No austerity anywhere in the world has restored a national economy

Paul Krugman’s recent column looks at the romance between the “austerians” — the promoters of austerity for economically troubled nations — and the need to inflict pain to get economic gain. His bottom line — no country that has tried austerity has seen a major economic benefit.

My bottom line — add “to its people” to the end of Krugman’s bottom line and you’ve got it exactly. There is an obvious economic benefit, but only for a few.

Let’s start with Krugman. He begins (my emphasis):

Looking for Mister Goodpain

Three years ago, a terrible thing happened to economic policy, both here and in Europe. Although the worst of the financial crisis was over, economies on both sides of the Atlantic remained deeply depressed, with very high unemployment. Yet the Western world’s policy elite somehow decided en masse that unemployment was no longer a crucial concern, and that reducing budget deficits should be the overriding priority.

That’s a familiar story, one we’ve detailed before. The answer to economic crisis is always budget cuts and austerity. Then he pivots to austerian attempts to find an example:

In recent columns, I’ve argued that worries about the deficit are, in fact, greatly exaggerated — and have documented the increasingly desperate efforts of the deficit scolds to keep fear alive. Today, however, I’d like to talk about a different but related kind of desperation: the frantic effort to find some example, somewhere, of austerity policies that succeeded. For the advocates of fiscal austerity — the austerians — made promises as well as threats: austerity, they claimed, would both avert crisis and lead to prosperity.

The column is interesting because it lays out that history. First the example was Ireland, which the head of the European Central Bank said in 2010 was “the role model for all of Europe’s debtor nations.” But events proved them wrong; Ireland is worse off today than it was back then. So then the U.K. became the touted model, until it wasn’t. Then little Latvia, which has recovered some, was pushed forward; but Latvia still has 14% unemployment. Hmm.

Krugman’s conclusion — nowhere in the world is there an example of austerity that works as the austerians said it would. The policy is “wrong on all fronts.” Yet they (Our Betters) still promote it.

“All your money are belong to us” — the song of the predator class

Krugman stops there, but I’ll continue with the obvious question. Why do they still promote it? Krugman’s answer, from elsewhere, is the Beltway Bubble and its international equivalent:

my side of the debate is actually paying attention both to the numbers and to the arguments of the other side, while the Very Serious People only listen to each other.

In other words, the poor darlings are just deluded, bubbled, sealed from understanding.

Those whom he calls Very Serious People, I call Our Betters. This difference in language (between his and mine) is indicative of the difference in analysis between Krugman and people like me. The language “Very Serious People” speaks to their role as pundits, opinion-generators and insider-echoists. “Our Betters” speaks about their power role — the role these people play in running our lives (at the Obama and Robert Rubin level) or in serving those who run our lives (at the David Gregory and Joe Scarborough level).

In other words, it’s certainly true that the baronial class and its servants and administrators listen only to each other, and thus reinforce in each other the comforting cover story that they’re only doing what’s in our ultimate good.

But the baronial class is also the predator class and they know precisely where the benefit (for them) always lies. This is the predator class in operation:

Income disparity 1979-2007_CBPP

The Predator Class in action. If you added the Top .001% to this chart,
it would have to be taller than you are.

If you added the Top .1%, the Top .01% and the Top .001% to that chart, you’d need a chart as tall as your room. What the chart calls the “Highest Fifth” includes what I call the “retainers” — administrators, enablers (that’s you, CNN producers) and professionals needed to keep the system working. Everyone else is workers, and look what their hard work got them.

All of the gains of worker productivity (the harder smarter computer-enabled work of the lowest four-fifths) have gone into the pockets of the highest fifth and especially the very top earners. Note that these are individual incomes, not corporate incomes; as I’ve argued elsewhere, the corporation is just the collection device, the force extender, for the CEO class that wholly controls it; shareholder-ownership is the comforting cover story.

This is what James Galbraith calls “the predatory state” — and he means that economically. The predatory state is a state that enables and is controlled by economic predators, extremely wealthy vampires who feed on their fellow citizens. Galbraith (my emphasis):

That the looming debt and deficit crisis is fake is something that, by now, even the most dim member of Congress must know. The combination of hysterical rhetoric, small armies of lobbyists and pundits, and the proliferation of billionaire-backed front groups with names like the “Committee for a Responsible Federal Budget” is not a novelty in Washington. It happens whenever Big Money wants something badly enough.

