Krugman vs. Stockman
It was no Rumble in the Jungle, that’s for sure. There were no blindside blows to the ribs, no bone-crushing roundhouse punches, and no blood-spattered warriors sprawled out on the canvas for the mandatory 10-count. But by the time ABC’s 15-round bareknuckle extravaganza was over, just one man was left standing, David Stockman, TKO champ of “This Week’s” Sunday morning political blabberfest.
The anticipation for the main event had been building for more than two weeks, ever since Reagan’s former budget director had delivered his hyperbolic libertarian manifesto on the editorial pages of the New York Times. Stockman’s incendiary treatise took a sledgehammer to Washington, Wall Street, “mutant crony capitalism”, FDR, the ballooning budget deficits, Lyndon Baines Johnson, the droves of debt-encumbered, consumption-addled Americans and, of course, Beelzebub Satan himself, the perfidious John Maynard Keynes.
Here’s a clip from Stockman’s sepulchral screed aptly titled “State-Wrecked: The Corruption of Capitalism in America”:
“Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.
Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.”
It’s a great read, particularly if you think the country is circling the plughole, which most people do. And Stockman doesn’t pull his punches either. He “kicks ass and takes names”, and the name that looms larger than all others inkjet Ben Bernanke, public enemy #1. The micromanaging central planners at the Fed take a real beating in Stockman’s diatribe, according to him– their scatterbrain printing operations and gluttonously-lavish bailouts are at the very heart of all that ails the nation.
That’s not to say that I agree everything Stockman says. (balanced budget, a “means-tested safety net”, etc) I don’t. But I do think he is dead-on in his overall analysis that corrupt institutions have “turned the economy into a giant casino” and “have brought America to an end-stage metastasis.” More important, he’s captured the mood of the times, which he sees as relentlessly bleak. Who would dispute that? When he refers to our present epoch as “sundown in America”, he speaks to the vast number of 99 percenters who’ve seen their jobs, their homes and their future prospects go up in smoke in the last decade as more and more of the country’s wealth is carted off by ne’er-do-well plutocrats and scotch-guzzling fund managers.
But while Stockman’s editorial has broad popular appeal, it’s come under ferocious attack by the liberal commentariat, who’ve savaged Stockman on issues that are largely meaningless to the average working stiff. Obama’s primary apologist, Paul Krugman, has been leading the jihad against Stockman; pounding away at his economic theories while dismissing him as a “cranky old man”. Here’s a sample of Krugman’s work in a recent post on his blog:
“Actually, I was disappointed in Stockman’s piece. I thought there would be some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they’re unusually teched up, get investment advice from Zero Hedge.”
The attacks on Stockman have come from all quarters of the liberal establishment. Much to his credit, Robert Scheer has veered from the party-line and defended the ex-budget director in a recent column at Truthdig titled “It Wasn’t David Stockman Who Wrecked the Economy.” Here’s a clip:
“Why is David Stockman driving everyone crazy?…What’s all the outrage about?…
The headline on Stockman’s piece—“State-Wrecked: The Corruption of Capitalism in America”—is unquestionably accurate…..What his critics find so disturbing is not a quaint argument about the purity of monetary policy but rather the bold assertion that the overall American system of crony capitalism is in fact wrecked. This is a contention that most Americans might readily agree with in terms of their daily experience, but one that the hardly suffering pundit class would rather not contemplate…
Bernanke, who throws $85 billion a month at the bankers who caused this mess, purchasing their toxic mortgage based derivatives, is still treated with respect. But Stockman, who opposed bailing out the banks so they, like those tens of millions of foreclosed homeowners, could learn a tough love lesson in real economics, is now an object of derision…
That fiasco’s enablers—Alan Greenspan, Robert Rubin and Lawrence Summers—and the more disastrous ones to follow were crowned “The Committee to Save the World” on Time magazine’s Feb. 15, 1999, cover and are still welcomed in those polite circles where truth-teller Stockman is being treated as a pariah.”
