May 30, 2011 at 11:36 am
As I wrote the other day, it’s essential to turn the conversation back to what we should be doing on the jobs front, so I was glad to see Paul Krugman thinking along those lines this AM. But I was struck by this ‘graf:
“For example, we could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. We could have a serious program of mortgage modification, reducing the debts of troubled homeowners.”
Especially re the WPA-idea, this got me thinking about the relative value of important voices like Paul’s promoting what we should do right now as opposed to what, given political constraints, we could do.
And I think now is a good time to emphasize the latter.
Let me be clear. I totally agree that we mustn’t let “political realism” shut down our thinking on the best way out of this mess. And while that kind of writing sometimes feels academic to me, if done well (as Paul does it), it can slowly but persistently set the stage for actually doing the right thing when the political landscape shifts. Shift it will, and at that time, Paul will be among those who built the “new” paradigm from which economic policy will flow (“” around ‘new’ because most of this is known since Keynes).
I know—sounds like wishful thinking (well, for some…for others, sounds like their worst nightmare)…but I bet I’m right.
But then there’s this: There will be no WPA-type programs in our near future. There was no appetite for them in the Obama admin in the midst of the worst recession since the Great Depression and there’s a lot less now. The reasons for that are interesting and I’ll speak to them another day. But it ain’t happening.
And please don’t accuse me of “negotiating with myself” here. I stressed above the importance of making those arguments, and I frequently made them myself as a member of the President’s economics team.
It’s also congenitally hard for politicians to get behind “a serious program of mortgage modification.” Those who advocate for this (the NYT editorial page, e.g.) are right, but they’re also downplaying a very binding constraint. The politics of this idea are deeply wound up in moral hazard. People forget, but it was precisely this action—giving mortgage relief to someone at risk of default and not to someone who was struggling to keep up their payments—that birthed the Tea Party.
Yes, it’s true that leaders must stand up to such views and do what’s right for the economy…damn the torpedoes and all that. But those of us espousing such actions must respect, or at least acknowledge, that those torpedoes are not pointed at us. They’re pointed at politicians who take them seriously and thus we need also need to espouse plans b, c, d and so on. (In this space, for example, there are ways outside of federal legislation to encourage principal write-downs—more to come on this in later posts.)
You might say that with the likes of Cantor and Ryan is ascendance, there’s no point in even contemplating “coulds.” I think that’s too easy and the stakes are far too high for it.
This is not a critique of Paul. As I said in my initial post, there’s no more important voice in the debate I’m trying to amplify than that of Paul Krugman. He’s one of the few writers I miss when he goes on vacation.
[Don’t you get a little bummed out when you open the paper on a Krugman day and he’s not there, or when he says he won’t be adding to his blog for a few days because of travel? What’s more, I could be wrong, but seems to me that when Paul is away, the Very Serious People he worries about say crazier stuff. It’s as if up on Capitol Hill, they’re going, “Krugman’s on vacation! It’s the perfect time to launch our bill to do away with social insurance once and for all!! Mwahahaha!!!”]
But here’s a challenge for Paul. I know he’ll keep writing “should” columns and that’s crucial for a better future. But for a better “now,” I’d like to see a column—maybe a few columns—called “What We Could Do.” He’s done a lot of this before—I don’t want to imply he’s divorced from the “now”—but this would be a good time for him, along with the rest of us interested in trying to make some desperately needed lemonade from some terribly sour lemons, to turn aggressively from should to could.
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