More of the same will not fix our economy

Posted in Around The Nation, Had Enough Yet?, The Economy at 12:01 pm by wcnews

The sequester is an idiotic idea that will make our economy worse. It was born because what needs to be done to fix our economy is largely left out of the discussion. In a nutshell President Obama deals from the center and the GOP is so far right, and there’s no left balance in any of our current negotiations. The reality is if our elected representatives would pass what the American people prefer, it looks nothing like the current discussion the villagers are having.

As Paul Krugman shows today there’s an insane parallel to those who were so wrong about the Iraq war and those who continue to be so wrong about what our economy needs now.

We’re just a few weeks away from a milestone I suspect most of Washington would like to forget: the start of the Iraq war. What I remember from that time is the utter impenetrability of the elite prowar consensus. If you tried to point out that the Bush administration was obviously cooking up a bogus case for war, one that didn’t bear even casual scrutiny; if you pointed out that the risks and likely costs of war were huge; well, you were dismissed as ignorant and irresponsible.

It didn’t seem to matter what evidence critics of the rush to war presented: Anyone who opposed the war was, by definition, a foolish hippie. Remarkably, that judgment didn’t change even after everything the war’s critics predicted came true. Those who cheered on this disastrous venture continued to be regarded as “credible” on national security (why is John McCain still a fixture of the Sunday talk shows?), while those who opposed it remained suspect.

And, even more remarkably, a very similar story has played out over the past three years, this time about economic policy. Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam’s alleged weapons of mass destruction.

Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they’ve been wrong about everything (why do people keep treating Alan Simpson as a wise man?), while critics of the consensus are regarded as foolish hippies even though all their predictions — about interest rates, about inflation, about the dire effects of austerity — have come true.

Although most won’t believe - mainly because very few are talking about it - the deficit is shrinking. What all of this means is that the main reason our economy is still in a depression is because we’ve been doing austerity, and it’s been hurting, not helping.

A nice healthy dose of New Deal style Keynesian Economics is all that’s needed. But that’s not going to happen until there’s serious push back from the left. The sad truth is that it’s not possible to do what’s needed for our economy to rebound in our current political system.

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