John Galt: terminally selfish, or terminally stupid?
by David Atkins
Paul Krugman takes a good look at the abject failure of the Austerians at an academic and a public policy level, and asks if the problem is simply delusion, or a more sinister corruption of elite policymakers.
Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price. Economists can explain ad nauseam that this is wrong, that the reason we have mass unemployment isn’t that we spent too much in the past but that we’re spending too little now, and that this problem can and should be solved. No matter; many people have a visceral sense that we sinned and must seek redemption through suffering — and neither economic argument nor the observation that the people now suffering aren’t at all the same people who sinned during the bubble years makes much of a dent.
But it’s not just a matter of emotion versus logic. You can’t understand the influence of austerity doctrine without talking about class and inequality.
Thus, the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.
Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.
It could be that the wealthy feel an innate sense of guilt at riding the economy into a ditch, and feel the need to project that guilt onto their lessers. Or it could just be that the wealthy are doing quite nicely the way things are and see no reason why they should give up any of their stolen wealth to boost aggregate demand.
Are the John Galts simply stupid about economics, or do they know better and lie through their teeth in order to maintain their position? That debate can rage on, for whatever it's worth. But one thing's for sure: honest policymakers who want to do right by the country would do well to stop listening to the wealthy, and start listening to the rest of the 90% of America. The John Galts of the world aren't brilliant at anything beyond their own self-enrichment. A talent for extracting a great sum of money from predation on consumers and workers doesn't translate to an understanding of macroeconomics, or anything else for that matter.
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