Monday, August 24, 2009

Krugman on Zombies

Here are some key bits from Paul Krugman's NY Times op-ed:
Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.

Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.

Let’s talk for a moment about why the age of Reagan should be over.

First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen.

To be sure, the wealthy benefited enormously: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years.

Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years. President George W. Bush, who had the distinction of being the first Reaganite president to also have a fully Republican Congress, also had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.

And then there’s the small matter of the worst recession since the 1930s.

There’s a lot to be said about the financial disaster of the last two years, but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came.

...

So why won’t these zombie ideas die?

Part of the answer is that there’s a lot of money behind them. “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, I would add, his campaign contributions — “depend upon his not understanding it.” ...

But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn’t used the bully pulpit to confront government-is-bad fundamentalism.
There's more, so go read the whole article.

What completely stupifies me is the inability of the average American to connect the dots: the right has hoodwinked them for 30 years. But as the health care imbroglio proves, the average American is still in thrall to the idiocies of the right. They can still be manipulated by lies such as "death panels" and "socialized medicine". It is simply astounding.

2 comments:

Unknown said...

I called it the tinkle down effect for many years. I remember working with a man who was the secretary of the democratic party in Idaho for a few years, laughing as an old clunker drove by with a Reagan/Bush bumper sticker on it. This image summarizes the idiot idealism of Reagan who led the state of California to debt instead of surpluses and began this nations slide into what we are living right now. I can't stop myself from this line of thinking, sorry.

RYviewpoint said...

Thomas, I like that: the "tinkle down" theory. That sure cuts through the idea of the "sweet smell" of success.

Your point is a good one. The guys at the top are real manipulators. They convince the guys at the bottom to be their patsies. The poor idealist at the bottom who is convinced that a "pro business" agenda means "good times" ahead with lots of money for everyone is being fooled.

What business really needs is honest government and clear rules strictly enforced. No inside deals. That is what will grow the economy. But that apparently doesn't sell. So political parties set themselves up with one as "pro business" and the other as "pro the people". The reality is that without successful business "the people" are slowly impoverished. You need pro people & business, but a business that is geared toward making a better future, not a quick profit leaving devastation behind.

You need honest business, solid business, growing and profitable business which are hiring and allowing wages to go up. No more sweet heart insider deals that corrupt everybody. Both parties need to be cleaned up with the idea that they want to grow the economy, increase wages, make businesses more profitable. That's success: a bigger pie so everybody gets a better slice. But also a pie where the slices are distributed more fairly, i.e. the top 0.01% don't get 4% of the economic pie while the bottom 20% get 4% of the economic pie. That's a 2000 time difference! Nobody is calling for leveling down, but the guy on top shouldn't be zoomed up so high that he is literally gone out of sight!