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The usury crisis continues

great_usury_crisis.jpg

The periphery of Europe continues to exhibit the frightening features of ongoing financial crisis. There is a race between Ireland and Greece to gain the shameful distinction of the first eurozone country forced by circumstances to plead for relief from the bailout fund established in the spring.

Take a gander at these numbers:

Total foreign bank exposure to Ireland’s economy is $844bn, or five times the value of Ireland’s GDP or economic output. Of that, German and UK banks are Ireland’s biggest creditors, with €206bn and €224bn of exposure respectively. To put it another way, German and British banks on their own have each extended credit to Ireland greater than Irish GDP. Which doesn’t sound altogether prudent, does it?

The cost of state rescue of reckless Irish banks may reach €50, putting Ireland’s budget deficit above 30%, which is simply staggering, and quadrupling its national debt from five years ago. According to most reports, the Irish political class insists on making good on the debts its banks (some now nationalized, others half-nationalized) owe to foreign investors. The distinction between bank debt and sovereign debt is vanishing: another indicator of the drift toward plutocracy. Both America and the EU have fixed their policy against any further major bank failures, which in practice means that bondholders will be made whole by taxpayers.

The press of necessity increasingly constrains state spending. Numerous European countries present budget deficits far in excess of what EU rules allow. They’ll have to cut spending and raise revenue. Similar pressure is evident here in America, though in our case from a popular discontent that few expected at all and none at this level of intensity. But it is far from obvious that austerity — spending cuts and revenue-raising taxes — is wise policy. Governments that cut domestic welfare spending and raise taxes in order to service debts held by foreigners are governments looking right into the teeth of considerable political risk. What about the creditors to these imprudent banks; should they not feel the pain as well? What property right inheres in a bond issued by a bank that by rights should be gone from this earth?

Of course the dangers natural to defaults (which would certainly spread the pain to bondholders) are not trivial: a country that stiffs its foreign creditors better hope its domestic sources of capital can pick up the slack when the foreigners say “no thanks” to the next bond issue. In the case of Ireland, so far it appears that the dependence on foreign credit outweighs the fear of internal discontent. A Financial Times report speaks of a “stubborn” Irish “pledge to honour virtually all bank debts.”

The primary characteristic of most Western political economies right now is uncertainty. There has been a worldwide collapse of final demand. Much of it is due to the retrenchment of the American consumer. The common response to a shortage of final demand is the attempt to import it from other countries. Quite a few nations, beginning with Germany and Japan, have achieved prosperity by importing American demand (that is, by exporting products for sale in America). No one can say for sure if the American consumer will return with demand sufficient to maintain that model of globalization. If not, it will mark the end of an age and the dawning of a much more straitened and bitter one. The attempts to import foreign demand, now lacking the beneficence of American backing, will take on a more acquisitive quality; the world will return to something approximating the mercantilism of old.

Such is my expectation, anyway. Beyond that I can only say that we live in interesting times indeed.

Comments (62)

Only a few weeks ago, the Irish government, and the avatars of austerity - aka. structural adjustment - were touting an increase in reported GDP as sign that austerity is wondrous in its works. The reality of the matter was more complicated: yes, Irish GDP rose, but mostly as a function of Ireland's role as the Cayman Islands of the Western World, a glorified tax shelter where corporations nominally domicile, and report income, so as to evade taxation. So, yes, GDP rose, but meaninglessly, as far as the rectification of the actual Irish crisis is concerned; little of those paper profits were collected in tax, so as to pay down debt, bail out banks, or support the 20% of the population who are unemployed. The reality of Irish political economy is simply this: that the middle classes and the poor are to be immiserated so that bankers may be bailed out and kept in their sinecures, and the wealthy principals of foreign corporations may avoid fulfilling any obligation other than Uncle Milt's sociopathic one - to make as much profit as possible. Ireland is determined to honour these debts - all of them meaningless and void, in ethical terms - so as to preserve her 'credibility', which is to say, so as to preserve her status as a national tax-evasion scheme.

That various Western electorates either acquiesce supinely to this state of affairs, or actually long for it to be imposed, is a sign of derangement; one does not know whether to answer such folly, or to pass over it in discreet silence, allowing its bearers to receive the full recompense of their folly.

Even through this acute crisis Irish unemployment still compares favorably to the years before the Celtic Tiger phenomenon. The recession has not erases all the country's gains; not even close.

I question the equating of private bank debt with sovereign debt too, but I suppose I'm less inclined to simply dismiss out of hand the concerns of those on the ground.

