In approaching this subject, let us first address the historical situation of the Obama administration. The task of [presidential] museums, like that of history generally, is to document periods of great change. The task facing the makers of the Obama museum, however, will be pretty much exactly the opposite: how to document a time when America should have changed but didn’t. Its project will be to explain an age when every aspect of societal breakdown was out in the open and the old platitudes could no longer paper it over—when the meritocracy was clearly corrupt, when the financial system had devolved into organized thievery, when everyone knew that the politicians were bought and the worst criminals went unprosecuted and the middle class was in a state of collapse and the newspaper pundits were like street performers miming “seriousness” for an audience that had lost its taste for mime and seriousness both. It was a time when every thinking person could see that the reigning ideology had failed, that an epoch had ended, that the shitty consensus ideas of the 1980s had finally caved in—and when an unlikely champion arose from the mean streets of Chicago to keep the whole thing propped up nevertheless.
I understand someone like Josh Barro who is a conservative (Neoliberal?) and does usually act as an apologist for the Republicans. But I’ve never seen him intentionally misrepresent the facts. He has his ax to grind, just like I do. But he would never make a statement like, “Raising the minimum wage will cost jobs.” He knows the data. The research on the subject is all over the place. I don’t actually know where he is on that issue, but I know from experience that he’s much more likely to say something like, “The studies are inconclusive. The truth is we don’t know the effect; it will probably depend upon the time and place and the size of the increase.” That’s an honest man—or at least a man who is trying to be honest about issues that matter to him.
But as a result of being so honest, Barro is pretty much left out of Republican discourse. If you see him on television, it will be MSNBC and not Fox News. Because the truth of the matter is that to be taken seriously in the conservative movement, you have to be either ignorant or deceptive. This isn’t because conservatism is inherently indefensible. But in this country, the conservative movement has gone off the rails. And actually, the Democrats have too: they are now halfway on the old Republican tracks, while the Republicans will soon be taking out homes a couple blocks away from the railroad. So in order to keep complaining about the same stuff conservatives are always complaining about, you can’t be like Josh Barro. You have to cherry pick numbers in such a way as to completely deceive your readers.
And that brings us to Robert Samuelson at the Washington Post, where it doesn’t ever matter what the numbers say, the United States economy is on the verge of collapse! Although wrong year after year, Samuelson still manages the headline, Budget Policy as Prayer. The CBO produced one of its long-term budget outlooks last week, and most people think it looks pretty good—better than it has in years. William Gale at The Brookings Institute provides a very middle-of-the-road assessment in, Six Takeaways from CBO’s New Long-Term Budget Outlook. And his first point is, “The size of the budget deficit today isn’t a problem, and it’s not much of a problem for the next few years either.”
Samuelson doesn’t see it that way! He claims that, “Its themes are distressingly familiar.” That’s right: bread lines, roving biker gangs, no parties, no discos. You know the way it is. To give you an idea of just how bad it’s going to get, Samuelson says, “Under favorable assumptions, the CBO projects deficits of $7.6 trillion from 2015 to 2024.” Well, by favorable assumptions, we mean current law. You know: assuming that the Republicans don’t take over the government, cut taxes for the wealthy, start a few more wars, and increase subsidies to every large corporation in the world.
The problem is that Dean “Pundit Slayer” Baker, actually read the report (pdf). While it is true that the CBO projects $7.6 trillion in deficits over the next decade, because of economic growth, this will cause the Federal Debt held by the public as a percentage of GDP to go up just four percentage points: from 74% now to 78% in a decade.
Now, I’m not going to lie to you, the CBO projects the debt to go up from 78% to 106% during the 15 years after that. But there are a couple of issues to bear in mind here. First is that even ten year forecasts are simply bad; 25 year forecasts are complete fantasy. And as Baker points out, the only reason the deficit is 74% now, is because of the financial crisis and the bursting of the housing bubble. In the first quart of 2008, it was 36%. Remember: that ain’t Obamacare or any other new “liberal” laws, since they’ve all been paid for; that is reduced tax revenues and increased welfare programs because people are poorer. So if the Republicans would help the government to grow the economy instead of hinder its growth, we could see a boom that would cause our debt to GDP ratio to go down—way down.
