Monday, October 21, 2013

Wolf! Wolf! Wolf!



Hopefully, my regular readers remember the name Martin Wolf -- the chief economics writer at the Financial Times. That's all you need to remember at the moment -- the head economics guy at the United Kingdom's version of the Wall Street Journal.

Everything you have heard from Conservative Republicans about economics since 2008 is wrong. (It was wrong way before that but we don't have that much time.) Everything you've heard from the Tea Party people about economics is Crazy wrong. (That's "crazy" with a capital "C".)

Pay attention to these quotes from his interview with Bill Moyers. The subject is sequestration, the debt ceiling, default and balancing the U.S. budget

"Now, the fact is that an instantaneous balancing of the budget, even if we leave aside the terrible possibility of defaulting on debt, would do enormous economic damage, impose an instantaneous and, I think, really very large recession on the US and on the world."

"But also it would create an enormous recession because instantaneously, even if they cover their interest obligations, the budget deficit will be closed. It's about a little over four percent of GDP, which is a very big sum, instantaneously that will be taken out of the economy and the economy would just as its beginning to recover reasonably well, collapse again."

"But threatening actually to default on your obligations in this way seems to me to go well beyond normal political life. And any president it seems to me has to defend the political process against that."

"...there's a lot of hysteria about it, but I think the US has a completely manageable long term debt position."

"...imagine a negotiation with the Democratic Party which after all really did win the last election..." (Emphasis added. I took that to mean the million plus more votes Democrats received nation-wide vs. the Republicans.)

"What I think is the bigger cost if the theater goes on is simply that the government of the United States is distracted. Obviously if it's going to now have a rolling every couple of months crisis and a rolling discussion of these issues, it can't do any of the other things that the world would like the US to do..." (A major, major ploy of the Republicans. Budget, immigration, banking reform and a whole host of things that Republicans don't want to change.)

"I think actually the US is clearly cutting the economic functions of the government too far, it's basically being reduced to just defense interests, social security and Medicare. There are other things government needs to do which are shrinking dramatically to a tiny proportion of national income. I think it's a tremendous mistake. So I think you should relax budget, not tighten further."

There's more. A lot more. Now go watch it and listen to the context.



Did you catch this part. I think it's the most important part.

"What has surprised me is how little pushback there has been from the Democrat side in arguing that the government really did have a very strong role in supporting the economy during the post crisis recession, almost depression, that the stimulus argument was completely lost though the economics of it were quite clearly right, they needed a bigger stimulus, not a smaller one."

Continuing that thought....

"And it does seem to me that the Democrats have, for reasons I don't fully understand, basically given up on making this argument. And so in a way the conservatives, the extreme conservative position has won, because nobody is actually combating it."

I suggest you "combat". Push back. Stop muzzling yourselves. The Federal Government does some mighty important things -- things a lot more important than National Parks -- and you happen to do them. Stand up. Be counted. Or the nuts are going to take over your government.

Don Brown
October 21, 2013

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