cover the new income taxes,” then you don’t understand how corporations are taxed), and raise the income cap on FICA assessments to double the current level of $113,000 per year.

    Then realize that the U.S. cannot fix the world and that seeking to control the world is simply imperialistic lust for power. Cut the military down to the level required for purely defensive needs: none of this “projecting American power” (for what? to satisfy egos?) or scaring the public with tales of terrorists or Reds under the bed. Use the savings to rebuild and upgrade America’s infrastructure, because if you’ve traveled to other First World countries, you know that this, not missiles, is where we suffer from a gap between us and the rest of the developed world.

    But none of this will happen. It’s more fun to blame “welfare mothers” and “illegal immigrants.”

  16. Submitted by Neal Rovick on 08/19/2013 - 09:53 am.

    The biggest factor in sustaining democracy in America is not being discussed:

    Far fewer people are required to work to provide the economy with the things it needs.

    This is what is keeping a lid on wages, this is what is driving long-term unemployment, this is what is driving temporary jobs, this is what is behind the increases in SNAP and disability, this is the hole in group retirement and pension plans, this is the hole in governmental budgets, and this is a main cause in the concentration of wealth. And the apparent main absorbers of the intelligent excess labor in this modern economy–medical and education–are running up against the wall of being too expensive for continuing the current rate of consumption.

    The natural opposition of a large group of people consigned to minimal engagement in the economy and a smaller group of elites can only be mitigated in a majority-rules democracy by a series of clever distractions whipped up to deflect the issue and divide the majority. The distractions must be bigger and noisier–but there must be distraction.

  17. Submitted by Richard Helle on 08/19/2013 - 07:21 pm.

    Taxes and government spending don’t vaporize capital, they redistribute it.

    I agree, but the percentage of wages paid to revenues realized by corporations are at historic lows.

    http://www.businessinsider.com/companies-need-to-pay-people-more-2013-8

    Without addressing this wage issue, then pumping money into the economy is like a direct deposit into the bank accounts of the wealthy. A sane increase to the minimum wage would help but it’s more of a political stance then a substantive fix for a 30 year trend. The middle class has to exercise its power in numbers and stop giving in to the moneyed interests. We need higher wages. We need to organize.

    • Submitted by Paul Udstrand on 08/19/2013 - 09:21 pm.

      Obviously…

      Spending isn’t the only way government can stimulate the economy.

      • Submitted by Richard Helle on 08/20/2013 - 10:50 am.

        Of course obviously

        Single Payer Health Care, High Speed Rail, Smart Grid, Sustainable Power Generation are all programs the government could pursue that would stimulate the economy but if the jobs that are created don’t pay any more then handing carts out at Wal Mart then there will be no evidence of recovery. We often hear about a talent deficit in the work force. It’s a complete myth. What we are seeing is a shortage of people that are willing to do jobs for the wages offered. The government bailed out Wall Street and the Banking industry to what end? Their business practices have not changed in any substantive way and any stimulus from those bailouts that was promised has not materialized. 1.5 trillion dollar giveaway to the same people that drove the world’s economy to the brink of collapse with no requirements on future lending or the creation of non existent paper products that somehow increase in value when they move from one desk to another. It is my contention that the government cannot solve this problem because the government is part of the problem. It is my contention that the middle class has to take responsibility for it’s own well being. Don’t misunderstand, this is not some variation of the rugged individual meme. Just the opposite. Workers need to organize and consumers need to change their behaviors. When workers are paid a fair wage and consumers buy products made by their neighbors we will see recovery.

        • Submitted by Paul Udstrand on 08/21/2013 - 10:25 am.

          Elections matter

          I don’t disagree with most of Richard’s statements but I think they stem from the liberal buy-in to the “Great Stupid”. The Great Stupid is what I call an era that began in the mid 80’s when Americans decided that government and public policy were irrelevant. Personal affirmation and consumerism were the liberal contribution to this era, the idea that a good resume’ and responsible “buying” was all we needed to solve problems. The effect is that with the exception of the cold war every problem we faced when I graduated high school in 1981 has gotten far far worse. Now we have liberals quoting Ronald Reagan: “the government is the problem not the solution.”

          I agree that the middle class has to take responsibility, but part of that means voting intelligently. The fact is that none of these problems can be solved or coherently addressed without government. Your not going to organize unions as long as Walmart and Jimmy Johns can stifle organization drives and guys like Rahm Emanuel say: “F@*% the UAW” when they get into power. If you don’t vote against “right to work” legislation your not going get anywhere with Unions.

          Nor are you going to change the world or fix the economy simply by buying different stuff. Consumerism is inevitably co-opted by marking strategies. Stuff grown in Iowa is considered “local” in MN. “All Natural”, “Organic” blah blah blah it all ends up being marketing strategy, if that’s what you buy, they figure out a way to put it on the package. That’s why after 30 years of choosing paper instead of plastic things have only gotten worse. We turned a nation of citizens into a nation of consumers, consumers have no responsibilities beyond deciding what they want to buy, responsible consumerism is simply an oxymoron. Consumerism is the problem, not the solution. Consumerism lets you sink deeper and deeper into crises while believing that your thinking locally and acting globally.

          In a democracy the extent to which the government is the problem or the solution depends on the citizens. Don’t expect the government to be a solution if the citizens spin off into an alternate universe where they can shop their way out of global climate change and huge recessions and strong resume’s negate economic reality. This is how you create a nation where millions of “honor students” graduate into $8.00 an hour jobs, if they can find a job. This is how you end with a nation full of people driving 10 gallon a mile SUVs 30 years after the FIRST oil crises.

          The key isn’t pretending the government is irrelevant in the face of responsible consumerism and personal empowerment. We will only make progress on these issues when we use the government to solve problems. This is why the Eagle has returned (i.e. the endangered species act) but fur coats are still selling for several hundred dollars despite consumer activism.

  18. Submitted by Paul Udstrand on 08/20/2013 - 07:49 am.

    Notice….

    How far removed from reality are those who claim: “government doesn’t create jobs”. Yet that’s exactly what Rand Paul was saying on national TV over the weekend. It’s downright scary that such people are actually in power, which brings us back to Krugman’s anxiety.

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