Krugman looks down the rabbithole of economic progress that the Republicans want to lead us into, without addressing the fact the Democrats don't want to really resolve the problem either.
Or more precisely, the people who own the Democrats and the Republicans don't want to resolve the problem, either.
...With 11 million homeowners underwater on their mortgages and 3 million more already foreclosed, we have to assume, given the average household size, that some 40 million Americans are feeling mighty strapped. The numbers grow to an overwhelming majority when you take into account the distress of all homeowners, who have watched the value of the family nest egg dwindle even if they substantially paid down or paid off their mortgage debt. And this very widespread feeling of being suddenly much poorer is a nationwide scourge that has dramatically cut the appetite for consumption that drives the economy.
That fact is recognized even by the very business people who are supposed to be inspired to new investment and hiring by Barack Obama’s proposal on Wednesday of an accelerated tax break on business investments. As William Dunkelberg, chief economist for the National Federation of Independent Business, told The Wall Street Journal, “If you give a small business guy $20,000 he’ll say, ‘I could buy a delivery truck but I have nobody to deliver to.’ ” Although Dunkelberg’s members would be happy with a tax cut, he said the most important help would be to “finally address the most important person in the economy—the consumer.”
The anger of wannabe consumers who no longer feel they have the wherewithal to feed that most important of American passions is what is fueling the widespread rage against elected officials. The Democrats, being the party in power, are the most popular target, but they are in deep denial when they blame their pending electoral plight on the demagoguery of their Republican opponents.
Of course the Republicans and their deep-pocket sponsors are being outrageous hypocrites when they blame others for the horrid consequences of their decades of lobbying for radical financial deregulation. Ever since the “Reagan Revolution,” their mantra has been “get government off the back of big business,” and once that was accomplished and Wall Street crumbled under the weight of its own greed, they supported George W. Bush in bailing out the knaves.
But the fault is clearly bipartisan. It was Bill Clinton who signed off on the radical deregulation legislation, and it is Obama who continued Bush’s practice of bailing out the bankers while ignoring the anguish their toxic mortgage packages caused the rest of us. That is why the Fed has gifted the banks with interest-free money to finance their new acquisitions while making them whole again by purchasing more than $2 trillion in toxic mortgage-backed securities and other dubious assets. Not surprisingly, the bankers pocketed that enormous gift from the taxpayers but did precious little in return by way of lending and investment that would bring down unemployment...
It certainly seems like a few of us are profiting mightily these days. Yes, it's only a few, but what's the point of being Masters of the Universe if most people aren't slaving for you?
...when someone says that late, post-industrial capitalism fails to "bring together willing buyers with willing sellers in order to produce value," then I wonder in what idealized world of pure form and meaning has this man been living, because obviously, if you consider the current American economy and the global system in which it is embedded, the production of "value" is incidental to the continued concentration of material wealth and political influence. That is the point. It isn't a failure of the system. It is the system. You can look at America and say:
We have very low capacity utilization (75%) and very high unemployment (10%).
That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment.
There are machines waiting to be worked and people waiting to work them but they are not getting together. The labor market is failing to clear.
And you can be very worried and confused by this. It might strike you as unsustainable. Politically destabilizing. Socially disloacting. Deeply inequitable. Harmful to the long-term project of republican governance.
Which, I'd say, is precisely the point. Cui bono, motherfuckers? Last time I checked, there were still some fuckers getting rich. Meanwhile, the American citizen is increasingly a cash-poor, at-will worker whose docility is enforced by his total dependence on the whims and good will of his employer. Capitalism! Ain't it grand?
It's the 'Merikan way.
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