The economic remedy now being touted is comparable to a situation in which doctors demand that leeches be used to cure illness, claiming that when people are sick the best thing to do is to bleed them to get rid of their toxins. Government austerity—when the private sector is sitting on $2.5 trillion in cash, unemployment is over 9 percent, and economic growth is dwindling—will definitely bleed the economy, and could kill off a recovery that’s never been more than tepid.
But this is the “solution” we’re now facing, both because the Republican Party has put defeating Obama ahead of the suffering of the American people, and because Obama and the Democrats have let the rightwing fanatics frame the debate. It is a tragedy largely of our own making, and one that could have been avoided.
Across the Atlantic, the situation is no better and possibly even worse. Great Britain and many European nations have not only embarked on severe austerity programs; in addition, the European Central Bank (the equivalent of our Federal Reserve) has decided to raise interest rates, electing to fight phantom inflation rather than promote growth. The likely result, of course, is to further choke off Europe’s economic recovery. Sometimes it seems as if the wealthy nations of the world are competing to see which can be more irresponsible and oblivious to basic economic truths.
Fortunately, many emerging economies (while not immune to the downturns in the wealthier countries) continue to grow strongly, and to lift millions out of poverty. Brazil, profiled in Saturday’s New York Times, is a case in point: after almost a decade of economic policies that have driven down inflation and attracted increasing foreign investment, plus significant government investments in social programs, the country has become a model for Latin America. And in Asia, even though China has run into higher-than-expected inflation, it too continues to enjoy rapid growth, and its investments in infrastructure continue to pay large dividends.
What will happen in America over the next couple of years is anybody’s guess. If we somehow manage to avoid a double-dip recession, luck will have more to do with it than sound policy. Despite the terrible economy, Obama still has a decent chance of being re-elected given the quality (or lack of it) of the possible GOP nominees. The fact that Michelle Bachmann has any chance at all of winning the nomination shows how crazy the Republican Party has become; she is truly a lunatic who has no business anywhere near the presidency. The new entry, Rick Perry, is the governor of one of America’s largest states; even so, he’s probably too conservative, fiscally and socially, to have any real chance of reaching the White House—no matter how bad the economy.
I never liked Obama’s emphasis on hope, which we rely on when things seem out of our control. I have always preferred human agency, and a strong conviction that we can be the masters of our own destiny.
But I do hope that one day I will be able to write a piece entitled “The Age of Reason,” when we actually get around to tackling the tough challenges we face—instead of pretending the problems will go away, or intentionally making them worse.