Must We Really Dive Right Into the Next Misguided Fiscal Debate?

October 18th, 2013 at 12:03 pm

…without even a breath to consider that the immediate threat is unquestionably not the budget deficit; it’s the growth, jobs, and income deficits.

Over at the NYT Economix blog.

In addition to the points in the post, one thing you see happening quite clearly in recent days is how essential a crisis mentality is to the dysfunctionistas.  Once they lost their grip on the Obamacare crisis, they immediately pivoted back to the deficit crisis, which as I stress in the piece, leads only to more spending cuts.

Of course, there is no Obamacare crisis (there is, apparently, some very glitchy software in some–not all–states that needs quick fixing) and there’s definitely no near or medium term deficit crisis.  But as long as obstructionists can keep everyone alarmed and in crisis mode, our ability to address the real concerns of most people remains out of reach.

Imagine instead that the politicians turned not to the budget deficit but to the jobs deficit, the infrastructure deficit, to poverty, wage stagnation, immobility and inequality.  Along with a budget conference — and don’t get me wrong; I’m glad they’re talking — imagine there was an economic conference to make recommendations on what’s really hurting the country, which I assure you is not our fiscal situation.  That’s taking care of itself for the short term, as is always the case after a recession (deficits go up in recessions, for obvious reasons)…

I’m surely going to jump into the budget debate myself any minute now, but before I do, I wanted to point out that this is not the debate we should be having. It’s the preferred debate of those who seek to shrink the role of government, to undermine social insurance, to reduce needed investments in public goods and human capital, and to protect the concentrated wealth of the top few percent.


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7 comments in reply to "Must We Really Dive Right Into the Next Misguided Fiscal Debate?"

  1. purple says:

    Speaking of investment, the U.S. really needs to tackle education costs. And that can’t be done when state schools are getting like 10% of their funding from the government. That are basically making up the difference with federal student loans, dismantling the tenure system (lecturers), and importing rich Asians who pay full load. I mean really, putting young aspirational kids in massive debt is no way to run a society morally or from the standpoint of the consumer economy.

  2. readerOfTeaLeaves says:

    Dr. Bernstein,

    I thought the NYT piece was terrific.
    But then it ended like this:

    I’m surely going to jump into the budget debate myself any minute now, but before I do, I wanted to point out that this is not the debate we should be having. It’s the preferred debate of those who seek to shrink the role of government…

    I have followed your blog in large part because when it began, IIRC, you’d quit your job in DC, frustrated over the lack of accurate economic information, which was making policy debates extremely problematic. Disinformation was producing bad policy outcomes. You hoped to get better information into the policy process.

    I thought to myself, “Hey, if this man has the guts to quit his job (particularly since he apparently still has kids at home), my hat is off to him. I’ll put OTE on my Top 5 bookmarks because I respect guts, and I wish him well. (And FWIW, hat’s off to his Missus, as well, for supporting his efforts to lead a meaningful life.)”

    This is not to say that I’m one of the readers that you were hoping to attract. Nevertheless, I am convinced there are *plenty* of us who have ‘bailed’: left jobs that seemed suboptimal in terms of the time/energy ratio. At some point, we all confront The Meaning of Life, and it clarifies that we need to do what matters, and not simply what others ‘think’ we should be doing.

    Which raises an existential question: why, having quit a very good job in DC, would you slog back to ‘the policy debates’ that *other people* want you (and the rest of us) to perpetuate?!

    To underscore my point: did those people who want to debate ‘shrinking government’ quit *their* jobs in order to try and make a difference?! I highly doubt it.

    So why debate on their turf, when they haven’t shown enough guts to risk their economic comfort by saying what really — in 2013 — needs to be said?! They’ve had 30+ years to make their case.

    And just to make my point as strongly as I can — it’s utter nonsense to perpetuate the same-old, same-old at an historical moment when a lot of new ideas are blossoming, and need to be publicly discussed. Here are 3 off my nearest bookshelf:

    First: p. 174 of my pbk copy of “The Spirit Level”, which reads: “Inequality seems to make countries especially dysfunctional across a wide range of outcomes.” This statement synthesizes a great deal of current research from the field of epidemiology. Shouldn’t policy discussions be based on recent research?

    If Grover Norquist or the Chattering Classes can’t get their heads around important epidemiological research that has huge economic implications, so what?

    The rest of us need to move forward; this information matters. And it matters whether you are an employee, an employer, or a policy maker. However, if the linkages between economic inequality and people’s health are not *publicly* discussed, then the wisdom inherent in this research cannot be applied to improve the lives of millions. (It also can’t be applied to build better business models if people don’t know about it.)

    Second: Anthropologist David Graeber’s* “Debt: The First 5,000 Years” points out the moral flaw at the heart of conventional economic theory: Adam Smith argued that human beings are primarily profit maximizing entities. We’re not; we never were. We are cousins, parents, siblings, aunts, uncles, nieces, nephews, and neighbors: we have relationships that can’t be reduced to mere profit maximizing. If we were merely profit-maximizing entities, we would never have lived in clans or tribes or cities.

