Ongoing Crisis And Liberal Blindness

The double dip of this crisis is upon us. The latest data agree: the housing market has been in full double-dip mode for five months as home prices keep declining. The foreclosure disaster keeps increasing the combination of homeless families and empty homes. Think capitalist efficiency. Unemployment rose back above 9 % again. The average length of unemployment is now 39.7 weeks, the longest since these records began in 1948. Investments by businesses are decelerating and governments keep dropping workers. 

Over 20 million workers are unemployed or underemployed. Over a quarter of the nation’s productive capacity remains unutilized, gathering rust and dust. Annual output of $ 1 trillion is lost by wasting these resources. Think capitalist efficiency again.

The so-called “recovery” benefitted US banks, larger corporations, and the stock market. It bypassed everyone else and is now over. Still wondering what hit them, victims of the crisis – the mass of working people – now face paying for that recovery.  “Their” government borrowed massively to bail out the corporations. That boosted the national debt. And that now “requires” cutting government spending by “absolutely necessary” reductions in government jobs, services, social security, Medicaid and Medicare.

What money the government saves by cutting public services it can then turn over to the corporations, the rich, and the foreign governments (led by China) who lent it the funds to produce that short-lived recovery (for them).

Paul Krugman is better than most mainstream economists. He pushes his liberal views against most of that mainstream. But Krugman shares the classic liberal blindnesses. Accounting for today’s economic wreckage he worries about “fatalism.” The problem for him is subjective.  People – Krugman likes to obliterate differences with that term - accept that “recovery from financial crisis is usually slow.” Krugman admits that previous governments similarly responded to crises slowly because of their shared “fatalism and learned helplessness.” What he proposes instead is the usual liberal set of economic solutions as “obvious”: aggressive fiscal policy (bigger deficits), aggressive mortgage debt reduction (mechanism unspecified), and so forth. The people should do these things because not doing them is “simply crazy” and because “fatalism…is the main enemy of prosperity.”

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