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This column is the Nobel Laureate's detailed explanation of why David Stockman is wrong in what Krugman calls "a mammoth screed," the former Reagan Budget director's “The Great Deformation.”

Krugman begins by reminding us that when the Great Depression struck,

When the Great Depression struck, many influential people argued that the government shouldn’t even try to limit the damage.
 Among these were Herbert Hoover's Secretary of the Treasury Andrew Mellon, whom he quotes as opining that the President
“Liquidate labor, liquidate stocks, liquidate the farmers. ... It will purge the rottenness out of the system.”
He also quotes Joseph Schumpeter, and then writes
Like many economists, I used to quote these past luminaries with a certain smugness. After all, modern macroeconomics had shown how wrong they were, and we wouldn’t repeat the mistakes of the 1930s, would we?

How naïve we were. It turns out that the urge to purge — the urge to see depression as a necessary and somehow even desirable punishment for past sins, while inveighing against any attempt to mitigate suffering — is as strong as ever. Indeed, Mellonism is everywhere these days.

the urge to purge - somehow when I read the title I immediately thought not of some bulemic, because that would at least carry with it the notion of having eaten well, which is not true of the ordinary American who is being crushed by what has happened in the economy and will be crushed even more by the proposed austerity, but rather of some medieval doctor further weakening the patient by "blood-letting" from an already sick man.  So it is with the approach of the austerity mavens with respect to our economy.

Krugman reminds us that those insisting upon austerity have been wrong at every stage of our recent economic crisis, while Keynesians (like himself) have been on target:

Remember how running the printing presses was going to cause runaway inflation? Since the recession began, the Fed has more than tripled the size of its balance sheet, but inflation has averaged less than 2 percent.
Krugman calls Stockman's analysis of our economic history as
pretty much standard liquidationism, with a strong goldbug streak.
goldbug streak - I wonder if that is intended at least in part to link Stockman to the craziness of the likes of Glenn Beck, who after all has been a paid mouthpiece for gold interests?

Perhaps not, since Stockman basically asserts that we have been going to Hell in a handbasket since FDR took us off the gold standard, and have been on sprees ever since:

spending sprees, consumption sprees, debt sprees, and above all money-printing sprees. If disaster was somehow avoided for 70-plus years, it was thanks to a series of lucky accidents.
In a sense, all of that tartness is simply preface from Krugman, who then provides an important economic lesson on our rising debt.  Yes, it has increased as a portion of GDP.  The amount that is foreign has increased, albeit less than most Americans think, but that it mainly America borrowing from Americans
which doesn’t make the nation as a whole any poorer, and doesn’t require that we collectively spend less. In fact, the biggest problem created by all this debt is that it’s keeping the economy depressed by causing us collectively to spend too little, with debtors forced to cut back while creditors see no reason to spend more.
Remember, you do not pay taxes on interest earned from government bonds, and that investment is still considered absolutely safe.  Add to that  the large amounts of cash being held by corporations because inflation is so low and we we should already see the need for investment to stimulate spending.  As Krugman has noted for some time, because interest rates are currently so low, the government should, rather than cutting spending, be increasing it as a stimulus whose return will based on historic trends within a short time return far more in tax revenue than it will cost interest.  Such additional spending will also create increases in revenue for state and local governments, as sales and income tax streams increase, the price of real estate begins to return to higher levels, and then those governments can perhaps even rehire some of those employees they have been forced to lay off because they are required to run balanced government.  That rehiring adds additional spending which will also increase government revenue through taxation.

Krugman is all for restoring financial controls and oversight to deter excess leverage and prevent the next crisis.  

