Sunday, June 14, 2015

Gummint debt

Government debt, engine of prosperity
Governments have accumulated debts probably ever since there was a government, and -- as Paul Krugman writes in this column -- it is an unshakeable belief of rightwingers that this is a BAD THING, despite evidence to the contrary.

The prime example is England, which institutionalized its debt in 1694 (when the Bank of England was organized for the purpose of buying government bonds), touching off the greatest economic expansion in history.

Not many Americans know that, but you'd think some few Englishmen would, and that a Chancellor of the Exchequer (treasury secretary) would, for sure. But, as so often happens when you expect people to know obvious stuff (and otherwise there'd be no need for a blog called Restating the Obvious), they don't:

 In particular, one important factor in the recent Conservative election triumph was the way Britain’s news media told voters, again and again, that excessive government spending under Labour caused the financial crisis.

It takes almost no homework to show that this claim is absurd on multiple levels. For one thing, the financial crisis was global; did Gordon Brown’s alleged overspending cause the housing busts in Florida and Spain? For another, all these claims of irresponsibility involve rewriting history, because on the eve of crisis nobody thought Britain was being profligate: debt was low by historical standards and the deficit fairly small. Finally, Britain’s supposedly disastrous fiscal position has never worried the markets, which have remained happy to buy British bonds despite historically low yields.

Nonetheless, that’s the story, generally reported not as opinion but as fact. And the really bad news is that Britain’s leaders seem to believe their own propaganda. On Wednesday, George Osborne, the chancellor of the Exchequer and the architect of the government’s austerity policies, announced his intention to make these policies permanent. Britain, he said, should have a law requiring that the government run a budget surplus — with current revenue paying for all spending, including investment outlays — when the economy is growing.
It’s a remarkable proposal, and I mean that in the worst way.
Readers who have been here for a while will remember that the globalization of the crash was a disproof of the rightwing claim that that Community Reinvestment Act caused our crash.  Remarkably, that idea is still being shopped and -- one supposes -- bought by the less reflective part of the citizenry that reads political statements.

RtO has been somewhat distracted by the covey of idiots vying for the rightwing vote in the coming elections and had almost forgotten how stubbornly the rightwing clings to its delusions. But the recent exchange between Jamie Dimon, criminal banker, and Senator Elizabeth Warren reminds us that the delusions are (as Krugman says) ineradicable.

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