|David Stockman, The Great Deformation: The Corruption of Capitalism in America
(wikipedia, for the young'uns.)
Well, this was fun.
Krugman on Stockman, pt. 1:
Cranky Old Men
Krugman, pt 2
Shorter David Stockman:
We’ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we’re really doomed. I mean it!
Actually, I was disappointed in Stockman’s piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff..
(or has a reason to lie, of course.)
Not much more, I promise. As Mark Thoma points out, the verdict among everyone who knows anything is that Stockman’s piece, mysteriously given star treatment, was pathetic and embarrassing. It’s full of big numbers that are scary because they’re big numbers...
Anyway, I get especially annoyed when people portray all of US fiscal history since the 50s, or something, as a tale of bipartisan runaway spending...Pre-1980, no problem at all; after 1980, deficits were very much a monopartisan issue until the financial crisis, which was a time when running deficits was appropriate. Anyone who says differently hasn’t done his homework.
Krugman, pt 3:
I guess I’m going to have to write more about David Stockman’s unfortunate rant, since a lot of people who should know better seem to think he made serious points...
I assume this is one of those: Robert Scheer at The Nation (originally Truthdig):
It Wasn’t David Stockman Who Wrecked the Economy
(note to self: Scheer/Truthdig unreliable when it comes to intellectual rigor.)
Why is David Stockman driving everyone crazy? The shoot-the-messenger frenzy that has greeted Sunday’s New York Times op-ed by Ronald Reagan’s former budget director leaves one searching for the message that has so unhinged his critics.
I borrowed that word “unhinged” from more than one of Stockman’s critics upset over his “rant” bemoaning the loss of the gold standard and the statist economics practiced by just about every American president from Franklin Roosevelt through Ronald Reagan on to the current inhabitant of the White House.
The only exception was a few golden years of fiscal responsibility under Dwight Eisenhower, who, like Stockman, was possessed of prudent Midwestern economic values. Stockman remains some kind of naive libertarian actually convinced that a free market ought to be free of control by the financial cartels and the cronies they purchase in government. What’s all the outrage about?
...What his critics find so disturbing is not a quant argument about the purity of monetary policy but rather the bold assertion that the overall American system of crony capitalism is in fact wrecked. This is a contention that most Americans might readily agree with in terms of their daily experience, but one that the hardly suffering pundit class would rather not contemplate.
For all of the strident attacks on Stockman’s column, I have yet to read a serious critique of his most brazen claim, that the bailouts and quantitative easing that have saved Wall Street and brought the stock market back to historic heights represent class warfare with the vast majority of Americans on the losing side...It wasn’t Stockman who wrecked the economy. It was Bill Clinton who deregulated the too-big-to-fail banks, and it was George W. Bush and Barack Obama who bailed them out. But even Paul Krugman, who knows how bad things are and yet manages to be charitable in appraisals of his Princeton colleague Ben Bernanke, dismisses Stockman’s critique as “cranky old man stuff. ...”
Krugman, pt 4:
Debt and David Stockman
Well, it turns out that I’ve actually been polite to David Stockman; Neil Irwin describes his recent writings as “spittle-filled”, and gets at the essentially destructive nature of Stockman’s critique. More on that another day. What I want to point out is the way Stockman unintentionally makes a point I’ve been trying to get across: debt does not directly impoverish us, because it’s money we owe to ourselves. OK, some of it is money we owe to foreigners, but I’ve dealt with that part already...
The nihilism of David Stockman
Krugman, pt 5
... “The Great Deformation: The Corruption of Capitalism in America” is a long, spittle-filled diatribe on how the Federal Reserve, Wall Street, FDR, and Richard Nixon ruined America. (Or so I gather — the book only came out today. But here are Stockman’s Sunday New York Times piece and an early review by Marcus Brauchli.)
...But pause for a minute to consider how fundamentally nihilistic Stockman’s view of the economy seems to be: that basically anything the state does to try to fix things is undermining some elegant capitalist order and will inevitably lead to chaos...
Thinking Straight About Debt
Paul Krugman, David Stockman Spar Over Federal Reserve Policy (video)
A heads-up: I’m doing This Week this week. Also on the panel: David Stockman. This should be, um, interesting.
So, a few more thoughts on debt and what it does and doesn’t signify.
Start with the numbers that Stockman loves to cite, showing the ratio of total debt, public and private, to GDP...Stockman, and to be fair quite a few people, would have us see this as evidence that we have been on a vast spending spree (Stockman is big on sprees), living far beyond our means and leaving us with no choice except a drastic reduction in spending. After all, debt is about 200 percent of GDP higher than it was before 1980. Isn’t this a giant burden on the nation?
