dagblog - Comments for "Larry Summers Is Not the Main Problem"

When I was a kid--and

Peter Schwartz — Fri, 27 Sep 2013 03:32:46 +0000

When I was a kid--and still--I always loved cartoons that had this dark, sort of Fellini-esque feeling. Some of them played like the old newsreels.

Dear Doc, Perhaps it was the

Peter Schwartz — Fri, 27 Sep 2013 03:30:31 +0000

In reply to Larry Summers Is Not the Main Problem

Dear Doc,

Perhaps it was the avidity with which I consumed this very good article, but somehow, when I got to the end, I expected you to lay out the preferred alternative to "centrism." I was waiting for it, but it never came.

Is it just lots of government spending (say the amount Krugman recommended) to create jobs and repair the country's infrastructure? Or what?

I am way out of my depth on matter economical, but it seems to me that one problem with just replacing the missing private sector spending is that it wouldn't necessarily have solved the debt problem.

IOW, it wasn't just that people had lost their jobs and stopped spending. It was also that their biggest asset had in many cases gone underwater. They couldn't unload their home and buy another. And they still owed huge amounts on a mortgage that was way out of kilter with home values.

In addition, they were very much in debt in other ways and were no longer able to service the debt or use increasing asset values to "outrun it," so to speak.

So even if folks had gotten their incomes returned to them, they most likely would have pulled in their horns and paid down debt or paid down their mortgage or down sized their homes. I'm not sure that debt servicing brings back the economy.

Of course, if the dip had been shorter, and not so many people had lost their jobs for extended times, then maybe they would've gone back to their free-spending ways.

All of which is to say that maybe even Krugman underestimated the amount of money the government would've needed to spend to right the economy.

Krugman is on record, I think, in dismissing the thesis that there are structural problems with the economy which would not have been addressed just by more government spending. For example, large mismatches between labor's skills and the new wave of jobs aborning mostly through the advent of new technologies.

But is he right about that? Seems to me we need a massive, national retraining and job clearinghouse function that would retrain workers for new kinds of jobs and make sure these workers and the employers who need them make the match.

Thanks very much, Bruce.

Doctor Cleveland — Sun, 22 Sep 2013 21:38:18 +0000

In reply to Doc, I perused this

Thanks very much, Bruce. That's very kind, and I really appreciate it.

I certainly agree that Obama needs to be supported while we push him towards the left, and the example of FDR (who pulled back from the New Deal too early in 1937) is an excellent one. This isn't about personalities. It's about changing the basic framework of the debate.

Doc, I perused this

Bruce Levine — Sun, 22 Sep 2013 16:13:10 +0000

In reply to Larry Summers Is Not the Main Problem

Doc,

I perused this yesterday, but I have to say having read it all the way through that it is one of the finest essays on the current state of the economy that I have read--anywhere. I mean that.

Whether it's centrism, or whether it is that the needle defining at which point we now find a center, it is not working.

Ramona's blog is an excellent corollary to what I take from what you're writing about here. Those of us who resist the tepid approach we see in the president on economic matters are left fighting to maintain what little there is left ensuring the bare minimum of what we a call safety net. It's frustrating.

Rising inequality, an overall drop in real spending power, finding it "groovy" to define a progressive outlook that disdains labor unions for just doing what they're supposed to do--representing working people--and a crumbling national infrastructure crying out for the kind of investment that we seem only willing to make in time of wars--these are the things that we need to take a collective deep breath and focus on. (Not sure if I would get a D for this sentence but you know what I mean)

I don't blame the president for everything, and I really do think that he wants to do the right thing and I find myself defending him more than I ever expected to, particularly for how he tackled healthcare (not perfect but promising I think).

But this dog just isn't hunting.

Thanks again Doc. Really nice work.

As per usual addendum: Obama will not move unless he is convinced that we have his back. Can the historians among us say that FDR, who campaigned for a balanced budget in 1932, was any different? This is not a defense, but politicians are in the world of politics. Perhaps to some extent the issue is how one convinces the president and Congress that we have there backs--and then maybe as a condition precedent we have to be their in sufficient numbers ourselves? Or something. Thanks again Doc.

