We blame where it belongs. Otherwise, it will further damage in future years
PAUL KRUGMAN / COUNTRY
The last three years have been a disaster for most Western economies. U.S. shows a massive long-term unemployment for the first time since the thirties. Meanwhile, the European single currency is collapsing. How it turned out so badly?
Well, I hear repeated ever more frequently to members of the self-appointed political elite, scholars, officials and renowned experts, is the assertion that the blame is mostly of citizens. The idea is that we got into this mess because voters wanted something for nothing, and no personality politicians responded to the stupidity of the electorate.
So this seems a good time to point out that this point of view that blames citizenship is not only interested, but completely wrong.
The fact is that what is now we're experiencing is a disaster that is transmitted from top to bottom. The policies that got us into this mess were not responses to citizens' demands. They were, with few exceptions, political champions of small groups of influential people, and in many cases the same people who now give us lessons to others about the need to get serious. And in trying to blame the common people, the elites are circumventing some much-needed reflections about their own catastrophic mistakes.
Allow me to focus primarily on what happened in the U.S., before he turns to Europe.
In these times, Americans do not stand to hear sermons on the need to reduce the budget deficit. This obsession in itself is a reflection of distorted priorities, and our immediate concern should be to create employment. But suppose we just talk about the deficit, and ask: What has been the budget surplus that the federal government had in 2000?
The answer is that three things mainly. The first was the Bush tax cuts, which added about two billion dollars to the national debt over the past decade. Second, the wars in Iraq and Afghanistan, numbering about 1.1 billion dollars. And the third was the Great Recession, which caused a slump in income and a rebound in spending on unemployment benefits and other Social Security programs.
Who is responsible for this damage budget? The people on the street, no. President George W.
Bush lowered taxes on the ideology of his party, not in response to a wave of popular demand (and the bulk of the cuts went to a small, wealthy minority.)
Similarly, Bush decided to invade Iraq because it was something he and his advisers wanted to do, not because Americans were crying out war against a regime that had nothing to do with the 11-S. In fact, it took an advertising campaign extremely misleading to convince Americans that supported the invasion, and yet, the electorate was never supported the war with the same enthusiasm that the political elite and the U.S. understood.
Finally, the Great Recession was caused by a runaway financial sector, encouraged by a reckless deregulation. And who was responsible for such liberalization? People in Washington because it was very powerful and with close ties to the financial sector. Let me publicly express my special thanks to Alan Greenspan, who played a crucial role both in financial liberalization in the approval of the Bush tax cuts (and which, of course, is now one of those who threaten us with the deficit).
So were the mistakes of the elite, not the greed of ordinary people, which caused the U.S. deficit. In general, the same could be said of the European crisis.
Needless to say, that's not what you hear tell the makers. In Europe, the official story now is that governments of countries with problems over the masses listened and promised too much to too few voters while raising taxes. And to be fair, this story is reasonably true in the case of Greece. But it is not at all what happened in Ireland and Spain, which had little debt budget surpluses and the eve of the crisis.
The True Story of the European crisis is that the leaders created a single currency, the euro, without creating the institutions needed to cope with periods of boom and difficulties within the euro zone. And the engine of the European single currency was the downstream project par excellence, a vision imposed by the elite to an extremely reluctant electorate.
Does it matter all that? Why should I worry about the effort to attribute the blame for bad policies to the public?
One possible answer is plain and simple responsibility. We should not allow those who advocated policies that wrecked the budget during the Bush era pretends to be deficit hawks, those who praised Ireland should not give lectures about responsible government.
But I would say that the main answer is that by inventing stories about our current difficulties absolve those who have put us in this situation, we eliminate any possibility of learning from the crisis. We must blame where it belongs, to give a lesson to our political elites. Otherwise, it will do even more damage in future years.
Paul Krugman is a professor of economics at Princeton University and Nobel Laureate in Economics 2008. © New York Times News Service. Translation 2011 News Clips.
