Go Get ‘Em, Krugman

While everybody and their brother (including me) was focused on Haiti, Krugman was focused on the Big Bankers.

Bankers Without a Clue

”Consider what has happened so far: The U.S. economy is still grappling with the consequences of the worst financial crisis since the Great Depression; trillions of dollars of potential income have been lost; the lives of millions have been damaged, in some cases irreparably, by mass unemployment; millions more have seen their savings wiped out; hundreds of thousands, perhaps millions, will lose essential health care because of the combination of job losses and draconian cutbacks by cash-strapped state governments.

And this disaster was entirely self-inflicted. This isn’t like the stagflation of the 1970s, which had a lot to do with soaring oil prices, which were, in turn, the result of political instability in the Middle East. This time we’re in trouble entirely thanks to the dysfunctional nature of our own financial system. Everyone understands this — everyone, it seems, except the financiers themselves. “

I was reading James Fallows’ cover story in The Atlantic yesterday (hopefully more on it later) and he stated what should be obvious to us all:

”The military: As wealth flows, so inevitably will armed strength.“

Although used in a very different context, the basic fact remains. Our economy pays for our military. It is what allows us to mount a rescue mission in Haiti (and elsewhere) and pledge $100 million dollars in aid without blinking an eye.

Let me jump back to Krugman to drive home the point.

”But there was nothing accidental about the crisis. From the late 1970s on, the American financial system, freed by deregulation and a political climate in which greed was presumed to be good, spun ever further out of control. “

We did this. It didn’t “just happen”. We knew from experience -- bad experience -- that an unregulated economy had a boom and bust cycle. We also knew that we had controlled it -- mitigated it -- for nearly 50 years. We chose to deregulate it. We chose to return to the boom and bust cycle. The boom was fun wasn’t it ? The bust ? Not so much.

We’re repeating history because we didn’t learn from it. And the sad part is that it is history still within living memory. History tells us that we can fix it. Reregulate the financial system.

Don Brown
January 16, 2010