Think Bigger, Please!

By Dan Kervick

Paul Krugman has yet another pair of pieces up about real interest rates, inflation rates, monetary policy “tightness” or “looseness”, and the purported theoretical connection between these phenomena and US stagnation: stagnation in US growth, employment and wages. Read them and yawn.

These discussions are a waste of time. The fundamental source of stagnation in the United States is a conservative, corrupt and intellectually deficient US government – infesting both Congress and the White House – that refuses to do its job and is incapable of thinking big.  We need an industrial policy, a detailed and aggressive program of mission-driven public investment for the 21st century, a national commitment to full employment and human development, and a very substantial increase in the federal government role in our economy. And we need our democracy and its citizens to get active in charting and implementing an agenda for our future, and to seize control of that agenda from the corporate profit-seekers and the complacent affluent who are stakeholders in the existing stagnation.

Mainstream economists aren’t helping. Most of them have very conservative late-20th century “end of history” views favoring dwindling states and a reliance on private sector self-sufficiency. They seem to be incapable of engaging with the kind of transformational economics and national ambition that drove our mid-20th century forbears and that is called for again in the early 21st century. High Church Neoliberalism is still the state religion among the economic policy elite in government and the academy, and it is crippling us as a country. We are also being held back by a sulky boomer gerontocracy who wallow in their endless varieties of dystopian misery and indulge doctrines of pre-determined failure and decline.

Profound national progress, and the full employment we will need to generate that progress, are not the outcomes of mysterious emergent forces dependent on an obscure economic providence. They are a political choice this country can either make or not make. Real progress will require the mobilization of the citizenry and a government-led agenda for transformation and national development. It’s not something that is simply going to emerge by hitting on an inflation and interest rate combination that is “just right” for the private sector firms and entrepreneurs who make our smart phones, deodorants and burritos.

Against the debilitating backdrop of national decadence and lethargy, the technocratic manipulations of the central bank are small potatoes. If I read one more brain dead piece about the cosmic significance of interest rates and central bank asset-shuffling, I think I’m going to vomit. The tired and vacant opinion classes, the hidebound academic establishment, the useless political drones in this country – all of them need to wake up. We have a grossly abused and underemployed generation of young people across the developed world, a generation restless and confused, yet poised for decisive and energetic action, whose future is being stolen from them by an unimaginative leadership establishment that fears change, thinks small and offers only more variations and the neoliberal social and economic structures that brought us the present era of inequality, plutocracy, rampant Social Darwinism, stagnation, financial instability and predation.

Cross-posted from Rugged Egalitarianism

Follow @DanMKervick

23 responses to “Think Bigger, Please!

  1. Bayard Waterbury

    This is such a great article. Of course, MMTer’s are and have been thinking this ever since the 2008 collapse and before. It is so obvious. But in our plutocratically generated malaise, we have a government that is under the thumb if wealthy globalists who are very happy to be making massive profits out of the stagnation, especially by finding ways, through legislative efforts and regulatory capture, to move the profits of our economy only in one direction, that is toward the tiny percentage of super wealthy corporate interests and are very happy to ignore the pain and suffering which is so needlessly being experienced by those whom they consider to be superfluous human assets at the bottom of the food chain. I am nauseated to see that any support for the unemployed and starving masses at the bottom is gradually being removed, that is, things like food stamps and other supports. What Friedman and Hayek started with Reagan (and even before) simply continues unabated. What more proof do we need to see to be convinced that capitalism and real democracy are completely at odds.

  2. They do not want a Individual prosperous society any more due to Peak Earth ideology . Pay attention to what is said in the end of this article about the ” Great Shift ”
    The Earth is full
    http://www.cnn.com/2012/04/08/opinion/gilding-earth-limits/index.html
    This talks about what that Great Shift will be about , the death of a currency .