Not surprisingly, Scheer has been the only voice on the left to take Stockman’s side against the army of toffeenose pundits and establishment dipshits who wave off the concerns of ordinary people as —how does Krugman put it?–“pathetic and embarrassing”.
This is the context in which the mano-e-mano faceoff was staged; Noble Prize winning heavyweight Krugman vs the scrappy underdog Stockman. Naturally, the econoblogs have been eating it up.
Then came the Big Day. Here’s an excerpt from ABC’s This Week featuring Krugman, Stockman, Arianna Huffington, Greta Van Sustern and always-irritating, George Will. (transcript) The confab starts with a softball question to Krugman about Friday’s lousy jobs report, which Krugman deftly sidesteps with his perfunctory “austerity” mumbo-jumbo never mentioning the fact that his hero, President Stardust, is the author and main backer of the present contractionary policy. Obama bears 100% of the responsibility for the jobs crisis.
Moderator George Stephanopoulos then moves on to Stockman who fires off this opening salvo:
“I think the machinery of government is failing. That’s the problem we face. A real threat to the main stream economy.
That’s why the numbers are far more serious than what you heard Friday than is being suggested by the White House. The truth is, if we were still counting the labor force the way we did in 2000, the last time the stock market was where it was today, the unemployment rate would be 13. 1%.
We had a massive drop out of the labor force. It’s not from retirement. That we’re not even beginning to appreciate the harm and the damage and the hurt going on in the mainstream. We had the lowest economic growth in the last 12 years other than wartime for a century.”
That’s how you deliver the goods, just square off and let ‘em have it with both barrels. In contrast, Krugman follows up with more obfuscating blather saying, “The numbers aren’t that bad. This month is bad. But the numbers actually over the past year and a half have shown significant improvement once you correct for demography.”
“The numbers aren’t that bad”? What planet does Krugman live on anyway? 7.6% unemployment 5-full years after the recession and Krugman thinks that’s okay? That’s not what you’ve been saying on your blog, professor.
Enter Arianna Huffington who makes a spirited appeal for job creation.
“This is a real jobs crisis. The urgency of the jobs crisis is not just the budget there’s a real disconnect between the real crisis is and what his priorities are. I know that Obama said that we can do both. We can reduce the deficit and grow the economy. We can’t. We haven’t been able to. (There’s) a disconnect between the real economy and the financial economy. Everything we are doing has been good for Wall Street…but not good for Main Street.”
Call me crazy, but I find it hard to buy Huffington’s populist bloviating, especially when she’s decked-out in designer rags and sporting a $400 coif. There seems to be a basic disconnect between her message and her appearance.
Back to Stockman:
“The thing is, what we’re doing is not working and that is the bubble machine coming out of the Federal Reserve. Zero interest rates are basically crucifying the savers of America on a cross of zirp. (ed–zero interest rate policy)
All of this money isn’t getting out of the canyons of Wall Street. It’s going back to Wall Street. It’s going back to excess reserves. It allows speculators to borrow money for nothing overnight. We get bubble after bubble after bubble. But it’s doing nothing for the main street economy.”
“Do you really think we should be raising interest rates with high unemployment?”
“I think to have zero percent with interest rates when interest rates are the price of money, when our economy has massive amount of debt built up over three decades. We don’t need more debt and debt isn’t a good thing.
I know we owe it to ourselves. Still, it’s a burden on the people who owe it….whether it’s households with mortgages, credit cards or whatever.. It’s hurting, and making more debt through zero interest rates is absolutely counterproductive.”
Stockman makes a good point here. No one denies that zero rates can help rev up a flagging economy, but 5 years of zero rates? Give me a break! It’s a complete ripoff. The Fed is providing limitless free funding for crooked bankers so they can gouge credit card holders for 18% per month while concealing the red ink on their balance sheets.
