The austerity policies that gripped the world in the face of the global economic downturn have not worked. Unless the intent was to make a bad situation almost intractably worse. In which case they have worked like gangbusters. Pop some Cristal!
The good news is that people are starting to wake up from this dementia. As Kevin Roose noted, the media are starting to question premises of austerians. As well they should, considering that the holy illuminated manuscript, a study by economists Carmen Reinhart and Kenneth Rogoff, turns out to have been an error-ridden mess. We are in the midst of what Politico calls "an intellectual shift away from austerity." Better late than never, I guess.
So who will be the last man to die for this mistake? The New Republic's Michael Kinsley has volunteered for the job, in a piece that essentially contends that while everything austerity critics have said (about it being a dysfunctional to non-functional set of economic prescriptives that have doled out harm where none was desired) is correct, it was still necessary to punish the proles, because offering help to the ordinary people being ground up in the teeth of the economic downturn would have sent the wrong message, morally speaking.
Kinsley's imagined antagonist here is, of course, Paul Krugman, who has contended the opposite -- by which I mean he has regularly advocated for bringing the economy back to full employment, breaking the back of the aggregate demand crisis, and doing all of this as a priority above blind deficit butchery. Not that he's a particular fan of high deficits. "Give me something that looks like a normal employment situation and I'll become a deficit hawk," Krugman has said. Which seems pretty reasonable.
Krugman's writings seem to bother Kinsley quite a bit, so much so that he gives Krugman top-billing in his piece, even though it was more clearly animated by an op-ed penned for The New York Times by David Stuckler and Sanjay Basu, titled "How Austerity Kills," which discusses, among other things a correlation between unemployment and suicide, and the extent to which the idiotic sequestration -- which is essentially austerity meeting PCP -- could spark all manner of public health crises.
Kinsley writes that Stuckler and Basu "are right, in a way," and that Krugman is also correct. But the reason Kinsley doesn't stop there and close up his laptop and walk away has nothing to do with any sort of economic argument. In the seeming belief that the author's choice of headline, invoking the idea that "Austerity Kills," has opened the door to a moral argument, Kinsley shucks logic aside and simply contends that measures to stimulate the economy and promote full employment are even more immoral. "'Stimulus' is strong medicine, " he writes, "an addictive drug -- and you don’t give the patient more than you absolutely have to."
Kinsley may have not read Krugman's work very clearly, considering the fact that the Times columnist, like the rest of America, is still left in a state of pure, childlike wonderment about what it might feel like to receive too much stimulus, as opposed to their experiences with the inadequate amount that was doled out after the downturn.
Over at Salon, Alex Pareene has subjected Michael Kinsley's recent austerity apologia to a thorough teppanyaki-style slice-and-dice, pointing out that Kinsley, while acknowledging the pain austerity economics have caused, nevertheless believes that the pain is "worth it," because, in Kinsley's words, "Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run.”
"Kinsley seems to accept that belief as true," Pareene writes, continuing:
It is hugely embarrassing on a number of levels that this is the last line of Kinsley’s column: “They at least are talking about the spinach, while the Krugmanites are only talking about dessert.” First of all, spinach is actually pretty good if it’s prepared well. Maybe instead of “spinach” the metaphor for austerity should be “poison.” “We need to eat our poison to make up for how much cake we had before” is the austerian argument, more accurately put.
Second of all, the “we need our medicine” line always -- literally always -- actually means you need your medicine. One reason austerity has been so popular (and Krugman says this as well) is that its effects don’t harm the rich.
Which explains why Kinsley can sit atop a puffy cloud and contend that while the harms and misery that austerity policies are piling up as their legacy (atop their foundation of junk economics) are plain and self-evident and unfortunate, the important upside is that normal human Americans are finally getting the comeuppance they so richly deserve. And that's the efficacy of austerity -- it's the economic version of a black-site stress position. The longer you have to stand there with your armed pinioned behind your back, the more you'll want to be a good boy and never have to suffer this pain again. As economic beliefs go, it's particular in its unrestrained sociopathy.
But these beliefs are fairly persistent. Back in July 2009, Chris Hayes wrote at length about the well-heeled belief that every boom-to-bust peregrination of the economy was an example of excess that needed a steady dose of Calvinism, in the form of immiseration, to correct. Hayes recalls the admonition of robber-baron Andrew Mellon, thanking Mammon for the Great Depression: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
It's not hard to find this same view among bankers, financiers and sundry Wall Streeters today. Recently a bond trader told me he hoped that the Fed would raise interest rates and plunge economy into a truly deep, painful (but he hoped, quick) depression. "I don't think that would be good for you," I said. "Oh, I'd be fine," he responded. ( I meant politically: as in, there'll be people with pitchforks at your door. We were talking past each other I suppose.)
