Monday, July 07, 2014

Beliefs, Facts and Money

New Krugman:

On the eve of the Great Recession, many conservative pundits and commentators — and quite a few economists — had a worldview that combined faith in free markets with disdain for government. Such people were briefly rocked back on their heels by the revelation that the “bubbleheads” who warned about housing were right, and the further revelation that unregulated financial markets are dangerously unstable. But they quickly rallied, declaring that the financial crisis was somehow the fault of liberals — and that the great danger now facing the economy came not from the crisis but from the efforts of policy makers to limit the damage.

More here.

You probably don't recall, but the financial collapse of 2008 pulled the carpet right out from underneath conservative economics.  Remember that one of the most foundational beliefs expressed by conservatives about economics is that government regulation always makes markets operate inefficiently, and that, ultimately, markets will regulate themselves.  By the time the financial collapse hit, we had been on a twenty year binge of Wall Street deregulation.  Ideally, from the conservative point of view, such deregulation would have made the market much stronger, not weaker.  But, of course, that's not what happened.  Indeed, deregulating Wall Street is what enabled the real estate bubble's collapse to infect everything else, by way of toxic mortgages repackaged as securities, in which EVERYBODY had invested.

Needless to say, some smart government regulation, or rather, regulation we already had on the books, but was repealed in the go-go corporate 90s, would have stopped the implosion in its tracks and saved the country a lot of heartache and misery.  That is to say, markets are NOT self-regulating, which means we need to regulate markets.  Which means conservative economics are WRONG.  We need the government to interfere in the economy in order for it to function.  And that, my friends, is an undeniable fact.

Of course, conservatives decided in lockstep to create and then live within a delusion about the collapse, which blamed liberals, as usual.  Anyway, that's all simply a subsidiary point.  The main point, riffing on Krugman, is that today we have conservatives embracing reality-denial on three major fronts: rejection of evolution (and the Big Bang), rejection of man made global warming, and rejection of reams of economic data totally undermining their assertions about how the economy actually functions.  And these are just the big ones--we can also include, for instance, Karl Rove's deep seated belief that Romney was going to win, even as the election returns were proving otherwise, and so on and so forth; Iraq's WMD also comes to mind here.

In short, we have about a third of the country living in pure fantasy about numerous key issues.  And that group of people wields a great deal of political power.  And they expect everybody else essentially to join them in accepting that black is white, day is night, and Ronald Reagan was a good president.  That's horrifying.  Sooner or later, this is going to blow us all up.  What are we to do?