To deal with the crisis that’s already here, we need monetary and fiscal stimulus, to induce those who aren’t too deeply indebted to spend more while the debtors are cutting back.
This of course is "anathema" to Mellonites, like Stockman, like the deficit hawks, like Pete Peterson, like unfortunately too many Democrats as well.  They think that deficit spending - which in their minds includes any spending on the social safety net that does go through the private sector so that corporations can gain some direct profit  - is what has caused our current financial crises, which they measure primarily in the size of deficits and debts, never mind that the deficit increased under a Republican administration in part because of unnecessary tax breaks for the wealthy and corporations and fighting two wars without paying for them.  Krugman warns us that their approach of liquidation is destructive, because
by turning our problems into a morality play of sin and retribution, it helps condemn us to a deeper and longer slump.
Of course, the messaging from the Mellonites has been working.  As Krugman puts it "sin sells."  That is,
the notion of macroeconomics as morality play has a visceral appeal that’s hard to fight. Disguise it with a bit of political cross-dressing, and even liberals can fall for it.
This is happening not just on the macroeconomic level of the national economy.   We see it in the policies of Democratic mayors like Emanuel in Chicago, who use among other things the financial problems as a justification for slashing away at the basic local government function of public education, and finding ways of turning that function into something that can turn profits for the investor class and corporations, even as it destroys neighborhoods and ignores the needs of those hurting the most.

The real political cross-dressing comes from a Democratic President more committed to a "grand bargain" with "bi-partisan" support than he seems to be to rebuilding the economy for the long term.  What is sad is that he can clearly argue that he was right on stimulus spending.  That is, he could clearly argue had he pushed for a more significant stimulus the first time around.  Even so, the data supports him - rather than pushing for the grand bargain he should be pushing for more stimulus.

Krugman's column saddened me because of its ending, especially the words visceral appeal that's hard to fight.   I do not think it is impossible to fight but the rhetorical battle is already lost when the Democratic President accepts the framing of the argument in a way that cedes control to the Mellonites, whether they are simply hostile to government or merely wrong-headed about how governments and economies actually function.

Still, the column is important enough I wanted to bring to the attention of this community.  The link gets you past the firewall and does not count against your quota of Times stories for the month.

Read the whole thing.

It is worth the time.

But then, isn't that always true of Krugman?

Originally posted to teacherken on Fri Apr 05, 2013 at 03:02 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Creative Destruction And Mike Rice (4+ / 0-)

    You see people out there defending Mike Rice. Think the same syndrome is there among people who want to see the economy take a Mike Rice approach to those who are expected by the concept of economic destruction to somehow up their game. Seems like a great stimulus would be to employ counselors who would help a good portion of the public explore daddy issues/

  •  I think you purge bubbles, though. (5+ / 0-)

    I think liquidation is the right emphasis for the real estate market, likewise for baroque financial instruments.  There's those, and then there's the rest of the economy.

    You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

    by Rich in PA on Fri Apr 05, 2013 at 04:00:54 AM PDT

    •  sorry,but we are long past bubbles in real estate (12+ / 0-)

      which is why so many local governments are struggling

      meanwhile bailed out too big to fail banks continue the squeeze on lending and paying excessive compensation and bonuses

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Fri Apr 05, 2013 at 04:15:59 AM PDT

      [ Parent ]

      •  Yes, we're long past bubbles in real estate (2+ / 0-)
        Recommended by:
        Sparhawk, bsegel

        That's why we are starting to get economic recovery; to the extent we're not getting a desirable recovery, it's because of deeper structural problems that existed prior to and during the bubble, starting with deindustrialization and a sustained Rightist offensive.  

        I've never had much sympathy for the "squeeze on lending" argument.  With interest rates as negligible as they are, banks can't afford any wrong decisions.

        You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

        by Rich in PA on Fri Apr 05, 2013 at 04:19:08 AM PDT

        [ Parent ]

        •  last time I checked, banks making big profits (9+ / 0-)

          from the credit card business, where interest rates and fees are not negligible

          "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

          by teacherken on Fri Apr 05, 2013 at 04:26:45 AM PDT

          [ Parent ]

          •  Here's a link you might like. (6+ / 0-)

            http://www.federalreserve.gov/...

            You'll note that revolving credit continues to shrink. Consumers are pissed.

            I love that our individual and household debts are referred to as "Consumer Credit Outstanding."
            It's no wonder ordinary folk do not know whether they are coming or going.

