Category Archives: Economics

Reagan Spending vs. #TeaParty Austerity

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Would Tea Party Republicans have voted to give Reagan his 50% spending increases and 700,000 more government jobs?

In an article from the Washington Post on “Tea Party” Congressman Mick Mulvaney of South Carolina, these paragraphs caught my attention:

Mulvaney mostly meets with voters through weekly town hall meetings. Sometimes he brings with him a 30-minute PowerPoint presentation, full of bar graphs and fever charts depicting the growing federal deficit and the surging cost of health care. In January, Mulvaney added a chart on the automatic spending cuts, known as sequestration, which next year will total about $100 billion.

To him the numbers make sense. “In the greater scheme of things, they are not that big,” Mulvaney said.

But, every once in a while, a personal anecdote punctures his certainty. Earlier this month, a friend and former campaign volunteer stood up at one of the town hall meetings to tell Mulvaney that the defense cuts had cost him his job of five years with a large defense contractor. “I just want you to know that these cuts are real and they hurt me,” said Jeffrey Betsch, a single father of three daughters, who was on the verge of being evicted from his home.

After the Rotary Club speech, Mulvaney was thinking about his friend as he drove down a narrow two-lane ribbon of worn blacktop, past strawberry farms and pine forests. He felt terrible, he said, but he also believed that the country faced problems that were bigger than the struggles of a single constituent.

“I don’t see how you wipe out 40 cents of spending on every dollar and not have someone get hurt,” Mulvaney said.

The punchline of the article, which is titled “As budget cuts hit S.C., a congressman is surprised at constituents’ reactions” is that his constituents are actually not angry with him, despite his stubborn refusal to shower the district with federal dollars, as his predecessor Rep.  John Spratt did. It was anger toward Spratt and his loose spending ways that propelled Mulvaney into office in 2010. That same anger may be the wind at his back if he runs for higher office in his state.

Yet principled though they may be, Mulvaney’s actions have had real consequences for his constituents. In addition to his former campaign volunteer, the Congressman faced the irritation of an Air Force general in his district who claimed the effects of the sequester had made the AF less ready for warfare than at any time in memory. To which charges, Mulvaney responded,  “If the cuts force us to look for better ways of saving money in the future, they will be a success. We can’t go backwards.”

How can a progressive argue with such principle? The chief pain caused in Mulvaney’s district is to the military and “independent” defense contractors–or should we say, to the people who work for either sector. Do progressives want to see that money continue to flow to those pockets, or can we use this opportunity of Tea Party intransigence to rethink our spending priorities? Continue reading →

Reagan’s Recovery vs Obama’s Recovery (UPDATE)

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Here’s an interesting comparison by Michael at EconoPolitics.com from April of this year. In sum, Michael shows, “Had total government spending and employment followed the same trend in this recovery as the 80s recovery, spending would be $895B higher and there would be 1,250,000 more government employees.”

Krugman Trashes Austerity’s Phony Morality Economics

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DAVOS/SWITZERLAND, 24JAN08 - Jean-Claude Trich...

DAVOS/SWITZERLAND, 24JAN08 – Jean-Claude Trichet, President, European Central Bank, Frankfurt, captured during the session ‘Systemic Financial Risk’ at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Photo credit: Wikipedia)

Apropos of a current theme of this blog, that the powerful Austrian school of economics that has supplanted Keynesianism as the go-to ideology of our government and, more and more, both political parties, is rooted in the same Nietzschean stew of pro-winner, anti-loser sentiment that appealed to the Nazis, Paul Krugman has a piece in the current New York Review of Books that devastates the “austerian” contention that Keynesianism feeds the Beast, while austerity corrects naughty economic behavior. His main support for his argument is the recent discovery of severe flaws in the methodology of two studies most often cited by austerians, one by Harvard profs Carmen Reinhart and Kenneth Rogoff and the other by Italy’s Alberto Alesina and Silvia Ardagna, purporting to show that government spending that exceeds 90% of GDP in the wake of a depression or financial meltdown is catastrophic for the economy in question.

David Stockman’s The Great Deformation … [is] an immensely long rant against excesses of various kinds, all of which, in Stockman’s vision, have culminated in our present crisis. History, to Stockman’s eyes, is a series of “sprees”: a “spree of unsustainable borrowing,” a “spree of interest rate repression,” a “spree of destructive financial engineering,” and, again and again, a “money-printing spree.” For in Stockman’s world, all economic evil stems from the original sin of leaving the gold standard. Any prosperity we may have thought we had since 1971, when Nixon abandoned the last link to gold, or maybe even since 1933, when FDR took us off gold for the first time, was an illusion doomed to end in tears. And of course, any policies aimed at alleviating the current slump will just make things worse.