Also, I can't understand why Ireland should be (rhetorically, natch) stripped of her independence in tax policy, as if low tax rates are morally illegitimate. Cayman Islands of Europe, national-tax evasion scheme, glorified tax shelter: what other terms of abuse can we devise to denigrate the Irish for defying the European norm?

If only we could get a worldwide tax-and-spend regime! That way none of these upstart punks could ever buck social democratic obligations.

Maybe it's just me, but I notice that in one part of a sentence Maximos complains that Ireland _isn't_ collecting taxes so as to bail out banks, and in the latter part of the same sentence he complains that Ireland is bailing out bankers. I assume there is some distinction here?

It's certainly ridiculous to blame Ireland for having low taxes, as if there's some sort of international moral obligation to have a high-tax regime and to try to "solve" unemployment by putting 20% of the population on the public dole. Paul puts it better than I ever could.

I would only add that if Ireland is simultaneously increasing sovereign debt, _that's_ a problem. That is to say, low taxes are great, but taking on some sort of govt. obligations (whatever they are) meanwhile and then paying them with debt _because_ your taxes are low may not be so great. So if the problem is Irish sovereign debt, then that's the problem. It needn't be the low taxes per se.

I'm noticing a pattern in Maximos' arguments. Maximos is quick to tell the productive classes to offer up their paychecks for the public good, but slow to demand accountability and prudence in how the money is used.

This is why he's constantly lashing out like this against those who want to keep more of their money, but you won't see him demand accountability in programs like welfare and Medicaid.

You can't have a debate about the common good with terms like this. If society won't set hard limits, then the productive classes have every moral right to tell their fellow man to go eff himself when he asks for support.

Also, I can't understand why Ireland should be (rhetorically, natch) stripped of her independence in tax policy...

The point of my rhetoric is that such policies have not benefited the Irish as well as alternative policies might have done; a large percentage of the economic gains of the Celtic Tiger period were paper gains, and filtered down to the people mainly through the crapulence of the nouveau riches, and the expansion of credit. The latter is the sign and seal of plutocracy, and the latter has come to its condign end in the Great Recession.

what other terms of abuse can we devise to denigrate the Irish for defying the European norm?

If I get some liquor in me, I can come up with many more besides those I have already leveled. Again, the point here is that focusing on lowering marginal tax rates, as a leading indicator or criterion of enlightenment or endarkenment in political economy, is crude and reductionistic; Germany and the Scandinavian economies seem to work very well, despite not being national tax-avoidance schemes, while Ireland functions rather inadequately as such a scheme.

That way none of these upstart punks could ever buck social democratic obligations.

Whoever said anything about global governance? I'm only expressing the wan hope that the Irish will recognize that, should they desire to live in a first-world country, they will have to pay for the privilege; plutocratic neo-feudalism will not deliver that society as if by magic. The myth that coddling the wealthiest sectors of society produces a general, distributed prosperity has been exploded by the Great Recession; the semblance of that prosperity was produced only by the expansion of credit, and now that has withered away. Besides, why is that only the lower orders have obligations to the common good?

I notice that in one part of a sentence...

Ireland is not collecting the taxes that it should be collecting, if it wanted to bail out the banks without doing more injustice.

...as if there's some sort of international moral obligation to have a high-tax regime and to try to "solve" unemployment by putting 20% of the population on the public dole.

Again, no one said anything about international obligations. I have only implied the existence of an ethical obligation to a)make those responsible for economic calamities pay for their redress (in this case, that would be banksters and those moving capital around the world, willy-nilly), and b)refrain from forcing those lowest on the social totem pole, those least responsible for the calamity, to bear the burden.

So if the problem is Irish sovereign debt, then that's the problem. It needn't be the low taxes per se.

Of course, in Actual World, these things are highly correlated: low tax rates, or low rates of tax collection, correlate with sovereign debt crises in the Great Recession. See: Greece and Ireland. Of course, I will be lectured about spending and the excessive - some actually excessive, and some merely "excessive" - demands of the little people. If, however, economic systems are not self-equilibrating, or at least not self-equilibrating in a manner that allows for dignified lives among the lower orders, then this will not be the most important problem in political economy.

Maximos is quick to tell the productive classes to offer up their paychecks for the public good, but slow to demand accountability and prudence in how the money is used.

Maximos' critics are quick to demand that the economic losers under neoliberalism and globalization offer up the last thin threads of the safety net remaining to them, but slow in demanding any sort of accountability from those who allocate capital and make economic decisions in, and for, the country.

This is why he's constantly lashing out like this against those who want to keep more of their money...

Because it's "lashing out" to express moral disapproval of a state of affairs in which ordinary people are made worse off so that banksters can be made whole, in which the afflicted are afflicted yet more so that the comfortable and rapacious may be more comfortable and rapacious still. Okay, then.

