Paul Krugman has no concept of Politics

Kurt_and_Hunter

(1000+ posts) Send PM | Profile | Ignore

Mon Feb-09-09 11:04 AM
Original message

Paul Krugman has no concept of Politics

Edited on Mon Feb-09-09 11:13 AM by Kurt_and_Hunter

Pangloss was the philosopher in “Candide” who maintained that this is the “best of all possible worlds.” Whatever example you threw at him—disease, famine, war—he would think up a way to cast it as the best possible thing.

If you start from the proposition that Barack Obama is the “best of all possible leaders”… the smartest and most effective human being who has ever drawn breath, then certain conclusions follow.

The latest Panglossian argument is that if the stimulus bill is puny and ill-targeted and endangers us all by failing to recognize the magnitude of the deflationary risk it is still the best of all possible outcomes.

Since it will barely pass, that proves that nothing better could pass and that the President has done a masterful job of wringing the best possible response from congress, given the politics of the situation.

And when an economist points out the flaws in what the Obama administration is doing it is said that he is clueless about politics… cannot understand the political realities of the composition of Congress.

There is, however, an alternative explanation of events that has the virtue of bearing some resemblance to reality: The administration has displayed, on the economy, a deficit of both understanding and leadership.

Here is what I assumed would happen when president Obama was elected… starting November 5th we would have seen a maximal effort to lead America toward a set of economic solutions. A large transition office should have been full of top economic minds crafting a comprehensive plan that would be revealed in President Obama’s inaugural address. This effort would have been leak-free and generated a measure of suspense and hope.

“I don’t know what they’re going to come up with but I support it because we need to do something.”

Whatever was laid out in the inaugural address after months of anticipation would have been 90% of the way to enactment, carrying the full hope and emotion of the transition of power.

Say Obama had laid out a 2.5 trillion dollar program: 500 billion of relief (aid to states, food stamps, unemployment), one trillion of demand-side stimulus (infrastructure, consumer debt interest relief, payroll tax holiday, short-term income tax rebates up to $250,000), 500 billion to recapitalizing the lending sector and 500 billion of direct intervention in the housing market.

That program would have enjoyed great national momentum and passed with a few face-saving tweaks. (And had he proposed a mere 100 billion program it would have enjoyed great national momentum and passed with a few face-saving tweaks.)

That’s the politics. That… is… Leadership. Congress is not a rigid input-output system... a mathematical set of fixed quantities. Congress is a body composed of human beings with constituencies and shifting political interests who can be led.

It never crossed my mind that Obama would NOT commit the full prestige and emotion of his ascendance to power to a daring and comprehensive package, but he didn’t. We will all pay some price, large or small, for it not being done. As the saying goes, you only get one chance to make a first impression. Every subsequent move will now be harder than it needed to be, opposition more reflexive, difference-splitting more accepted.

Going forward I hope that something will be learned.

(Obama is doing great on everything else, but the economy is THE thing——that thing upon which both the Obama Presidency and the future fortunes and direction of the nation and the Democratic Party hang.)