Following on yesterday's post about the use of the "OOH! SHINY PEBBLE!" trick by focusing on deficit reduction, we find that, over at TPM, Rotwang nails the deficit reduction misdirection hooey too:
I beg you all to not get embroiled in the bankrupt pastime of figuring out how to balance the budget. That is what all the very serious people, the economic royalists of The Washington Post ("If you don't get it, you've got a quarter!"), the ignorant television talking heads, and now a parade of bankrupt commentators and commissions would have us do. This is the ultimate sucker's game.
Amen. Instead we should do this:
In the face of this perverse distraction, what is called for is a doctrine of implacable massive resistance: no discussions of austerity until the current employment situation is adequately addressed. What is called for is a trillion of new spending. It's time for the WPA and the CCC. High-speed rail. Rebuild the Gulf Coast wetlands. Weatherize tens of millions of houses. Wire the schools. Free municipal wireless broadband. Reverse all state and local government budget cuts.
And before dealing with deficits, something should come first:
Show me an enacted program to raise employment massively, and I'd be willing to talk about ways to fix the budget in a humane way, closing military bases, withdrawing from Afghanistan and Iraq, raising taxes, and plenty of other wholesome devices. Until then, forget it. The notion that we have to do something "now" or else is just a flaming lie. We've been told this for twenty years. Who can still believe it?You would think twice if you lived under a totalitarian regime and some mundane topic like civil service pay, legitimate in and of itself, was raised. No, there are some issues that automatically justify postponement of other discussions. 9.5% unemployment is one of them....
So our children will enjoy less debt and more indigent parents and grandparents. The effective political response is obvious: "WHERE ARE THE JOBS?" You fucks.
I'll note that, in a recent poll, by a margin of fifteen to one, people thought jobs were important, not deficits.
Apparently, 56% of Americans are now liberals. Or something.
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And deficits cause job losses at some point in time.
Actually, the deficit isn't an issue. It's debt that's the issue. The US has a huge debt addiction problem.
The UK where I'm based likewise.
The real problem is that both the US and the UK, and almost all western countries use accounting fiddles far worse than Enron to manipulate the debt numbers.
Seems you're in favour of Enron accounting.
Nice non sequitur there, Nick.
I am not familiar enough with the UK to comment on your situation. However, as anybody who travels regularly within the US (whether by plane, train, or automobile) can attest, our transport infrastructure is falling apart thanks to years of penny-wise, pound-foolish deferred maintenance. Similarly with electrical service and water/sewer service, though these things are only noticed when something goes badly wrong. Assuming we want to remain a civilized country (and I'll stipulate that this is a generous assumption with some of our politicians), we will need to repair or replace much of that infrastructure in the next ten to twenty years, as well as improve broadband internet service (on which we badly lag the rest of the world). We have two choices: we can spend the money now while it's effectively on sale (10-year Treasury bonds yield well under 3%, and we can hire people who are desperate for any kind of work), or we can spend it later when it will cost more. Most people who can choose the first option would do so, and as our government controls its own currency it can choose the first option. Anybody who does not at least acknowledge that we must choose one of these two options is not serious about the national debt. However, the so-called deficit hawks insist that we cannot afford to choose option 1 and pretend that we do not therefore have to choose the even more expensive option 2. As the band Rush said: If you choose not to decide, you still have made a choice.
Nick--
It seems you are confusing governments with people and/or corporations. Governments can do powerful things with money that the private sector simply can't (without risking punishment): take, print, default, and the like. Moreover, governments are, in theory, trying to smooth the economy, whether by damping the business cycle or correcting for externalities, say. This is in contrast to people, who are trying to maximize their personal utilities, or corporations, who are trying to maximize their net profits.
In other words, it pretty much never makes any sense to judge government accounting or spending by comparison with the private sector. It's apples and oranges.
Of course, you are not along in making this elementary error. But it does not make it any less bone-headed just because pretty much every last politician, pundit, editorialist also makes this mistake.
I respectfully point out that the WPA et al did not solve the crash of the great depression, World War II did. It seems unlikely that a new WPA would be any more likely to solve the problem now, from an economic engine standpoint.
It might give unemployed people productive work to do, in theory, but that assumes that unemployed people are going to want to do that sort of work. From what I see around me, most people are content to let immigrants do most of that kind of hard work (and more power to the immigrants who are willing and able).
Elmer @ 4:
Actually, US GDP had recovered to pre-crash levels well before US entry into WWII:
http://www.housingbubblebust.com/GDP/Depression.html
elmer: "I respectfully point out that the WPA et al did not solve the crash of the great depression, World War II did. It seems unlikely that a new WPA would be any more likely to solve the problem now, from an economic engine standpoint.
It might give unemployed people productive work to do, in theory, but that assumes that unemployed people are going to want to do that sort of work."
Well, we won't know unless we try, will we? In a sense, we "solved" the crash of the threatened depression, although in a far from perfect way. The problems now are two-fold: unemployment and household debt. A new WPA or CCC may not "solve" those problems, but would be better than doing nothing. And attempts to balance the budget will only make things worse.
Unfortunately, our current crop of politicians seem not to care about these problems, and their replacements seem hell-bent on making things worse.