OK, the sheer size of that number should tell you immediately that this can’t be right...
I wrote about this analytically a while back...
Krugman, pt 6
The Intellectual Contradictions of Sado-Monetarism
Or, of course, their actual intention is something else entirely. But that's crazy talk ;~) Which, segue:
Still convalescing from This Week; but it helped focus my thoughts a bit more...
What I realized is that Stockman, and many others, represent the latest incarnation of sado-monetarism...Nothing must be done to alleviate the pain!
I have to admit that the resurgence of sado-monetarism has come as a surprise. In the early stages, some readers may recall, there were many people — e.g. my colleague David Brooks — arguing that we should use monetary rather than fiscal policy to respond to the crisis...But now that the deficit scolds have killed fiscal policy, monetary policy is also under attack, and with even more vehemence. Yet there’s something very odd about that attack...
So sadomonetarism is intellectually inconsistent. It wants to blame central banks for all the instability in the economy, it preaches a doctrine of non-intervention, but it can only make the case by insisting that financial markets are irrational and unstable to begin with, in which case it’s hard to see why laissez-faire makes sense under any conditions.
And no, I don’t think the sadomonetarists have thought this through. Their position isn’t intellectual, it’s visceral: easy money=sin, and must not be condoned. And while everyone is entitled to his own viscera, this is no way to make economic policy.
Crackpot Realism and the Education of David Stockman
In a previous article I examined sociologist C. Wright Mills' thesis that American foreign policy in the post-World War II era has been dominated by the crackpot realist. Briefly, Mills held that our foreign policy elites evince a groupthink, endlessly reverberated in the echo chamber of modern mass media, which helps them rationalize unethical, reckless, or downright crazy policies as pragmatic, tough-minded, and workable. Debacles like Vietnam, Iraq, and Afghanistan are the result.
But wait, there's more:
While Mills concentrated his thesis on foreign policy and war, it is equally applicable in the domestic realm. During the last four decades, ever since the promulgation in 1971 of the so-called Powell memo, a manifesto by future Supreme Court Justice Lewis Powell, crackpot realism has become the driving force in public discussion of U.S. economic and fiscal policy. In the same manner as in foreign policy, debate over economics -- a field which defines the terms of who in society gets what -- has been dominated by the crackpot realist mentality. And as in foreign policy, narrow, grasping, and self-serving policies which may be good for the few but disastrous for the many are transformed into practical and self-evident wisdom that must be implemented because there is no alternative, or because every other alternative will lead to some vaguely specified disaster...
...A museum-grade example of the crackpot realist has just emerged for our examination after nearly 30 years of obscurity. David Stockman, President Reagan's director of the Office of Management and Budget from 1981 to 1985, has now surfaced after a post-government career destroying American businesses during 17 years as a leveraged buyout artist to issue a bitter and interminable jeremiad against the federal government for ruining the economy.
Superficially, Stockman's bill of indictment could have been written by a Marxist. Morgan Stanley's former head kleptocrat, John Mack, comes in for his acerbic criticism, as do erstwhile Federal Reserve Board chairman Alan Greenspan and deceased conservative economic deity Milton Friedman. As for economic policy, "the entire mega-LBO boom was the equivalent of a state-assisted fraudulent conveyance." Stockman is accurate here, even as he writes with exquisite lack of self-awareness.
Who is responsible, in Stockman's view?
The government, for allowing it to happen. Certainly it contributed heavily to the debacle, insofar as Congress dismantled the New Deal legal and regulatory framework which had been designed to prevent a recurrence of the financial buccaneering of the 1920s. But why did the government do so? Largely because of political contributions from the so-called free-market entrepreneurs whom Stockman thinks have been mysteriously forced by government to do bad things...
What is Stockman's remedy? In true crackpot fashion, he recommends a horse doctor's dose of the same medicine that caused the mess in the first place. In his view, John Mack and his colleagues like Richard Fuld and Angelo Mozilo would have behaved like choirboys had only the government not meddled in the sacrosanct free market. Stockman also suggests a return to the gold standard, an economic nostrum more likely to be advocated by a gullible follower of Glenn Beck than anyone conversant with the history of the last 80 years.
Stockman's resume reveals what makes his tribe of crackpot realists tick...The Reaganomics budget wizard and leveraged buyout jockey is fundamentally a divinity student seeking a Theory of Everything.