Meanwhile Mom and Pop get zippo interest on their paltry retirement savings forcing them to downgrade from ground beef to catfood and move from their one bedroom flat to a dilapidated doublewide in the back of the Safeway parking lot. Is that what Krugman thinks is sound policy?”
Here’s Krugman’s response:
“This is actually part of my problem with David’s book. Which is, we have huge debt numbers. A huge misunderstanding of what those numbers mean. People say, debt is 3. 6 times GDP. We’re broke. The country has been living beyond its means. That’s not what it means.
It’s a little known fact that America earns more on its investments overseas than it pays to the foreigners. We have complexified the economic system. Now, some mortgage originator makes the loan, borrows the money, using securities, you count the same debt twice.
We have this overly complex financial system. We need to bring it back to simplicity. It has nothing to do with excess.”
Do you have any idea of what he’s talking about or is he just beating his lips?
What a terrible answer. People are worried about the debt and deficits and Krugman tries to allay their fears by saying the economic system is too complexified. What the hell does that mean? It’s that Krugman’s elitist way of saying, “You dopes can’t possibly understand the economy, so leave it all to us experts.”
It sure sounds like it.
“The CBO predicted that another 750,000 jobs would be lost this year because of the sequester. And there’s absolutely no plan by the administration to deal with the jobs crisis….We have 64% increase in suburban poverty. We have a doubling of people on food stamps and disabilities payments. We have millions of people’s homes under water.
The administration is ignoring their crisis. Because they’re prioritizing deficit reduction. This is not a right/left point. They have bought into the Republican talking points.”
Like I said, Huffington seems to say all the right things, but it just doesn’t resonate with the people she claims to support. The fact is, it’s hard to channel Huey Long when you sound like Zsa Zsa Gabor.
“The administration has a difficult choice to make. Do they talk about what they should be doing? Or do they position themselves like nothing is going to happen? They chose not to talk about what’s going to happen. They have chosen to do a halfway cut between what’s happened and what’s going to happen. None of this is real.”
More gibberish. This is why Stockman did so well in the faceoff, because–as smart as he is–Krugman lapses into these periodic trances where he sounds like a snake-oil salesman. What he appears to be saying is that Team Obama doesn’t really draft policy on the basis of conviction, but based on political calculation. In other words, “If we can’t win, we won’t try.” That’s hardly a ringing endorsement of the Dear Leader.
Krugman, one last time:
“This isn’t about machinery, it’s about people and visions. We have two parties who have fundamentally different visions of what america should be. We have democrats, who want the expansion of the safety net and have gotten it in Obamacare. They want it to be even more. And we have Republicans that want to dismantle a lot of the legacy of the Great Society and the New Deal.”
This is such nonsense. What difference have we seen under the Dems?
Zilch. The drones, the wars, civil liberties, regulation, spying, Guantanamo; you name it, it hasn’t changed a bit. Same shit, different leader.
Obama claims he can kill a US citizen without charges or trial, but Krugman maintains the Democrats have “fundamentally different vision of what America should be.”
Finally, Stockman goes in for the kill.
“The (Democrats) don’t stand for anything.
They don’t believe in anything. Why do we still have Too Big To Fail? We allegedly had a heart attack, the banks are bigger than ever. Why don’t Democrats do something to break them up and cut Wall Street down to size?”
And that’s how it ended, with Krugman backing up against the ropes while Stockman delivered one haymaker after another like a windmill spinning in a gale-storm. Mercifully, moderator Stephanopoulos intervened and stopped the carnage, lifting the ex-investment banker’s gloved hand skyward and declaring him “This Weeks” new champ. Krugman was rushed off to ICU where he is reported to be in stable condition.
Krugman has one of the best economics blogs on the Internet, but he should stay away from TV. It’s not his long-suit. He should also stop making excuses for Obama, the crummiest president ever.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at firstname.lastname@example.org.