When the economy collapsed in 2009, America entered what has been called the Great Recession. It's not the first time the country has hit an economic downdraft on steroids - and we did have some things that kept it from being an all-out disaster: food stamps, unemployment benefits - the whole social safety net.
But here we are in 2013 and the economy is still not working for all too many people. Unemployment is higher than it should be, and the recovery only seems to have reached the 1% - the rest of us are still treading water. Corporate earnings are up, the stock market is up, and the surviving big banks are bigger than ever. But Main Street is still looking pretty beat down. What's going on?
Kevin Drum over at Mother Jones has put together a handy summary in reader-friendly form with charts, numbers and such, looking at the economic disaster we've inflicted on ourselves in the name of a really bad policy and how it unfolded.
More below the Orange Omnilepticon.
It's not like there weren't proven answers on how to turn the economy around. (Krugthulu is still being dismissed as shrill). Instead, America - and Europe - embarked on a deliberate policy of Austerity at a time when governments should have boosted spending to take up the slack in the economy. The results should have proved beyond question by now that Austerity has only made things worse.
And indeed, it seems as though the Economics Profession for the most part has abandoned it. Unfortunately, the policy makers have not. Austerity and smaller government is still the order of the day, as first propounded by Saint Ronald "Government is not the solution to our problem, government is the problem" and ratified by the Big Dog - "The era of big government is over."
And how has that worked out for us? Not so hot. It seems this bipartisan accord included a lot of collateral baggage that has worked out great for the 1% - and screwed the rest of us. (Meanwhile the 'quest' for bipartisanship is still sucking in those who should know better.)
Kevin Drum has the Cover Story over at Mother Jones this week: It's the Austerity, Stupid: How We Were Sold an Economy-Killing Lie In it you can find numbers, charts and timelines showing how the embrace of a flawed doctrine has hurt us and continues to hold us back.
Drum seizes on the unfortunate work of Reinhart and Rogoff as a kind of trigger - they attempted to show that high levels of debt (above 90%) would trigger economic disaster, and it became the center piece of the Austerian doctrine that prioritized debt reduction and slashing government spending as the way out of the collapse. Never mind that Keynesian economics called for a massive stimulus, or that the R&R paper would turn out to be badly flawed. It tied in with an anti-government ideology embraced by both sides, and fed the idea of the economic collapse as a kind of morality play in which redemption could only come through suffering. (Not that the 1% suffered for long.)
Drum's story points out that Austerity has not only hurt us in the here and now - its effects will linger into the future. There are people whose economic lives have been set back, investments not made in infrastructure, lost production, and so on. Drum's assessment is not encouraging:
So have we learned our lesson from all this? Of course not. No further stimulus is even remotely on the table, either in the United States or in Europe, and Republicans are already promising another debt ceiling crisis unless Obama agrees to yet more spending cuts. The inmates took over the asylum three years ago, and they show no sign of leaving.Is there any sign of a backlash yet? If the Republicans force a shut down of the government, that might be a tipping point, the Chuck Todd apoligists of the press not withstanding. The "folks who run the world" were certainly terrified by Occupy Wall Street - and who knows what smoldering sparks OWS has left in its wake? Charles P. Pierce notes that Ronald Reagan's idolaters have lately been distressed by the disrespect that is starting to fester.
Austerity is working out fine for the 1 percent: Their jobs are safe, their investments are growing, and their taxes are low. But the rest of us are paying a high price in the form of slow growth, high unemployment, and stagnant wages for years to come. All things considered, we've been remarkably tolerant of our fate. The folks who run the world might do well to ponder how long that's going to last.
TEMECULA – A bronze statue and marble-tile monument in honor of President Ronald Reagan and his belief in American’s can-do spirit has been hit by vandals, who torched the tribute, which destroyed tiles touting Reagan’s words of wisdom and left the likeness of the president tarnished and defaced.Individual Americans are starting to realize the snake oil they've been fed for the last 30 odd years has failed them, and how badly they've been screwed by it. They really haven't been given a clear alternative though. One reason FDR was able to push through so many of his policies was because it was pretty obvious that capitalism had failed - and there were worse alternatives waiting to be taken up. FDR saved capitalism from itself. It remains to be seen if anyone today can pull off a similar feat in the face of an entrenched elite oligarchy with the legion of fanatical foot soldiers of the Tea Party cult to do their dirty work.
...Opponents of austerity in a depressed economy opposed it because they believed that this would worsen the depression — and they were right.emphasis added
Proponents of austerity, however, were lying about their motives. Strong words, but if you look at their recent reactions it becomes clear that all the claims about expansionary austerity, 90 percent cliffs and all that were just excuses for an agenda of dismantling the welfare state. That in turn helps explain why the intellectual collapse of their supposed arguments has made no difference to their policy position.
His post The Depressed Economy Is All About Austerity pulls no punches. As it concludes:
I don’t want to pretend to spurious precision here. Instead, I just want to make the point that given what we know and have learned about macro these past five years — and given the modest recovery that has taken place — we’re now at a point where, to repeat, to a first approximation the depressed state of the economy is entirely due to destructive fiscal policy.emphasis added
The austerians have a lot to answer for.
Not that the Austerians ever will pay a price for the folly they imposed on us - or those who believed in their sincerity. It all boils down to a simple trade off: more for the rich and less for everyone else.
And if you want one more thing to really put icing on the cake, the Masters of the Universe who blew up the economy are as clueless as ever. Kevin Drum links to an Ezra Klein article spelling out just how offensively victimized they feel.
AIG CEO Robert Benmosche is in trouble for telling the Wall Street Journal that the fight to cut AIG bonuses after the company was bailed out by the federal government was basically the work of a lynch mob, "sort of like what we did in the Deep South [decades ago]."...
...Wall Street tycoons really do feel put upon. They simply don't feel any collective responsibility for either the housing bubble or the Wall Street fraud and financial manipulation that made it worse. Nor do they feel any responsibility to support government action that helps ordinary workers who were hurt by the massive recession that followed. Nor do they believe that any further regulation of their activities is warranted in any way. They are the engines of the economy, not rent-seeking mooches, and they're just damn tired of all the pipsqueaks who think otherwise.
It is truly mind boggling.