Bleeding The Patient
by digby
I'm going to embroider this on a pillow:
When I was young and naïve, I believed that important people took positions based on careful consideration of the options. Now I know better. Much of what Serious People believe rests on prejudices, not analysis. And these prejudices are subject to fads and fashions. --- Paul Krugman
That's from yesterday's column in which he explains that these Very Serious People have all decided to believe in fantasies about invisible bond vigilantes and confidence fairies, making wild assumptions about people's future behavior based on well ... prejudices, fads and fashions. And sadly for all of us, those fads and fashions happen to be based on a fascination with austere "tough love" at a time when we are in such a weakened state that such things might just kill us.
And what's most amazing is that it has almost nothing to do with the arcane subject of macroeconomics at all. It has to do with the notion that a bunch of politicians and economists are making important decisions based upon what they perceive to be human behavior. I'm not sure that most of the people who are doing that have a clue about human behavior. (There are some economists, like Robert Frank, who study that aspect of the field, but I don't get the sense that they are being consulted.)
It's certainly possible that many of these elites believe they have special knowledge of the world of markets and can, therefore, predict how bond traders will react to certain situations, which seems to be of the utmost concern. However, their predictions have been miserably off the mark on that so far and there's little reason to have confidence that their rather simple-minded view of what motivates people has any validity at this point. As for their magical thinking about "confidence" well --- good luck with that. For the most part people have confidence because they perceive, though a complicated set of observations both obvious and subliminal, that the future is bright. Why anyone thinks that a grim call for sacrifice while they are still reeling from a massive loss of of wealth and security is going to do that is anyone's guess. I'm guessing this idea seems reasonable because they aren't going to be the ones doing the sacrificing --- and since our elites "identify" as salt of the earth, middle and working class Americans they figure everyone else will be as unconcerned about a generation of lost dreams as they are.
Both Krugman and I have written that Keynesianism is counter-intuitive and hard to explain, but as Avedon Carol perspicaciously observed in this discussion, that's not really true. She said "when the patient is hemorrhaging you give it a blood transfusion and right now the doctors are prescribing leeches." It really is that simple.
And these "doctors" are just as medieval in their understanding of human psychology. They are basically saying that invisible demons have invaded the minds of the people and they need to be beaten out of them. I'm guessing if these devils fail to flee, the patient will be deemed to be a witch and burned at the stake. Welcome to the new Dark Ages.
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