PAUL KRUGMAN / COUNTRY
The last three years have been a disaster for most Western economies. U.S. shows a massive long-term unemployment for the first time since the thirties. Meanwhile, the European single currency is collapsing. How it turned out so badly?
Well, I hear repeated ever more frequently to members of the self-appointed political elite, scholars, officials and renowned experts, is the assertion that the blame is mostly of citizens. The idea is that we got into this mess because voters wanted something for nothing, and no personality politicians responded to the stupidity of the electorate.
So this seems a good time to point out that this point of view that blames citizenship is not only interested, but completely wrong.
The fact is that what is now we're experiencing is a disaster that is transmitted from top to bottom. The policies that got us into this mess were not responses to citizens' demands. They were, with few exceptions, political champions of small groups of influential people, and in many cases the same people who now give us lessons to others about the need to get serious. And in trying to blame the common people, the elites are circumventing some much-needed reflections about their own catastrophic mistakes.
Allow me to focus primarily on what happened in the U.S., before he turns to Europe.
In these times, Americans do not stand to hear sermons on the need to reduce the budget deficit. This obsession in itself is a reflection of distorted priorities, and our immediate concern should be to create employment. But suppose we just talk about the deficit, and ask: What has been the budget surplus that the federal government had in 2000?
The answer is that three things mainly. The first was the Bush tax cuts, which added about two billion dollars to the national debt over the past decade. Second, the wars in Iraq and Afghanistan, numbering about 1.1 billion dollars. And the third was the Great Recession, which caused a slump in income and a rebound in spending on unemployment benefits and other Social Security programs.
Who is responsible for this damage budget? The people on the street, no. President George W.
Bush lowered taxes on the ideology of his party, not in response to a wave of popular demand (and the bulk of the cuts went to a small, wealthy minority.)
Similarly, Bush decided to invade Iraq because it was something he and his advisers wanted to do, not because Americans were crying out war against a regime that had nothing to do with the 11-S. In fact, it took an advertising campaign extremely misleading to convince Americans that supported the invasion, and yet, the electorate was never supported the war with the same enthusiasm that the political elite and the U.S. understood.
Finally, the Great Recession was caused by a runaway financial sector, encouraged by a reckless deregulation. And who was responsible for such liberalization? People in Washington because it was very powerful and with close ties to the financial sector. Let me publicly express my special thanks to Alan Greenspan, who played a crucial role both in financial liberalization in the approval of the Bush tax cuts (and which, of course, is now one of those who threaten us with the deficit).
So were the mistakes of the elite, not the greed of ordinary people, which caused the U.S. deficit. In general, the same could be said of the European crisis.
Needless to say, that's not what you hear tell the makers. In Europe, the official story now is that governments of countries with problems over the masses listened and promised too much to too few voters while raising taxes. And to be fair, this story is reasonably true in the case of Greece. But it is not at all what happened in Ireland and Spain, which had little debt budget surpluses and the eve of the crisis.
The True Story of the European crisis is that the leaders created a single currency, the euro, without creating the institutions needed to cope with periods of boom and difficulties within the euro zone. And the engine of the European single currency was the downstream project par excellence, a vision imposed by the elite to an extremely reluctant electorate.
Does it matter all that? Why should I worry about the effort to attribute the blame for bad policies to the public?
One possible answer is plain and simple responsibility. We should not allow those who advocated policies that wrecked the budget during the Bush era pretends to be deficit hawks, those who praised Ireland should not give lectures about responsible government.
But I would say that the main answer is that by inventing stories about our current difficulties absolve those who have put us in this situation, we eliminate any possibility of learning from the crisis. We must blame where it belongs, to give a lesson to our political elites. Otherwise, it will do even more damage in future years.
Paul Krugman is a professor of economics at Princeton University and Nobel Laureate in Economics 2008. © New York Times News Service. Translation 2011 News Clips.
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