Home / General / Neocons:Munich :: Austerians:Stagflation

Neocons:Munich :: Austerians:Stagflation


Matt O’Brien is correct:

I checked, and re-checked, and triple-checked, and I can confirm that it’s not 1979 anymore.

Now, that shouldn’t be too surprising — I’m not writing this on an Apple II, after all — but it is to a generation of men (and yes, they are all men) who think stagflation is always and everywhere a looming phenomenon. No matter how low inflation goes, they see portents of Weimar. But that neverending 70s show isn’t just a phobia of rising prices. It’s the idea that the solution to economic pain is more pain. In other words, Volcker-worship.

Indeed, Kinsley was actually explicit about it:

But only in this sense. Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run. This doesn’t mean that they have forgotten the lessons of Keynes and the Great Depression. It means that they remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to.

You might think the fact that inflation remains very low might give Kinsley pause, but apparently not. You might also think the fact that the invocation of the 70s makes no sense even on its own terms might also undermine the argument. Except, again, that logic and history don’t really have anything to do with it — it’s an excuse, like pretending to believe that Saddam Hussein was a threat comparable to Hitler to advocate a war you’ve wanted for other reasons anyway. It’s just overclass moral panic, identical to Kinsley’s silly arguments about Chris Christie. Other people have to suffer to pay for some perceived sins; that’s the whole argument. And you can bet that if it was Kinsley being asked to make sacrifices he’d start recognizing the errors in his own arguments very quickly.   The drug analogy is perfect, although not in the way Kinsley intends; a similar logic is used to justify a war on drugs whose immense costs and gross inequities can’t be rationally defended, but persist in large measure because there are sinners and someone has to pay.   As the manager said in Wall Street, “it ain’t going to be me.”

  • Facebook
  • Twitter
  • Google+
  • Linkedin
  • Pinterest
  • TT

    Far too many nominally left-leaning pundits and finance/business types confuse the Chicago School’s winning a round in the intellectual debate 35 years ago with scoring a decisive and permanent knockout. The pundits and financiers spent the ’80s completely internalizing Chicago’s arguments, so that they became part of “what everybody knows”. That the past five-and-a-half years have repeatedly reduced Chicago’s intellectual foundations to rubble has made no impression at all. “Everybody” still knows what Robert Samuelson writes every week, that the Great Society caused stagflation and that everybody except me and my friends has to pay for it. Oh, and Paul Krugman’s really mean.

    • SFAW

      Oh, and Paul Krugman’s really mean shrill.

      Please, get your wingnut astroturf talking points straight, OK?

      • Procopius

        Actually, it seems to me that most of the screams against Krugman that I’ve seen in the last year or so concentrate on the idea that he’s abrasive and sarcastic. Now I read his column a lot, and enjoy it, and think he does a great job of explaining difficult ideas in a clear manner. I do not recall ever seeing him call his opponents the names I think they deserve. He says they make Econ 101 mistakes on Ricardian Equivalence; he does not say John Taylor is senile. He points out where their predictions have failed to materialize; he hasn’t said Glenn Hubbard and Greg Mankiw are corrupt hacks. So I think the OP had it right. They don’t complain that he’s shrill, they claim he’s being mean to them.

    • mpowell

      I don’t know what the reason is, but I agree with TT over Scott here. The problem is that these people really believe the crap they are writing. It’s not just an excuse. They really believe that easy money produces ‘fake’ economic results.

      • Every Loser in History

        I don’t know about there. No doubt there’s a little from column A and little from column B.

        I know that National Review spent years during the Bush presidency warning that we were facing a deflationary spiral, so the Fed needed to avoid tightening while Congress shouldn’t worry about deficits.

      • any moose

        People tend to believe things that allow them to do the things they want to do.

        • Mooser

          This Mooser agree.

    • progressive

      This is a critical point. Too many supposed liberals have accepted Chicago School economics, in large measure due to successful propaganda by the right. Unless you count a massive upward redistribution in wealth, the Chicago School has failed to deliver on its lofty promises. It’s doubtful that the Chicago School approach was the correct solution even for stagflation. The Fed followed the prescription of Milton Friedman — targeting the growth in monetary aggregates rather than interest rates, inflation, and unemployment — from 1979 to 1981 to contain inflation. And it was a disaster. Interest rates and inflation bounced all over the place and created tremendous uncertainty for consumers and businesses. This was contrary to Friedman’s prediction that a fixed growth rate in the money supply would usher in economic utopia. Inflation was ultimately tamed when the Fed returned to its multi-factor approach to monetary policy.

      More fundamentally, liberals need to reject the idea that a bit of inflation is the worst thing in the world. Inflation produces both higher wages and prices but reduces the real burden of debts. This benefits debtors and hurts creditors. And given that the vast majority of Americans are net debtors, moderate inflation benefits the average person. Even among the elites, the effects are mixed. Inflation helps people who owns real assets whose value appreciates in a time of rising prices and hurts people who hold bonds and cash whose value declines in real terms. It’s no coincidence that the financialization of the U.S. economy has occurred during a thirty-year period of historically low inflation. William Jennings Bryan and the populists were right — inflation is the friend of the masses and the enemy of the elite. In fact, if the Fed could engineer 5% inflation today, it would be a godsend and help us get out of this six-year slump.

    • i’m sorry, perhaps i’ve been having quiet time and missed it, but could you please provide at least a half-dozen left-leaning pundits who accept that inflation is the worstest possibility ever?

      very serious people think that, i agree, but i’m not sure what left-leaning pundit believes that.