            The problem that instinct-driven people have is that they are intimidated by the idea of owing anyone anything -- for the simple reason that they know from experience that they can't deliver. Think of the student whose homework is always below par. Eventually, it doesn't show up because the dog ate it. If the student cuts up in class, it's to distract the teacher from asking questions he can't answer. Our instinct-driven verbally adept politicians do the same thing.

            We organize governments to deliver services and prevent abuse.

            by hannah on Fri Apr 05, 2013 at 05:27:36 AM PDT

            [ Parent ]

      •  Um... (4+ / 0-)

        The boom markets of the mid-aughts are roaring back.  So Cal, No Cal, Phoenix, etc.  I have a friend who is trying to buy a house in Phoenix.  He has been out bid three times and has for contract addendums on one house which allowed the seller to come back and counter-offer a higher price.  It's nuts.It's all fueled by unbelievably low interest rates and speculators with a lot of cash in their pocket.

        'Where free unions and collective bargaining are forbidden, freedom is lost' - Ronald Reagan, Communist

        by RichM on Fri Apr 05, 2013 at 10:17:07 AM PDT

        [ Parent ]

      •  The percentage of school funding (1+ / 0-)
        Recommended by:
        bsegel

        that comes from real estate taxes (~40%) is roughly equal to the percentage of income younger teachers  (%30) spend on housing.

        Governments such as those in California may get lots of taxes off $400,000 houses and $200,000 condos, but they also have to pay their workers a lot more money so they can afford those $400,000 houses and $200,000 condos.

        Local governments really don't gain much (40% minus 30%) from high-priced housing.

    •  I follow a simple rule on economic questions (16+ / 0-)

      The central problem in our economy, in my view, is economic injustice:  rising income inequality, non-liveable wages and working conditions, sharply increasing corporate profilts coinciding with declining wages, and the like.  Just about every economic problem we face stems from rich people having too much money and everybody else not having enough:  persistently high unemployment, the Federal deficit, anemic GDP growth, too big to jail banks, even unstable financial markets.

      From this point of view, anybody not talking about getting more money into the 99%ers pockets and limiting the power of the wealthy as their first priorities is wrong, no matter what economic problem they're trying to solve.  Simple rules are easy to remember, and in this case the simple rule seems the most reliable guide.

      Citizens United defeated by citizens, united.

      by Dallasdoc on Fri Apr 05, 2013 at 06:04:26 AM PDT

      [ Parent ]

    •  You purge bubbles when they are small. (3+ / 0-)
      Recommended by:
      BYw, RichM, bsegel

      This is one fundamental idea in Keynes' General Theory of Employment, Interest and Money from 1936. Small bubbles, when identified and appropriately deflated do not pose a great risk to the overall economy. Large bubbles, such as that of real estate and certain types of stocks, deflate on their own often with a chaotic and destructive fashion.

      But then, identify a bubble. Then identify what is a natural market for a commodity like real estate. When the distinction can be made between the two and, appropriately, price floors and ceilings, then bubbles can be identified and popped. This is a central issue of government as a regulatory entity that does not entertain a profit motive.

      •  There was a Federal Reserve (0+ / 0-)

        chairman (Martin?) that said that his job was to pull the punch bowl (cheap money) away as soon as the party started to get going.

        •  William McChesney Martin, Jr. (0+ / 0-)

          The Time Magazine quote:

          A stubborn, honest and puritanically forthright man, Martin liked to explain that the Reserve Board’s unpopular actions arose out of its necessary role of “leaning against the wind.” He said: “I’m the fellow who takes away the punch bowl just when the party is getting good.” (Martin is a teetotaler.) Above all, he defended the integrity of the U.S. dollar at home and abroad, though he and the board lacked the power to do the job effectively alone.
          He was Chairman of the Federal Reserve from 1950 to 1970.
    •  The rest of the economy (0+ / 0-)

      has been in depression since 2001.  It's only the bubbles that hid it.

