Monday, August 22, 2011
Politics Trumps All
What is it going to take before Republicans listen to reason? You have to ask yourself now, what is their goal? A sound economy? Jobs? Reducing the debt? Whatever you think it is, you have to ask yourself why they won’t move forward.
You don’t have to believe me. You can believe The Economist. First, let’s look at their Wikipedia entry.
”The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England.”
All right, they’re English. So right off the bat they don’t have a Republican vs. Democratic slant.
”The Economist is characterised by some outsiders as a right wing publication.”
So, if anything, they have a conservative -- as opposed to liberal -- bias.
”It takes an editorial stance which is supportive of free trade, globalisation, government health and education spending, as well as other, more limited forms of governmental intervention. It targets highly educated readers and claims an audience containing many influential executives and policy-makers.”
That gives you a feel for the publication. Now, let’s look at what they had to say in a recent article.
We just need some sort of sign
”You know, it's hard to be in a position of power at times like these. The stakes are high, and the path forward is uncertain. The thing is, markets are showing the way forward. The deeper the decline in Treasury yields, the clearer it is that markets are scared stiff about the growth outlook. And conveniently, governments can then borrow on incredible terms, using the proceeds to make overdue investments, thereby supporting growth in the short-term and the long-term! The American government can borrow at zero to negative cost at durations out to 10 years. There are always risks, to action and inaction alike, but as risks go, using cheap money to fix deteriorating infrastructure or provide health care to the unemployed or subsidise worker retraining or support research is an incredibly safe bet. In Britain, gilt yields have fallen to their lowest level since the Victorian era. As risks go, slightly easing the pace of fiscal austerity is an incredibly safe bet.”
Republicans ought to eat that up, right? ”...markets are showing the way forward”. I mean, that fits the bill for their narrative doesn’t it? Follow “The Market” guys. Borrow at ”negative cost at durations out to 10 years” and ”fix deteriorating infrastructure”. I’m not going to push it. I’m not even going to suggest ”worker retraining”. Even though a “right wing” publication did. (By the way, I don’t know what a “gilt yield” is but evidently the world’s money is fleeing to the safety of the United Kingdom’s government too. You can follow the link from this article but suffice it to say they are at their lowest rate since 1896.)
”After years of this kind of thing, it's difficult to know what more to say. Markets and history alike are indicating the direction in which advanced economies are heading. We can't be completely certain about the nature of the recession and weak recovery, but we can be confident enough to know what general actions are necessary.”
For me, it’s coming down to this; If you don’t believe in the Keynesian economic model, then what’s your plan? The only large scale example we have is the recovery from World War II. Granted, that isn’t much. But what examples do the other folks -- the anti-Keynesians -- have? (Oddly enough, when I did a search on “anti-Keynesian”, I was returned to The Economist.)
For me, this comes closer to the real truth. From The New Republic in September of 2010.
Explaining GOP Anti-Keynesianism
”It's a fairly fringe view (anti-Keynesian), and one that has had little purchase in the GOP before 2009, and had essentially no support during the 2001 recession. But it's also worth noting that this view totally comports with the party's political interests. The largest factor in the party's political success in 2010 and 2012, by far, is the economy. republicans have no incentive to support policies that would stimulate growth. Now, they probably don't want to walk around thinking that their role is to deepen the recession. That's where the newly vogue anti-Keynesian policies come in. It provides a handy intellectual framework to justify self-serving behavior.”
(In case you don’t remember, Republicans were all about stimulus in 2001.)
And there you have it. Consciously or not, the Republican leaders have decided that their political future trumps the country’s future. The program that has the best chance of working -- massive stimulus in the form of government spending -- might get President Obama reelected. And we just can't have that.
You did notice the background on that video, right? Politics trumps all. Even when the fate of the world is at stake.
August 22, 2011