Nobel award winner and New York Times columnist Professor Paul Klugman chatted with Charlie Rose earlier this week about Klugman’s contention that President Barack Obama will be perceived by historians as one of the nation’s most successful, for example exceeding Ronald Reagan.
Klugman pointed to the underreported and underestimated successes of the Affordable Care Act despite the many obstacles placed in its way. He also asserted that the financial reforms that were enacted are far more stringent and provide more important safeguards than generally given credit.
When questioned about the slow recovery from the financial crisis of 2008, Krugman put the blame on the Republican controlled Congress that refused to enact stimulus programs that the President had endorsed and as prescribed by Keynesian economics.
John Maynard Keynes drew a distinction between the operations of economies during prosperous periods and during times of recession or depression. He advocated balancing the budget and paying down national debt during the former and fiscal stimulus and borrowing by the government during the latter.
Krugman might have added that virtually every reputable economics in the country (and also NewsLanc) had called for fiscal stimulus rather than austerity to put people back to work and rekindle the economy. Yet conservatives and much of the public reverted to the old fashion notions of ‘fiscal responsibility’ that metastasized the 1929 economic reversals into the Great Depression and thwarted recovery in 1936, disregarding all that John Maynard Keynes had since taught us and which principles had properly safeguarded the national economy for intervening decades.
The failure of Congress to act caused the Federal Reserve to undertake extreme monetary measures, flooding the banks with money and bringing borrowing costs of banks down to near zero percent. The result has been to double the stock market values and further enrich the top one percent of the country at the expense of the rest.
Just as occurred in the late 1920s and early 1930s, Europe and the USA dovetailed their folly. While economists had cried out for fiscal stimulus for Europe (as they have for the USA), the governments and bankers insisted on austerity. Only now that Europe is at the brink of falling into another recession, are more reasonable voices being heard, expressing what should have been obvious.
Most people have others matters to attend to than studying medicine or economics. Concerning the former and the Ebola scare, they would not presume to allow government officials to turn their back on the advice of the medical profession. And yet when it comes to a sick economy, the public accepts the mumble jumble of the ignorant and opportunists, while disregarding what the vast majority of economists advise.
Apropos the above, here is a report from the New York Times concerning an awakening to economic reality now taking place over Europe:
Bloc in Europe Starts to Balk Over Austerity
NEW YORK TIMES: …One after another, European leaders arrived in Milan on Thursday for a summit meeting with their Asian counterparts, smiling for photographs despite gloomy financial news this week of stock markets tumbling and borrowing costs shooting up, especially in Greece, evoking memories of the euro crisis two years ago.
In past years, however, the eurozone nations buckled under to German demands to slash budget deficits and roll back public services, and then watched in dismay as unemployment rates shot into the double digits and growth collapsed. Now, France, Italy and the European Central Bank have coalesced into a bloc against Chancellor Angela Merkel of Germany, and they are insisting that Berlin change course.
“We need to show that Europe is capable of investing in growth, and not only in rigor and austerity,” said the Italian prime minister, Matteo Renzi, speaking to reporters outside the conference center after presiding over the opening of the meeting. He described the international financial situation as “very delicate” and said Europe had still not earned the confidence of international markets… (more)
