Krugman: Only a Big-Spending Government can Get us out of our Depression (Moyers)

Bill Moyers interviews Paul Krugman, who attacks the GOP deficit hawks for interfering with our emergence from the Great Republican-caused Depression of the early 21st century. What we need, he says, is more government stimulus. But we’re not going to get it.

9 Responses

  1. Interesting interview.

    The conservative’s point of view that the government is intrinsically bad and its influence in the economy should be reduced to a minimum is a fundamental unquestioned dogma, or first principle, of conservative thought which is thought to transcend the model of empirical testing which is the hallmark of scientific inquiry which has proved itself since the scientific revolution of the 17th century to have been so fruitful.

    Their view is more religion than science.

    The experiment, during the Bush years, which saw a radical reduction of tax revenue at the top, also saw the deepest recession since the Great Depression, and it also saw negative growth in the private sector, the first time since the great depression. President Bush presided over the smallest ratio of job creation to deficit creation of any president since the great depression.

    The experiment which was suppose to have produce a vibrant economy proved to be an abject failure.

    But the conservatives did not learn from the failure of their experiment.

    The model of scientific inquiry in which the results of experiments are taken to be trustworthy test of the validity of a theory is completely lost on the conservative mentality

  2. About half-way through he gets to the core of our economic problems, saying…”once again….we’re not in the realm of rational discourse…”

    It strikes me this is due to the compelling attractiveness of simplistic solutions and ideology when faced with increasing complex rational alternatives. Lacking the patience, education, and dedication it takes to do one’s homework and somehow institute policies considerate of the various constituencies, it seems quite futile. Even ostensibly responsible people now throw up their hands and go for the panacea of the invisible hand. To argue against this is to implicitly call these folks stupid.

    At least a couple of times Krugman used the late 1930’s and WW II govt spending to illustrate the level of spending needed. I’m sure he’d make adjustments for the dumb-labor shovel-ready jobs of those days and the high-technology workers of today. But done half-heartedly even this approach would flounder when current employers already have a very hard time finding workers with such skills.

    I suppose this could be resolved, assuming sufficient political commitment, by govt empowered schools/training programs combined with basic research grants. This approach could lead to the creation and development of new technologies, such as the breakout of semiconductor technologies under Reagan, which we are still harvesting today. Talk about something that might meaningfully address the global warming/energy picture, when you consider the many small breakthroughs being made even in its absence

    But, as he also as much as says, to get past the current political intransigence we’d need the equivalent of invaders from space to bring people together and behind such an agenda. K makes a great argument, but its hard to see a way forward when the political commitment depends on an absent rationalism and where our proven capacity for progress is so evidently glacial.

    Let’s hope for those space aliens.

    • Travis: minor point. In the 1930s businesses *trained* their workers. Now jerkass business executives claiming “we can’t find trained workers”. Well, train them, dumbass.

      • (I’m referring to the business executives who think trained workers spring from the head of Zeus as dumbasses.)

        • Nathanael. Actually I think this is flaw in such a progressive perspective. My experience is of a significant part of the population that is just too thick to take-on very much in the way of training, let alone the education that is the foundation of deeper judgment, taste and development. The culture of apprenticing in Germany argues against this opinion, but I rather stand-by it: some people just need to be trained with a stick and will always be limited. Used to be some guy at GM could screw-on a wheel, but it takes a little more upstairs to run the robot now doing the job.

          More directly to your point, most employers are relatively small, and while one firm easily can train some guy to run a Ditch-Witch, another will be hard-put to train someone up to design the semi-conductors or do the highly-skilled machine tooling at the factory making said Ditch-Witch. They may well be able to train someone coming in the door with a sufficient foundation, but from what I understand programs that develop this sort of foundation are expensive and far between.

          A great case CAN be made that private industry can fill such a gap, as certainly as it represents a need and might present a capitalistic opportunity. What I’m troubled by, is why these big proprietary schools are designed NOT to provide needed skills, but more to fleece students via poor training and non-valuable skills, and taxpayers via guaranteed student loans, which are the basis of their business model. Current career training programs are largely ineffective in terms of providing jobs and skills that industry really needs (defined by where they’ll quickly and happily hire new graduates).

  3. We may get a big-spending government in 2020. I see little hope for 2016, and no hope until President Hoover II is out of office.

  4. I think part of the scam of the Right that allowed them to restage 1929 is that they can say, “See, we had Big Government this time and we still had a crash.”

    Recall that one of Reagan’s appointees wrote a biography in which he proudly admitted that they all intentionally cut taxes on the rich and raised military spending in order to create a future fiscal crisis that would require massive cuts to the programs that helped the Americans they considered their enemies. The Tea Party attacks on teachers and colleges, and the Fiscal Cliff, were the end game of the same strategy.

    Tax cuts for the rich are how the Right create the illusion that somehow Big Government was responsible for the crash that the rich themselves actually engineered, with the resulting ballooning deficit as the scapegoat. The rich of 1929 would have considered it insane to do this on purpose. But that’s because they were committed to investing in America, and they had no way to run up the deficit to manipulate the system.

    Now, the rich can take their money out of the US, or easily move it from state to state. This means all governments, state or national, are blackmailed into a global bidding war against each other to cut taxes and social services. Meanwhile, military spending has come along as a way for the rich to get a government that’s only big for them. So running up war spending while getting tax cuts, the Reagan formula, became the sacred formula. The military spending takes up all the slack that Keynes had expected to exist during a depression, yet does less and less each decade to produce ordinary jobs. That’s because the military’s “needs” are manufactured by lobbyists based on what the owners of the defense industry want: weapons that by nature require the fewest workers to make and maintain, whose budgets disproportionately disappear into “black” R&D and poorly-overseen software development. (Then easily diverted into political campaigns, a la Duke Cunningham?)

    Keynes’ mistake was to assume that all government spending at a particular point in time had an equal effect on the velocity of money, the key to getting out of a depression. Studies keep showing modern military spending produces the least economic multiplier of all government activities. Yet the sacred nature of national security makes it impossible for the public to use that data in judging what activities the government should continue. Thus the war machine has become the capitalists’ perfect anti-Keynesian tool – government spending that can’t stimulate the economy but can’t be denounced as morally inferior to other forms of spending.

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