Friday, May 17, 2013

For Alas, We Have Sinned. On Michael KInsley's Defense of the Austerians.

Here's a fascinating story for you:  First the New York Times publishes an op-ed piece stating that economic austerity kills.  Then Michael Kinsley writes a piece partly seeded by that but mostly aimed at Paul Krugman's arguments about austerity as a misplaced policy during economic depressions of the type we have been (or still are) experiencing.

What's fun about Kinsley's arguments is that they have nothing to do with economic theory debates about what works or what doesn't work in squashing depressions in the bud.   Nothing.

Instead, Kinsley wants to talk about morality and sin and its just desserts:

Krugman sometimes writes as if, right or wrong, his view is the courageous one, held by folks willing to stand up to the plutocrats and their lackies. But his message to all classes is: party on. It’s your patriotic duty. How much courage does that take? The really tough message—once again, right or wrong—is the one the austerians have to deliver, which is that the party is over. And this leads to a question that Krugman finally addressed in a recent column: What’s in all this for the austerians? If Krugman is right that the results of austerity are harmful and potentially catastrophic, why should the elites who he says have the real power be pushing it so hard? No one on either side of this debate actually wants the economy to tank, surely. But before you can have an ulterior motive, you’ve got to have a motive. What is the austerians’ motive?
Krugman’s answer isn’t bad. He writes:
Some [powerful people] have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.
There’s something to this, though not enough. There may be a Snidely Whiplash out there somewhere who is willing to take a recession if that’s what is required to rip apart the social safety net. But surely the Obama administration is not filled with people secretly trying to repeal the New Deal, although it’s the Obama administration whose policies Krugman finds so disturbing.
Krugman also is on to something when he talks about paying a price for past sins. I don’t think suffering is good, but I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy. Sure let’s raise taxes on the rich. But that’s not going to solve the problem. The problem is the great, deluded middle class—subsidized by government and coddled by politicians. In other words, they are you and me. If you make less than $250,000 a year, Obama has assured us, you are officially entitled to feel put-upon and resentful. And to be immune from further imposition.
Austerians don’t get off on other people’s suffering. They, for the most part, honestly believe that theirs is the quickest way through the suffering. They may be right or they may be wrong. When Krugman says he’s only worried about “premature” fiscal discipline, it becomes largely a question of emphasis anyway. But the austerians deserve credit: They at least are talking about the spinach, while the Krugmanites are only talking about dessert.

Mmm.  I love that!  But the reason for my love is an awful one:  It's so bad that it's good for me because now I can tear it apart.  So I sin.

Let's begin that tearing-apart by noticing that mumbly-mouthed muzziness.  It is the first alarm bell here:  Everybody sins!  Everybody deserves to be whipped!  Nobody is at any special fault.

The sinners in Kinsley's morality tale are everyone and no-one, though he singles out the middle-classes as deluded, subsidized and coddled by the government.  Perhaps there should be no middle classes in this country, if they are so very subsidized and coddled?  Only the rich and then the vast hordes of the poor?  But I digress.

So everybody sins.  Yet the people who sinned particularly, in the sense of causing the system collapses we have observed, are not defined or named or discussed.  The sin is a general one, hovering above all humans everywhere.

We have all lived beyond our means, we have all partied all night through and then slept through the productive part of the day and thus we all need to be punished.  And because nothing and nobody is actually at fault here, everything and everybody must suffer!  No specific punishments are needed for those who did more than just breathe during the relevant period of sinning.  We are all miserable sinners and must suffer.  Except for the top one percent.

That's what I mean by the mumbly-mouthed muzziness (probably not a real term but should be).

Kinsley's article is also unhelpful by asking us to relate to economics as if it was a religion (perhaps the other guys are right, perhaps not, but they believe fervently in their cause), rather than an imperfect research tool used to find out what works and what does not work.  It is even more unhelpful in not being interested in the answer to that.  For under any and all morality scenarios, putting suffering people through more austerity if it doesn't help at all is immoral.  Right?

What's odd about much of the morality writing I go through is how bad it is, in the sense of not diving through the surface of some sort of inherited masochistic-flavored relief, of not asking what kind of morality it is we are talking about or what religious system defines the sins we discuss or whether intent matters at all here. 

The common consequence of all that is to assign sinning to everybody but preferably to "others" and to argue that we are all belt-tightening equally if a poor person loses a job and health insurance and a rich person must postpone that new yacht.  From that muzziness come false equalities and also false prescriptions, I believe.

The Echidne rules about economic crimes is first to try to prevent them.  In the case of the financial and housing market crashes, find out why they happened and change the laws so that they cannot happen again.  Give regulators of the markets new and sharp dentures (their teeth have all been pulled out) and give them real power to punish the criminals they find.  Don't put the criminals back in the economic saddles as is happening.

In the case of Greece and other similar cases, make stupid gambling with countries much more difficult.  If you find that one country exploits the EU by having certain individuals get all sorts of benefits (retiring at fifty without any health problems, say). throw the book at that country and stop the undesirable practices early.

The second rule is to find out the culprits and punish them.  General self-flagellation appeals to some people, but economic systems work much better if a person contemplating an economic crime also contemplates the consequences of getting caught.  That so much of the morality tale writing talks about our general sinfulness helps the real criminals and also makes similar crimes in the future much more likely to happen.  Systems provide us with incentives.  If the incentives are bad, bad outcomes are more likely.

I'm tempted to have a third rule about such crimes which would be to avoid that overall muzziness, not only because it's utterly useless but also because it can be used for any type of sin, to justify any sort of vileness, and also because it ignores the reality where some people have much more power to "sin" in economic terms and other people have very little power  not to "sin" in those terms if pushed towards an immoral move by the more powerful.  Think of the nineties games between those selling mortgages to uninformed buyers who didn't actually qualify but were told that they did by the sellers.  The former knew the game, the latter did not, in many cases.  The sins were not equal, but it is the latter who got punished.