In general, I'm politically right of center when it comes to fiscal issues. Obviously, after the catastrophic banking crisis of 2008, when we saw up close that the virtues of the invisible hand of the market come with a price: markets crash and revivals can be long in coming and very painful to wait for. The cost to our society has been very dear so far, and is looking to get worse before we see a meaningful upturn. Sometimes letting the market just do its thing can simply be too devastating to bear. Yet when things are going well, it's generally good to just stay out of the way of what the market does well. In other words, the cycles of markets are too turbulent to just let them run wild, but it's mainly the lows that we have to worry about.
I look at it like floating in a pool. Just let the buoyancy happen. But if you start to go under, do something about it.
Last night I caught Paul Krugman's appearance on Charlie Rose, where he talked about the price we're paying for fiscal austerity. His main point was that austerity now only shrinks the economy, and that the Fed is already as low as it can be on interest rates so there's really nothing more they can do to stimulate private sector growth to compensate for cuts in government economic activity. Krugman says we need another stimulus now to get the economy moving again. In the two previous major economic slowdowns, the emergence from the doldrums came, in the 1880s, from the railroad boom and, in the Great Depression, from World War 2. In the first case, technological innovation and a new industrial market led to economic expansion. In the latter case, the massive government spending on the war effort kicked the market into gear. Krugman asserts that now we're at a moment in time where we need one or the other to get us out of this mess, or we risk falling into deflation and rising unemployment.
In other words, we're sinking below the surface and we need either a boogie board or we better start activity swimming to get our heads above water.
To me it seems obvious that a national effort pushing development of alternative energies and energy-efficient technologies could prove to be the technological innovation that leads to new industrial markets. America could even become a manufacturing nation again, an exporter of goods.
In the meantime, though, we need some kind of spending to invest in our infrastructure — fix our crumbling bridges, our pothole-filled roads, our collapsing schools; build up our information infrastructure before we end up being on par with the third world — do things that put people to work improving our commons that is beyond the purview of any single corporation and bet on the future potential of this country.
The Republicans, however, and not a few conservative Democrats, are in a psychological brain-lock triggered, I believe, in no small part by their own buyer's remorse: After racking up trillions of dollars of national debt under the Bush Administration, and setting the stage for the bank meltdown that cost us trillions more in not just bailout funds but also lost economic growth and activity, the GOP has suddenly glommed onto the idea that they need to stop spending. Their anuses have puckered tightly shut and they'll be damned if they unclench.
And this anal retentive fear of spending is exacerbated by the right-wing's culture of bedwetting fear, which is showing itself in conservative attacks on immigrants, on equal rights for gays, on equal rights for blacks (because of course the Civil Rights legislations of the 1960s are problematic, says tea bagger candidate Rand Paul and others), and so on.
So the panic-stricken conservatives are blocking even aid to the unemployed — as if unemployed works who are looking for work but cannot find it were the real problem of our economy. Like nervous children who never learned how to swim, the right wing leaders are locking onto us all, frozen in fear, dragging us all down under water.
Yet the Republicans declare that such panic is virtuous.
Changing metaphors for a moment, let's look at our economy as a house. In general, you want to run your house in sound fiscal order. But sometimes you just have to spend. You have to spend if the roof is leaking. You have to spend if the water main breaks. You have to spend if the electrical wiring shorts out. You can't just say, "Well we spent too much on the credit cards throwing parties, so now we refuse to fix the broken water heater." (Maybe you shouldn't have spent so much on your war parties in the first place, Senator Mitch McConnell!)
Now is not the time to give in to conservatives' panic. We are not a country that displays its best out of fear. When we face the challenges head-on and mobilize our resources, we tend to triumph. When we react in fear and trepidation, we tend to make mistakes that cost us for years, even decades.
Yes, we need to get a handle on our long-term national debt. It's fucking frightening how big it has gotten in the last 10 years. But now's not the time. First we have to prime the economic engine again, and kick things into gear, get people working. Working people spend. Working people feel better about themselves. A working nation is empowered.
Then, when the economy is humming along again (which, by the by, also means government revenues are rising again), that's when we cut spending. Let's fix the house first, then worry about the monthly budget. Let's swim now, while we can, before we drown.