I recently read a comment that “the truth is always complicated.” I couldn’t disagree more. I think the truth is generally clear, concise, and basically simple. It’s the consequences of a usually obvious truth that are often complex, creating confusion and in too many cases, the opportunity for ideologues to pervert the truth, often propagating outright lies to enhance their causes.
I have never studied economics. But I’ve heard and read enough to believe that there are basic economic truths even if usually buried in characteristic jargon, Greenspan double-talk (the modern standard of obfuscation), or the lies that support many anti-social and anarchic political agendas. So, following are what I think are some apparent truths and consequences of our current economy and some of the untruthful commentary about it.
Truth: Growth comes only from demand for goods and services. Demand comes only from people spending their own money on their own needs at their own discretion and/or the government spending people’s money (taxes) to provide necessary services they cannot provide for themselves. The consequences of this truth are (1) both individuals and the government borrow money, individuals to live a reasonably good or better life than their income at the time allows (mortgages, car and college loans, credit cards, etc.) and the government to fulfill its obligations (national defense, law and order, education, equal opportunity, etc.) while keeping taxes on people as low as possible, (2) both borrow too much for bad reasons, mainly to gratify themselves through unaffordable luxuries or conspicuous consumption, build unnecessary and inefficient government institutions, and impose geopolitical and military hegemony on the world, and (3) we have engaged in an ongoing socio-political dialog on these issues since the founding of our nation, a debate that has now become vicious, libelous, slanderous demagoguery promoted by a mindless media about how much and for what purpose should people and the government borrow. The current spate of lies (or at best, stupidity) that has resulted are (1) that increasing taxes on the wealthy and closing corporate tax loopholes will inhibit job growth, and (2) that a balanced budget amendment to the Constitution will foster good economic policy. The wealthy do not create demand with their riches, since there is a limit even to luxuries one can consume while their investments produce no demand, and the only economist who would support a balanced budget amendment would be an unbalanced one. A government that cannot borrow is a government that cannot govern, which is exactly what the Tea Party and a growing number of their Republican sycophants want.
Truth: In a recession with its resulting unemployment (leaving aside who caused it and why), the only antidote is to build demand, which can most effectively be done by the government borrowing and spending to support the unemployed and to create jobs to put them back to work. The complicating consequences are how much unemployment insurance is enough, how much additional debt the nation should incur, and on what should the money be spent. The lies (or at best, ignorance) that are generated in this debate are that (1) unemployment insurance encourages people not to seek work, (2) corporate leaders will have greater confidence in our economic future if we reduce deficits without increasing their company’s taxes (what Paul Krugman calls “the confidence fairy”) and will therefore invest in creating jobs, (3) defense spending, Social Security and Medicare should be untouchable as sources of reduced government spending, and (4) cutting government and its spending is the most important priority in restoring our economic well being. Yes, I’m sure some people game unemployment insurance and don’t deserve it but certainly not the tens of millions who were working productively a few years ago and now are not. Besides, unemployment insurance is the surest way to spur immediate demand, since this money usually has to be spent to survive. And the only reason a company hires is to produce more in response to increased demand, which has little to do with how much confidence the CEO has in the future. We could significantly reduce our deficits by capturing the untold billions of dollars wasted in defense, Social Security and Medicare. Finally, those who are shouting the loudest about budget deficits and the national debt are those who hate government and its programs, particularly those that help the poor and disadvantaged. And the political leaders who cater to their anti-government rhetoric don’t really care about how deficits will impact our children and grandchildren. They care about wealth and power while they care nothing for the welfare of the nation.
One last truth and consequence: The surest way to drive us from any form of recovery from this great recession back into the dreaded “double dip” is for the government not to spend more on job creation, the only viably sustainable way to greater demand and growth. Government spending did not create the great recession. Only government spending will prevent it from recurring and taking most of the global economy down with it. If that happens, the size of the national debt won’t matter, not to cringing Democrats too frightened to debate it or to the Tea Party and the Republicans who are more and more cravenly beholden to its moronic commitment to anarchy.
But as usual, I have devolved into an anti-Republican rant (although there are plenty of Democrats who join them out of liberal arrogance, moral cowardice and/or their own style of idiocy) when the point I wanted most to make is that truth, whether in economics or more importantly in morals and ethics, is usually not hard to discern. Within the context of our culture, we can pretty much understand right from wrong and arrive at what should be a nearly universal acceptance of basic truth. Unfortunately, the all-too-human truth is that the seven deadly sins usually seem to overwhelm righteousness. In government, the so-called art of diplomacy probably provides more examples than economics of temporizing with truth to avoid having to deal with it. Our sad history of supporting (or at best, tolerating) murderous dictators in the name of our “national interest” merely scratches the surface.
But that’s another rant.