      • Bill Murray

        I guess it depends on whom one considers left leaning. there are many who consider Kinsley left leaning after all

        • i suspect you are right, bill murray: i certainly don’t consider kinsley left-leaning, but there may be those who do.

          but even so, let’s see some more: all the left-leaning types i read believe that the fed has created a ceiling and not a target on inflation and that we could really use a few years of 3-4% inflation….

          • Bill Murray

            and what pundits are those after Krugman? I’m not sure I could come up with a half dozen left leaning pundits without Joe Klein and EJ Dionne, certainly not left leaning wrt economics (and even Krugman took a long time getting close to this). I would say quite a bit of Democratic congress people are on board the 1979 economics train, but again not many left leaning economically.

            • IM

              Krugman was an accident. After all Krugman the pundit was created by Kinsley.

  • Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run.

    A lot of guys at the track talk like that.

    Krugman also is on to something when he talks about paying a price for past sins. I don’t think suffering is good, but I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be [. . .] The problem is the great, deluded middle class—subsidized by government and coddled by politicians.

    “Krugman is a water-walker. Like them politicians in Washington trying to fight this recession with one hand tied around their balls.”

    • Walt

      I didn’t understand the last bit. Is it a paraphrase of a movie quote?

      • Gerald

        Yes, it is a paraphrase of a quote from the movie “Platoon” made by Sergeant Barnes (the villain memorably played by Tom Berenger).

        Pretty obscure, out-of-left-field reference.

    • opinions on shape of earth differ doesn’t improve if it is rephrased to “sincerely held opinions on shape of earth differ.”

      • SB

        Nice play on words from the original A.A. Milne quote (Winnie-the-Pooh):

        “If a statement is untrue, it is not the more respectable because it has been said in Latin.”
        ― A.A. Milne, Not That It Matters

        • Davis X. Machina

          mehercle! totae nugae! Quod Latinē dictum, tamquam falsum, plane honestius est.

  • James E. Powell

    One reason that the policy-makers can still impose policies from 1979 is that a very large percentage of Americans are still there. They still believe that the government is the problem, that Democrats want to raise their taxes and give the money to the [insert racist epithet], that Democrats are weak on foreign policy, that people who cannot find work are just lazy, that unions are bad, that corporations are good, and so on.

    Weren’t we just talking about EBT card stories that circulate? Other than the reference to EBT cards, are they any different from the stories from 1979? Does anyone think that the public supports unions? Or regulations of corporate behavior?

    • Manju

      One reason that the policy-makers can still impose policies from 1979 is that a very large percentage of Americans are still there.

      But one could argue, oddly enough, that Europe has actually gone to rightof the US.

      Here is one arguing it:

      But I’d point out that the austerity/hard money axis is, if anything, even stronger in Europe. Indeed, the ECB makes Ben Bernanke look like William Jennings Bryan.

      -Paul Krugman

      • Walt

        This is true, and super-weird. I think it’s wrapped up in national stereotypes though (including national self-stereotypes). Inflation is something that the dissolute French and Italians engage in, unlike upright Germans or Finns. Now that the Germans have the upper hand, they get to punish everyone else for the sins they view themselves too good to commit.

        • Xenos

          The austerity programs are starting to seriously impact the ability of German manufacturers to sell their products in much of the EU. I think we can expect to see some German softening on the Austerity business.

          • Xenos

            Also too: If the UK leaves the EU and Hollande can turn things around a bit on the matter of the French economy, then even if the German government wants to continue austerity policies they are not going to find much diplomatic support.

            • The Germans have an election coming up in September, barring another huge crisis (Slovenia seems to be next), that’s the next event that could really change austerity in Europe. The UK may or may not vote to leave the EU, but that wouldn’t be until after the next British election, which Cameron is in no hurry to call and which isn’t required until 2015. If Merkel goes down, however, that could shake things up much sooner.

              • John

                My understanding of recently implemented changes to the British system is that Cameron *can’t* call the elections before 2015 so long as he doesn’t lose a vote of confidence.

                This was part of the coalition agreement with the Liberal Democrats, who wanted a safeguard to prevent Cameron from calling an early election to decimate them and get a majority on his own. So long as Clegg sticks to Cameron, Cameron can’t call an early election.

          • Steve LaBonne

            Funny how beggaring some of one’s major trading partners fails to magically bring prosperity to one’s export-oriented economy. Who could have predicted that?

            • Malaclypse

              Yes, but think of all the people who believe that the 50s were prosperous because Europe was destroyed, rather than in spite of that fact.

              • Dave

                Of course, if year-on-year % growth is your measure, it helps to start from nowhere – cf. China…

              • firefall

                Well, it was prosperous for America because Europe was destroyed – not much competition, plus lots of government spending in the form of supports to rebuild Europe resulting in European purchases of American goods. Stimulus, by any means.

                • mpowell

                  This is a perfect example of someone getting the story backwards. It was a great growth opportunity for Europe, a terrible one or the US. US growth was achieved in spite of circumstances.

              • Procopius

                Well, the right insisted the Marshall Plan was sending dollars to Europe, rather than into the pockets of American manufacturers. It has always amazed me how the conservatives refuse to see the world as it really is.

            • Dave

              And yet, the German stock market is up over 25% on a year ago… Fucking the Greeks and the Spaniards clearly doesn’t bother them THAT much…

              • DocAmazing

                Well, the Germans were a decade or so overdue for fucking Europe again.