...but you won't see him demand accountability in programs like welfare and Medicaid.

It all depends upon what sort of accountability accountability is. But we probably cannot even acknowledge that welfare reform, which forced many single mothers off the dole, and into crap jobs, meaning that they cannot spend much time with their children, and lack many social supports, is more complicated, ethically, than just "getting people off the dole". When social conservatives fail to apprehend this point, it is still more amusing.

If society won't set hard limits, then the productive classes have every moral right to tell their fellow man to go eff himself when he asks for support.

If society will not set hard limits upon the usuries, rents, exactions, and depredations of the Good and the Great, the common man has every right to tell them to eff themselves when they demand the support of the laws for their undertakings. It is sheerly stupefying that, in an age in which the "meritocracy" has left off any sense of obligation to the American nation, to the common good of the American people, we are still hectored about the obligations of the little people, as though Christ's words - To whom much is given, much will be required - have been inverted.

I'm not a social Darwinist, y'all; make your peace with that fact.

Maximos' critics are quick to demand that the economic losers under neoliberalism and globalization offer up the last thin threads of the safety net remaining to them, but slow in demanding any sort of accountability from those who allocate capital and make economic decisions in, and for, the country.

In case you haven't noticed, the banksters don't exactly get a lot of support from anyone here. Not me, not Paul, Lydia, etc.

Because it's "lashing out" to express moral disapproval of a state of affairs in which ordinary people are made worse off so that banksters can be made whole, in which the afflicted are afflicted yet more so that the comfortable and rapacious may be more comfortable and rapacious still. Okay, then.

You neglect to acknowledge that most of the people who bear the real burden are the middle class. The poor bear nothing because the poor and working classes (really, two separate things in the US in normal economic times) either pay nothing or close to it.

A 15% federal income tax on $80k of household income stings far worse than 35% on $500k.

Even that is no excuse for higher taxes. What it means is that the middle class should pay even lower percentage of its income to Uncle Sam. Say, to the tune of 5% for all federal taxes combined.

It all depends upon what sort of accountability accountability is. But we probably cannot even acknowledge that welfare reform, which forced many single mothers off the dole, and into crap jobs, meaning that they cannot spend much time with their children, and lack many social supports, is more complicated, ethically, than just "getting people off the dole". When social conservatives fail to apprehend this point, it is still more amusing.

There is nothing ethically complicated about this. Providing a guaranteed social safety net to unwed single mothers has been proved, as much as social science can prove anything, to be one of the core reasons why family life has collapsed in the West.

When a woman no longer needs a husband to support her children because the state will non-judgmentally play the role of provider for her, it turns the entire natural order on its head. She does not need to honor and submit to her husband because the moment he gets too "head of household" for her tastes, she can hop right back into the dating market or just start cheating on him. Big government has given her a rock solid positive right to do that through guaranteed funding for her and her brood. They'll even throw in a subsidized kangaroo court for the father of her children.

we are still hectored about the obligations of the little people, as though Christ's words - To whom much is given, much will be required - have been inverted.

I'm not a social Darwinist, y'all; make your peace with that fact.

No one here is a social Darwinist either. There's no peace to be made with that.

The fight here is over your unwillingness to acknowledge that America has numerous classes, ranging from at least the underclass, to the working class, to the middle and upper classes.

The heaviest burden is felt by the middle class who pay proportionally the worst level of taxes. The middle class is also seethingly resented by the underclass, into which the average unwed single mother you referenced naturally fit.

It is a real eye opener when a poorer individual, perfectly earnest in every way, looks you dead in the eye and says it's "unfair" that you, a software developer, make substantially more than they do as a waiter.

In case you haven't noticed, the banksters don't exactly get a lot of support from anyone here.

The category of those responsible for economic decision-making and the allocation of capital is not co-extensive with the category of banksters.

You neglect to acknowledge that most of the people who bear the real burden are the middle class.

I haven't neglected anything. If it was not mentioned above, that is because it was not germane to any of the points discussed above. Since you've mentioned it, the reasons for the pinching of the middle class are as follows: 1) Since the early 1970s, the median income, adjusted for inflation, has either stagnated, or grown marginally; 2) What rate of growth in the median income has been observed has been accompanied by stratospheric increases in the costs of education, housing, and health care, and the reasons for this are complicated - though some are manifestly politico-economic; and 3) the percentage of revenues collected via taxes likely to fall on the middle classes has risen, while the percentage of revenues collected via taxes likely to fall on corporations and the rentier class has fallen. Since virtually all political factions in the US refuse to reckon with the causes of these trends, I can only conclude that they do not much care about the fate of the middle classes.

