Damn These Elites

From the humble, proletarian pen of a hard-working man of the people Nobel Prize Winning Professor of Economics at Princeton and the London School of Economics, to the lowly pages of a little known newspaper with small circulation New York Times comes a damning of the elites that run our lives yet another tired blaming of the Bush Administration for our economic woes.

Paul Krugman must receive a per-word raise every time he finds a way to write something less coherent than his last piece.

So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.

Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis. 

The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters. 

Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public? 

One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people whopraised Ireland as a role model shouldn’t be giving lectures on responsible government. 

But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.

While the general point that we shouldn't be listening to most of the now-reformed "fiscal hawks" telling us what to do now is a good one to take from this article, the fact that Krugman couches that same argument in a finger pointing tirade at some shadowy elites (read: EVIL REPUBLICANS) is not only purely irresponsible, it's also hypocritical, particularly his shot across the bow at Alan Greenspan.

Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.

Apparently Krugman has forgotten, or maybe wishes all of the rest of us had forgotten, about his own prodding of Greenspan to do exactly what led us into the housing bubble and eventual crisis in the first place.

KRUGMAN: I think frankly it’s got to be — business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE). 

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she — or I should say he and she, can they bring back this economy? 

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don’t know

That particular exchange took place back in 2001, prior to 9/11, where Krugman surveyed the post-internet recession and proclaimed that the Fed had to pump up the housing sector.  The Nobel Prize Winning, New York Times Contributing, Princeton and LSE Economics-Teaching ELITE Krugman, was one of those people pushing us further down the Keynesian Road to Serfdom to the point we find ourselves at now.

I remember some lowly prole writing something pretty smart recently...

But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.