There's no question that economic contraction feels quite different to a bond trader and an unskilled worker. A spike in unemployment hits those on the margins of the labor market the hardest, while contractions also usher in deflation, which has a strong tendency to make the rich richer. But the faith in the salutary effects of economic misery also derives from a puritanical view of the economy, one that can manifest itself on both the left and right. Under this view contractions are collective punishment for our trespasses; we are sinners in the invisible hands of an angry God.
Or, as Joseph Schumpeter put it, "a depression is for capitalism like a good, cold douche."
Speaking of, let's go back to Kinsley. The plainly risible portion of Kinsley's paean to psychosis as an economic remedy is this:
I don’t think suffering is good, but I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy. Sure let’s raise taxes on the rich. But that’s not going to solve the problem. The problem is the great, deluded middle class -- subsidized by government and coddled by politicians. In other words, they are you and me. If you make less than $250,000 a year, Obama has assured us, you are officially entitled to feel put-upon and resentful. And to be immune from further imposition.
The group of people who Kinsley refers to as the "great, deluded middle class" happen to be the people who have already paid a huge price for the profilgacy of those who personally took actions that specifically tipped the economy into a downturn. And there's a dollar figure you can put on the price they paid: $4.7 trillion. That's how much taxpayer wealth was "disbursed by the U.S. government in an effort to aid the financial services industry," after the financial services industry cocked up the economy of the whole damn planet. The middle-class has also paid for that error by being subjected to a massive unemployment crisis.
As for being "subsidized" and "coddled," I don't really know to what Kinsley is referring. Credit was loose in the aughts? The Bush administration promoted an "ownership society?" There was a housing bubble? The economy glided forward and upward on the dream of spending beyond your means? Treat that as some sort of moral failing if you like. It's generally considered to be immoral to engage the services of a prostitute, but we all know that it's the pimps who drive that business who get rich. And whatever "subsidization" and "coddling" transpired in the pre-crash era still made a few people very wealthy.
And then the "coddled" bailed them out when they got in trouble.
So, the middle class, far from needing some sort of further punishment or admonition against how much they've been coddled (that's as sick a joke as there ever was), has very ably served as the sin-eater in post-crash America. Whatever debt they've owed, it's been paid in full several times over.
The pain prescription, at this point, is nothing but pure sadism. But, happily, it gives me another opportunity to cite Joe Wiesenthal, who contends against the argument that "pain" is a necessary economic remedy. Though he understands the appeal:
It's understandable why the pain metaphor is so popular. One, it's logical to think that the answer to big deficits is cuts, and cuts are painful. More importantly, it appeals to an innate sense that pain is frequently a long-run redeeming thing to experience. You go to do Crossfit, and you feel pain. But then pretty soon you're a beast that's never felt better. Some religious people used to mutilate their own flesh to show proper respect to The Lord.
So this is just a popular idea: Take the pain now, be redeemed.
But this Calvinist Calvinball is bunk, as Wiesenthal goes on to explain at length, beginning most importantly with the reminder that as far as debt-slashing engines go, there's never been a better one than full employment.
A chart that everyone needs to have seared into their brains is this one, which shows the deficit as a percentage of GDP (red line) vs. the unemployment rate (blue line).
For 60 years (!) the pattern has held. When unemployment drops, the deficit as a percentage of GDP drops. When unemployment rises, the deficit rises.
"The bottom line," Wiesenthal writes, "is that pain and belt tightening are associated with higher deficits" and that it's "entirely the wrong way to think about closing the deficit." So, it's not just that it's inhumane to believe that what the middle class needs is a continuing reminder of how they deserve the pain of the post-crash economy, Kinsley's maniacal anti-stimulus beliefs are the entry to a vicious cycle. The supposed cure is actually the disease in disguise. The more we lessen the pain of the middle class, the better the economy fares. The more we deepen the pain, the worse the economy gets.
What's been exposed here is actually pretty interesting. The promise of austerity economics was that those economic tactics would right the ship of our economy, and bring it safely into the port of prosperity. It was "the quicker path," remember?
This plainly did not happen. Now, bereft of any evidence to point to, lacking any means of documenting that austerity has achieved anything other than widespread pain and misery, Kinsley's left to argue that the pain and misery were the real virtue of austerity all along. And he takes a righteous pleasure pointing that out. Kinsley insists that "austerians don’t get off on other people’s suffering." I'm willing to believe that. But if Kinsley's any guide, they sure do get their kicks pointing out that the suffering is deserved. The moral posturing is an addictive drug.
Well, I'll just say that if Michael Kinsley really needs help getting his ya-yas out, he should just check Yelp for a decent bondage club in his area, and leave the rest of middle-class America the hell alone.
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