    Obviously, Graeber calls into question the morality of our current economic system. I can understand that Graeber might not be a valued guest at CNBC or Goldman-Sachs, but so what? Given the current public interest in Pope Francis’s statements about the immorality of our current (global, capitalist) economic system, I’d suggest there is a widespread public thirst for an economic debate that includes discussion of what a ‘more moral’ economics might look like — and I’m pretty sure that millions of unemployed and uninsured does not meet the criteria for ‘moral’ economic policies. Nor does usury in credit cards, college loans, or other legal contracts.

    Third: “Race Against the Machine”** has some terrific data, and it is a wonderful synopsis of current economic, employment, and educational challenges in a digitizing world. Opening my copy at random, I see: (p. 29) “While the foundation of our economic system presumes a strong link between value creation and job creation, the Great Recession reveals the weakening or breakage of that link.” This entire book needs to be at the forefront of the policy debate. Are we supposed to ignore this information, as if we’re still stuck in 1965 – or 1980? That’s absurd and self-defeating; to say nothing of delusional.

    I certainly understand if this comment is too personal (and long) for you to put on your blog, and I’d have no hard feelings whatsoever. (I’m a bit uncomfortable leaving it, but then – I remind myself – I’m only on this planet *one* time, and I intend to speak as honestly as I am able while I’m here.)

    Frankly, as an aging Boomer, and as someone who has ‘bailed’ from work that did not feel strategic — in an effort to try and get more meaning in my life — I’d like to respectfully and gently remind you: we only live once.***

    If we are lucky, we have a chance to do things that matter.

    Why on earth — when economics is currently starting to froth and burble with useful, productive ideas that come from the sources as diverse as epidemiology, anthropology, and MIT’s Digital Business Center — would you tolerate slogging back into “…the preferred debate of those who seek to shrink the role of government…”?

    Life is too short.

    Let’s start having the debates that we NEED to be having.

    I hope – for the sake of your kids, my kids, and everyone else’s kids – that you find a way to engage in those debates.

    Godspeed, and you have the patience of a saint to put up with my comments (!). rOTL

    * Yes, Graeber is viewed as an anarchist and therefore Very Serious People discount him. They do so at their peril; he’s brilliant.

    ** Any book recommended by both you and Tim O’Reilly had to be worth a read. It was. Mine is packed with margin notes. Terrific book!

    *** Clearly, an assumption on my part. But it’s generally beneficial in helping to discard the extraneous, irrelevant, and aggravating. Living only once is a kind of self-enforced discipline, so that’s the upside.

    • Jared Bernstein says:

      OK, RoTL–I’ll need to cogitate on that one and will get back to you. I will say that when reading this, I thought of Malcolm X’s comment toward the end of his life when he started working with more mainstream civil right leaders, whom he’d earlier eschewed. It was something about “sometimes when you think people are driving in the wrong direction, you need to get in the car with them to help.”

      (And no, I’m not comparing myself to a hero of the civil rights struggle…)

  3. Altoid says:

    When’s the last time the total federal debt was zero? Not in my lifetime, I’m certain, and maybe not in anybody’s lifetime who wasn’t trying to decide between Thomas Jefferson and his opponents.

    It’s always particularly bothered me that these scare-mongers talk as if the federal debt is something we have to _pay off_ like it was a mortgage. We don’t. It would be good not to add to it and we don’t want to devote too much of our tax revenue to servicing it, so we’d probably be better off eventually developing surpluses that retire some of it. Or, dare I suggest, let inflation run at 2-3% a year and see where that gets us in a generation.

    But we can’t let these scare-mongers get away with talking about the national debt like it was a mortgage. They don’t always say it that way, but they imply it, and you can hear it easily in all this talk about saddling grandchildren with payments, etc. They need to be called on it, and Jared, you’re in the best position of anyone I know to do that. You’re just the guy.

    You could point out how important our existing debt is to the banking system, for example. How could financial markets function without Treasury debt to backstop them and function as reserves? That’s a good reason not to let it get out of hand but also not to eliminate it. Wiping out the debt would itself be a catastrophe, wouldn’t it? (Not to go as far as Hamilton and call it a national blessing or anything– you’d think the party of business would understand that side of it.)

    The debt isn’t a mortgage, it’s nothing like a mortgage, and they shouldn’t get away with talking about it like a mortgage.

  4. Alex Zaffron says:

    Whether we wish to or not, regrettably, is irrelevant. The clock is ticking. Congress set the timetable. The challenge is to prevent as much damage as possible. RoTl above, has presented a remarkably comprehensive description of the intersection of morality and economics, and the failure of this link under current conditions.

    So, given the near certainty that congressional Republicans are going to grind us through this sausage machine yet again, what very specific elements should the President and house members deem non-negotiable? I submit, all.

    You’ve actually been in the middle of these things–Seems unwise to ‘give away the store’ until the midterms, whose outcome, on the House side, cannot be worse unless Pat Robertson and Donald Trump literally buy the western hemisphere (It could happen…).

  5. Robin Schulberg says:

    Maybe Obama is thinking that he will have more grass roots support for job-creation programs if he can get Congress to agree on a fiscal plan that reduces the deficit in the longer term.