John Cassidy points out that the deficit isn't the problem that too many people falsely believe it to be. Not only is it not out of control, but, as a percentage of GDP, it has dramatically decreased in recent years.
After five years of economic crisis and the continuing suffering of millions of ordinary Americans, someone has finally described our plutocrats for what they are, that is, sociopaths. I suppose that this isn't the first time, but it's certainly the first instance that has crossed my radar. So my thanks go out to Paul Krugman for using the s-word.
I went in search of more information about Professor Blyth, and I found this entertaining video critique of austerity economics that he made a while back:
It's refreshing to see someone acknowledge so forthrightly the class politics in the recent turn to austerity. I'd have greater respect for economists if more of them recognized the political aspect of their discipline. After all, economics used to be called political economy for a reason.
I recently read Roger Bootle's
The Trouble with Markets: Saving Capitalism from Itself.
If you're looking for an intelligible, not especially technical explanation
of the causes of the financial crisis, then this might be the book for
you. I read the revised and expanded paperback edition.
Mr. Bootle's book is well written, but two passages really jumped out at me.
Here's the first, from page 181:
Is there a need to do anything at all? Indeed, is there anything that
can usefully be done? According to some people, recessions
clean things up and sort things out. So, far from complaining about
the recession or trying to stop it, we should simply lie back and
I see things differently. Yes, a little bit of recession can sometimes
do you good. So too, I am told, can the occasional cold bath. But
spending the whole day immersed in freezing water is not to be
recommended. The current economic downturn has gone well beyond a
short, sharp dip. The fashionable phrase for crisis deniers is
"creative destruction," first coined by the economist Joseph
Schumpeter. However, remember that this phrase and the associated idea
only gained traction from the contrast with their more frequently
observed cousin, destructive destruction.
Here's the second, from page 217:
It has long amused me that the doctrine of efficient markets, and the
much looser but wider endorsement of free markets in general, find
their strongest supporters in university economics and finance
departments, by and large peopled by individuals who, protected by
their tenured appointments at not-for-profit institutions, never come
face to face with the capitalist system in action. They are the ones
who blithely assert the case for free markets, even to the point of
arguing the merits of allowing the whole financial system to be
allowed to implode, confident in its later resurgence, stronger and
healthierand presumably in the resilience of their own pension
schemes. They would not last five minutes on a trading floor before
being eaten alive.
Taken together, these two passages express an idea that I've often had, namely, that those who most vociferously extol the virtues of capitalism are never those
whose jobs are creatvely destroyed by the workings of the marketplace. This has always struck me as morally obnoxious, especially when those whose jobs have survived untouched use their influence to obstruct or defeat policies designed to help those who have been thrown out of work through no fault of their own.
Anyway, I recommend Mr. Bootle's book to your attention.
Here's an excerpt from No One Would Listen: A True Financial Thriller, Harry Markopolos's new book, in which he explains how he discovered that Bernie Madoff was running a Ponzi scheme. As the book title indicates, Mr. Markopolos tried to expose Madoff but for a long time no one would listen.