An Invitation to Brad Plumer to join us in Warning against the Folly of Austerity

By William K. Black

Yesterday, I wrote an article entitled Why Progressive Austerians do the Greatest Damage. The article was prompted by a column written by Brad Plumer. Plumer commented on my article, expressing his disagreement with my characterization of his position.

BILL BLACK: “Brad Plumer is a member of this Washington Post group of austerians of the left.”

BRAD PLUMMER: “Oh really? Explain to me how this works. All the posts I’ve written about how austerity’s not working are… some sort of deception? The vast majority of things we write are about how austerity’s been a failure in Europe, making essentially the same points you make above. The post you’re criticizing may not have been worded well, or may have problems. But we certainly haven’t been “pro-austerity.””

I don’t think there is any disagreement and no one is claiming an effort at “deception.”  When I write about a columnist’s article I can only base my analysis on what they write.  I cannot divine their true intent if it differs from what they write, particularly if I don’t know them in person.  I do not know Mr. Plumer.  In his most recent article, the one I discussed, Plumer did not take the position that “austerity has failed.”  He did not take the more relevant, accurate, and powerful position that austerity was the problem (not simply a failed “solution”).

What Plumer wrote in the column I discussed was that the jury was out on whether austerity was a solution that had had been unsuccessful soley because it was implemented inappropriately, i.e., through tax increases rather than slashing public expenditures for the poor.  Indeed, as Plumer presented the issue the implication was that the balance of economic thought was that “pro-greed, anti-need austerity” (slash taxes on the rich and services for the poor) could be successful if combined with an aggressive monetary policy.  Plumer noted that the nations that had implemented “pro-greed, anti-need” austerity – Greece, Spain, Portugal, and Ireland were all failures, but he did not conclude from that disastrous track record that such austerity was the problem rather than a solution.  He did not present the dominant economic view that following pro-cyclical fiscal policies in response to a severe recession is bound to make the recession worse.  He did not even conclude that pro-greed, anti-need austerity plus monetary stimulus was a failure.  He also did not present the grotesque economic, human, and political cost of following a strategy that has forced Greece and Spain into Great Depressions and responded by trying to slash the incomes of the poor and working class and services for those most in need while reducing taxes for the wealthy.  Instead, he presented pro-greed, anti-need austerity as a policy favored by responsible economists.  He cannot legitimately complain that I called him out for giving aid and comfort to a suicidal strategy that is literally killing people, driving hundreds of thousands to emigrate, forcing millions into long-term unemployment, and the economies of the periphery into Great Depressions.

Indeed, Plumer went further in the column I discussed, accepting the fundamental myths underlying the “there is no alternative” (TINA) rationale for austerity.  First, he wrote as if austerity can remove budget deficits during a Great Recession or Great Depression.  My first column explained in detail why this is false.  Pro-greed, anti-need austerity (cutting tax rates for the wealthy and governmental programs for the needy while slashing working-class wages) is a superb strategy for causing a Great Depression, which will slash government revenues while increasing demand for government services.  The result can be a larger budget deficit.

Second, Plumer’s original column implicitly endorsed the OECD’s austerian claim that letting the U.S. tax reductions scheduled to terminate at the end of 2012 expire and cutting social spending would “improve” the U.S. budget deficit.  That claim is economically illiterate and Plumer had the bad fortune of implicitly endorsing the OECD’s (“pro-greed, anti-need”) austerian claim at the same time that the CBO issued a report warning that the year-end 2012 “fiscal cliff” would likely throw our economy back into the Great Recession.  Plumer’s only caution about the OECD’s forecast that austerian policies in the U.S. would “improve” (by which the OECD and Plumer mean “reduce” even though reducing the deficit by these means would actually harm the nation) is to mention the uncertainty as to whether the U.S. government will actually implement all these cuts to spending and increases to taxes by year-end 2012.  Plumer is implicitly endorsing the OECD’s economically illiterate austerian claim that if the U.S. throws itself over the fiscal cliff by slashing public services and taxes it will increase economic growth and lower the deficit.  It will do the opposite.  It will throw most of the world into a Great Depression.  These points explain why I called him pro-austerian.

I am happy to hear from Plumer that he did not intend to take these pro-austerity positions and that his wording in his column did not convey his intent.  I believe that his column revealed a root conceptual problem, not simply imprecision in expressing his views, but I cannot know that for sure.  At several points in his column I believe that he demonstrated that he actually believed the myth that a nation in recession that desires to reduce its budget deficit can produce that result through a policy of austerity.  It is far more common that adopting austerity deepens a recession, which can even cause the budget deficit to increase.  Perhaps I am wrong and he always knew that the claim that austerity reduced deficits was a dangerous myth.  If so, he would do his readers a great service if he would expose that myth.

I will be delighted to bring to the attention of NEP readers a future column in which Plumer explains why austerity is the problem, not the solution, explains the myth of being able to reliably end a budget deficit through austerity, and explains why pro-greed, anti-need austerity causes catastrophic damage and is immoral.  We would be proud to ally with Plumer in making these points to the public.