Reality by nualabugeye
All through the last two and a half years there has been talk on all side about confidence. The Republicans started this meme, but it has been adopted by the Democrats as well. Over and over we have been told that Policy X was needed if we are to have a growing and stable economy.
This has been rightly mocked as appeals to the Confidence Fairy. This obsession with confidence grew as an appendix to the voo-doo of Supply Side Economics and has about as much to do with reality as its big brother originally espoused by St. Regan.
It might be palatable if it actually worked, but every time we have been treated to the need to restore confidence it has lead to the opposite result. We have seen that the claims of the Republicans that the ACA would cause less employment because of the “uncertainty” of the new law. Instead after it was passed hiring increased.
We were told over and over again that we had to provide confidence to the markets by engaging in austerity measures in the debt ceiling/deficit reduction battle. Instead of making the world more confident about our economy we got a scolding by (say it softly but say it clearly) the seemingly politically motivated S&P downgrade of our debt.
I am really confused by this push for certitude for business. I didn’t go to business school but I have worked for enough C and D level execs to know that they teach that there is no such thing as certainty in business. In fact that is kind of the point of business in a capitalist system, being able to take a risk that you think is good, but don’t know will pan out, and then either reaping the benefits or suffering the pitfalls.
It is part a parcel of the idea of a market. Yet the self-proclaimed champions of the market are staking the future of our nation on making sure that we remove risk and provide the current masters of the universe with confidence.
It seems to me that this is more of the Faith Based Reality thinking that came into full bloom in the George W. Bush administration. They famously said they were going to create reality instead of dealing with it.
Well, like all delusional people, they can live in their created reality only as long as the consensus reality does not contradict them. And lest anyone think I am just pointing at the Republicans about this, take a gander at this post by Brad DeLong. He has talked to a lot of the White House economic team and this is what he is hearing:
And when I talk to their staffs, the message I hear is not “we were wrong about how the world works, and are rethinking the issues from the ground up to figure out what to do” but instead “we were unlucky: our policies were good”. Never mind that Richard Koo or Carmen Reinhart or Ken Rogoff or indeed all of us who have ever taught the Great Depression in Europe foresaw the rerun of 1931s Credit-Anstalt crisis that is now playing at the European cinema.
Faith based thinking at its very worst. It can’t possibly be that there is a major flaw in the way they planned, it is all about luck.
I am not one to bash business just to bash business. It’s too easy a target and any industrialized nation does need some policies that help business as well as regulations that constrain it. Like everything in governance, it is only done well and correctly when there is a proper balance.
But it is clear that we have gone way, way, way overboard on the side of trying to “help” business. The only reason to help them is to make sure that your economy is stable and provides not only goods and services but good jobs and opportunity to you people.
By trying to reward the current top of the heap companies (you know, the ones that go out of their way to fund political campaigns) we have pushed the economy into a place where 2.5 trillion of business money is sitting on the sidelines.
These companies don’t believe in the Confidence Fairy. They believe in the economic basics, and all the confidence building in the world is not going to change the fact that our dumbass government has just committed to a policy that will not only result in reduced demand over the next decade, but basically precludes any chance of major stimulus or jobs programs. After all if you are saying you’re going to spend less, there is not going to be any money for putting people to work.
If the goal is to make business get off the sideline the way to do it is not to help them line their coffers by doing what they are doing now. It is by showing that there is an opportunity (but not the certainty) of taking the 2.5 trillion and turning it into 5 trillion.
It is time for Washington to wake up and recognize that they have been living a pipe dream. No matter how hard they clap for the Confidence Fairy it is not going to rise like Tinker-Belle at the end of Peter Pan. It is a non-existent creature.
It is not like we don’t have examples of what happens when you provide confidence by austerity. Ask Great Britain how that whole austerity thing is working out for them. They forced themselves into a second recession and now neighborhoods all across their capital are burning.
Does anyone think that inspires a lot of confidence? Me either.
Sadly I don’t see us actually changing course. As long as Republicans can take someone as clueless as Rep. Michele Bachmann seriously about the economy (she recently said that if she had been president she would have avoided the downgrade by letting the U.S. default. Yeah, that’s right she thinks that default is better than having S&P think we won’t pay our bills in the future. Go figure) and we have a White House economic team that can’t recognize a mistake we are going to get more of the same.
This is where living in the reality based community sucks. We can see the car going off the cliff, but we are not allowed to talk to the clowns driving it. Or if we do talk we are told to sit down and STFU!
London is burning, if we continue down this path, by next summer it might be Washington or Chicago or Detroit or Los Angeles.
The floor is yours.
