is a columnist for The Progressive Populist and
a faculty adjunct at Cochise College. His most
recent book is, Politics, Religion, and Culture
in an Anxious Age.
Around the world, corporate media and even substantial segments of the working class have embraced an old religious creed, the celebration of austerity. Its cold bath is supposed to rid us of our sins. Its tenets stand in contrast to the academic wisdom of post World War II generation and to many of the metrics commonly accepted across the political spectrum. We cannot understand the power of this reborn orthodoxy without addressing its complex roots. Several historical narratives converge. They reflect and sustain compelling social and personal identities. These seem especially comforting amidst cultural and economic turmoil. Nonetheless, if this austerity is not effectively challenged, it may unleash forces as destructive as those of the thirties. And stopping austerity will also require critical scrutiny of much of the liberal and neo-Keynesian critiques that thus far constitute the only serious systemic response to austerity’s lure.
“Spain had a budget surplus before the economic collapse. Spain had a budget surplus… Perhaps repeating this line three times will help the… people who have columns in the Washington Post… get some understanding of the issue. .the only euro zone country that looks much like Greece is Greece. The other euro zone crisis countries had hugely better finances in the years [before] the crisis.”Europe’s embrace of austerity is especially troublesome because it evokes memories of fascism. Many commentators constantly reiterate that Weimar hyperinflation led to the Nazis. Hyperinflation, however, occurred in the early twenties when the Weimar Republic chose to pay its obligations by printing more money. The Nazis were and remained a minority party during the Weimar hyperinflation. They grew during massive deflationary pressures occasioned by Depression and by the government’s harsh austerity measures taken in the face of contracting demand.
“When I was in the White House, I used to bristle when people would say I was a Keynesian economist. They acted as if I believed that fiscal stimulus mattered because of some theoretical book written in 1936… I used to say I am not a Keynesian economist, I am an empirical economist. I believe what I do because of the empirical evidence.”I agree with the case Romer builds and especially appreciate the way she presents the obvious contradictions in the current mainstream line. Nonetheless, I have several qualms. George Lakoff and Elisabeth Wehling argue: “voting decisions are fundamentally taken on the basis of values and empathy. Policies and facts matter; they are, however, not absorbed in isolation but are moreover embedded in values. Politicians therefore need to communicate a value framework in which policies are embedded and add up to a coherent programme….” (Common Dreams, )
“To take a concrete example: what counts in the effective social machine demonizing welfare in the USA is the shame attached to receiving public aid without contributing to society with your tax dollars. It's shameful to have lost your job or your home; you're stupid, a loser to have been in a position to lose it, and you're a lazy, stupid loser if you haven't found another one…And so you don't combat this shame by trying to change individual people's ideas, one by one, with information about unemployment trends; you combat it by showing your face, by embodying your lack of shame, by putting a face on unemployment or homelessness. You thus counteract the existing collective affect by creating a positive affect of, shall we say, joyful solidarity. Shame isolates (you hide your face); joyful solidarity comes from people coming together. It's joy released from the bondage of shame.”The narrative surrounding government spending is complex and evolving. Government is not some timeless abstraction. Yet even where Keynesian ideas are invoked within the university, Keynes’s insights are narrowed or slighted. As Greek economist Yanis Faroufakis points out, neo Keynesians, most notably Paul Samuelson, tried to synthesize Keynes’s macro with neoclassical micro economics and its core faith in determinate models and market equilibriums. Keynes had argued that capital and labor markets were inherently indeterminate because they were driven by multiple agents speculations as to the intentions of other agents. Governmental institutions and policies needed to be crafted periodically to cope with the self-intensifying spirals of optimism or pessimism.
Seventies stagflation, occasioned in part by OPEC and the breakdown of the post WWII international political economy, was something that technocratic neo Keynesian models had failed to predict or control. These failures led to a return to older faiths in pure markets driven by classical microeconomics. If Samuelson’s IS/LM model failed to explain stagflation why not throw out the whole Keynesian corpus. Since Samuelson had explained sub-optimal equilibria and the need for periodic fiscal stimulus or interest rate cuts in terms of such ad hoc factors as wage stickiness, why not just do away with such stickiness. Eliminate unions and repeal minimum wage laws.
In this context, Keynesian economists need to spend more time considering job creation strategies like shorter work hours that might both reduce unemployment, ease burdens on those currently in the workforce, and touch new quality of life concerns. The chance for a little shared leisure and collective joy would go a long way to foster receptivity to others who for whatever reason have not shared the long work grind. Nationalism itself, both here and in Europe, needs closer scrutiny. Today the concept of whole nations as profligate or frugal drives a destructive economic policy in both Europe and the US. Yet Germans are not all frugal ants and Greeks not all spendthrift grasshoppers. And rather than talk abstractly about job creation, let’s discuss and illustrate schools, bridges, and the aesthetic experience of public parks, transit systems etc.