  3. What type of “mission-driven public investment” do you have in mind, specifically? The roads and bridges type infrastructure spending seems to be a small-scale thing, not a lot of people have construction experience or training, etc.

    • I’m thinking of a comprehensive national plan to transform our energy system, transportation system and housing system, to re-establish industry economically stable communities in devastated parts of the country as well as changes in the nature and scope of the public education system. If people lack the necessary skills, imparting those skills is part of what we need to do. Teaching is one form of employment.

      • I think you will need to retool the tool and die industry so we can supply our own vital parts supplies so that if the dollar is rejected as a trade currency by the BRICS who have become the worlds suppliers of all industrial parts supplies at least we can keep our society functioning .
        The International Corps are wrecking the dollar and this countries Independence as a self supportive society by lobbying trade policies that have wiped out the very durable production capability we need to withstand such a currency rejection .

        • Chasing a simple currency swap internationally is not a monetary policy that supports a society , and thats all these trade policies have accomplished in the past 20 or so years for the U.S. .

  4. Pingback: Think Bigger, Please! | The Money Chronicle | S...

  5. It’s discouraging that no one in power is even discussing viable solutions. Some are fighting for food stamps but what’s needed is jobs and no one is even talking about it. I’ve watched a few programs recently and commentators are still talking about our government needing to cut programs and there isn’t much opposition to them on the shows.
    Employer of last resort has to be taken seriously but back in the 30s and 40s, it took a depression to make it happen. As soon as the war ended, the rich moved immediately to weaken the unions and to stop the government from funding the people.
    As long as they continue to control the media, they can feed their pabulum to the masses. I’ve been reading the blogs today and the right wingers are all over them talking about out of control government spending and high taxes, at a time when the deficit is rapidly declining and the taxes are the lowest in 60 years.

  6. Mark Robertson

    [1] Dan writes, “We are also being held back by a sulky boomer gerontocracy who wallow in their endless varieties of dystopian misery and indulge doctrines of pre-determined failure and decline.”

    Agreed. A sociological rule that applies everywhere at all times is this…

    When the masses are enslaved, they cope with their misery by defending it, and by begging for more. They champion their chains. They call their agony patriotic, and “better than any alternative.” They rationalize their austerity. They retreat into fantasy and self-righteousness. They attack each other, squabbling over trivial minutiae. They lose their ability to reason, and to distinguish between truth from lies. They convince themselves that ignorance is wisdom.

    These are coping strategies. They are self-destructive, yet they become deeply engrained habits, even addictions. Stupidity and collective suicide become a narcotic. Absurdities become “common sense.” Mindless propaganda becomes impervious to facts and logic.

    Such is the psychology of perennial helplessness and demoralization.

    Contrast this to what happens when the masses are empowered. They cease to squabble with each other. They take a genuine interest in politics and economics. They recover their ability to reason, to think logically, and to distinguish facts from fantasy. They recover their willingness to authentically ask, “Why?” as they did when they had been children. They enjoy a radically boosted morale. They dream of a better world, and they act collectively to make it real.

    Such is the psychology of freedom and empowerment.

    For example, consider the Venezuelan government’s policy of forcing retail outlets to stop their horrendous price gouging, and start charging reasonable prices for consumer goods. This move has caused the Venezuelan masses to feel empowered. It has awakened them from their apathy and their resignation. It has caused them to actually read journals and alternative newspapers. Ordinary Venezuelans have tasted dignity and freedom, and they want more.

    [2] Dan writes, “If I read one more brain dead piece about the cosmic significance of interest rates and central bank asset-shuffling, I think I’m going to vomit.”

    And I think I’m going to punch my computer monitor.

    As for Paul Krugman, he is not a leftist. Instead, Krugman is a liberal — i.e. a right-wing elitist in a populist hat. This contradiction manifests as endless poppycock. Such is Krugman’s drivel.

    [3] Dan writes, “The fundamental source of stagnation in the United States is a conservative, corrupt and intellectually deficient US government – infesting both Congress and the White House – that refuses to do its job and is incapable of thinking big.”