      "with rights come responsibilities." Wrong. Responsibilities continue to exist even if you abdicate your rights.

      by happymisanthropy on Fri Apr 05, 2013 at 11:59:08 AM PDT

      [ Parent ]

  •  Thanks for this, Ken... (13+ / 0-)

    I often miss Krugman's column these days.

    This would almost be amusing if it wasn't so diametrically opposed to the real solution to an ailing economy.

    “Liquidate labor, liquidate stocks, liquidate the farmers. ... It will purge the rottenness out of the system.”
    If you're going to purge "the rottenness" from an ailing economy it ought to be [short term] profit-taking. When an economy begins to sputter it's either up to big business or government to restart it. One or the other.

    In our present circumstances -- instead of righteously suckin' it up for six months to a year -- businesses are refusing to spend on labor. (instead hoarding their wealth) So it's up to government to spend.

    If you want economic growth:

    First and foremost, forget all the austerity crap. '86 the sequester. Raise the minimum wage, modestly raise tax rates, (on the 2-3% this time) and then create jobs both by forming an infrastructure bank, and funding more R&D.

    If you want to make Medicare sustainable: (since single-payer is off the table) expand coverage, 'cap' profits, negotiate prescription drug prices, and then change the fee-for-service system.

    Social Security: raise the 'cap' to about $140-$150,000

    (and put the freakin' Wall Street gang in jail just to introduce 'em to a little li'l bit of social justice)

    Oh, and legalize WEED!

    lol

    "That men do not learn very much from the lessons of history is the most important of all the lessons of history." ~ Aldous Huxley

    by markthshark on Fri Apr 05, 2013 at 04:47:53 AM PDT

    •  carry you one step further (18+ / 0-)

      or two, since there are two parts

      1) eliminate the cap on social security

      2) cut the social security age -  that would encourage some people who have access to pensions but are not eligible for social security to retire, opening up jobs for younger people backed up in the queue

      as far as how we raise taxes on the wealthy, put in a financial transactions tax -  it will either generate a huge amount of revenue at a very low rate, or else it will discourage some of the computer-automated trading that is distorting the stock market, or maybe even both.

      Use that money to guarantee Medicare's viability, by devoting 1/2 of its revenue to Medicare funding, which should enable two further things to happen.

      1.  lower the age for medicare, which will also lead to people retiring and opening up jobs

      2.  stop the problem of physicians who refuse to take medicare because the reimbursement rates are too low

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Fri Apr 05, 2013 at 04:53:21 AM PDT

      [ Parent ]

    •  People have to be bad to justify beating (2+ / 0-)
      Recommended by:
      bsegel, happymisanthropy

      them.

      We organize governments to deliver services and prevent abuse.

      by hannah on Fri Apr 05, 2013 at 05:30:03 AM PDT

      [ Parent ]

    •  Your key phrase "If you want economic growth" (3+ / 0-)
      Recommended by:
      profundo, markthshark, bsegel

      The Republicans in Congress want nothing more than to make things as miserable as possible on this country for having the temerity to vote for a Democrat for President not just once, but twice.  To make matters worse, it's a charismatic, intelligent black man, who shows with everything he does do that he's not only a better president than their candidate could have hoped to be, he's smarter than their candidates and in some ways he's a better Republican than their candidates.

      The Republicans tried all they could to make Obama a one term president.  Now that they've failed at that, they're trying their best to make sure that no Democrat is elected in 2016.  Their best so far, fortunately, has not been to effectively muzzle all those Republicans who continue to alienate huge sectors of voters, from women, to minorities, to GLBT to civil Libertarians.

      Economic growth would be the nail in their coffin for a generation at least, so that's what they're fighting in the streets, in the hedgerows and in the halls of Congress.  President Obama shows every sign of wanting to allow them to win, too.

      •  Certainly a flawed strategy... (2+ / 0-)
        Recommended by:
        ColoTim, bsegel
        Now that they've failed at that, they're trying their best to make sure that no Democrat is elected in 2016.
        They've been trying to make him fail (in the eyes of the electorate) since Jan. 2009. Hasn't worked yet.

