Krugman Trashes Austerity’s Phony Morality Economics

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

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Random Double Feature: The Barefoot Contessa and Ladri di Biciclette

Every once in a while (in truth, probably a little more often than the average person), I will watch two movies in one sitting. Thanks to Netflix instant streaming and my handy-dandy Blue-Ray player with built-in wi-fi, I am able to select two movies almost at random to watch on my TV anytime. Of course, if it were truly random, the potential list would include every film ever made and I wouldn’t have any choice in either of them. That would be an interesting experiment, indeed. But since I do have a say in the matter, I pick films from my bloated queue (usually), which means I must have a pre-existing interest in any given component of any given “random” double feature.

Last night, the films I chose were Joseph L. Mankiewicz‘s 1954 Hollywood melodrama The Barefoot Contessa, and Vittorio De Sica‘s 1948 Italian neorealist classic Ladri di Biciclette. Although made within a few years of each other and each taking place at least partly in Italy, the movies are worlds apart in theme, look and sensibility. It may even seem unfair to compare them, like comparing apples and clothes hangers. But I found this pairing surprisingly useful in clarifying some of my personal cinematic tastes. Readers of this blog will no doubt have different takes and tastes. I’d be interested to hear what you think. Continue reading