Providing a guaranteed social safety net to unwed single mothers has been proved, as much as social science can prove anything, to be one of the core reasons why family life has collapsed in the West.

But I'm not controverting that fact. In fact, as I indicated, I'm presupposing it, and going on to argue that the situation is more complicated than simply "getting people off the dole." Is it really an unvarnished triumph for conservative and Christian ethics to force single mothers into the market for crap jobs, with the necessary consequence that they will be deprived of most involvement in the lives of their children? For that matter, has welfare reform actually resulted in a decline in bastardy, or merely a decline in the numbers of people on the dole? I understand well the deformations and perversions of family law, believe me. What I'm arguing is that "just getting people off the dole" will not alter much of the situation, and will not be a costless reform, void of unintended consequences.

No one here is a social Darwinist either.

What do you propose be done for those unwed mothers? If the only response is something of the order of, "Let them serve as examples to others, that these latter might not sin likewise", I doubt that this answer differs all that much from social Darwinism. Letting those who have nothing to lose suffer the unvarnished consequences of their own folly, ignorance, and vice will perpetuate an underclass - because, as I repeat myself, the reasons for the existence of the underclass are not exhausted by the 'incentives' to unwed motherhood - which will, in turn, necessitate an increasingly militarized security society, erecting barriers, real and figural, to exclude the parts-no-parts of the social order. As I have said times without number, I really do not desire the replication, in America, of the sociology and security structures of Brazil. Stated differently, you aren't going to change many behaviours, or convert many souls, with the threat of the knout, real or metaphorical. Conservatives have here become deracinated materialists; noticing the real connection between certain social programmes and certain social pathologies, they simplistically imagine that they can mitigate the latter by abolishing the former, as though economics could transform culture in this manner. How leftist, actually.

The fight here is over your unwillingness to acknowledge that America has numerous classes...

What? Kindly point to the portion of my writings in which I refuse to acknowledge the existence of social classes, as opposed to pointing to the reality of class incessantly. No, the burden of my writing is that social classes have obligations to one another, and that the upper classes of America, the so-called "meritocracy", have basically defaulted on their obligations, forsworn any obligation to the common good, and checked out of the common American storyline.

It is a real eye opener when a poorer individual...

I learned this lesson at the tender age of seven, when some envious families at the Baptist church my parents were then attending spread various slanders about my father, taught their children not to associate with me, and so forth, all because my father's business was beginning to develop and prosper, and despite the fact that, materially, we were no better off than they were. However, envious waiters, greedy Baptists, and other malcontents have nothing to do with the dominant story of American political economy, namely, the dissociation of the "meritocracy" from the fortunes of the middle and lower classes.

Of course, I will be lectured about spending

Well, you know, Maximos, spending _does_ have something to do with debt. This is as true at the national level as at the individual level.

But as usual, you miss the agreements between us for the disagreements. On the one hand, I couldn't disagree more with your contempt for people who use tax shelters and your contempt for Ireland for being a country where they can do so. On the other hand, I'm the person around here who goes around quoting Abraham Lincoln on how you can't stay out of trouble by spending more than you ear. Since the government doesn't "earn" anything (unless the government of Ireland is highly unusual), the version of this for the government is that they can't stay out of trouble by spending more than they take in. So I'm _on board with_ pointing out that Ireland has evidently gotten into this pickle by taking on debt while keeping tax revenues low. It's just that you apparently want them to raise taxes big-time so as to stick it to the rich, whereas I want them to try every which-way to avoid that, and, yes, this may mean belt-tightening measures in some of the left-loved programs that you are so indignant about. And that doesn't bug me.

But I recognize the justice of the complaint that they can't just go getting themselves further and further into debt and meanwhile pointing to their low tax rates. That's just hiding the financial pea, it seems to me.

It's just that you apparently want them to raise taxes big-time so as to stick it to the rich, whereas I want them to try every which-way to avoid that, and, yes, this may mean belt-tightening measures in some of the left-loved programs that you are so indignant about. And that doesn't bug me.

So, the rich should enjoy Low Taxes Always!, even if a consequence of this is a large, pauperized sub-population? I mean, it's my position that, depending on underlying structural features of the economy, taxes should sometimes be low, or lowered, and sometimes higher, or raised; this is a matter of prudential judgment within an overarching frame of ethics. Is your position on taxes categorical, unyielding, regardless of consequences?

The point of my rhetoric is that such policies have not benefited the Irish as well as alternative policies might have done; a large percentage of the economic gains of the Celtic Tiger period were paper gains.