        But if Obama keeps pushing these proposed cuts to Medicare and Social Security; he'll accomplish alone what Republicans can't seem to get done together -- sink Democrats' shot at keeping the White House in 2016.

        It just makes no sense.

        "That men do not learn very much from the lessons of history is the most important of all the lessons of history." ~ Aldous Huxley

        by markthshark on Fri Apr 05, 2013 at 09:22:50 AM PDT

        [ Parent ]

  •  Well, it fits nicely with what is hinted (10+ / 0-)

    at strongly in the diary, but not said directly: the notion among the elite that the poor must be punished for being poor; that any attempt to help the poor out of their condition is anathema because it "rewards" their poor state in the first place.  

    The internet is ruled by cat people. Dog people are busy playing outside.

    by Canis Aureus on Fri Apr 05, 2013 at 04:56:38 AM PDT

    •  yep! eom (3+ / 0-)
      Recommended by:
      TomP, blueoasis, bsegel

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Fri Apr 05, 2013 at 05:05:19 AM PDT

      [ Parent ]

    •  "the poor must be punished" (9+ / 0-)

      This notion among the elite, then as now, exists because they refuse to accept responsibility for their failed policies and beliefs and they need someone to blame other than themselves. Then as now the largess and excesses of the richest coupled with political power resulted in the economic distress for most in this country. Until this country changes its policies to promote economic benefits  for the vast majority of its citizens versus capitulating to the greed of the richest, until then, we will remain a nation in decline.

      •  The elite also have stunning resistance to (3+ / 0-)
        Recommended by:
        teacherken, bsegel, tofumagoo

        empathy.  They grew up never needing to develop it, punished if they ever tried to exert some and its counter, greed, has been celebrated as depicted in the movie "Wall Street" by Gordon Gecko.  "Greed is Good".

        Nobody at any level is effective at forcing them to change their ways.  OWS was the best shot we had but I wish OWS had gone ahead and been political rather than just protesting without actually achieving change.

  •  good post. (3+ / 0-)
    Recommended by:
    teacherken, TheDuckManCometh, bsegel

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Fri Apr 05, 2013 at 05:05:10 AM PDT

  •  Obama more concerned w/bi-partisan support (3+ / 0-)
    Recommended by:
    lostinamerica, ColoTim, bsegel

    Democratic President more committed to a "grand bargain" with "bi-partisan" support than he seems to be to rebuilding the economy for the long term.

    80 % of Success is Just Showing Up!.....The Climate Change Denial Era........IS OVER.........Welcome to......CLIMATE HELL!

    by Churchill on Fri Apr 05, 2013 at 06:32:28 AM PDT

    •  than rebuilding the economy for the long term (2+ / 0-)
      Recommended by:
      lostinamerica, bsegel

      Democratic President more committed to a "grand bargain" with "bi-partisan" support than he seems to be to rebuilding the economy for the long term.

      80 % of Success is Just Showing Up!.....The Climate Change Denial Era........IS OVER.........Welcome to......CLIMATE HELL!

      by Churchill on Fri Apr 05, 2013 at 06:32:51 AM PDT

      [ Parent ]

  •  these things have been said (3+ / 0-)
    Recommended by:
    ColoTim, bsegel, tofumagoo

    a zillion times.

    I really don't think the Dems who are against it don't know all this - they know.  They're just doing whats politically popular.

    Face it, until Dems can prove that they can hold on to the house for longer than 2 years under a Dem president, which hasn't happened since Jimmy Carter, the Dem party will continue to cave to the Republican Party.

    The House controls spending and taxtation, so what point is there screeching about how right Krugman is when it's controlled by irrational NeoConfederates?

    You can talk about this until you're blue in the face. They will never do it.

    Get out and win the House back in 2014 and try to keep it for more than 2 years under a Dem president first, then we'll talk.

  •  Krugman doesn't know what he's taking about (1+ / 1-)
    Recommended by:
    bsegel
    Hidden by:
    Moonspinner

    The Great Depression happened because of the excesses of the 1920s. Once the crash was baked in, there was no appropriate policy response.