Big Money has been gunning for Social Security, Medicare and Medicaid for decades – since the beginning of Social Security in 1935. The motives are partly financial: As one scholar once put it to me, the payroll tax is the “Mississippi of cash flows.” Anything that diverts part of it into private funds and insurance premiums is a meal ticket for the elite of the predator state.

By “elite” of the predator state, Galbraith means “owners” of the predator state, the top predators themselves. It’s that predatory feeding that produces policies, promises and pronouncements like these that Krugman describes:

Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will.

They’ll say and do anything to get at more dollars; they’ll destroy the planet’s ability to support life itself, all for more dollars. Look again at the chart above. They’ve been looting the country, the government, the schools, the pension plans, your wages, the equity in your home, everything they can get their hands on since Reagan Days. Their only goal — All your money are belong to us. These are true monomaniacs, in the clinical sense.

So yes, they’re self-deluded. But like every feral beast, they also know where the food is. That food is us unless we stop them. And stopping them starts (in my most humble opinion) with naming them and  shaming them.

An example of naming — does Obama serve the predators who finance his elections and his looming Legacy & Library Project, or does he serve the people who elected him? Ask it loud and proud. The “debt ceiling–sequester” deal is his next chance to show us. As is Keystone, for those who are watching at home. But he can’t show us if we don’t ask him to, and in no uncertain terms.

My advice — dare to be bold, progressives. This game has a fourth quarter, and we’re in it. At some point, the predator will destroy all the prey and then die. Justice for the beast perhaps, but no fun for the already dead.

[Update: Corrected the quote attribution from James Fallows to James Galbraith, where it belongs. Thanks to commenter AcquiredExpertise for the catch.]


To follow or send links: @Gaius_Publius

Gaius Publius is a professional writer living on the West Coast of the United States.

Share This Post

36 Responses to “No austerity anywhere in the world has restored a national economy”

  1. Mike says:

    The word “Predator” connotes a type of power that is almost honorable and casts the rest of us as prey. It’s better to use the word “Parasite”. It connotes the feeling of nausea and sickness and casts the rest of us as the truly productive members of society. It also has the twin benefit of using Ayn Rand’s terminology to frame the true parasites of our economy and our lives..

  2. (Notice that he didn’t actually answer your question?)

  3. Got a cite for that quote?

  4. BigGuy says:

    The income gains for the top 1% over the past three decades allows the typical family to own two vacation homes and a boat.

    The income gains for the bottom fifth allows parents to buy 2 apple pies for a dollar for the kids when they go to McDonalds.

    The American Enterprise Institute has conservative economists in its employ who argue the standard of living of the poorest fifth has increased a great deal more than 16% in 30 years because many of the poor have cable TV and air conditioners while the poor in Africa and India do not have that. Isn’t that great?

  5. Tim Kane says:

    Then there is South Korea. They implemented a strong stimulus plan beginning in early 2009. By strong I mean roughly 25% of GNP over four years. South Korea then enjoyed 0.2% growth in 2009. In 2st quarter 2010 they enjoyed 7% growth and 3% unemployment. They settled for 5 to 6% growth for all of 2010 and unemployment under 5%. By May/June 2010 the local press referred to the recession of 2009 like it was ancient history – along with the recession (there) of 1997.

    I think the reason nobody knows about this is because it is an embarrassment of riches for the Koreans. They don’t want the rest of the world elite to focus their attention on them. So there seems like a muted conspiracy that no one will talk about South Korea’s great success – the Rich Austerians don’t want to talk about it, of course, and the fortunate South Korean’s play along seeing only harm could come to them by bragging about their success (in the form of closed markets and trade retaliation, and perhaps even cultural back lash, as seen to the response to Psy in some quarters)

    In 2001 – the average Korean family had two workers with two incomes averaging $2000 a month in take home pay – or $4000 a family (48000K) – providing a comfortable middle class existence (when I worked in Korea, my health insurance cost me $42 a month). This was probably still roughly true in 2005 though there was pressure for pushing past this. But by 2011 the typical Korean family has two take home incomes averaging $3000 a month. This is a stunning development. That’s $6000 a month after taxes and insurance. That’s $72,000 a year for each family. For an American family to have that they have to make an extra $7000 (at least) for health insurance and $9,000 for taxes – that’s a gross wage of nearly $90,000 for a family. Contrast that with the fate of the typical family in the U.S. and, well, things aren’t too good.

  6. pappyvet says:

    Thanks for the post Naja ! Henry Wallace was indeed an interesting and exceedingly insightful man. He saw much of what we are now going through.

