Monday, February 20, 2012


Krugman is right again. Today's column is about the stupidity of austerity measures during a recession.

What is it about Big Men (and it's usually men)? When they screw up, they screw up Big, and after they screw up they spend the post screw-up period arranging ways to blame everyone else.

The big money people, the hedge funds, the investment banks, bet long on dubious items and they leveraged themselves to do so. When their bets failed, they couldn't pay up so they were bailed out by us.

But that wasn't enough. They couldn't bear taking any blame for what they'd done, so they blamed the people who were victimized by their greed and overreaching. They blamed the people whose jobs were axed because of the downturn they, the bankers and hedge fund gamblers, had caused. They blamed homeowners whose home values dropped because bankers had wagered those home values too high. They blamed the homeowners' children and the homeowners' dogs. Once they'd blamed everyone but themselves they arranged to punish them. The punishment is called Austerity.

But austerity doesn't work. Let me rephrase that: it works badly. It has a very powerful effect, but the effect is negative. It is like surgeons bleeding a patient who is suffering from loss of blood. It is like an airline pilot whose plane is in a stall deciding it's a good time to conserve fuel.

Austerity is like starving one's children to protect their inheritance. Who does it benefit? The bankers who manage the funds.

Austerity is a financial form of anorexia nervosa, and just as dangerous. It's been proven dangerous, ineffective, wrongheaded and stupid over long years of painful experience. The problem is most people don't have long memories or good understanding of these things and bankers have the money (provided by the taxpayer bailout) to buy advertising and network air time and political influence. They are able to sell anything they'd like, and austerity is what they'd like now––for us, not for them.

Austerity forces everyone to sacrifice to make sure the bankers don't need to. They caused a problem, and we are fixing it––but we are only fixing it for them. We are paying for the damage they did and this payment period is prolonging and deepening the harm done. Austerity causes broad harm to avoid inconveniencing a small group of bankers.

AUSTERITY IS HOW THE RICH TEACH WORKING PEOPLE TO BE POOR. This is a phrase that should be heard more, but without the kind of money bankers have it's not likely to be heard very much on radio or television.

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