    The proper response to a credit crash is never to get into an overextended position to begin with (like a car crash). Once you've actually experienced the crash, you are screwed. There are no good policy choices available to you.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Fri Apr 05, 2013 at 06:45:12 AM PDT

    •  so the New Deal was a total failure (7+ / 0-)

      about par

      "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

      by teacherken on Fri Apr 05, 2013 at 06:49:47 AM PDT

      [ Parent ]

      •  Sixty million dead worldwide (1+ / 0-)
        Recommended by:
        bsegel

        Half the planet flattened before our economy finally got back into shape.

        No thanks.

        Besides, Krugman ignores the subtext here. Automation is increasing at a furious rate. Any attempt to raise worker salaries is going to be met with increased (successful) attempts to automate the workers away.

        Housing bubble: we have way too much housing stock and Boomers are downsizing. Real housing prices (especially in surburbs) are going to continue to fall.

        The top 1% of global workers make over $50k/year. Workers elsewhere want what we have, and we have neither the moral authority nor the actual power to tell them they can't have it.

        These, and other structural economic issues, are the real drivers here. They are hard to deal with, so Krugman advertises papering them over with more and more debt. That's how we got into this mess.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Fri Apr 05, 2013 at 07:00:13 AM PDT

        [ Parent ]

  •  Wow. I'm (perhaps naively) surprised to see (2+ / 0-)
    Recommended by:
    bsegel, happymisanthropy

    Schumpeter in that camp. I'm not an economist, but IIRC, Schumpeter was the one who proposed that the behavior of Robber Barons was not best explained by economic rationality as it was by the simple human desire to dominate. In a way, he was one of the founders of behavioral economics. That he should have been so wedded to dogma surprises me.

    Incidentally, on something of a tangent, it turns out that chimpanzees are actually better at modeling their conspecifics' minds than are we.

    Interesting.

    Ceterum censeo Factionem Republicanam esse delendam.

    by journeyman on Fri Apr 05, 2013 at 06:48:43 AM PDT

  •  Krugman Is Onto Something DEEPER Than He Realizes (4+ / 0-)

    And he encapsulates it with this:

    It turns out that the urge to purge — the urge to see depression as a necessary and somehow even desirable punishment for past sins, while inveighing against any attempt to mitigate suffering — is as strong as ever.
    What most people fail to realize is that THIS is exactly what's going on. THIS explains their behavior.

    They ARE trying to punish the country for our sins. Their decisions about the economy are NOT rational, reasonable or logical in any way shape or form.

    They are making a decision to PUNISH the country either consciously or unconsciously, individually and on  a group psychosocial dynamic level, and that decision is based on pure emotional need to do so.

    They (the GOP mostly) have an emotional need to inflict punishment on us. To inflict pain. To abuse us.

    Any OTHER justification for it is backfill, and an excuse and a cover for the real reason, which is to feed an emotional need within themselves to inflict suffering.

    This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: [http://www.myspace.com/beetwasher]

    by Beetwasher on Fri Apr 05, 2013 at 06:53:50 AM PDT

    •  MORE: This Is Where Krugman, IMO, Misses The Real (2+ / 0-)
      Recommended by:
      bsegel, tofumagoo

      Issue:

      ...by turning our problems into a morality play of sin and retribution, it helps condemn us to a deeper and longer slump.
      See, Krugman thinks this is being "turned" into a morality play. What he's missing is actually the REALITY of what's going on. To the GOP, whether they are truly conscious of it or not, it IS a morality play! This really IS all about making us pay for our sins. They NEED to do this, they are COMPELLED to do this, mete out this punishment. It is driven by an EMOTIONAL NEED FULFILLMENT.

      Krugman glances over this as if THAT is the cover. He's wrong, that's the REALITY seeping through.  He's astute enough to pick up on the language, but he wrongly switches the cover story with the reality.  Their economic arguments are the COVER story, the EXCUSE that they lay over their true, emotional motivations.

      The GOP has an emotional NEED to deal out retribution upon the country. That is why their arguments don't make any sense to someone examining their actions through a rational model.