                • The Dark Avenger

                  There’s the old Cold War joke about loving Germany so much, you want to have two of them….

              • Bufflars

                Aren’t many stock markets around the world up a significant amount since last year? It seems to be more of a global phenomenon that is happening despite regional monetary policy.

                • guthrie

                  Is it not the point that despite the actual economies of many countries having problems, the big multinational corporations who make up the stock market are doing well and making lots of profits, which they are then hoarding because they don’t see anything to spend it on, thus preventing any sort of improvement in general economic conditions for the small people?
                  Have we reached the stage of development where the transnationals are truly what their name implies?

          • Barry

            “The austerity programs are starting to seriously impact the ability of German manufacturers to sell their products in much of the EU. I think we can expect to see some German softening on the Austerity business.”

            I’ve been amazed that this hasn’t happened far earlier. Durable goods orders have got to be crashing in a large chunk of the Eurozone.

            What it might be is that the EU is similar to the USA – major manufacturers don’t count even half as much as Big Finance.

      • Sly

        But one could argue, oddly enough, that Europe has actually gone to rightof the US.

        A lot of this is due to the political structure of the Eurozone; an integrated monetary policy, but a disparate financial policy. To oversimplify, the EU is the United States without our Federal government. And our Federal government is responsible for a significant share of our economic activity, in terms of both raw spending and allocation of resources.

        Not incidentally, most of the austerity measures in the U.S. have been at the state and local level, and in areas where the Federal government has either limited authority or limited willpower to intervene.

    • Well, my fucking paycheck is still there…

    • Mooser

      “One reason that the policy-makers can still impose policies from 1979 is that a very large percentage of Americans are still there.”

      Affluent people are living longer and longer in America, and they often are left in responsible positions for a long time after their character has crumbled, but the actual disabling symptoms of senility are not apparent.
      We live under an geriocracy.

  • It’s always dudes worrying about stagflation. A coincidence? I think not.

    • Hogan

      For one thing, it has “stag” in it.

      • Aneece

        If your recovery lasts for more than four quarters, consult your central banker.

  • Rarely Posts

    Austerians, Neocons, Drug Warriors, and other establishment conservatives all embrace a morality play view in which sinners have to suffer. But it’s a mistake to focus too much on the “morality play” aspect. They want to see suffering, full stop. They create the morality play as a weak pretext to justify their sadism.

    You know people by their fruits. Conservatives pursue policies that cause widespread death, suffering, greater inequality, and lower economic and technological growth (sometimes even loss of economic wealth). Instead of assuming that they want more economic growth but are mistaken about how to achieve it, it seems more likely that they want these results. Anyone who is still conservative after the Bush II years must, on some level, just like suffering for its own sake.

    • As Cordelia Naismith Vorkosigan says “If you will the means you’d better damned well will the ends, and if you will the ends you’d better will the means.” (paraphrasing) which means, I take it, looking at her fictional life that you have to be willing to do what it takes to get to your desired end, but you also have to take the responsibility for the means and ends you are willing. What pisses me off about the right wing, at this point (because there isn’t a meaningful left wing to complain about or I would) is that they simply refuse to acknowledge the suffering of others. They prefer euphemisms and jokes and the elide the real fact that, at the base of the economy, people are literally dying for some billionaires tax cut. That’s what it all boils down to:

      people have rotting teeth
      untreated diabetes and blindness and amputations
      stunted mental development
      stunted social development
      incarcerated relatives
      dangerous foster care situations
      crumbling streets
      unsafe schools
      polluted grounds and water
      no hope

      That is the reality of “austerity” and unchecked and unregulated capitalism. But like the gun fetishists refuse to believe that another two year old was shot by a gun because–look! the parents would not have been prevented from buying a gun by Toomey-Manchin, or Look! it wasn’t an assault weapon or Look! they weren’t really responsible gun owners in the first place because argh blargh you can’t make Kinsely draw a straight line between the toothless middle aged low wage worker who lives in excruciating pain and current tax policy because why should he? He’s up at 30,000 feet giving you the important overview, not down in the weeds.

      • Sean Cooper

        Not often you see Bujold quoted in a political blog. That said, I LOVE the Vorgosigan Saga.

        • I love the Vorkosigan saga too. Lots of great politics in it.

          • RepubAnon

            “I don’t want power over idiots -I object to idiots having power over me.”
            -Cordelia Naismith

            Somehow, we’ve got to get the idiot austerians out of power. You’d think constantly being wrong and driving the economy into the ground would be enough. Unfortunately, the idea of “no pain, no gain” is too deeply engrained in our society.

          • Emily

            People before principles.

            • “The first thing a principle does is kill someone.”

          • Count me too as a huge Bujold fan.

    • Steve LaBonne

      Atrios just had a post along those lines with a link to this one. At some point it becomes clear that sadism is the only real candidate for explaining this stuff.

      • R. Porrofatto

        I dunno. Sadism implies some interest in the victim’s pain by the person inflicting it. While that may be true for some fraction of right-wing austerity mavens, I’m more inclined to believe that the elite and their right-wing enforcers are simply too interested in themselves to care; other people, and their pain, simply don’t exist to be of any concern. Austerity is simply a means to their own ends. What’s truly dismaying is the degree to which the racism and ignorance of ordinary people is so masterfully exploited by the right-wing that even working people internalize the elitist view that suffering and sacrifice is not only acceptable, but necessary. Sure, they want the belts of THOSE people to be tightened, but low wages and unemployment have made them desperate enough to acquiesce to their own ill treatment — after all, it’s just like you run a family household, right? (Hell, in my experience, to even mention the word inequality with some folks is to be subjected to an anti-socialist tirade from the last glib asshole they heard on the radio.)

