Monday, October 13, 2014

When The Righteous Are In Charge

The IMF recently released a report warning that the world economy is once again tipping towards recession. Why? Paul Krugman writes in today's New York Times:

The proximate answer lies in a series of policy mistakes: Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on. But why do governments keep making these mistakes? In particular, why do they keep making the same mistakes, year after year?
The answer, I’d suggest, is an excess of virtue. Righteousness is killing the world economy.

The righteous believe that ordinary folks -- who are drowning in debt -- will have to pay for their sins. They also believe that those who led them there bear no responsibility for the mess they helped create. Put simply, the righteous believe in punishment, but not forgiveness:

As I said, it’s about righteousness — the sense that any kind of debt forgiveness would involve rewarding bad behavior. In America, the famous Rick Santelli rant that gave birth to the Tea Party wasn’t about taxes or spending — it was a furious denunciation of proposals to help troubled homeowners. In Europe, austerity policies have been driven less by economic analysis than by Germany’s moral indignation over the notion that irresponsible borrowers might not face the full consequences of their actions.

So the policy response to a crisis of excessive debt has, in effect, been a demand that debtors pay off their debts in full. What does history say about that strategy? That’s easy: It doesn’t work. Whatever progress debtors make through suffering and saving is more than offset through depression and deflation. That is, for example, what happened to Britain after World War I, when it tried to pay off its debt with huge budget surpluses while returning to the gold standard: Despite years of sacrifice, it made almost no progress in bringing down the ratio of debt to G.D.P.

It's obvious where the Harperites stand. Whether it's the economy, or justice, or international affairs, they stand four square for punishment. God, you see, is on their side.


the salamander said...

.. not sure that any sort of belief in Gawd or other invisible friend, burning bush or immaculate election explains or excuses the Harper Prerogatives.

Better to seriously look at the Harper Government as a sort of Japanese Whaling For Science type of myth. A destructive elitist denial of reality.. that presumes there is no consequence.. indeed preaches and screeches the dogma.

We'd do well as Canadians to begin building an ark or suitable enclosure for the entire twisted collection of Harper pus sacks. Maybe the First Nations recall a radical remedy for such madness, and rabid idolatry.. a belief that man can eat oil or money.

Unlike the Japanese, we are not simply making up astounding lies to explain the hunting of whales. In Canada we are accepting legislation to exterminate species by eliminating their critical habitat.

At the heart of it all, that's what Stephen Harper is espousing.. and the Peter Kent's, the Ray Novaks, the Nigel Wright's are fine with it all...

Owen Gray said...

It's not enough to debate their foes, salamander. They must exterminate them.

Scott Fitzgerald maintained that truly great intellects could deal with opposing ideas. Obviously, we're not dealing with great intellects.

Norm said...

"God, you see, is on their side."
By inference you must believe that the "devil" is on the side of the debtors. Debtors whether individuals, households or countries go into debt knowing the lender must be paid back. Krugman's hypothesis and culprit is utter drivel.
Yes world finances are in ruin, fueled by unrealistic expectations but debt forgiveness has to be paid by someone--who. I've got a 100 bucks spare would that do? I expect Krugman and you and me will be the fall guys for others follies but why should we.Do I think the lenders are at fault, yes and should never have been bailed out.
Krugman thinks that inflation is an answer but that's just legalized theft from savers.

The Mound of Sound said...

Intellect is antithetical to faith, Owen.

Owen Gray said...

Krugman admits that inflation plays a part, Norm. But demand ultimately increases income -- personal and governmental.

Increased income leaves room to pay down debt.

Owen Gray said...

In the end, faith is all they've got, Mound -- misplaced and twisted faith.

Anonymous said...

I say you are all wrong, I believe what Flaherty said. The oil, gas, mine and the wealthy barons, are sitting on all of the money. That stops the cash flow around the globe and that causes a recession. The wealthy barons gain more and more control, by doing so. I really think that is why Flaherty resigned? He and Harper were not getting along.

We know the wealthy barons are, bottomless pits of greed. When they line up at the trough and squeal for more money? Harper gives them another, $60 billion in tax deductions. Harper steals from us to give to, the wealthiest outfits in the world. Why?

Owen Gray said...

Why? Because the wealthy believe they are virtuous, Anon. Obviously, that's not the case.