Paul Krugman writes that 2020 was the year when Reaganism died:
This year is closing out with a second demonstration of the lesson we should have learned in the spring: In times of crisis, government aid to people in distress is a good thing, not just for those getting help, but for the nation as a whole. Or to put it a bit differently, 2020 was the year Reaganism died.
What I mean by Reaganism goes beyond voodoo economics, the claim that tax cuts have magical power and can solve all problems. After all, nobody believes in that claim aside from a handful of charlatans and cranks, plus the entire Republican Party.
No, I mean something broader — the belief that aid to those in need always backfires, that the only way to improve ordinary people’s lives is to make the rich richer and wait for the benefits to trickle down. This belief was encapsulated in Ronald Reagan’s famous dictum that the most terrifying words in English are “I’m from the government, and I’m here to help.”
True, there wasn't enough aid and more -- much more -- is still needed. But 2020 illustrated a simple truth: government can make people's lives better:
All this big-government intervention worked. Despite a lockdown that temporarily eliminated 22 million jobs, poverty actually fell while the assistance lasted.
Nor did huge government borrowing have the dire consequences deficit scolds always predict. Interest rates stayed low, while inflation remained quiescent.
Republicans in the United States and the Conservative Party of Canada embraced Reaganism as dogma. 2020 was the year that proved they have worshipped a false god for a very long time.
Image: Peter Trumbore
8 comments:
With all due respect, this Krugman analysis is hardly new. Lowly commenters opining on political blog essays have been saying the same thing for literally years.
I try to find more fundamental reasons for why things are the way they are, not starting in the middle with Thatcher and Reagan and moving forward from there. Of all the analysis I've read over the years, the most erudite has been by Professor Michael Hudson who is a veteran of Wall Street and Distinguished Research Professor of Economics at the University of Missouri at Kansas City (UMKC). he has his own website, but his articles there lag ones he publishes elsewhere, such as one from a few days ago, at:
http://www.informationclearinghouse.info/56114.htm
Anyone who has followed political news for a time and has a very basic understanding of economics should have little trouble following his explanation of how we got here from there. Much more interesting than rehashing old progressive memes about the great unwashed neoliberals of the last four decades.
BM
Thanks for the link, BM. It gets to the point:
The financial sector essentially is of the 1% or the 10% that holds the rest of the economy in debt. The financial sector makes its money by getting the rest of the economy indebted to itself and making money off asset price gains. In the past, the financial sector made its money by getting interest. But now, with almost zero interest what it’s after is capital gains because capital gains basically are either untaxed or taxed at very, very low rates.
So, the financial sector essentially makes its money not by being part of the production and consumption economy but by siphoning off as much money from the production and consumption economy as it can for real estate, for insurance and for debt service and banking services. The insurance, of course, would include the health insurance.
It's the siphon economy.
The GOP has always known that big government intervention works and they've used it for years to insulate their rich donors from financial consequences, see e.g. 2008 financial crisis and 2020 Covid relief. As Dick Cheney frankly admitted, the GOP doesn't care about deficits while in office. Squawking about them is just a way to avoid helping anyone who isn't white and rich.
Reaganism was always about grinning while enriching the rich at the expense of everyone else, and getting away with flagrant lawbreaking. The poisonous weeds that Reagan planted continue to flourish within the GOP, abetted by Democrats and media who balk at exposing and pulling the weeds of elite wrongdoing. Krugman strikes me as unduly optimistic about Reaganism's demise.
Cap
The evidence suggests that Reaganism should have died, Cap. But, in a fact-free universe, it is the zombie that keeps eating brains.
My very cynical viewpoint has been that Reagan missed a word in his statement. It should have been, "“I’m from the US government, and I’m here to help".
Sorry, I was just leaving.
It seems an article of faith among neo-liberals, especially in the USA, that only the private sector can do anything productive or innovative. This contradicts two or three thousand years of history and is challenged by lots of recent experience---see for example https://www.currentaffairs.org/2019/04/cheating-at-monopoly or for a fuller treatment of more recent events have a look at Mariana Mazzucato's rather fascinating book The entrepreneurial state: debunking public vs. private sector myths.
Unfortunately this fervent and unfounded belief distorts far too policy. In the US, especially, the weird perversion of Christianity known as the "Prosperity Gospel" further confuses things.
And therein lies the problem, jrk. Reaganism has become -- for many -- religious dogma.
@ Owen
Reaganism has become -- for many -- religious dogma.
Now that you mention it, yes. I is a bit like the intertwining of Aristotelian "science" and Church dogma that helped get Galileo into that last bit of trouble.
When people confuse what they should render to Caesar and what they should render to God, jrk, there's a world of trouble.
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