        • I think its sadism in the same sense that there’s a homoeroticism in male bonding over sexual exploits that is (seemingly) heterosexual but really all about the relationship between the men talking about sex. You can’t get this many people to publicly argue for the necessity of the suffering of others without coming to the conclusion that “more in sorrow than in lust” won’t cut it. At some point you have to inquire into the social setting in which these discussions take place and recognize that there is a pleasure, for these people (as for everyone, I suppose) in standing shoulder to shoulder with like minded austerians even as the public goes down, drowning, for the third time.

          Interestingly enough Bush II is supposed to have said, uneasily, during one of the early rounds of budget fuckery “shouldn’t we do something for the poor? Haven’t we done enough for the rich” but he was argued out of it. Did he enjoy the pain of others? Not exactly. But did he prefer the warm hugs of his friends assuring him he was doing the right thing even though, clearly, he suspected he was doing the wrong thing? Yes.

    • tt

      I don’t buy it. The austerity story is too popular to always be motivated by sadism. The idea that suffering results from sin which must be cleansed by sacrifice is an attempt at making moral sense of a chaotic universe. Life is too complicated and unpredictable to make “know people by their fruits” sensible policy.

      • DocAmazing

        Life is too complicated and unpredictable to make “know people by their fruits” sensible policy.

        When they’re producing the same fruits, over and over, and fighting off attempts by others to point out they tyes of fruits they’re producing, then the “complicated and unpredictable” argument doesn’t hold. Once or twice, it’s an understandable mistake. More than that, and it’s deliberate and reflects their motives.

        • tt

          This assumes the relation between cause and effect is easy and obvious. It’s not, though. People believe far more ridiculous things than the austerians contrary to all evidence.

      • Malaclypse

        The austerity story is too popular to always be motivated by sadism.

        When the austerity story bothers to supply any detail (let’s cut Social Security! Let’s fire some teachers! Let’s stop paving roads! who wants meat inspections, anyway?) it rapidly loses pretty much any popularity outside the 27%ers.

        • And to the extent that austerity is broadly popular in general, it’s by and large because people don’t understand how government finance works, and fall for the household analogy. And, obviously, lots of non-sadists think it’s preferable for a household to cut back it’s spending when they hit a lean patch.

          As far as the elite media types who constantly parrot this stuff…yeah, I think there’s a certain strand of sadism involved.

          • Lurker Delurking

            I don’t think it sadism as much as indifference to the suffering of other people. They don’t enjoy it; they just don’t care, as long as they get to claim the moral high ground at no cost to themselves. I think it’s actually worse than sadism.

            • GB Shaw said it best:

              “The worst sin toward our fellow creatures is not to hate them, but to be indifferent to them: that’s the essense of inhumanity.”

          • Brien Jackson’s comment gets to the difference between a populist notion of the economy as household writ large and people’s real, personal, experience of the actions of family members within a a given household economy.

            Sure, it seems obvious that in any given family with assets, liabilities, income etc… you might well need to “cut back” and retrench when income goes down. But families never cut costs across the board by, for example, cutting everyone’s medicine consumption by half. If the baby needs her medicine to survive, and another family member, say the parents or grandparents, needs their medicine to avoid itchy eyes, you make a choice in how you are going to cut that spending. To eliminate it all–or to eliminate that which is necessary for one member’s survival so that the parents or grandparents can be more comfortable would, in fact, be sadistic. To withhold food from the younger or senior members of the family to pay for the “working” or “asset owning” members of the family would also be definitionally sadistic.

            Of course, these practices were quite common not too long ago. I have a (now deceased) family friend from an large old Irish American family. In her childhood the working members of the family sat and ate first, at the set of four chairs and plates that they owned. Then the non working members sat and ate last, whatever was left. Grandparents, wives, children and other non “productive” members of the family were frequently abandoned by those whose earnings or whose temperament did not extend to sharing. Was my husband’s grandfather a “sadist” for abandoning his mother, wife, and children? Probably. in some real sense. Maybe just a schmuck. But when Fuck you I got mine rises to the level of public policy you have to go with sadist.

            • The Dark Avenger

              Yes, you see the same thing in Mexico at banquets where the men get served first, and then the women afterwards.

              I have a friend who is married to a woman from an upper-class family that lives in the region of Mexico City. She didn’t realize the implications of this custom until her husband pointed it out to her.

            • Manta

              If the “working member” get fed, he can work and provide some food.
              If the old and the children are given preference, he works less and there will be less food to share.

              In other words: having to choose who to feed properly sucks, but the rational choice is to feed first the person who provides income.

              • Sure, no one is arguing that it doesn’t make sense. When in a lifeboat that is sinking one should certainly cannibalize the cabin boy. But aside from that sort of case one might want to think twice before commiting to this as the principle on which one runs either a household or an economy. In farming its called “eating your seed corn” when you destroy the productive capacity of your future generation by, for example, cannibalizing it in order to survive.

                • Hogan

                  Or, as in our case, not to survive, but just because it sounds right.

