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