Based on work I did for this post from yesterday (see especially the figure) and some writing on Europe, I was struck by a seemingly salient difference between our politics and that of Europe right now: the electorate of Europe is waking up to the serious problems caused by austerity measures. The electorate of the US is not.
In Europe, you’ve got national and local elections reflecting frustration with austerity. Yet here in the US, it’s a fair bet that most people are wholly unaware that we’ve been moving pretty aggressively in that direction as well. Here I document recent declining deficit numbers, along with folks losing UI benefits.
And then there’s the MarketWatch (MW) dustup discussed in the first link above. Rex Nutting from MarketWatch posts a few easily available data points showing how slowly government outlays have been growing and conservatives throw a fit because it goes against their key talking points: a) the President is an out-of-control spender, and b) there’s nothing wrong with America that spending cuts can’t solve.
(As noted in yesterday’s post, there are those who object to the MW analysis—but even when they make their own adjustments, they get the same qualitative answer—Obama’s a smaller spender than any president in decades.)
So, why is austerity beginning to be recognized as harmful in Europe but not here? Off top of head:
First, why there?
–some of the economies are much worse there…Euro-area unemployment is closing in on 11%, Ireland: 14.5%; Greece and Spain: >20%. We’re still at 8.1%.
–the UK stands out as a fairly stark natural experiment: they were in recovery; they went austere; they’re back in recession. It’s not that simple, but it’s not a lot more complicated either.
–Hollande’s election was catalytic;
–this isn’t just a street protester thing—Nobel laureate economists and staid institutions like the IMF and the OECD are stressing the policy primacy of growth measures right now;
Why not here?
–people don’t know the actual spending record;
–people don’t do counterfactuals: we did the Recovery Act and the economy’s still slogging along. Ergo, growth measures don’t help. The fact that things would have been worse absent those measures is a political non-starter;
–less faith in gov’t’s ability to get anything right over here, fueled by lots of politicians who work hard to make this a self-fulfilling prophecy;
–deficit hawks outnumber Keynesians in America.
–as austerity-frustration is energizing new electoral fights over there, anti-gov’t, anti-spending Tea Party played that same role here, starting in earnest with the 2010 midterms.
I don’t have poll results to back this up, and I’ll look to see if they’re out there. But my impression is that when it comes to economic austerity measures, we don’t even know we have the problem.
No, it’s worse than that — most Americans think that the problem is too much spending. Aggressive ignorance injected into the discourse by the corporate media. The rich don’t like to pay taxes; therefore, the media will promote austerity, consequences be damned, because for the rich, the negative consequences aren’t that bad.
What problem? With the legal ability to stick most of the costs of the output gap on the backs of a small powerless minority of unemployed people (by denying them access to the so called “employment market”), the “electorate” doesn’t face the most serious repercussions, it just hears about them on the news shows.
We actually do know we have the problem. Is there a state in the union that hasn’t implemented austerity of some sort? The measures generally come in the form of reduction of services, including education, health, programs of various types to help at-risk or disabled populations and the elderly. CA has drastically cut its programs for the elderly, infirm, and disabled and is about to do it again. Los Angeles, for a time (until a new tax was approved), cut the number of days the library system was open. Class sizes have increased. Certain things have dropped from the curriculum. Summer and afterschool programs have been curtailed if not been eliminated. People notice these things but don’t think of them as the same austerity that Europe implemented. It’s the job of bearded and beardless economists and professors to point it out. It would also behoove the Obama administration to spend some ad money on ads like Robert Reich’s videos. Those are great.
Two words: “Fox News”. Five more: “the vast right wing conspiracy”.
If you, out of politeness, I assume, neglect the fact that we have a media that has treated “austerity economics” as the definitive solution, then you’re missing the cause of the public’s miseducation.
The Obama administration– and, perhaps, you as a former member of its economic team– haven’t done a good enough job educating people. I say that as a fan of yours; but truth to power and all that.
I’m also a fan of the President. But I’m disappointed in him in many ways– he has gone out of his way to be accommodationist to the opposition, only recently turning to be an aggressive opponent of theirs. Part of that accommodation was his pivot in 2010 or thereabouts towards deficit reduction, as chronicled by Krugman and others.
Better to have set himself up, then, as the champion of fixing the economy through additional and better stimulus. To have reinstated Glass-Steagall. To have insisted on cleaner and better cleanup of the foreclosure situation.
It is too late now to not cause the damage of the past two years; it may be too late to prevent damage in the next few. It may also be too late for him to successfully win a second term.
Hey, I am drinking tea that i purchased from China on eBay: http://bit.ly/KtjAhA Their teas is pretty delicious and taste too lovely:-) but take a relatively long time for int’l dispatch … Where can i purchase SOOO fresh tea in the USA?
>(As noted in yesterday’s post, there are those who object to the MW analysis—but even when they make their own adjustments, they get the same qualitative answer—Obama’s a smaller spender than any president in decades.)
Change in spending does not come close to being what people have in mind for “overspending”.
For example, suppose that President Bush had increased government spending by 30% in his final year. If the current president had merely left it at that level, there would be 0% increase in spending but declaring him to be the highest spending president would be very reasonable.
(And again, ignores tax issues.)
Job creation without government spending, inflation, or trade barriers: http://jobcreationplan.blogspot.com/