              • Mooser

                For God’s sake, feed the women who make the babies (among many other things, but you can’t starve and do that) and the children, and let us old men fend for themselves, if it’s survival you’re worried about.
                We eat way more than we need, and can alway go eat grubs or fish something if we’re too old to hunt.
                So we feed the men first, and if the food runs out…? That’s a way to ensure quick extinction. But most male-centric behavior is. It’s the snails and puppy-dog tales, no doubt.

        • tt

          Yes, that’s right. Sacrifice in the abstract is more popular than sacrifice in reality.

      • That’s backwards. The problem of a chaotic universe–known also from a different perspective as the problem of theodicy–can be solved in a number of ways. Only some religions and some fetishized economic theories resolve them by pushing misfortune off on those who “deserve it” or who “need to be sacrificed” to propitiate an imaginary god or bond trader. Its not a natural act, in other words, to choose a course which is historically associated with the mass suffering and even suicide of vulnerable populations. Its a choice, an ideological choice and a social choice made possible by the pyschological importance of shoving fear and anxiety off onto those who “deserve” it and the dosicla distance between those who get to choose to strike (the hammers) and those who get to endure the striking (the nails).

        • Lee Rudolph

          “Dosicla”? Google is not helping me define this.

          • Hogan

            Probably “social” when you’ve lost the home row.

          • Vance Maverick

            I’m guessing “social”.

            • Sorry, I’m a fast inaccurate typist. My vocabulary isn’t really that arcane. Go for the “its a typo” explanation first, if google doesn’t help.

        • tt

          I don’t get where you’re disagreeing with me. A “social choice” is different from sadism, no? I don’t claim to be able to distinguish what comes from biology, accidents of history, etc. but I do think the austerity narrative is powered by tendencies that already exist within our culture.

          • No, sadism is not some deep seated impulse that is biological or psychological–I’m arguing that sadism/indifference to the injuries suffered by others is a social construct dependent on the notion that “the other” exists in some special position that we either will never occupy or that if we did occupy it we would acknowledge its rightness (we deserve it).

            I think your argument, such as it is, is “backwards” because you posit that there is some natural and inevitable line from fear of a chaotic universe to a belief that someone hsa to suffer in order to make the universe make sense and/or that we must find a p lace for suffering which makes the universe makes sense (is just). This is a pretty complicated argument which you only glanced at so its hard to refute its presuppositions when you don’t seem to know what they are or didn’t allude to them. But basically I’m arguing that resolving chaos by deciding that someone needs to suffer to right the balance is itself a social, historical and ideologically contingent solution, not a natural outgrowth of the chaos and entropy in the universe.

            • tt

              think your argument, such as it is, is “backwards” because you posit that there is some natural and inevitable line from fear of a chaotic universe to a belief that someone hsa to suffer in order to make the universe make sense and/or that we must find a p lace for suffering which makes the universe makes sense (is just).

              No. My claim was that the austerity tale is an example of trying to make moral sense of the universe, not that it’s “natural.” I said nothing about what is “natural” or “inevitable.” I obviously agree that like everything else humans think or do it is “social, historical and ideologically contingent.” What I don’t agree with is that most people promote austerity because they get off on the suffering of others.

              • I was responding to this in your original post:

                The idea that suffering results from sin which must be cleansed by sacrifice is an attempt at making moral sense of a chaotic universe. Life is too complicated and unpredictable to make “know people by their fruits” sensible policy.

                Because I misunderstood where you were going with the second half. To me “life is too complicated and unpredictable to make ‘know people by their fruits” a sensible policy.” didn’t make any sense other than as self contradictory. By definition the idea that suffering results from sin which must be cleansed by sacrifice is dependent, in the social realm, with both believing that you can “know people” and know what they deserve, and that society or the universe or god is in a position to make the cleansing of their sin an actual working proposition.

                I see now that you meant the second part of your observation to refer specifically to Austerians–these are the people who one “can’t know from their fruits.” I would disagree with that–I think if you can’t know people by what they will to happen, and the excuses they offer when someone gets killed by their proposals, what can you know them by? The universe is complex but its not really that complex. And you can see that by the fact that the Austerians deny the obvious results of their actions (people are not dying at a greater rate than otherwise) or deny that there good alternatives, or deny that they have anything to do with the policy and say they are just kind of noodling around with their opinions.

        • Johnny Sack

          Are they really one and the same? I don’t believe in god so I have absolutely no internal theodicy struggles, but I still find The Crying of Lot 49 to be one of the most resonant books I’ve ever read.

        • Dany Tardgaryen

          Slightly off-topic, I’ve never understood the problem of evil (but I haven’t read much on it, granted). The premise of an omnibenevolent deity itself always struck me as a non sequitur.

          One of my good friends who is an atheist came there via the problem of evil. As more of an apatheist (don’t care one way or the other, but lack a belief) I never understood this. Sure, a god that allows such suffering is not a god I *want* to believe in, but it does not logically follow that there is no god because of this. And even if that weren’t a non sequitur, it’s premised on another non sequitur, omnibenevolence.

          This is just my intuition based on casual conversations, I haven’t really read anything on the philosophy of religion other than some Aquinas excerpts (et al) in catholic school and that Dawkins book.

          • Slightly off-topic, I’ve never understood the problem of evil (but I haven’t read much on it, granted). The premise of an omnibenevolent deity itself always struck me as a non sequitur.

            ??? The heart of the problem of evil is that given an omni-allgoodthings deity, how can evil exist?

            The problem of evil doesn’t threaten the existence of aribtrary deities…indeed, drop one of the omnis and you’re good to go. (E.g., you can be omnibenevolent but impotent or ignorance, etc.)