Then you're hanging some pretty harsh rhetoric on counterfactuals and measures of prosperity that are very difficult to gauge. Some sizable percentage of the Celtic Tiger economic growth was clearly paper gains. How much will be the subject of dispute and analysis for decades. Nor do we have much ground for conjecturing exactly how this will all play out. Greece pursued alternative policies, as did Portugal, Spain, etc. They are all likewise under frightful pressure from this crisis of usury. If Greece fails and Ireland survives, will you then acknowledge that social democracy is more ruinous than supply-side policy? Of course not; nor should you, even from my perspective. There are way to many factors involved here to present straight-line cause and effect narratives.

Again, the point here is that focusing on lowering marginal tax rates, as a leading indicator or criterion of enlightenment or endarkenment in political economy, is crude and reductionistic

I agree, which is why I'm puzzled by your laser-like focus on them. Such a focus was emphatically not present in my OP, for the simply reason that I think it a secondary matter. Ireland reduced taxes to attract business; she had the misfortune of doing so in an age when a sizable proportion of business was entangled with usury. It could have been otherwise. There is no necessary link between the rate of taxation and usury.

As for a global tax regime, it would seem to the only way to avoid having certain states (Ireland, Cayman Islands, Switzerland) go their own way on taxation and regulation in order to attract business. The Europeans have been harrying the Irish for years on taxation -- long before any hint of the usury crisis was visible. There have been lawsuits and all manner of bureaucratic hectoring. For myself, I always rooted for the Irish. The social democracy of the EU has strong despotic strains, and it was encouraging to see someone stand up to it. If a nation is not free to set its own rates of taxation according its own estimate of its interest, it is not free period.

There is no necessary link between the rate of taxation and usury.

In the Irish case, there is: The tax-shelter political economy resulted in massive accumulations of capital; given that they weren't, in the main, invested in producing anything of value, they had to be invested somehow, and they were invested in instruments of usury - hence, the Irish bailouts. Ireland chose, not merely to have a low-tax economy, but to have a low-tax financialized economy, and now enjoys the natural offspring of such an economy.

As for a global tax regime...

As I stated above, my hope is that the Irish themselves will realize the inadequacy of their political economy, and act to reform it. I have no desire to witness any sort of supranational governance, least of all over the country of my ancestors.

The social democracy of the EU has strong despotic strains...

For reasons more related to the EU project itself, and the post-Marxist ideology of the Euroleft, than to social democracy itself. As the chapter on Sweden in Carlson's Third Ways makes manifest, social democracy was socially conservative in its inception and ambitions, and only after the turmoil of 1968, when the state apparatus was captured by leftists, including feminists, did it become an engine of social radicalism.

I haven't neglected anything. If it was not mentioned above, that is because it was not germane to any of the points discussed above. Since you've mentioned it, the reasons for the pinching of the middle class are as follows: 1) Since the early 1970s, the median income, adjusted for inflation, has either stagnated, or grown marginally; 2) What rate of growth in the median income has been observed has been accompanied by stratospheric increases in the costs of education, housing, and health care, and the reasons for this are complicated - though some are manifestly politico-economic; and 3) the percentage of revenues collected via taxes likely to fall on the middle classes has risen, while the percentage of revenues collected via taxes likely to fall on corporations and the rentier class has fallen. Since virtually all political factions in the US refuse to reckon with the causes of these trends, I can only conclude that they do not much care about the fate of the middle classes.

I think it is even simpler than that. They refuse to subject their cherished political beliefs to scrutiny. It is a long-running denial of reality. Everything from the way our society does social services, to business and the military. In our gut, we know they're not sustainable, but admitting that throwing ever-increasing piles of cash on schools, subsidized health care, bigger military engagements and outsourcing jobs left and right are not solutions to, but symptoms of, larger problems would require a wholesale reexamination of how we see the world.

But I'm not controverting that fact. In fact, as I indicated, I'm presupposing it, and going on to argue that the situation is more complicated than simply "getting people off the dole." Is it really an unvarnished triumph for conservative and Christian ethics to force single mothers into the market for crap jobs, with the necessary consequence that they will be deprived of most involvement in the lives of their children? For that matter, has welfare reform actually resulted in a decline in bastardy, or merely a decline in the numbers of people on the dole? I understand well the deformations and perversions of family law, believe me. What I'm arguing is that "just getting people off the dole" will not alter much of the situation, and will not be a costless reform, void of unintended consequences.

The problem is that welfare reform stopped well short of where things needed to be to reduce bastardy substantially. The ugly truth is that poverty must be wielded by society as a weapon against those who would indulge themselves in such ways without the independent means to support themselves.