But given that Samuelson seems to think that high debt is just going to kill us, Baker noted that there just isn’t any evidence for that:
The truth is that Samuelson will do anything to push his policy preference, which is to slash Social Security and Medicare. And there isn’t much of a Social Security problem at all. There is a Medicare problem, but that is due primarily to the fact that we pay twice as much as other advanced countries for our healthcare. And even Medicare isn’t looking as bad as it was a few years ago. Plus, there are lots of ways to deal with any shortfalls in these programs: we could raise the Payroll Tax cap and make that tax slightly less regressive. But that is exactly the sort of thing that Samuelson wants to avoid.
Samuelson writes pretty much this same column once or twice a month. He is always freaking out that we are going broke. Today is just special because it shows that even when the data are positive, he’s still freaking out. He carefully pulls out data and quotes from the CBO report to make his case. There is no way that he is unaware of what he’s doing. His intent is to deceive his readers. Robert Samuelson is a liar, which should come as no shock because most conservatives are liars.
Actual economist Nick Rowe points out that I am wrong about Monetarism. It too is demand based. Some thought has shown this to be true. By lowering interest rates, the government (or Fed if you want to be technical) makes borrowing more attractive and thus increases demand. This has left me with some questions about what actual “supply side” economics is. I’m sure I’ll bring that up in later posts. It also should be noted that the current crop of crazy conservatives don’t like Monetarism because they think it to is a kind of tax. If you talk to libertarians, they usually think that the Fed is just a conspiracy to devalue the dollar and thus steal money from hard working people. Regardless, my error about the nature of Monetarism doesn’t affect the point of this article. However, I greatly appreciate that Professor Rowe took the time to correct me. I’m a generalist and need as much of that as I can get. -FM
There are a lot of loony ideas in economics. The reason, I think, is because even though a particular economic policy might not be best for the economy overall, it can be very good for a particular group. And when that group is rich and powerful, there are going to be a lot of people using all their brain power to justify why such a policy is really good for everyone. But in the macroeconomics world, there really are only two serious approaches to fix an economy that is under performing. The first is for the government to spend extra money to increase demand and thus get the economy moving again. Much of this kind of stuff happens automatically: unemployment insurance works this way. We call people who believe in this kind of intervention in the economy Keynesians.
Whereas Keynesians look at propping up economic demand, the second group looks at propping up economic supply. They do this with money flow. By allowing businesses to borrow more cheaply, they will invest more and expand, thus putting money into the economy. We call people who believe in this kind of intervention in the economy Monetarists. They tend to be a more conservative lot than the Keynesians.
Matt Yglesias is always saying that if you want to help poor people, give them money. This is a response to neoliberal and conservative policies that want to do everything indirectly. Rather than just give an unemployed person money or a job with the government, we give a tax break to employers, hoping they will hire the guy. This is kind of how I see the Monetarists. I think what their real fear about the Keynesians is that more government spending will lead to higher taxes. That is a big concern. But the main thing is that the Monetarists just seem to have an ideological problem with the government spending money.
So there has been a small argument between Monetarist Nick Rowe and Keynesian Paul Krugman. And while Simon Wren-Lewis has nothing but nice things to say about Rowe, he makes a really important point in an article yesterday, What Annoys Me About Market Monetarists. And it gets right to the heart of the liberal-conservative divide in this country. (I don’t mean to say that Rowe is a conservative; I don’t know; and these days, the thinking of people like Rowe are considered terrible by conservatives; so even if he is a conservative, he isn’t a crazy one.)
The point that Wren-Lewis is making is that Keynesians don’t say that only fiscal policy will work; they believe in monetary policy too. It is just that when monetary policy isn’t working, Keynesians believe fiscal policy should be used. The Monetarists are rigid and I think it all comes down to ideology. They don’t want to use government spending so they come up with reasons why government spending would be terrible. (Again: Wren-Lewis isn’t talking about Rowe here—just the Monetarists generally.)