            • Dany Tardgaryen

              Ah ok. I misunderstood then. I’ve had it put to me that if the problem of evil isn’t reconciled it defeats the concept of a deity, which is rightly absurd. Anyway, I think the concept of omnibenevolence is incredibly hubristic and I generally avoid such debates.

              • Dany Tardgaryen

                Another form of lazy thinking I’ve seen is that one omni implies another (omnipotent therefore must be omniscient or omnibenevolent). I haven’t taken the time to determine what is considered nonsensical and what isn’t. Reading debates about god and religion on the Internet is marginally more pleasant than reading 4chan or space dicks

                • Well, the usual implication, IIRC, is form omnipotence to omniscient (since if I am all powerful, I have the power to know anything, so why not know everything) and omniscient to omnibenevolent (which requires a kind of anti-akrasia theory a la early Socrates).

                  The case for omniscience to omnipotence is fairly weak (i.e., you know how to get power, but there might not be a way for you to get some power and you could know that). Omnibenevolence just sucks as a starting point.

                • Omnipotent never has to imply omnibenevelent although it generally implies omniscience and (sometimes) omnipresence. The problem of god’s response to suffering and chaos is primarily a problem of monotheism since all other gods and peoples, existing in a multi-deity universe (or a theistic universe) either suffer with and for others without promising to fix things or shrug their shoulders and say “waddya gonna do?” In a mancihean world with just two gods, or a god and a devil, you also don’t have this problem because god can be omniscient but he isn’t omnipotent since he has an opposite whose actions also have to be taken into account.

                • Malaclypse

                  Omnipotent never has to imply omnibenevelent although it generally implies omniscience and (sometimes) omnipresence.

                  I’d argue that YHWH doesn’t become omni-benevolent until the time of David, or possibly the prophets. He’s certainly not omni-benelovent in Job.

                • Hogan

                  So you’re saying God evolved? You hadn’t ought to talk like that around decent folk.

                • Hi aimai,

                  Omnipotent never has to imply omnibenevelent although it generally implies omniscience and (sometimes) omnipresence.

                  I do think that if you deny weakness of will (i.e., no being prefers the worse but always the better) then omniscience implies omnibenevelence and thus you get there from omnipotence. That’s a pretty specific form though.

                • BTW, the omni-s are fun to think about separated from religion or deities per se. Goedel’s ontological argument, for example, is a really fun use of modal logic.

              • Anyway, I think the concept of omnibenevolence is incredibly hubristic and I generally avoid such debates.

                Er… hubris, in the standard but apparently mis interpretation, is pride so great it offends the gods. Not sure how that plays out with omnibenevolence or why omnibenevolence gets singled out..

      • wengler

        Authority stomping their boot on the weak is a very popular idea among the elite. Policy is not made by those that believe that everyone ought to have an equal chance.

    • UserGoogol

      The history of the entire human species is full of widespread death, suffering, inequality, and stagnation, and they weren’t all sadists. Having a decent society is just very hard and the complicated psychology which surrounds policy decisions doesn’t always lead people to the right choices, although progress still happens.

  • It’s “Volcker worship”…so long as you pay no attention to the fact that Volcker isn’t much of an ideologue about it:

    Volcker said the current policies Fed officials’ put in place are “OK at the moment” because there’s “no inflationary problem at the moment, and they want to support growth.”


    IOW, they don’t even have that excuse for being ignorant assholes.

    • Oh, its like Calvinism if you don’t really read Calvin, or Volckerism without Volcker.

      • See, I think I would contend that there’s just no such thing as “Volckerism,” and (for better or worse) his actions as Fed chair were strictly mechanical problem solving ones, not a function of some strongly hold, rigid ideological belief. Which goes a long way towards explaining why everyone has completely mislearned the “lessons” of the Volcker period…as I saw Yglesias wrote yesterday.

  • Fake Irishman

    The American touch tone is the the 1970s, but it’s also important to recognize the questionable German obsession with hyperinflation as the root of the rise of Hitler.
    Hyperinflation didn’t kill the Weimar Republic — it was austerity. The German hyperinflation occurred from roughly 1921-1924 when the allies saddled Weimar with a huge war debt, but a variety of policies were able to stabilize prices in the mid 20s. The deflation of the 1930s caused by the austerity policies taken in response to the Great Depression ultimately killed the center parties and left the field for the Nazis.

    • Fake Irishman

      And I guess I just fulfilled the dictates of Goodwin’s law in a very wonky way. I blame Scott for starting with the “Munich” reference.

    • E Dhp

      To this I would add “Debasing the currency killed the Roman Empire” myth, in which a century of multi-dimensional chaos is explained by a revaluation that actually occurred, during the reign of Diocletian, when things were finally getting a bit better.

    • Barry

      I’ve wondered about this, particularly when I think of the current fascist government of Hungary, and the growing fascist movement in Greece. Nazism came to power in and due to the Great Deperesion. Before that, it’s was #5 or 6 among various right-wing groups.

      If I were an evil fascist sympathizer, I’d root for a depression – and the moreso now that communism is not a viable alternative for a revolution.

    • catclub

      This. The Beer Hall Putsch in 1923 failed.

      In 1933 unemployment in Germany was 47% and Hitler came to power.

      Now, what are unemployment rates in Spain and Greece? Which direction are they going?

      • Joshua

        Yep, and anyone who thinks it can’t happen again should watch the VICE story on HBO about the Golden Dawn party.

