Posted by AzBlueMeanie:
The elite über-rich plutocrats — the one percent — are in complete control of the economy and the government. The ninety-nine percent who lead their lives of quiet desperation trying to earn enough income to provide for their families and to pay the bills, are simply too exhausted, and too poor, to be politically active and engaged. They are the voiceless, whose suffering is ignored in favor of the well paid lobbyists doing the bidding of the plutocrats.
Paul Krugman writes today, The 1 Percent’s Solution:
Economic debates rarely end with a T.K.O. But the great policy debate of
recent years between Keynesians, who advocate sustaining and, indeed,
increasing government spending in a depression, and austerians, who
demand immediate spending cuts, comes close — at least in the world of
ideas. At this point, the austerian position has imploded; not only have
its predictions about the real world failed completely, but the
academic research invoked to support that position has turned out to be
riddled with errors, omissions and dubious statistics.
* * *
[T]he dominance of austerians in influential
circles should disturb anyone who likes to believe that policy is based
on, or even strongly influenced by, actual evidence. After all, the two
main studies providing the alleged intellectual justification for
austerity — Alberto Alesina and Silvia Ardagna on “expansionary
austerity” and Carmen Reinhart and Kenneth Rogoff on the dangerous debt
“threshold” at 90 percent of G.D.P. — faced withering criticism almost as soon as they came out.
And the studies did not hold up under scrutiny. By late 2010, the International Monetary Fund had reworked Alesina-Ardagna with better data and reversed their findings, while many economists raised fundamental questions about Reinhart-Rogoff long before we knew about the famous Excel error.
Meanwhile, real-world events — stagnation in Ireland, the original
poster child for austerity, falling interest rates in the United States,
which was supposed to be facing an imminent fiscal crisis — quickly
made nonsense of austerian predictions.
Yet austerity maintained and even strengthened its grip on elite opinion. Why?
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. . . 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
What, after all, do people want from economic policy? The answer, it
turns out, is that it depends on which people you ask — a point
documented in a recent research paper
by the political scientists Benjamin Page, Larry Bartels and Jason
Seawright. The paper compares the policy preferences of ordinary
Americans with those of the very wealthy, and the results are
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
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.
* * *
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
And this makes one wonder how much difference the intellectual collapse
of the austerian position will actually make. To the extent that we have
policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we
just see new justifications for the same old policies?
I hope not; I’d like to believe that ideas and evidence matter, at least
a bit. Otherwise, what am I doing with my life? But I guess we’ll see
just how much cynicism is justified.
Sorry professor, but the one percent just won again today, your cynicism is justified. Ezra Klein writes, The Democrats have lost on sequestration:
The Democrats have lost on sequestration.
That’s the simple reality of Friday’s vote
to ease the pain for the Federal Aviation Administration. By assenting
to it, Democrats have agreed to sequestration for the foreseeable
* * *
In effect, what Democrats said Friday was that in any case where the
political pain caused by sequestration becomes unbearable, they will
agree to cancel that particular piece of the bill while leaving the rest
of the law untouched. The result is that sequestration is no longer
particularly politically threatening, but it’s even more unbalanced:
Cuts to programs used by the politically powerful will be addressed, but
cuts to programs that affects the politically powerless will persist.
It’s worth saying this clearly: The pain of sequestration will be
concentrated on those who lack political power.
So it's game over. The one percent have won. The ninety-nine percent are the voiceless who have lost.
UPDATE: Business Insider declares The Economic Argument Is Over — Paul Krugman Has Won. "The argument is over. Paul Krugman has won. The only question now is
whether the folks who have been arguing that we have no choice but to
cut government spending while the economy is still weak will be big
enough to admit that." Clearly the answer is "no."