What do you propose be done for those unwed mothers? If the only response is something of the order of, "Let them serve as examples to others, that these latter might not sin likewise", I doubt that this answer differs all that much from social Darwinism.

I propose that the state should make it be plainly known that it acknowledges no moral duty to provide for them. Then I propose that the church should offer reasonable assistance to those who will turn away. Those who won't can serve as metaphors. I think that fits neatly into the concept of separating the wheat from the chaff.

Letting those who have nothing to lose suffer the unvarnished consequences of their own folly, ignorance, and vice will perpetuate an underclass - because, as I repeat myself, the reasons for the existence of the underclass are not exhausted by the 'incentives' to unwed motherhood - which will, in turn, necessitate an increasingly militarized security society, erecting barriers, real and figural, to exclude the parts-no-parts of the social order. As I have said times without number, I really do not desire the replication, in America, of the sociology and security structures of Brazil. Stated differently, you aren't going to change many behaviours, or convert many souls, with the threat of the knout, real or metaphorical. Conservatives have here become deracinated materialists; noticing the real connection between certain social programmes and certain social pathologies, they simplistically imagine that they can mitigate the latter by abolishing the former, as though economics could transform culture in this manner. How leftist, actually.

Economics cannot reform the culture by itself, but it has to be part of the conservative attack. In fact it has to be a core part of the attack.

I don't agree that a more militarized security apparatus is necessary. Rather, what is necessary is a return to traditional American law enforcement where the law-abiding citizenry had the same arrest and use of force rights that the official police had. Force plays a role here as well. If the underclass knows it is perfectly legal for the middle class to shoot them dead over any serious violent confrontation, that'll make it easier to control them on the law and order side.

What is necessary is a three part attack:

1) Take away the guaranteed safety net.
2) Take away the ability to commit crime safely to approximate the former. (This includes ending the war on drugs)
3) Dramatically reduce the role of secularism in public life.

I learned this lesson at the tender age of seven, when some envious families at the Baptist church my parents were then attending spread various slanders about my father, taught their children not to associate with me, and so forth, all because my father's business was beginning to develop and prosper, and despite the fact that, materially, we were no better off than they were. However, envious waiters, greedy Baptists, and other malcontents have nothing to do with the dominant story of American political economy, namely, the dissociation of the "meritocracy" from the fortunes of the middle and lower classes.

Then you understand how relative it is. The non-elite upper class resent the elite. The middle class resents the upper class. The working class resents the middle class. The underclass resents everyone, including their own.

The problem here is one of greed and envy. The elite have been able to capitalize on this. If the middle and working classes hadn't abandoned their traditional values in favor of big houses, nice cars, fancy vacations, etc., it would have been much harder for our country to get so deeply in debt. The classes feed off of one another. Every class bears a tremendous amount of blame in its own right, and I'm not convinced that the upper class bear any higher percentage than the others.

That's not a necessary link; it's a circumstantial one. Had the capital accumulated by lower taxes been plowed into productive investments in manufacturing, say, maybe we'd be talking about Ireland giving the Germans are run for their money. As you say above, "it's my position that, depending on underlying structural features of the economy, taxes should sometimes be low, or lowered, and sometimes higher, or raised; this is a matter of prudential judgment within an overarching frame of ethics."

Exactly.

Exactly, yes. If the rich who domicile their wealth in Ireland wish to invest in usury and speculation, as opposed to productive activity, it should be taxed away from them: you get less of what you tax.

Maximos, my attitude to high taxes is about like this: No, they aren't intrinsically wrong. Neither is shooting yourself in both feet. But in both cases, I have lots of trouble thinking of any situations in which these things are anything but a very, very bad idea, and _therefore_ wrong.

It's probably kind of like that for you and foreign wars: You would probably say they aren't evil in principle, but you never met a real-world one you liked. Same with me and high taxes.

Btw, Maximos:

Surely, surely you must be able to figure out for yourself that, "You're social conservatives; therefore, you believe that mothers should be at home with their children. Therefore, you believe that unwed mothers should be at home with their children. Therefore, you should oppose welfare reform that gets unwed mothers working rather than at home with their children" is a really poor argument. Right? I can't really imagine that you think that any social conservative has to be committed to anything that makes that a good argument or that any intelligent social conservative who is also a fiscal conservative would be at a loss for _really obvious_ answers to that attempted argument.

Because, if you can't figure out for yourself some pretty sensible things that such a person would say in response to that, I doubt that there's the slightest point in my saying them.

I'm with Lydia on taxation. Prudence must govern -- all three of us agree on that, and probably Mike T too. But my argument against high taxation that is about 90% of the time it is not simply bad prudentially, but in certain often unexpected or unintended ways unjust.