In itself, Stockman’s book isn’t important. Aside from a few swipes at Republicans, it consists basically of standard goldbug bombast. But the attention the book has garnered, the ways it has struck a chord with many people, including even some liberals, suggest just how strong remains the urge to see economics as a morality play, three generations after Keynes tried to show us that it is nothing of the kind. Continue reading →

The Idle Rich and the Working Stiff: Nietzche von Hayek on Capital v. Labor

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Corey Robin, whose Nation piece on Nietzsche and Hayek I referred to here, posted this comparison of the two thinkers’ ideas on class on his own blog. They support his contention that Hayek was more in tune with Nietzschean philosophy than commonly supposed. Whatever you think of Robin’s thesis, it is instructive at least to see the contempt or, at least, casual dismissal of the worth of the working class in Hayek’s musings.

Wealth Inequality in America: It’s Worse Than You Think

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Hat tip to Upworthy for this astonishing and superbly well made video.

Related articles

Thoughts on the Cherokee Blood-Feud, or Anthropology is Only Fun Till Someone Puts an Eye Out!

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This is a fascinating piece (with an irresistible title!). It reminded me of a documentary film called Push Back (or Pushback?),  Payback by Margaret Atwood. It’s a difficult film to remember because it’s a little all over the place, but one segment concerns a blood feud in Albania of all places. The consequences of the patriarch of this little family in the Albanian mountains having killed a neighbor over a dispute involving land was that every member of the family was marked for assassination if they left the property. The entire family, in other words, was serving the murder sentence. As “northier” says, this is not an anomalous form of justice; this is the apparent human default. Are there other animals that behave this way? Or is this sense of debt unique to us?

David Graeber touches on this in his history of debt. But northier makes an interesting observation about the collective guilt shared by the customer support staff operator (who’s often half a world away from the actual perpetrators of banking chicanery) with the whole corporation, at least in the view of the irritated customer.

Really interesting food for thought here.

Another blast from the past

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“[M]odern democracy is at the service of global capitalism. We will not be voting our way toward a more humanist redistribution of resources, least of all if the market does not require it. Similarly, when we voted for Obama in 2008, we did not really vote for what we had the audacity to hope we were voting for, nor for change we really could believe in. We were voting, simply, for the choice the Democratic Party, through its intricate, arduous and obscenely expensive vetting process, presented to Democrats and Americans as the titular head of its party. We were not voting for any ideas other than the usual handful that get talked about endlessly in media that also owe their existence and wealth to global capitalism. We get what global capitalism pays for and wants and needs in that office to further its aims and agenda (of enriching the rich and distributing resources toward that end).”

Blast from the past, but it seems relevant still

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“It appears that the inequality gap in the US has been caused by a combination of legalized looting of public resources by the financial class and tax policies that have favored them above all other classes in the society. This is, in effect, a government underwritten redistribution of wealth away from the bottom 99% toward the top 1% and, therefore, it would seem to violate the Paulist principle that starts this article.”

#Frankenstorm and the Way We Talk About Climate Change

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Andrew Revkin, in his Dot Earth blog for the New York Times, has been writing a lot over the past few days about the relation of global warming/climate change to the ferocious late-season appearance of #Frankenstorm Sandy, which flooded lower Manhattan, Brooklyn and Queens, tore up the Jersey shore, killed some 40 people in the US and left more than 7 million on the East Coast with no power for several days (not to mention the overlooked damage it wrought in the Caribbean before smashing into Delaware on Sunday). Many of his readers (including climate activist Dan Miller) accuse Revkin (who is a science journalist and not a professional scientist) of taking too cautious a tack on climate change generally and on human responsibility for the increase of North Atlantic storm activity in particular. Continue reading →

Tax Increases or Books: A Library Fights Back

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This video tells the tale of how Troy, Michigan’s public library cleverly and successfully fought back (with the help of an ad agency) against a Tea Party effort to shut it down in lieu of authorizing a 0.7% tax increase to keep it open. This story is probably a common one in the age of austerity. Although the election was almost two months ago, this is the first I heard of the campaign.

I’d like to believe that the Tea Partiers are sincere in their chagrin over the sense that they’ve lost control of their government. We on the left certainly can understand that. But they repeatedly show poor value judgment, as in this instance in Michigan. They can often seem to embody Oscar Wilde’s quip about a cynic knowing the price of everything and the value of nothing. But they’re witless cynics if they don’t know that 0.7% added to a yearly tax bill is a very small price to pay for a library.