Why won't they fix the economy? They're doing God's work.
by digby
Krugman asks an important question today:
[D]epressions do end, eventually, even without government policies to get the economy out of this trap. Why? Long ago, John Maynard Keynes suggested that the answer was “use, decay, and obsolescence”: even in a depressed economy, at some point businesses will start replacing equipment, either because the stuff they have has worn out, or because much better stuff has come along; and, once they start doing that, the economy perks up. Sure enough, that’s what Apple is doing. It’s bringing on the obsolescence. Good.
But why suffer through years of depressed output and high unemployment while waiting for enough obsolescence to accumulate? Why not have the government step in and spend more, say on education and infrastructure, to help the economy through its rough patch?
Why? I don't know that there's one reason. As Krugman says it's a combination of ideology, exaggerated deficit fears and Republican obstructionism, which is true. But I also think opportunism plays a big role. Powerful people sense a moment in which to restructure American life more to its benefit. The Pete Petersons of the world have been working for a very long time to destroy the New Deal programs and business would dearly love to break unions and lower wages and benefits all around. As Rahm Emmanuel famously said, "Never let a crisis go to waste."
There's also the ole Andrew Mellon morality tale:
"liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
Or the sexy John Galt version:
So you think that money is the root of all evil? Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?
Some of us think that making people suffer needlessly is cruel and that condemning an entire generation to lowered expectations for not good reason is immoral. But people who buy into the notion that capitalism itself is not an economic system but rather some sort of moral force that keeps the "bad people" in line don't have a problem with it at all. Indeed, it's a means to an end. If they can use this crisis to end any notions that the parasites, looters and moochers don't have to accept the Hobbesian jungle the people in charge believe they deserve for failing to get rich --- the highest level of mortal achievement --- they will have succeeded. As Goldman Sachs chairman Lloyd Blankfein memorably said, they're "doing God's work."
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