A small businessman of my acquaintance recently mentioned to me that his tax obligation was forcing him to turn over basically all his excess capital by mid-month. He wants to hire folks, feels that there is opportunity to a small-scale but significant expansion, even risk in not doing so, but he is prevented by the combination of state, local and federal taxation. So a small community, too fine a thing to endure Maximos' hacking abstractions, is deprived of a few jobs; and some liberals and others social democrats can feel better that they have really given it to the damnable usurers.

Well, I say that usury is damnable; but I also cannot say for sure what exactly usury is, given the mystagogy of the finance industry. This knowledge of ignorance, so to speak, is a check on my confidence. I strongly suspect that my friend's business, like countless others, is not about usury, is not about trading in sheer abstractions, but instead is rather partially caught up in it, as all of us are. Mostly his business is merely a smart and bold answer to some demand or unmet need, the act of a man who has put his energies into a fundamentally noble calling, the business enterprise. Not even the furthest excesses of Old Uncle Milt's followers can deprive this calling of its basic legitimacy as a possible calling.

I say again that usury is damnable. Its insidiousness is particular appalling, and as such has kindled my sympathy for Dante's very stern judgment against it, which rings so bizarre to modern ears, as it did to mine before more careful investigations into the matter.

So usury is damnable. Were I to play Maximos the Sourpuss in some burlesque, I would now predict that "my opponents" will surely proceed to lecture me for not saying that usury is damnable firmly enough. I have some admiration for supply-side economics: you dirty apologist for usury!

The problem with misanthropy is that it can often turn allies into opponents for no good reason.

I don't have time to look up the link, but my impression is that Dante also has a place in hell for people who mess with the value of currency (yes, found it--falsifiers of money). Just to throw that into the mix. (Oh, btw, the answer to your question from a long while back, Paul, about corporate script or whatever it's called, corporate paper, is that last I checked there is no law requiring people to accept it as legal tender for all debts private and public.)

Okay, I'll stop that train of thought, now.

Usurers and falsifiers of money are pretty much the same thing, right?

There are some multiple trillions of commercial paper trading today. Thousands of firms issue it. It forms a considerable portion of what is called the money market. Its sudden and shocking impairment played a major role in the acute crisis that precipitated the TARP proposal and all the rest of it in 2008. Is this not a type of currency in our economy? I think so.

Usurers and falsifiers of money are pretty much the same thing, right?

I don't think so in Dante. The latter are counterfeiters. Not that I don't think there's probably a connection, of course! :-)

As for a type of currency, I guess a lot hangs on "a type of," but there's got to be something special about a different type of currency that people _have_ to accept.

They refuse to subject their cherished political beliefs to scrutiny. It is a long-running denial of reality.

It is not only the left, or the largely apolitical - or episodically political - masses, but also the right who must re-examine, must interrogate ruthlessly, even cruelly, their fundamental presuppositions. The Great Recession is at least as much a refutation of the dogmas of the political right as it is of any other faction's stale ideological tropes. The structural preconditions of the Great Recession demonstrate that low marginal tax rates do not always produce productive investment beneficial to the whole of society, that rising tides, as the quaint, and now faintly obscene metaphor would have it, do not always lift all boats. Those preconditions disprove the notion, always utterly void of any appreciation of human nature, that deregulation always yields positive outcomes. And so forth. You may rail against debt all you desire, and I will not gainsay you, save to observe that there are worse things in this world than debt, or even sovereign default, and that the origins of the debt are more complicated than the problems with deregulation.

The ugly truth is that poverty must be wielded by society as a weapon against those who would indulge themselves in such ways without the independent means to support themselves.

As regards the earlier discussion of Social Darwinism, we have arrived at the realization that we're talking about six of one, and half a dozen of the other.

The classes feed off of one another. Every class bears a tremendous amount of blame in its own right, and I'm not convinced that the upper class bear any higher percentage than the others.

The fish, as they say, rots from the head. For myself, I will only observe that Christ assigned the greater responsibility to those given more prerogatives, and that Scripture spends much more time in discussion of the injustices of the rich and powerful than it does expatiating on the laziness and resentment of the poor.

But in both cases...

Is there a meaningful difference between "No, they aren't intrinsically wrong." and "In every set of circumstances I can think of, they are a very bad idea, and therefore wrong."? Functionally, it's a negative categorical imperative, with a worthless limiting concept appended to it: not intrinsically wrong, just always wrong.

It's probably kind of like that for you and foreign wars...

Actually, it's not like that at all, since I can rather easily think of circumstances in which foreign wars would be warranted and just.

