"That’s the basic story. Consumer demand is strong enough to sustain a recovery, but not strong enough to give workers any bargaining power. In the short run, the labor market is still slack. In the long run, the dominant trend of the previous two decades — skyrocketing inequality — is resuming. There’s a good argument about the adequacy of the Democrats’ response to this state of affairs. But say this much: It is a response to this state of affairs. If you look at President Obama’s economic strategy, you see a combination of policies addressing these conditions in some form. You have proposals to replace sequestration, which is a millstone around the economy’s neck, and implement some infrastructure and other short-term stimulus. You’ve got some additional inequality-reducing proposals to reduce tax deductions for the rich and promote early childhood education... The right has consumed itself with a lively internal argument about the direction of conservatism and the Republican Party — libertarian populism, conservative reform, and all that. But this discussion has ignored the front and center economic questions. Do conservatives still think cutting short-term deficits will increase rather than retard growth? Academic support for that position has almost entirely collapsed. I don’t even see many conservative intellectuals defending it in columns. And yet the Republican Party marches on, opposing any effort to lift short-term austerity policies that economists almost all believe are holding back the recovery. It’s as if the head of the austerity monster has been sliced off, but the body lurches forward regardless. Meanwhile, however Republicans resolve their long-term vision debate, they have coalesced around a short-term vision. It is to repeal Obamacare without a replacement, maintain short-term austerity, weaken labor laws, loosen financial regulation, and defend every tax deduction enjoyed by the affluent. I don’t see how this policy mix could be remotely defended in light of actual circumstances. Almost nobody on the right seems to want to defend it. But nobody seems interested in placing even the slightest pressure on the Congressional party to alter its stance, either. The great economist Paul Samuelson once said, "Let those who will write the nation’s laws if I can write its textbooks." He seems to have been too naive. The great economic arguments of the recession are over, and it turns out not to matter."
Posted on: Mon, 16 Sep 2013 12:04:56 +0000
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