      This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: [http://www.myspace.com/beetwasher]

      by Beetwasher on Fri Apr 05, 2013 at 07:24:59 AM PDT

      [ Parent ]

    •  yep... (1+ / 0-)
      Recommended by:
      bsegel

      gotta read nc today April 5, 2013

      Now It’s Official: Obama Sells Catfood Futures, Um, Social Security and Medicare Cuts
      There is no more pretense possible. As we’ve warned for some time, Obama is eager to put a notch on his belt by being the President that rolled back the New Deal programs that helped create broad-based middle-class prosperity and dignity. He’s cast himself as an adult inflicting discipline on profligate Americans.

      Read more at http://www.nakedcapitalism.com/...

      ''A conservative is a man with two perfectly good legs who, however, has never learned to walk forward.'' FDR

      by lostinamerica on Fri Apr 05, 2013 at 07:36:23 AM PDT

      [ Parent ]

    •  Fine Tuning, If You Will... (1+ / 0-)
      Recommended by:
      bsegel
      [Republicans] ARE trying to punish the country for our sins. Their decisions about the economy are NOT rational, reasonable or logical in any way shape or form.

      They are making a decision to PUNISH the country either consciously or unconsciously, individually and on a group psychosocial dynamic level, and that decision is based on pure emotional need to do so.


      I don't agree that this is driven purely by emotion on the part of all conservatives. There are really two groups of right wingers: For the authoritarian followers (i.e., the base), yes, it's about their easily-manipulated-by-their-leadership emotions; for conservative leaders, who are about means-justify-the-end politics, it's always been about being in control, serving the rich and corporations, and a cynical view of the rest of us (including the above-mentioned base).

      You meet them halfway with love, peace and persuasion, and expect them to rise for the occasion ~ Van Morrison

      by paz3 on Fri Apr 05, 2013 at 10:41:39 AM PDT

      [ Parent ]

    •  A $800,000 two-bedroom house (0+ / 0-)

      is an economic sin.

      I was looking at property in the London W2 postcode area recently. I would not want people paying such absurd prices managing my money.

  •  Visceral appeal of purging is what gives us C-CPI (2+ / 0-)
    Recommended by:
    teacherken, bsegel
  •  While I agree with K's refutation (3+ / 0-)
    Recommended by:
    blueoasis, Jim P, bsegel

    of Stockman, I see little from him on regulating TBTF financial cos., or dealing with the general corruption of the financial industry.  Which is and continues to be the greatest threat to the economy.

    Proper policy is stimulus, govt breaking up tbtf banks, creating a federal bank for the people (ala Dakota) and, more generally, a shift of economic focus from finance to innovation--backed by policy.

    And, oh yes, prosecutions.

    "To recognize error, to cut losses, to alter course, is the most repugnant option in government." Historian Barbara Tuchman

    by Publius2008 on Fri Apr 05, 2013 at 07:17:31 AM PDT

  •  this Democratic president's Grand Bargain (2+ / 0-)
    Recommended by:
    blueoasis, bsegel

    is official...

    President Barack Obama's proposed budget will call for reductions in the growth of Social Security and other benefit programs while still insisting on more taxes from the wealthy in a renewed attempt to strike a broad deficit-cutting deal with Republicans, a senior administration official says.

    http://news.yahoo.com/...

    ''A conservative is a man with two perfectly good legs who, however, has never learned to walk forward.'' FDR

    by lostinamerica on Fri Apr 05, 2013 at 07:30:13 AM PDT

  •  Whatever you call it, Mellonism, Hooverism, (4+ / 0-)

    Austerity, Randianism, etc., it's all a form of modern day Puritanism married to wishful thinking economic theory that isn't grounded in economic fact, and as such is, at best, about Old Testament original sin theology that simply will not reconcile itself to New Testament moral humanism let alone empirical reality, and, at worst, economic cover for justifying the rape of the 99% by the 1%.

    Basically, people who call for austerity are either looking out for their perceived interests (which, ironically, they're wrong about because they're only reducing the long-term effective value of their wealth by advocating it because austerity destroys economies and thus the value of wealth), or they're puritanical moral scolds whose opposition to deficits and deficit spending is grounded more in personal moral outlook than economic theory.

