Monday, August 02, 2010

Defining Prosperity Down

New Krugman, from the New York Times:

I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think.

Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal.

And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.


I’d like to imagine that public outrage will prevent this outcome. But while Americans are indeed angry, their anger is unfocused. And so I worry that our governing elite, which just isn’t all that into the unemployed, will allow the jobs slump to go on and on and on.

Get the details

I wonder.

Not about where we're headed, Krugman is right on target as far as that's concerned: bad economic theory is taking us into many years of sluggish growth alternating with chronic recessions. Clearly, we've set the controls for the heart of the sun, as it were.

No, what I wonder about is whether our leaders are committing economic suicide because they're heartless assholes who don't care about rank-and-file Americans, or whether it's because our leaders are incapable of questioning the Reaganomics that got us into this mess in the first place. My gut instinct is to believe the latter. I mean, it's impossible to stare into the souls of Congress to divine their true motivations, so all we can really do is speculate.

Krugman has good reasons for believing that Congress and the White House simply don't care. After all, based on what they actually do, the legislation that they pass, and the debates they have, it sure does look like they don't give a fuck. We're experiencing extraordinarily high unemployment, and all they seem to be focusing on is the deficit. Small business are going under day in and day out, but big business gets all the bailouts.

But, you know, I used to buy into Reaganomics, myself, years ago. And it's quite a beautiful and seductive theory. It is essentially supply-side in nature, arguing that the best thing the government can do to grow the economy is to generate policy that favors producers over consumers and workers. The idea is that once producers get really cranked up, their products get cheaper, and more jobs are created, which allows people more money to spend as consumers. In effect, or so the theory goes, the government doesn't have to deal with the demand side at all because supply-side policy takes care of that indirectly.

Like I said, beautiful. If only it worked in the real world.

Because I embraced the supply-side view over a quarter century ago, I've been watching all these years to see how it's working out. And you just can't get away from the fact that since Reaganomics became conventional wisdom in Washington, for Democrats and Republicans alike, the rich have gotten richer and the poor have gotten poorer. The theory says that shouldn't happen. There's supposed to be prosperity for everybody. But there's not. Things have gotten much worse since the Reagan era.

So if Reaganomics is, empirically, an utter failure, why does almost everyone in Washington continue to embrace it? Belief is a curious thing: it doesn't have to have anything to do with what actually happens. Virtually everybody in America, for instance, believes in the strange being known as God, but there is about as much evidence for His existence as there is for the Easter Bunny's existence. No problem. Lack of evidence makes people believe more strongly. Yeah, I know, that makes no sense at all, but, you know, what can you do?

People believe in God because it makes them feel good. People believe in Reaganomics for essentially the same reason. Evidence, reality, scientific studies, none of this makes any difference. I'm not really sure why Reaganomics makes people feel good, but I have a few ideas. Supply-siders pitch the notion as being about freedom, and hard work, and property rights, abstract ideas that are historically near and dear to the American heart. It's probably very much like Stephen Colbert's "truthiness." That is, supply-side economics feels right, feels American, so it must necessarily be right.

And that's where I think our idiot-leaders are coming from. It's not that they don't care about people spending years without a job, even though they legislate policy that ensures such a situation. It's that they honestly believe, in spite of mountains of evidence to the contrary, that their job-destroying agenda is, in fact, a job-creating agenda.

Kind of like medieval doctors who would bleed their patients to death, all the while believing that they were saving them. We really haven't come too far in the last thousand years.