Just saw this, Oxy. It's

Ramona — Sun, 22 Sep 2013 12:58:39 +0000

In reply to Thanks, Ramona. This tea

Just saw this, Oxy. It's misplaced under Doc's post, so I'm not sure I should be responding to it here.

I agree with you, and it's both commendable and necessary that we support food banks as much as we can, but people on food stamps still need food banks. We can't let up on the food stamp fight. Millions of poor people, including the working poor, count on them both.

The elite in this country in

trkingmomoe — Sun, 22 Sep 2013 11:36:53 +0000

In reply to I haven't mentioned Yellen in

The elite in this country in general is out of touch with realities of most people now. The ones who do aren't speaking up. Wall Street is full of men who are sure they can handle any women. I don't think Janet Yellen is a push over. The Fed can't fix what Congress won't change. It is up to us to put better people in Congress so they will do their job.

Thanks, Ramona. This tea

Oxy Mora — Sat, 21 Sep 2013 18:58:48 +0000

In reply to Larry Summers Is Not the Main Problem

Thanks, Ramona.

This tea party Congress was born from the womb of anti-Obama backlash with a birth mark saying "defund Obamacare". The reality is that as various folks find out it is in their self interest to enroll in an exchange the program will gain in popularity---which is exactly what Cruz said, that is, "people will get hooked on it". So the defund vote is a show vote to insure the particular member is not challenged from the right.

As for the food stamp vote, it is despicable and the truth is it effects many poor white folks in red states. In terms f the awful reality I encourage people to find a local food bank and make a contribution, which is what I'm doing.

I haven't mentioned Yellen in

Doctor Cleveland — Sat, 21 Sep 2013 17:45:52 +0000

In reply to Larry Summers Is Not the Main Problem

I haven't mentioned Yellen in the post or in the comments. But I hope it's clear that if I write a post saying that nominating Larry Summers for Fed chair is not the main problem, I also don't consider nominating Yellen for Fed chair the whole solution.

The entire conversation among our elite policy-makers is out of sync with the economic realities on the ground. I don't know enough to come up with actual proposals, but five years in it's clear that everyone who can get listened to in meetings is out of touch to one degree or another.

Well, yes. We can push the

Doctor Cleveland — Sat, 21 Sep 2013 17:42:22 +0000

In reply to This does cut right to the

Well, yes. We can push the story back further. And the real story is the Democrats' acceptance of Reaganomics as a non-extreme position, so that their own position is simply a moderate "alternative" version of the Republicans' approach.

To put it another way: post-Reagan Democrats are like post-FDR republicans on economic issues. Eisenhower and Nixon accepted the New Deal as the basic reality and worked within its parameters. Republican economic policies between 1952-1980 are just New Deal Lite.

Likewise, Clinton and Obama accept Reagan's policy (or his anti-spending ideology) as a reality they can't change and work within its parameters. (Remember "The era of big government is over"?) So their policies are Supply Side Lite.

We haven't had a grand political realignment, yet, that pushes the Overton window back to the left on money issues. But we have had a reality realignment, meaning the spectrum of politically "realistic" options no longer suffice to deal with the actual problems we're facing.

Yellen 'ideas', repeal Glass

NCD — Fri, 20 Sep 2013 14:25:40 +0000

In reply to I should add that Yellen is

Yellen 'ideas', repeal Glass Steagall, Cut SocSec, OK NAFTA. Meet the new boss......

While supporting Yellen has become a cause célèbre for progressives opposed to Summers' regulatory hostilities, Yellen supported a host of economic policies during the Clinton era that have since become broadly unpopular. She backed the repeal of the landmark Glass-Steagall bank reform and she supported the 1993 North American Free Trade Agreement. She also pressured the government to develop a new statistical metric intended to lower payments to senior citizens on Social Security