  7. Naja pallida says:

    Henry Wallace was an interesting man. He also warned of us using war as a means of attempting to attain full employment, when people started to use the argument that WW2 was what got us out of the Great Depression – and not any of FDR’s economic policies. He quipped that if that were the case, then we should immediately declare a permanent state of war against the Pacific Ocean. Of course, his point has been proven in spades, given that we’ve had two of the longest wars in our country’s history just recently, all the while we’ve also had some of the worst unemployment rates in history. Because we put war profiteering over rallying the country around the war effort, and investing in innovation and production here at home. But I digress…

  8. Bill_Perdue says:

    That’s a meaningless question.

    It attempts to promote the bankrupt idea that there are ‘lesser’ evils and the shameful idea that it’s somehow OK to vote for Obama’s mass murder of civilians, his attacks on the Bill of Rights, his union busting and his malign neglect of the unemployed, homeless and those tossed into the snake pit of intractable poverty instead of Romney’s similar plans. Why would you hold the ludicrous position that one is worse than the other?.

    There are no lesser evils and those who voted for war, union busting and the malign neglect of workers in harms way have no excuses. They stand indicted of aiding and abetting the criminality of the .01%.

    How about you tigerlily78?

    Are you proud of your support for the administration that ignores doing anything real to end the misery of millions of unemployed? Do you gain some comfort from the murder of Arabs and muslims – especially Palestinians, Afghans and Pakistanis? How about the wastage of the lives of tens of thousands of GIs. That’s what a vote for Obama (or Romney) means in the real world.

  9. tigerlily78 says:

    And how do you suspect Mitt Romney would act differently or better in the office? Or John McCain for that matter? I think with Obama you at least have someone struggling with a conflicted personality who although wanting the power and the favor of the elites, still understand the plight of the average people. His biggest mistake is that he think he can compromise and make them both happy, when the reality is the compromises keep coming up with far greater benefits for the elites.

    I don’t think anyone really has much doubt about where the “consciences” of McCain or Romney would lead them. Romney IS the elite, simply interested in making a hobby of being on the stage pretending to be a leader not a financial despot. McCain has long been an evident lapdog of the elites. I don’t see how given the two most likely choices we could have hoped to have done better than Obama. Of course the real joke in all of this is the characterization on the right as Obama being a socialist, when judged on his actual policies he falls center right of most of the Republican presidents we have ever had. What America essentially had was a non-choice between “fiscal conservatism” and “fiscal conservatism wrapped in extreme religious ideology and racism”.

  10. tigerlily78 says:

    And if we had elected Romney, how do you suppose things would be any better?

  11. Kim_Kaufman says:

    My opinion is “they” have given up on profits or growth in the U.S. because their focus is on profits and growth from the emerging markets — China, India, etc. Obama’s GM bankruptcy led to reducing labor costs and production in the U.S. while moving production over to China where I believe sales of GM cars are the source of most of GM’s revenue and profits — which, of course, they keep offshore and don’t pay taxes in the U.S., further ensuring downward growth and sales in the U.S. for them.

  12. ccaffrey says:

    I’m encouraged that people have started getting their mojo back. The voter suppression actions brought the fight back and showed that people power CAN overcome big money. We just need to work at coalition-building and not let the momentum drop. Love the quote by Alice Walker, “The most common way that people give up their power is thinking they don’t have any.”

  13. Sweetie says:

    “It is clear that we must enter an era of austerity…” — Nancy Pelosi

  14. pappyvet says:

    I am aware of that. The comments he made were in an op ed piece he wrote in early 45 for the New York Times,

  15. ccaffrey says:

    It’s WAY beyond anything sensical. This is addiction that would make a junkie blush. They already have more than they could possibly use in one lifetime. It’s about acquisition. Acquisition of more — more wealth, more power, more property, MORE than anyone else has got. It is the megalomania of Caesars. In their minds they are gods over all they see. It is not without relevance that every spiritual tradition through history warns about the LOVE of wealth and power. It is insatiable. Since there is no hope of them even reaching step 1 of a 12-step program, the only answer to stop them from bringing us all to the brink of destruction is a PUBLIC INTERVENTION. These people don’t know the meaning of the word “enough”.

  16. cambridgemac says:

    We don’t exist to them because the Kochs – and any billionaire – earn in 10 minutes more than we earn in a year. Imagine how you might feel about a group of people who earn three dollars a year…. (Roughly what the median American worker earns in ten minutes.) Obviously those people would live nowhere near you and you would have no contact with them….