  • E Dhp

    That “sincere” thing pops up a lot, too, as if it even matters. Fred Camper’s followers were sincere too, but I don’t want them influencing policy.

    In general, though I can’t help doing it myself half the time, I really think worrying too much about the motivations of public figures is a suckers’ game. I find the half-dozen-or-so common explanations for Austerianism all pretty plausible. But they all seem kind of trivial in comparison to the point that austerity is, in the actual world, a tremendously counterproductive policy.

    • I think the reason “sadist” has come up as a possible short hand is that the term was introduced by Kinsley (IIRC?) as an absurdist rebuttal to the Krugman stance that whatever the motivation the policy prescriptions they are coming up with are downright destructive of a subject population. Kinsley shifted the goalposts quite a bit by rhetorically aligning himself with a a “middle class” composed of “people making less than 250,000 a year” (two lies in one sentence, I think) and then more or less saying a) I can’t be a sadist because I’d be oppressing myself! and b) this is ridiculous because I’m an ordinary person and I’m nice and I support Austerity so no person supporting Austerity can be accused of not being nice/a sadist.

      I’m actually willing to go with sadist tout court because people should grasp the actual results of their policies and sometimes a clear cut word will rouse them from their comfortable stupor and sometimes you just have to say “if you cut someone’s throat and leave them to bleed to death” you don’t get to say “it seemed like a good idea at the time, I meant well.”

      • E Dhp

        That’s fair, and reading my original reply, it comes across as too high-handed to everyone who (like me, obvs, commenting on this thread) can’t help but wonder what the hell is wrong with these guys.

        Definitely agree it’s a moral failing. The evidence on austerity is clear, and the ideas are only complicated if you’re committed to not understanding them. The only actual fact in Kinsley’s handwaving — the beyond-duh point that very few people are villains in their own personal movies — is no defense.

  • Pingback: Macroeconomic Machismo - NYTimes.com()

    • rea

      Wow, an approving Krugman link for Scott!

  • Lit3Bolt

    The past 5 years summed up:

    Private bank losses were socialized.

    The public’s reward was underemployment, unemployment and government service cuts, because once the government was tethered to giving money to banks, the main way to make profits soar was to cut employees and keep on the 3 people who oversee cashing automatic checks from Uncle Sam.

    Keynesian economics is alive and well. It’s just flowing up, not down.

    • joe from Lowell

      This narrative doesn’t work so well now that the banks have paid back the bailouts.

      • They paid off the bailouts but they continued to loot the system in other ways, didn’t they? Especially in the matter of transferring monies to their failed administrators through massive payouts and can anyone explain to me how Jamie Dimon loses, what, 9 billion with an oopsy and doesn’t have to make his investors whole?

        • Bill Murray

          also there is a reason Senator Warren is trying to get students the same loan rate as banks

        • joe from Lowell

          The narrative I was questioning wasn’t “Banks do bad things,” but rather, “Keynesianism has been flowing up.”

          • Mean Mister Mustard

            Is this one of your back-door Obama critques?

            • joe from Lowell

              I was unaware it had anything to do with Obama.

              You seem jumpy.

              • Mean Mister Mustard

                It’s just hard to tell. They’re so fluffy, those criticisms

                That is all. Carry on.

                • joe from Lowell

                  “It’s hard to tell” seems to be a thing with you.

          • If by Keynseianism is flowing up you mean “stimulus for me and not for thee” in the form of bank bailouts I couldn’t agree more.

          • progressive

            This is a standard defense offered by Wall Street and Obama apologists. Yes, the banks paid back the TARP money but this ignores how TARP was a huge wealth transfer from the public to the banks.


            More generally, large financial institutions still receive a host of guarantees from the Treasury and Fed. Banks continue to borrow to finance speculative activity, knowing that they will not have to bear the full losses if their bets fail. The Obama administration has made its priorities clear through its actions. The big banks and their executives are immunized from financial and legal risk while distressed homeowners (and other non-elite borrowers) are out of luck, see, e.g., the joke of a foreclosure settlement. It should come as no surprise that all the benefits from economic growth since 2010 have accrued to the top 1%.


            • joe from Lowell

              This is a standard defense offered by Wall Street and Obama apologists.

              This is a standard talking point offered by people who can’t rebut a fact. It’s taught in freshman year logic class as the ad hominem fallacy.

              Yes, sock-puppet, those terrible, awful Obama apologists do tend to point out facts that you find inconvenient. That’s to terrible of them. If they were more honest, they’d lie.

              The very special regurgitation of the Austrian argument that expanding the money supply is counterfeiting that steals people’s money is oh-so-progressive, while the irrelevancy of the second link (Hey, there are other things that have nothing to do with TARP that are bad!) is merely an effort to deflect the conversation away from a direction that you don’t like.

            • joe from Lowell

              It is amusing, though, to watch people who spent a good four years wailing about the “cost to the taxpayers” flip-flopping around while making the argument that the (nonexistent) cost to the taxpayer is a meaningless consideration that only those mean, terrible Obama-pologists would ever bring up.

              • Mean Mister Mustard

                You seem stressed. Take a break from paddling that canoe.

                • progressive

                  I hope Joe from Lowell will explain why Ben Bernanke, Eric Holder and Tim Geithner are true progressive heroes.

                • joe from Lowell

                  Did it take a great deal of self-control to avoid actually saying “I’m rubber, you’re glue,” son?

      • wengler

        You will find that becoming flush with cash when your smaller competitors and other industries are failing is a very easy way to make money.

