Next stop Mt Rushmore
by digby
by digby
Here's a fascinating piece by Ryan Louis Cooper about the failure of the elites. He features this mindblowing video of Paul Krugman and some British conservatives (you should watch the whole thing) and observes:
I'm reminded of 2010-2011, where Obama and his team made a "pivot" to concentrating on debt and deficits that was, from an intellectual or political standpoint, utterly boneheaded.
The whole political discourse these days is strongly reminiscent of the Great Depression years. Herbert Hoover presided over three years of disastrous economic failure, but went round saying things like:
Nothing is more important than balancing the budget with the least increase in taxes. The Federal Government should be in such position that it will need issue no securities which increase the public debt after the beginning of the next fiscal year, July 1. That is vital to the still further promotion of employment and agriculture. It gives positive assurance to business and industry that the Government will keep out of the money market and allow industry and agriculture to borrow the monies required for the conduct of business.
It wasn't just an institutional problem with Hoover. All the institutional incentives were lined up for him to fix the depression; he didn't, and as a result was utterly crushed at the polls in 1932. He was captured by an ideology that prevented him from operating in his own political self-interest. The same goes for most of the political elites in Europe, and Obama to a lesser extent. (Hoover deserves a bit more of an excuse, I suppose, in that there wasn't much of an economic consensus back in his day, but given how conservatives are prone to quoting his ideas nearly verbatim today I reckon even if Paul Krugman had been around back in 1930 Hoover would have done the same things.)
Oh, you know it. In fact, it seems as though the elite consensus response to this lesser Depression is to try to vindicate him.
The whole piece is good and I agree with him. There is something about the groupthink among elites that makes them at the very least, hidebound if not just plain dumb. But I do have to take small exception to one thing. There was no pivot, at least in the sense that it was something they hadn't planned well before.
January 11, 2009, 9 days before the inauguration:
I asked the president-elect, "At the end of the day, are you really talking about over the course of your campaign some kind of grand bargain? That you have tax reform, healthcare reform, entitlement reform including Social Security and Medicare, where everybody in the country is going to have to sacrifice something, accept change for the greater good?"
"Yes," Obama said.
"And when will that get done?" I asked.
"Well, right now, I’m focused on a pretty heavy lift, which is making sure we get that reinvestment and recovery package in place. But what you described is exactly what we’re going to have to do. What we have to do is to take a look at our structural deficit, how are we paying for government? What are we getting for it? And how do we make the system more efficient?"
"And eventually sacrifice from everyone?" I asked.
"Everybody’s going to have give. Everybody’s going to have to have some skin the game," Obama said.
I know I keep saying this, but I think it's important. The problem wasn't that the administration was undisciplined. It was that it was too rigid and refused to change course when the economy didn't respond as they had hoped. They just carried on with the plan, I'm assuming because they believed it would be Morning in America by 2012 and the country would be thrilled with the grown-ups in the room who revived the economy and "fixed" entitlements all in one term. Next stop Mt Rushmore.
That didn't happen, obviously. And if President Obama wins re-election (which I am now convinced is not entirely assured) I can see little evidence that we'll get off this merry-go-round. We are unfortunately still in an economic trough (much of it because of the "pivot" to spending cuts at all levels of government) and headed for yet another Grand Bargain negotiation after the election. If Romney is elected I assume they'll speed up the ride.
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