  17. The election in ’44 had FDR for president and Harry Truman for VP. Wallace was VP in ’45 only until January 20th.

  18. cambridgemac says:

    Australia is the only OECD country that escaped the Great Recession – because they boosted government spending (deficits) dramatically at the right time. China did the same – and they’ve done fine. The facts are easy to obtain. The Media kewl kidz and the elites don’t care about facts. 1984. Give the proles prolefeed.

  19. William Barido says:

    The predator class will not go quietly into that good night. But they will gladly drag the rest of us to economic oblivion if we let them. The idea that they are our Betters is a fiction promulgated by the Kochs, the Waltons, the media talking heads, and bought poiticians.
    The truth is they are not our Betters, but instead bettors on making fortunes at the expense of those whom they consider to be their Lessers in society.
    Krugman has it right. The austerians need our cooperation if they are to remain the economic elite that they are today.
    Only our willing compliance allows them to continue to exercise their power over our economic future.
    It is long past time to break that pattern and that power.

  20. pappyvet says:

    Fascism on the march. In 1938, Mussolini dissolved Parliament and replaced it with the “Camera dei Fasci e delle Corporazioni” – the Chamber of the Fascist Corporations. In broad daylight and in front of everyone. The modern day variety has learned it’s lessons.

    But we have not been without warnings throughout history even during and after the 2nd world war period.

    In 1945, Vice President Henry Wallace said, “The American fascists are most easily recognized by their deliberate perversion of truth and fact. Their newspapers and propaganda carefully cultivate every fissure of disunity, every crack in the common front against fascism.” He went on to say, “They demand free enterprise, but are the spokesmen for monopoly and vested interest. Their final objective toward which all their deceit is directed is to capture political power so that, using the power of the state and the power of the market simultaneously, they may keep the common man in eternal subjection.”

    Fast forward to today. From Citizen’s United to what Republicans in Pennsylvania are now doing to rig the next Presidential election by changing how Electoral votes are counted in the state. All being fueled by a relentless barage of hate talk and paranoia laced propaganda that ,”carefully cultivates every fissure of disunity, every crack in the common front .”

    80% of Americans said that the passing of NAFTA would cost good paying jobs to low wages in other countries. That would include both republicans and democrats. And we were right. Now that the cat is out of the bag and the mythologies have been firmly implanted, it will take a mountain of will to correct. Unfortunately,with 50 out of 100 of the world’s wealthiest countries not being countries but transnational corporations, this could take years and the hopes of the fascists are that by that time, it will no longer matter.

  21. pappyvet says:

    “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. … corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”President Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins) Ref: “The Lincoln Encyclopedia”,

  22. GaiusPublius says:

    Damn. Thanks!


  23. AcquiredExpertise says:

    That article is from Galbraith, not Fallows.

  24. BeccaM says:

    Yep. That was one of the core tenets of the New Deal: Put people to work. Those who work earn money. They spend that money, which puts other people to work.

    Throwing money at the plutocrats only results in the plutocrats getting richer. They already have far more than they need.

  25. BeccaM says:


    The banksters and rentiers and Plutocratic Bastard Class (PBC) are enjoying the bounty of never-ending money-gushers.

    For the rest of us though? Cuts in everything, layoffs in both the public and private sector. No pay raises. No bonuses. Unemployment numbers closer to 20-25% when everyone who actually wants a job (as opposed to in the UI system) is counted. The 99% has been living in ever increasing austerity — and now the PBCs are eying our Social Security pensions and Medicare health insurance, programs into which we’ve paid our entire working lives.

  26. BeccaM says:

    I’ve said this before: Austerity serves the interests of the Plutocratic Oligarchs.

    It preserves and expands upon their parasitically acquired wealth. Austerity also deepens the divide between the Have-Too-Much and the Have-Nots. And it conditions the 99% to internalize the notion that wealth is only for a lucky, deserving (not really…) few, while the best the rest can hope for is to keep treading water.

    Austerity teaches people to be afraid, all the time, of going broke, and it teaches hopelessness, to keep us all submissive and compliant.

    What we are witnessing is social engineering on a massive generational scale, the elevation of a new, malign, self-serving aristocracy based on predatory capitalism.

  27. Bill_Perdue says:

    Excellent post.

    Only one question remains, and that is when and where workers will get over being shell shocked and begin to fight back. The ILWU, ILA, NNU and CTU have all led militant actions and the left wing in unions is growing by leaps and bounds. They’re opposed to the spousal abuse dependence of the AFL-CIO CTW leaders with right centrist Democrats. Madison was an example of the ability of the union left to mobilize and to attract unorganized workers to the fight.