My take on American politics is that conservatism has ossified into a strictly ideological movement. So when approaching any problem, they start with a long list of things that can’t be done. For example, if they are looking at inequality between school funding, the solution cannot be federal funding to equalize them. Instead they push more testing or ending teacher tenure or neoliberal policies like providing tax incentives to manufactures to give computers to low income schools.
Liberals, on the other hand, are open to all policies. That is, for example, how we got the conservative healthcare reform law now known as Obamacare. But even on education policy, I don’t see liberal resistance to the elimination of tenure as not being open to the idea. It is rather that elimination of tenure has little is anything to do with helping children, and everything to do with the conservative desire to destroy teachers’ unions.
It seems that even a reasonable academic like Nick Rowe falls into his own kind of false equivalence. He seems to think that just because Monetarists are against fiscal policy, that means Keynesians are against monetary policy. But that’s not true. It goes along with the claim by conservatives that they want small government as an end in itself. (They don’t actually want small government, but that’s what they claim.) Thus they assume that liberals want big government as an end in itself. That’s simply not true. We want certain things to be done, and it really does matter to us if it uses a little government, a lot of government, or no government.
This can’t be said enough: liberalism is practical. Liberals are not trying to turn the United States into a socialist utopia. This is in stark contrast to conservatives who are ideological. They are trying to turn the United States into a utopia, although they disagree as to whether it would be a theocracy or an anarchy. This difference between the ways that liberals and conservatives see policy is our fundamental problem. Liberals can’t compromise with conservatives who won’t even consider any ideas outside their tiny ideological box. And as we saw with Obamacare, even when liberals do squeeze into that tiny ideological box, the conservatives make the box even smaller.
And if fairly reasonable Monetarists can’t agree that when monetary policies aren’t working, we should use fiscal policies, how can we possibly get Ted Cruz to admit that tax loopholes for oil companies ought to be closed?
On this day in 1899, one of the greatest American novelist Ernest Hemingway was born. When I was younger, I was quite fond of his work. To my young boy mind, he seemed to establish what it was to be a man. That’s most especially true of Jake Barnes in The Sun Also Rises. There was something very poignant his sexual dysfunction along with his drive to still be around women. But looking back on the book now, it seems a very immature view of men, which doesn’t necessarily mean it isn’t true. But it certainly doesn’t present anything like the male ideals that Homer provided for the ancient Greeks.
What still moves me as much today as it ever did is his style. I still remember this one sentence from A Farewell to Arms that is so simple and yet evocative, “I looked back and saw the three cars all climbing, spaced by the interval of their dust.” That’s like poetry and Hemingway’s fiction is probably the most lyrical of the 20th century writers. There’s no doubt that Gertrude Stein was a master of language, far exceeding Hemingway. But she is such a master that I find her difficult to read most of the time. And based upon pure writing, I think Hemingway was better than both Fitzgerald and Steinbeck.
But here I am at 50 and I still read Fitzgerald and Steinbeck. I even occasionally read Stein. But Hemingway: never. Part of that is having read a good too much of Hemingway when I was younger, but the same could be said of Steinbeck. What Hemingway always lacked, and this became clearer and clearer as I got older, was what Fitzgerald and Steinbeck had in abundance: great characters and a humane worldview.
Hemingway’s work seemed to be limited by his own personal demons. He was afraid to allow his own humanity to be shown in his work. That’s why I think his mostly solitary The Old Man and the Sea works the best of his fiction—because it is more mythic and even spiritual. The me, it is an allegory for life. It doesn’t really matter that he got the marlin back safely. The essence of life is the journey, not the destination or the trophies. It would have been interesting to see him have developed in that direction, but instead, it stands like Orson Welles’ F for Fake: a great work never built upon.
The last couple years of his life, Hemingway seems to have suffered from hemochromatosis—the accumulation of iron in the body. This caused him to deteriorate mentally, if not physically. It led to him twice being “treated” with electroshock therapy, which made his mental state even worse. Regardless, he eventually killed himself. It’s sad, because I think he had a lot to offer as an older writer. With his clarity of vision and careful style combined with wisdom, he might have done really great things. Then again, it might just have been a lot more gossipy trash like A Moveable Feast. But he could have had more important things to say. Isn’t it pretty to think so?
Happy birthday Ernest Hemingway!