        Local banks around here failed left and right. No bailout for them.

  • This might seem slightly off topic but Fred Clark, over at Slacktivist, has put up an old post of his on the role of Hell in modern Christianist theology–that is: the role of damnation for the people who preach it and it seems rather on point (its actually called “Hell and the Credit Card Lobby” to make it even more on point).

    Something like this notion of the deterrent value of Hell is frequently suggested as an objection to my initial statement in this post, that I don’t believe in Hell as a place of infinite and eternal torment. “But without Hell,” this objection goes, “why should anyone be good?”
    To their credit, almost none of the devout people raising this objection really means it. They are not, themselves, shaped and driven primarily by the fear of punishment. Such a fear is neither necessary nor sufficient to explain their own belief in the obligation to be and to do good, to love, to do justice or to correct injustice. The fear of Hell is, for them personally, scarcely a motivating factor at all. Their motivation is more like what 1 John says, “We love God because God first loved us,” and not the terrorized and traumatized mutilation of that scripture, “We love God because God will burn us forever and ever if we don’t.”
    So it’s telling that the main advocates of the idea of Hell as a deterrent are not themselves influenced by that deterrent at all.
    Nor, unfortunately, are those who really need to be — the usurers, the torturers, the tyrants, abusers, enslavers, despoilers or predators.

    • sibusisodan

      Good spot – thanks!

  • The Austrian School fans I know seem to think that high inflation is actually happening now, and is not generally perceived because of some sort of cooking of the numbers.

    They’re very fatalistic about it, and insist that it’s too late for us to avoid disaster, because we’ve entered the late phase of a spiral of moral degeneration, money-printing, debt, hyperinflation and collapse that supposedly eventually destroys every civilization in history in an endless cycle.

    There’s a version of this that Jerry Pournelle popularized in the science-fiction community, which claims that civilizations since antiquity progress from barbarism through monarchy to democracy, whereupon the people “vote themselves the treasury” and civilization collapses to begin the cycle again. I have yet to hear of a single case of a civilization actually running through a full cycle of this, but it’s apparently a universal ironclad law.

    (There’s a popular form of this widely misattributed to 18th-century historian Alexander Tytler, in a form that seems to have actually been first stated by a cork company president in 1951. It does seem to have some vague antecedents in classical Greek theories of history, though I doubt those guys had much evidence either.)

    • joe from Lowell

      There’s a version of this that Jerry Pournelle popularized in the science-fiction community, which claims that civilizations since antiquity progress from barbarism through monarchy to democracy, whereupon the people “vote themselves the treasury” and civilization collapses to begin the cycle again. I have yet to hear of a single case of a civilization actually running through a full cycle of this, but it’s apparently a universal ironclad law.

      Sort of like the Road to Serfdom, then – the universal explanation of totalitarianism comes into being, that fails to match any known examples of how countries with totalitarian governments got that way.

    • What’s the difference between the people “voting themselves access to the treasury” and looting it and the previous state of affairs in which the Dictator or the Aristocracy see not difference between the treasury and their own purses? Other than the presumed possibility that when “the people” do it they actually rationalize and justify their disbursements (bread and circuses) while when the tyrant or the oligarchs do so they don’t have to? And what about how the treasury gets filled, anyway? Why no discussion of the topsy turvy accounting for our current treasury in which all money that we ahve to care about is owned by the wealthy, while the widow’s mite and the daily and weekly taxes on the poor are considered to be nothing at all? On reflection I’d argue that “civilization” is more likely to collapse–if by civilization we mean public education, roads, clean water, clean air, science and art–when the people as a whole are unable to pay for these things from their government treasury and when the Oligarchs and corporations refuse to pay in for these things.

      • Barry

        That’s what I was going to say – the elites vote themselves the treasury.

    • Josh G.

      1943, actually.

      David Brin points out that the “Tytler calumny” is factually untrue, no matter who said it. And always has been.

      • Ah, you’re right; I was mixing it up with the other supposed Tytler quote that was the origin of the “vote themselves the treasury” line, which is from 1951.

    • Barry

      “The Austrian School fans I know seem to think that high inflation is actually happening now, and is not generally perceived because of some sort of cooking of the numbers.”

      Krugman has covered this (billion item price index).

      • E Dhp

        Well, in semi-defense of the Billion Price Index, while it was put together by people who thought inflation was under-reported, as created, it doesn’t actually show that. And its creators have accepted the results

        The really sketchy psuedo-inflation measure I’m aware of is put together by ShadowStats, though I imagine there are others.

        • Hogan

          [quietly registers UnskewedInflation.org domain name]

          • Malaclypse

            It is always a good time to buy or sell gold!

            • joe from Lowell

              “Gold prices are at record levels. This chart shows that the price of gold has been increasing for several years. Therefore, buy gold now.”

          • E Dhp


    • E Dhp

      Yeah, this is up there with “armed societies are polite societies” in the annals of bad ideas from sci-fi.

      • + an infinite number.

      • (the other) Davis

        The more relevant adage applicable to an armed society is “if all you have is a hammer…”

        Sometimes it seems like inflation is the Austrians’ hammer.

  • Pingback: Slight change of plan | Fraser Sherman's Blog()

  • Pingback: Multi Medium » Teh Serious()

  • Pingback: Krugman’s blog, 5/20/13 | Marion in Savannah()

  • Pingback: On the field of economics… | The Exile()

It is main inner container footer text