    Nevertheless we’re still behind the times. In 1934, five years into the last Depression, a series of massive, well led, militant and ultimately victorious “general strikes signaled the sudden emergence of a fighting left wing in the unions that began to sweep the field, ignoring the right centrist Democrats and organing in almost every industry with the notable exception of industrial type agricultural enterprises.

    Great strikes broke out in San Francisco – – Minneapolis – – and Toledo (1).

    With all the attacks on workers and our unions by right winger like Obama, Coumo, Brown and Rahm Emanuel and just as many right wing Republicans the stage is set.


  28. Guest says:

    A little worse than than. The problem is that this “strategy” shrinks the economy as a whole. The privileged elite actually isn’t so smart as intentionally to intend to impoverish the rest. They just fucking DON’T CARE what happens to anyone else as long as they can do as they like. That’s where I part company with Gaius. Would that they were that bright. They’re not. As far as the Koch brothers are concerned, we don’t even exist. If they had any smarts, they would realize that the course they’re on leads to social upheaval and revolution, and that the price of some privilege in any society is justice and opportunity for everyone. They don’t want our money, and they don’t care if we have none. Actually, the trajectory they’re on ensures we won’t have any for them to take. They just want to be pigs.

  29. Bill_Perdue says:

    Aided and abetted every step of the way by Obama and those who voted for him.

  30. lynchie says:

    You are right and there is no long term planning in the private sector. Profits down = lay off workers and get those remaining to do the job of 2 or 3. What the plan also entails is the end to welfare, medicare, medicade and SS. This will steer more profits into the hands of the 1% and steer workers money to wall street. Initially it will be shielded from tax but they will get that too. The loss of company pensions and conversion to 401K’s means that without SS no one can retire with any security except the 1% and frankly they aren’t going anywhere when they can just continue piling money up offshore with no tax burder.

  31. samizdat says:

    But it’s austerity for thee and me, and bailouts, zero interest rates for the banks, and profiteering for Boeing, LockheedMartin, Halliburton, Raytheon, and the cosmos knows how many other “defense” parasites.

  32. samizdat says:

    “…does Obama serve the predators…”? One need only to look back at the last five years for the answer.

    Of course, if one is a Drone-bamabot, one only sees what one wants to see.

    Hmmm, is that ignorance, or self-delusion?

  33. guest1 says:

    Anyone who thinks we have austerity in this country right now is bonkers. We arn’t recovering because we have a fake economy based on zero interest rates and constant bank bailouts and war.

  34. Guest says:

    It’s not clear it even works for the elite in more than the short run. If there’s no broad-based spending power, there’s no market for the toilet paper and other crap that the Koch Brothers peddle. It’s pretty clear that the drag on the present economic recovery is the decline in public sector spending in the last four years, accelerated in the last six months. In contrast to the Bush years, when public sector spending increased every year, overheated the ecomony with unpaid-for wars and ultimately blew it up. The idea that government spending doesn’t create jobs is a pernicious myth. Most of it doesn’t go to government workers, and somebody has to be employed in the private sector to execute the programs that are funded. That portion of it that does go to public employees normally gets spent in the market economy and supports more jobs. The issue is not whether the government spends money, but what it spends it on — and the real deficit in this benighted polis is in spending on activities that are investments to produce growth in the future. The Republican debt hawks — and the Democratic chicken debt hawks who are afraid of them — who want the sequester to occur, instead of plotting a course of public investment spending that will continue economic recovery, want and are trying to steer the country into recession/depression as a platform for trying to get control of the Congress in 2014. They want 1937 all over again, except that, in Roosevelt’s case it was largely a naive mistake, but they know exactly what they are doing. And they’re not doing this out of any over-arching vision for the long-term health of the economy, despite the rhetoric. All they want is control so that they can force the governenent off the regulatory backs of the likes of the Koch brothers. It’s all short-sighted. There’s no long-term vision here. They don’t care what happens to the country or most of its people as long as they’re OK for the time being.

  35. caphillprof says:

    The middle and lower classes are so stupid that they cannot think through their own collective self interest. One person’s spending is another person’s income.

  36. nicho says:

    Well,hen it worked perfectly. The results have been exactly what the one percenters wanted. The goal was and is to destroy the middle class. Mission accomplished.

© 2021 AMERICAblog Media, LLC. All rights reserved. · Entries RSS