    My view is different. As I see it, politicians are bribed by the rich to impose more and more austerity, in order to continually widen the gap between the rich and the rest, and to expand the supremacy of the financial economy over the real economy. This is a calculated, deliberate, and intentional campaign to enslave the masses. Today it occurs in almost all developed nations. Even China is undergoing radical neo-liberal “reforms” — i.e. mass privatization, de-regulation, and financialization. This is radically accelerating the gap between the rich and the rest (which, after all, is the whole point).

    [4] Dan writes, “Mainstream economists … seem to be incapable of engaging with the kind of transformational economics…”

    My view is different. As I see it, mainstream economists are paid to lie, just like politicians. If mainstream economists want to keep their jobs, then they must ensure that their universities continue to get grants and subsidies from rich people and from politicians. In order to do that, mainstream economists must promote austerity. They must spout the same lies that politicians do. They must champion an ever-widening gap between the rich and the rest. It’s not that mainstream economists are “incapable.” Rather, they are unwilling. They dare not question their masters.

  7. Getting the word spread is key, especially in academia. While the internet is great, since it can move info to so many people effortlessly, the change in mindset really has to be done at the university level. As you said, economists, both “left” and “right” (though I see the differences now between em miniscule) are cut of the same mold and have little concept outside what they’ve been taught.

    But they were taught it…I used to believe much of the same stuff. Hope you guys can spread your word through more “accepted” mediums that can reach people. I have time and interest so can search the internet for leisure but many dont realize it’s power and will have to be taught through school. Great article as always

  8. Good one, Dan. I like the fire and it’s right on the mark!

  9. Dan Kervick’s article is full of emotive phrases which boil down to very little.

    “We need an industrial policy…”. So he’s advocating central economic planning? They tried that in Russia for about 70 years and it didn’t work too well.

    And apparently we need “a detailed and aggressive program of mission-driven public investment for the 21st century,”. Mission driven? That’s a nice catchy phrase, which means nothing.

    Granted public investment has declined during the crisis, which shouldn’t have happened. But “aggressive program of mission-driven…..” Spare me meaningless phrases like that.

    And apparently we need a “national commitment to full employment”. Another vacuous phrase. If someone thinks they know how to bring about full employment, I’m all ears. I want DETAILS as to how that “someone” can actually give us full employment.

    • Ralph, this is a pretty crude response. The fact that I think the federal government should play a larger role in the economy and implement an industrial policy does not entail I think the entire economy should be centrally planned. My view is that one reason for economic stagnation is that there is no national strategy around which private sector firms can coalesce. Government should help set a direction, undertake the key backbone projects itself and then let the private sector self-organize its own complementary activities.

      “Mission-driven public investment” is a term used by Mariana Mazzucato in her book The Entrpreneurial State, where it is contrasted with other forms of public investment, and where she argues it has historically been the most effective kind. In the US context, the space program of the 1960’s is a good example.

      Public investment hasn’t just declined during the crisis. In the US we have had decades of declining federal government consumption and gross investment, and this decline appears to be associated with a declining trend in annual growth rates.

      I think bringing about full employment would be quite easy. We have more things that need to be done than there are people to do them. We just need the government to step up, identify those tasks and hire people to do them.

      • The only mission the political class can rally itself and the country for is “national security”. Most periods of low unemployment have an important element of high “national security” spending. WWII is obvious. The space race was a good public relations method of proving to the Soviets that the US was capable of building ICBMs. The internet was a DARPA project. The super-NSA and drones of the ’00s was a reaction to 9/11. Without an external threat the only “missions” the nation’s elites are interested in are assuring their own status and competing with each other to see who gets to be highest in the pecking order. The land grant giveaways which built the West might be the only big non-great power competition-related national “mission” that elites could really agree on. So, is there some superpower out there that feels like an existential enough threat or an exploitation opportunity so awesome* that it’s necessary to give the proles some respect in order to take it on?

