The only blog I read every day is Paul Krugman’s Conscious of a Liberal. I like reading it because I learn a great deal about economics, and that is one area that I know very little about. (I also read Dean Baker over at Talking Post Memo and Brad DeLong’s GRASPING REALITY WITH BOTH HANDS.) I’m a very smart guy, but these men make me feel like a mouse whose greatest intellectual pursuit is getting on a wheel and running nowhere for ten minutes. Nevertheless. Krugman especially can’t seem to get his head around why we are dealing with our current depression (I refuse to call it the “great recession” or the “little depression”) the same way (or worse) than we did the Great Depression.[1] The me, the answer is obvious. Although there are a few elements to it, one overshadows the others.
A depression is great time to be rich. Houses, cars, clothes, jewelry, even books are cheap. This would be enough for Krugman’s Very Serious People to want to prolong the depression. Even better, one doesn’t feel rich because he has a great house and car; he feels rich because he has a greater house and car than his neighbors. There is no incentive for the rich to improve the economy. But how can the rich maintain this excellent state of affairs?
The world’s rich are creditors—to one extent or another. The last thing they want is for any inflation because that would mean that the value of the debt owed to them would decrease. It doesn’t matter that an economic recovery would no doubt increase their bottom line, even if their debt holdings are worth less. These are very short-sighted people, but they understand that wealth is a relative concept and it only matters how much money one has relative to others; the absolute amount of money is irrelevant. Inflation would shrink the gap between rich and poor and thus make the rich feel less rich—even if they had more money in real terms. It is well documented that the rich tend to do better under Democratic administrations—but again, this is in real terms, not relative terms.
America is only a nominal democracy. The 2010 election was not a mandate—conservatives won because liberals did not vote. The rich know this; this can see this with the obnoxious repetitions of Republicans (e.g. Mitch McConnell) claiming that the 2010 election meant that people did not want taxes raised, even though the people do indeed want taxes raised—even if only on the wealth. The rich are powerful to the extent that they can limit who votes, just as Jim Crow-era southern whites maintained power despite often overwhelming black majorities. If the United States had a law requiring all eligible voters to vote, we would have a very different government and country. If that were the case, the rich would still be powerful, but we would be able to pass laws that would improve our economy and the lives of those who are suffering the most.
It is no surprise that the Very Serious People don’t make any economic sense and are immune to facts that show how to fix the economy. These people are serious—serious about protecting their relative economic interests. Debtors do not run central bands, hold high elected office, and comment on TV news shows. We are living through 1934 again, the very year Upton Sinclair said, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” He got one thing wrong though, he should have said, “relative salary.” It is difficult to get a man to understand something, when his continued economic dominance depends upon his not understanding it!
[1] To be fair, Krugman does talk about these issues. However, he seems constantly surprised that the powerful act as they do. There is nothing in this article that hasn’t appeared at sometime on his blog—often many times.