    Something about excess (at least in others, as they always seem to excuse it in themselves) really bugs them, even if it's not really excess, but only appears to be. That's what this is all about, to the extent that their austerian views are genuine and not something they spout out of self-interest or because they're paid to shill it. They subscribe to the ancient belief that one must live within one's means, even if that means reducing one's standard of living.

    Which, in many ways, is a perfectly reasonable belief, so long as we're talking about reducing non-essential expenses during tough times. E.g. cooking at home, cheaply but still healthily, and not eating out, or skipping the annual trip to some fancy resort and taking a "staycation" (i.e. my family growing up).

    But when it comes to essential stuff like health, nutrition, housing, education, etc., it is NOT reasonable, not in an advanced society that enjoys a MASSIVE aggregate surplus, at least. No, when you can't afford such things you don't go without them. You get them anyway, whether it means that you personally go into debt, or society goes into debt, because there ARE essential.

    But no, it bugs them that some people--other people, that is--are getting more than they can afford, and that they are being asked to pay for it. Never mind that this is the right thing to do according to not only modern moral standards, but solid economic practice, and that society CAN afford to do this over the long run. No, on a personal, puritanical, irrational moral level, they simply do not like this, and all that other stuff just doesn't figure into their thinking.

    I.e. they're Old Testament Puritans with a bad case of economic OCD.

    I.e. they're assholes who need a good shrink, and to read the WHOLE bible.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Fri Apr 05, 2013 at 07:53:40 AM PDT

  •  I read part of Stockman's screed (6+ / 0-)

    in last Sunday's Times.  I stopped when, after that bit about "luck" being the reason for broad prosperity & no real upheavals for 70 years -- which we know was due more to Glass-Steagall and Keynsian policies -- he got to the root of all turmoil: taking the U.S. off the gold standard.

    (Hope that paragraph is clear.)

    Anyway, at that point the whole piece was obviously GOP gibberish and not worth my time.

    I look forward to reading Krugman's smack-down of it today.

    Irony takes a worse beating from Republicans than Wile E. Coyote does from Acme. --Tara the Antisocial Social Worker

    by Youffraita on Fri Apr 05, 2013 at 08:30:10 AM PDT

  •  The beatings will continue until . . . (6+ / 0-)

    No reason, the beatings will just continue until Milton Friedman rises from the grave to piss on John Maynard Keynes's ashes

    Regulate banks, not vaginas

    by MinistryOfTruth on Fri Apr 05, 2013 at 09:02:30 AM PDT

  •  Wrong and wrong (1+ / 0-)
    Recommended by:
    bsegel
    you do not pay taxes on interest earned from government bonds, and that investment is still considered absolutely safe.
    Treasury bond interest is subject to federal income tax.  It is exempt from state and local income tax.  State and local bonds usually (not always) are exempt from federal tax and the tax of the state and locality where the bonds were issued.

    Bonds are subject to inflation risk.  The current 10 year treasury bond interest rate is 1.78%.  After you pay federal tax on this interest you have less return than our present very low rate of inflation.  It is a guaranteed money loser.  Buyers of bonds at these rates are paying the treasury to keep their money safe--which says something about the state of affairs in the world these days.

  •  "Urge to Purge"? I thought was a diary about (1+ / 0-)
    Recommended by:
    bsegel

    eating at McDonalds.

    Gentlemen, you can't fight in here! This is the War Room!

    by bigtimecynic on Fri Apr 05, 2013 at 11:27:59 AM PDT

  •  I'd be all for purging (1+ / 0-)
    Recommended by:
    bsegel

    If those who were getting purged were the same people who brought us into the great recession.

    I guess it will get worse before it gets better.

  •  In mainland China (0+ / 0-)

    the government owns all urban land and leases it out for revenue.

    A urban land owning government can run on lower tax rates because it gets to skim off the revenue that goes to rich landlords in say the USA and United Kingdom.

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