Having a Secure Backup

Our parents and grandparents told us it was smart to have extra put by for a rainy day, but what happens when the rainy day fund in the coffee can under the floorboards is washed away with the house? What happens when your neighbors are too busy rescuing themselves to help you? We've learned from experience that institutional reserves are more practical than letting everyone fend for themselves. We need government, because the government is us.

When flood or drought or an earthquake strikes, it's good to live in a big country. (Joe Conason has a very good piece about this at nationalmemo.com.) A nation needs to plan for disasters that are more than local. Republicans are busy looking for redundancies to eliminate, but redundancy is an essential part of planning and planning is a key role of government. In a crisis big government is better than small. Extra is better than not enough. The Republicans are mocking the government response to Hurricane Irene, but it's better to be there early with sufficient force than too late with too little as happened to the previous administration with a previous hurricane.

Redundancy isn't the enemy of efficiency; it's crucial to maintaining efficiency in a crisis. Redundancy is a key part of emergency planning at the government level. It's been part of planning by governments of both parties, until the Republicans began thinking small.

There's a rationale for the Republicans' slimming obsession: disaster is an excellent profit opportunity for corporations that Republicans represent. War, disaster, famine, pestilence, epidemic, any or all the horses of the apocalypse will make opportunists very very rich if government is as small as Republicans would like it to be. But it will cost us.

It's called "Disaster Capitalism" and government preparedness is just what they don't want. Naomi Klein wrote about it in her book Shock Doctrine.

Here's a strange glimpse at the far extreme. Apparently the concept of personal redundancy is pretty important among the survivalist folks who demand less sufficiency in government. These podcasters preach the redundancy of two homes, for instance, which is nice for them. But consider this: when millions of people stockpile extra food, extra supplies and hide cash under the mattress, what does it do to the broader economy? What happens to those who can't afford to stash a year's worth away (or five years' worth)?

During the Great Depression this kind of behavior was called "Hoarding". Apart from how self-centered it is, hoarding causes shortages among those who aren't hoarding, who can't afford to or think it's wrong. Hoarding cash depresses the economy. (The corporations sitting on trillions in unspent government bailout money are the prime culprits here.)

There is a vital pragmatism to redundancy at the national level. It's been understood by most modern presidents. Roads and bridges to carry traffic if one or more are damaged, redundant lines of communication, backup power supply lines and backup power capacity. Securing these are the most important role of government, but the "cost cutters" eye sufficiency and backups as "waste" and "excessive". The way George W. Bush considered the revenue surplus he inherited from Clinton as free money he could throw away. Which is why we are experiencing shortages now. We could be more prepared and better equipped, but the Republicans want us to be less so. Why? Because it might make their clients rich.

Handling a Manic-Depressive Economy

For half a century it was the successful policy of the U.S. government to moderate the moods of the economy, mostly to keep the economy from dropping into a depression, but also to keep it from overheating. To act as a thermostat. This required government to modulate markets, to soften the hardship and deprivation at the low end of the cycle and rein in the excess reward at the upper end––something it's much harder to do because the rich investor class has thousands of lobbyists working to keep the upper end from any moderation however rational. When there is excess pressure in one direction it's necessary to pull in the opposite direction. This is what keeps boats afloat and cars on the road.

COUNTERCYCLICAL. Try Googling that word and you don't come up with much. A few arcane economic articles available in PDF. One of the most important jobs of government is to counter the irregularities of the economy. Prior to the regulations inaugurated in the early 20th century the U.S. economy had catastrophic nationwide bank panics every few years. These panics ruined millions of people and threw millions more out of work, broke up families, bankrupted thousands of farms and businesses, saw towns dry up and disappear, and precipitated waves of suicide and child abandonment.

The veers and spikes of the economy allowed a few speculators to become enormously wealthy. Bubbles inflated and popped leaving millions in the hands of a few clever people. Sometimes the speculators precipitated the bubbles and the panics in order to profit from them. Regulation put an end to the worst predatory market behaviors and ushered in the long period of broad prosperity that characterized the best half century in American history. It was a bit boring, perhaps, but homeowners and families don't benefit from financial rollercoasters. The dismantling of those regulations in the years after Reagan took away or weakened the countercyclical tools of the federal government and ushered in poorer labor markets, more fluctuations, more bubbles, more Wall Street misbehavior and led to the near collapse of 2008-2009. If the government had a stronger hand we'd be recovering more broadly now, but Reaganism has concentrated the recovery at the top. We have a topheavy poorly balanced economy that is more unstable and less seaworthy.

Unregulated economies sometimes behave like those overloaded ferries that occasionally capsize in the straits of southeast Asia. When they become overweighted on one side, everyone rushes to the opposite side and the craft capsizes. In moments of imbalance the craft needs a counterbalance to remain afloat. In the economic context this is the job of government. To put weight on the side that everyone is rushing away from. To spend money when everyone is afraid to. To spend money in areas that are slack, on necessary infrastructure that has been neglected––even when there is a shortage of revenue to do so. That is a function only government can fulfill, because government works over longer spans of time and across broader areas. Government thinks in terms of economic climate patterns rather than the weather of the moment. Across the United States one year's drought will visit another region next year. Knitting smaller regional markets and different sectors together helps keep the broad economy afloat.

Government's job is to moderate the spikes and the depressions, to balance the interests of different sectors, and it's foolish to take that capability away. There is a name for that do-nothing philosophy. Herbert Hooverism. Government isn't the enemy in an economic crisis. As was seen in the worst weeks of the crisis, government is essential, and never more essential than when free markets fail. We need a better vocabulary for explaining this. A better set of descriptive models. The government is a sure hand on the steering wheel, a thermostat to keep the house livable summer and winter. The government is also fire and police and public health departments when things go wrong. But this countercyclical role of government, this balancing mechanism, is key and little discussed. It needs to be part of the public conversation. When no one is spending is the most important time for government to keep money flowing in the economy. Government is the only entity that can and will work in opposition to the frightened impulses that have us paralyzed. Countercyclical is a cumbersome word. Maybe we need a better one.