Last January, in response to President Obama's State of the Union speech, I wrote the following (as part of a larger post here):
The last thirty years of 'growth' have been a disaster for America, in that it was illusory and not true growth at all. It was based primarily on debt and a 'casino' economy, with the mostly non-productive finance sector (along with the super rich in general) gobbling up whole portions of the nation's wealth, leaving the ordinary person slowly sinking below the waves of higher debt, lower wages or no job at all, little in the way of retirement and a housing crisis that has crippled people's wealth and mobility.And in another post a month or so before that, in December 2010, I quoted someone who wisely wrote that Obama's economic change was a change of style rather than substance:
What in the President's proposals will change this? Despite his boast of change, he has fundamentally left the financial sector to continues in its greedy ways, which is probably my primary gripe with his first two years in office (seconded by his Bushian policies on Afghanistan and terrorism). But I am encouraged by his rescue of GM and the auto industry (but even that was started by the Bush administration before him). He is also making an effort to increase exports, which could go a long way toward resolving many of our problems. Also, his clean energy policies are a step in the right direction, although I'm somewhat skeptical that reducing our reliance on foreign oil can be halted in this way, without a major increase through taxation on oil importation, which politically can't be done. Unfortunately, I don't see many people being able to afford a Volt or putting solar panels on their roofs in the near future. And the high-speed rail, that just isn't going to happen. I'd be happy for just regular old rail that runs regularly, on time, and where you actually need to go. But that probably isn't going to happen either....
Maybe we can muddle through the next thirty years on huge military/intelligence expenditures, clean energy expenditures, and a bloated health care and higher education industries. But frankly, I doubt it. I think our economic woes are going to come back and bite us in the arse, through a monetary/debt crisis, continued high unemployment and rising poverty, private and public bankruptcies, a continuing housing crisis, increasing commodity/consumer goods inflation, a possible military confrontation with China, and worst of all, a possible BIG terrorist incident in one of our cities, which will turn America into an armed camp and would mean the real loss of our liberty, perhaps forever.
Sorry to be so pessimistic, but that just seems to me to be the more likely outcome. I hope Obama's right, but I fear that I am.
In 2008 President Obama captured the nation with a message of change, yet in office he has chosen to deliver change of style rather than change of substance. At the headline level this choice was reflected in his call for bi-partisanship that looked to split the difference with Republicans. In economic policy, it was reflected in the wholesale reappointment of the Clinton administration team led by Larry Summers and Timothy Geithner, a case of continuity not change.Exactly. And then 18 months ago, in November of 2009, I wrote this:
Now, the administration is sinking under failure of its economic policy. That failure is due to its attempt to revive a 1990s paradigm that never worked as advertised and can only deliver stagnation. Painful though it is for Democrats to acknowledge, the reality is the economic policies of President Clinton were largely the same as those of President Bush. On this the record is clear for those willing to see. The Clinton administration pushed financial deregulation; twice reappointed Alan Greenspan; promoted corporate globalization through NAFTA and China PNTR; initiated the strong dollar policy; spoke of the “end of the era of big government”; contemplated privatization of Social Security; and struck down a core element of the New Deal by ending the right to welfare.
President Obama’s fateful decision to go with Clintonomics meant the recession was interpreted as an extremely deep downturn rather than a crisis signaling the bankruptcy of the neoliberal paradigm that has ruled both Republicans and Democrats for thirty years. That implied the recession could be fully addressed with stimulus, which was the same response as the Bush administration to the recession of 2001.
On the way into the office this morning, the NPR news break announcer proclaimed the recession over. Happy days are here again, or to arrive shortly!So, why is it that I am able to see these things when most mainstream, Establishment economics are blind to them? It's certainly not because I'm smarter than they are, or know economics as well as they do. I believe it has to do with the fact that conventional economics is too narrow and constricted a lens from which to actually understand the economic realities around us. It's like looking through a red piece of glass and thinking that the everything is actually red. It's only when you take the lens off and look at things from the wider and more honest perspective, that you see the truth of the matter.
Mainstream economists and the media are really pathetic. They are living in a dream world of wishful thinking and wide-eyed optimism, totally divorced from reality.
The only people I know of for whom the recession is over are the Goldman Sachs bankers receiving their bonuses for Christmas.
Of course, even the optimists don't really mean we're on the path to recovery, they just mean the economy has bottomed out. Which may or may not be true, given all the uncertainties still looming. But we are by no means starting to recover. If anything, we're just digging ourselves deeper in a hole, having replaced private debt with public debt.
And the worst of it is, nobody is leveling with the people about our true condition. It's too politically unpalatable. The truth is too unpleasant.
Or perhaps they've just deceived themselves. Denial is one of our biggest vices here in the USA.
Bless his heart. President Obama probably meant well, but he turned to the wrong people to give him the economic advice he needed: Summers, Geithner, Bernanke, and their ilk. And now he's paying the price. And unfortunately, and more importantly, we are too.