LEARNING ABOUT THIS GREAT RECESSION
Democracy Now Interviews Paul Krugman

From Democracy Now:

AMY GOODMAN: Paul Krugman, what would a new system look like? What would you advocate?

PAUL KRUGMAN: I think, in the end, we’re going to have to go back to something that is kind of like the system that emerged from the New Deal, which was tightly regulated banks and financial institutions, limits on risk taking, fairly high taxes for high earners, which—it turns out that, you know, low tax rates create incentives, but the incentives are actually to play dangerous games with other people’s money. A lot of things need to be updated for the twenty-first century and information technology and so on, but basically, our grandfathers got this thing right. Our grandfathers understood that finance is useful but dangerous and needs to be very tightly hedged about with regulations.

Click here to watch, listen to, or read the rest.

Last night I was hanging out with my ex celebrating her birthday. (Happy birthday, Becky!) We were channel surfing the TV after a while, and lingered for a bit on Charlie Rose interviewing some economists about Obama's bank bailout plan. The conversation just went on and on. I turned to Becky and said, "you know, I feel like I've got a pretty decent layman's understanding of all this, and could explain it if you wanted, but it's so fucking complicated that it would take a while, and I'm sure that fifteen or twenty minutes into it you'd be regretting asking me about it."

"All I know is that it's terrible," said Becky. Indeed. Can't argue with that.

And that's essentially where most Americans are coming from on the banking crisis. They know it's terrible, which it is. They know it's all like some big rigged game, favoring the inside gamers, and fucking everybody else, which is also true. Beyond that, however, it's one big Gordian Knot. I've been trying to use this space to educate whoever happens to drop by, mostly friends and a few net-surfing strangers, but I fear that explaining even my limited understanding of events is as eye-glazing and off-putting as, say, memorizing the Periodic Table, or reading Joyce, or whatever else put you to sleep in high school.

It's a damned shame that we don't teach economics K-12. I mean, really, economics and politics are ultimately indistinguishable in terms of real power, and the educational establishment just doesn't give a shit. It's almost as though they want us to be ignorant so as to make us more controllable. But that's another story.

The bottom line is that there's some serious shit going down right now, and most people have virtually no understanding of it, which means they have no say in the matter. So I strongly urge you, dear reader, to educate yourself, if you haven't been doing so already. This interview with Krugman is a good start--he can get wonkish at times, but his forte as a public intellectual is putting complicated terminology and ideas into plain everyday language. But you should go beyond the talking heads. Read up on John Keynes, the economist behind FDR's New Deal, who is now extraordinarily important because the current economic crisis is very similar to what the nation was facing back in the 30s. But you should also read up on neoliberalism, the now failed economic paradigm that replaced Keynesianism in the 70s, and is now responsible for this Great Recession. Read liberals; read conservatives. Compare and contrast. Don't feel like you need to master it all, like you need to understand everything. You won't. It's just too much information. Even economists are admitting today that there's a lot they don't know about what's happening. Just try to get a handle on the discussion. Just get yourself to where you can follow along. Believe me, you'll be in a much better position than you were when cries of "deficit!" seemed like a reasonable objection to the stimulus bill.

And do yourself a favor. Limit your self-education to no more than thirty minutes a day. It will prevent information overload and the frustration which usually accompanies it. More importantly, it will keep you from wallowing for hours in depressing and frightening news the way I do--man, in some ways it's like watching 9/11 on TV over and over again, if you know what I mean.

This Matt Taibbi essay from Rolling Stone is really good, too: "AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror." Check it out.

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