        *This doesn’t really only apply to the US. Parallels can be easily found wherever there is war and/or conquest.

    • I had many of the same thoughts as you Ralph, but I think a more constructive response is in order.

      Saying that the government CAN do a bunch of things really doesn’t help with much. More helpful would be to identify something that the country can get behind that the government has shown it can do. Take Dan’s suggestion of transportation. There aren’t any real private competitors in the mass transportation business (save airlines) and most will admit the current system is atrocious. The government doesn’t have to do the employment to have an impact. The government can simply pay the bill and hand out grants to states and localities to bring some sanity to transportation in major metropolitan areas.

      But it’s also not all about spending money to make jobs. Jobs are important because they give people a sense of pride and purpose, but there is more to life. Could the government do something to, say, encourage people to work from home? This is a potential win on many levels and it could be done by doing something like providing tax credits to companies who offer this option to employees. Sure, there will be whiners. There always are. But the point, I think, is to try to make a better life for citizens of the country, not to accede to the concerns of every doubter.

    • Ralph:So he’s advocating central economic planning? They tried that in Russia for about 70 years and it didn’t work too well.What Russia had was more like “nothing but central planning.” Any society, any government has central planning. That is what governments do. The idea is to govern, to centrally plan occasionally in the interests of the governed, and not have government always be a corrupt racket where the government’s Central Plan is Welfare for the Rich, whose Central Plan is: Take a small fraction of the money we got from the government to corrupt it into continuing the racket.

      And apparently we need a “national commitment to full employment”. Another vacuous phrase. If someone thinks they know how to bring about full employment, I’m all ears. I want DETAILS as to how that “someone” can actually give us full employment. It is very very very easy to achieve full employment. As Bill Mitchell says, no country which has tried to have full employment (or a good approximation) has ever failed. Have the ultimate employer, the government directly give people jobs. That’s it. Ask ordinary people what they want done, especially including the JG workers, and within reason give them the dough to do it. That’s it. Ordinary people run far more complicated things – in their ordinary working life, in local government, as judges and juries doing the far harder job of determining matters of fact.

      The Devil is NOT in the DETAILS. The Devil is in the Decision. The Devil is in understanding that things are as simple as they really are. Any 12 year old child could do a much better job of running a full employment program than the numberless charlatans of academia and bureaucrats poisoned with an utterly irrational can’t do attitude. (Which often is really a “don’t want to do” attitude.)

  10. I am in agreement with the anger towards the established economists and their adherence to economic dogma. There’s a tendency here, for obvious reasons, to rely upon textbook economics as being critical to understanding this problem’s root causes. The mistake these economists make is in arguing too hard against the obvious villains and not hard enough against the stealth villains.

    Our existing monetary system has failed. Utterly failed. I see people like Krugman trying to hold on to the dogma of textbooks because they write textbooks. There’s a lot of denial here. Just because the fresh water economists are living on another planet doesn’t mean that the saltwater dogma is correct.

    I’ve looked at the data. The saltwater dogma is wrong also, within our current context. They have mathematical formulas they like to defend without reference to the specific policies that take hold.

    Will they ever admit that the framework of the current Federal Reserve policy choices are a manifestation of crony capitalist policy and financial corruption? I doubt it.

    Yes, think bigger please. Good idea, Dan.

  11. How about a Mars mission?

    How about high speed rail up and down the E and W coasts, and one that links the great Midwest cities?

    How about the very highest speed, highest tech internet linking everybody to everybody?

    And, I don’t think most of our leaders are bribed or bought. They are mostly lawyers who are really good at sales, and simply don’t get that the US doesn’t have to run like a household.

  12. Have you read Adolph Reed’s essay, Nothing Left, in the March 2014 issue of Harper’s? It struck me as complementary to your post above.