Stockman, despite his sociopathic finger-pointing of blame for catastrophes he was instrumental in creating, is the consummate idealist. At the higher levels of religious intoxication, the idealist may become indistinguishable from the sadist: The mere clay of humanity is never worthy of the idealist's vision, whether that vision dwells in the firmament or on 1 Wall Street. And so it is with the crackpot realist...
David Stockman's Delusions: The Gold Standard Is Still a Really, Really Terrible Idea.
Barbarous relics are relics for a reason
But it seems hard to argue that the U.S. economy peaked in any way back in 1933. Well, unless you're a certain kind of libertarian. The kind of libertarian who thinks we cast ourselves out of our economic Eden after we cast off the gold standard to taste the forbidden fruit of fiat money.
David Stockman and the Cult of Gloom
In other words, a libertarian like ex-Reagan budget director David Stockman.
In a long and rambling piece that really defines the word "screed", Stockman inveighs against the Federal Reserve and deficit-spending for allegedly creating fake wealth and real bankruptcy. Rather than propping up our still-weak economy with monetary and fiscal stimulus, Stockman pines for what he imagines was, well, our golden age: the age of the gold standard and balanced budgets. It sounds plausible-ish -- who's for more bubbles and more debt? -- but it actually fails every test of logic and history...
...This libertarian worldview is fundamentally a religious one. The Market metes out its punishment for our speculative sins with the quite-visible hand of recessions. And we must accept its judgment. Doing anything to avoid our penance is just blasphemy against the one, true faith.
It's a barbarous relic.
The Four Dumbest Things In David Stockman's New Book
David Stockman Writes Huge Unhinged Screed About How America Is Doomed And How You Should Get Out Of The Market NOW:
The piece can truly be characterized as Hard Money Buzzword Bingo, as Stockman tries to get in as many scare lines as possible.
(Of course, there's also this guy who seems to think that 'revisionist history' is a good thing...)
Mourning In America: The Incomplete Education of David Stockman:
David Stockman’s education began at Harvard Divinity School where he hoped to become a great moral philosopher in the tradition of Christian social activists. It continued with his role as a congressman in Washington in the late 1970s. Then as director of the Office of Management and Budget (OMB) in the early 1980s, he was the cutting edge of the Reagan Revolution and “Morning in America,” which portrayed government as “the problem” and unconstrained free markets as “the solution”. His subsequent career as a businessman was troubled by bankruptcies and culminated in an indictment. Now his original divinity-school training has resurfaced and he has re-emerged as a fire-and-brimstone preacher.
Mr. Stockman believes that there is evil and corruption afoot in every corner of the land. All of us must repent, repent, he says, otherwise hell-fire will descend on us all...
Almost all of Mr. Stockman’s bile is directed at the sinners in government who are responsible for virtually everything that has gone wrong in America. In Mr. Stockman’s view, it wasn’t the private sector that offshored America’s tradable goods sector: it was the evil and all-powerful Alan Greenspan. It wasn’t the banks who created a bubble in derivatives: it was evil “Uncle Ben” Benanke, who lined the pockets of Wall Street with free money.
Connoisseurs of purple prose will find much to love in Mr. Stockman’s jeremiads. Whether they will be useful either for understanding what is happening in the economy or for providing a guide to useful remedial action is another issue...
America is now at an “an end-stage metastasis.” There is no way out. We are “broke—fiscally, morally, intellectually.”
Fun stuff, but is it true?
In short: nuh-uh.
The Highly Predictable Return of David Stockman: How the former Reagan budget director has mastered the art of playing the iconoclastic truth-teller. (Weigel -- and Slate, for that matter -- aren't among my favorites, but:)
Thirty-one years and six-odd months. That’s the new record. That’s how long former Reagan budget director David Stockman has dined out on his outcast/iconoclast—outconoclast?—reputation for fiscal straight talk. Reporters would have a tough time shaming parties or presidents if the occasional Isaiah didn’t break away and do the shaming for them. Stockman’s been shaming Republicans since his breakfasts with William Greider turned into a novella-length Atlantic blockbuster about his political “education.”
Stockman hung up his green eyeshade and spent two decades in the private sector. But for media purposes, he is forever a “former Reagan budget director” who “warns of new housing bubble” or “wouldn’t touch the stock market with a 100-foot pole” or “blasts Paul Ryan’s proposal.” The bio sells the story and confirms whatever economic theory is being plied. That’s a shame: Stockman’s current theory is one part sense and five parts Hunger Games nightmare. In his view the gold standard should be restored, entitlements should be abolished, and a brief crash would be followed by a somewhat prosperous dawn.
This was former Rep. Ron Paul’s plan for years, but the media takes it more seriously when it comes from someone like Stockman...