...is a really poor argument.

Except that - wait for it - I'm not actually making that argument, except in Bizarro World, where my words mean something altogether different from what they normally mean in combination. What I actually wrote, in contradistinction to the implied eisegesis performed upon my words, was that the matter of welfare reform is rather more complicated that simply getting people off of the dole, that bastardy is overdetermined, and not influenced by simple economic factors, except marginally, and so forth. That is not to argue that social conservatives should oppose welfare reform, merely to observe it interesting that social conservatives throw out all of the blather about culture, becoming crude economic reductionists, or Social Darwinists, when the subject arises. Complexity vanishes, culture vanishes, despite all the talk of it, and all they can see is the horror of bastardy, and the grifting of the poor. Oh, the moral hazard! The unpardonable social sin! If welfare was supposed to be the primary cause of the upsurge of bastardy, and removal of that cause does little to alter the rate of bastardy, has anything at all been learned from the exercise? Look, anthropologists have studied this phenomenon, and have discovered, in effect, that biology is more powerful than "the use of poverty as a weapon"; in other words, the urge of these people to reproduce generally overcomes the many barriers to well-being, because, given the misery and uncertainty of their circumstances, they figure that they may as well have children at a young age, because they'll not be around to have them later. To be certain, the phenomenon is overdetermined, but opponents of welfare need to reckon with the fact that some measures, with regard to some factors, are counterproductive.

But my argument against high taxation that is about 90% of the time it is not simply bad prudentially, but in certain often unexpected or unintended ways unjust.

I would imagine that we agree on the impossibility of perfect justice. And if perfect justice is unattainable, we confront the vexatious question of error, namely, the side on which it is more preferable to err. At some point, this country will have to become more serious about public policy, and will have to devise means of discriminating between classes and categories of businesses, based on circumstances, or what have you. In our political discourse, the struggling small entrepreneur is invoked incessantly as a shield to defend unconscionable concentrations of economic and political power: we mustn't strike at the plutocracy which siphons off our substance, and profanes our political discourse, transforming what should be the deliberation of a republican society into a sordid squabble over the division of the pelf, lest we injure the man who actually does something productive for his community. Well, to this I say that we mustn't injure that man, if we can at all avoid his injury - and we can, in principle. But if we are unwilling to make the necessary discriminations, and to fight for them in law and policy, then we should make our peace with the plutocracy, make our peace, that is, with the conversion of our dying Republic into the band of robbers noted by St. Augustine. A government without justice is naught but a band of robbers; and in our society, the robbers always hide behind the honest men, holding them hostage, coercing us, and subverting the government to their base ends.

I despair for this country, for to the great question of legitimacy, "why should anyone adhere to the social contract?", many conservatives can apparently only supply the answer, "force." Force - by the exercise of coercive power in formal adherence to the law, the Great and the Good may secure their pelfs. Force - those who are thus exploited and immiserated are simply going to cough it up, come whatever may, and heaven shall burn if they utter a harsh world against this regime!

The problem with misanthropy is that it can often turn allies into opponents for no good reason.

This is precisely the problem with our political discourse: demand that those most responsible for the Great Recession suffer the consequences, and that tonnes of flesh not be carved out of the hides of the weakest members of society, and one has become a misanthrope. And yet, it is not misanthropy for entire political castes directly to immiserate whole populations to make banksters whole, or, as in Greece, to allow the rich to continue to cheat on their taxes.

At some point, this country will have to become more serious about public policy

I deny categorically that there is any meaningful necessity in that statement. I figure it highly likely this country will become entirely less serious, more silly, more brassbound, more polarized on matters of public policy. I figure the chance of a recovery of seriousness is about as likely as a Braves victory over the Phillies in the NLCS.

So I grant all that follows in your bill of particulars. My country is prostrate under her sins. Yet I will not grant your conjecture that "our dying Republic" has become nothing but a "band of robbers," even "a government without justice;" which imposture "hide[s] behind the honest men, holding them hostage, coercing us, and subverting the government to their base ends."

Any page in almost any history can show me easily that if truly "a government without justice" will be our end, we still have a long damn way to fall.

I deny categorically that there is any meaningful necessity in that statement.

As do I; I merely expressed myself unclearly in that statement. If we wish to preserve the tattered remnants of republicanism, we will have to become more serious.

Yet I will not grant your conjecture that "our dying Republic" has become nothing but a "band of robbers,"

When the malefactors of great wealth contract with lobbyists, which lobbyists write most legislation of any economic substance, the Congress having abdicated itself - and why not, when such lucrative sinecures await them upon retirement from public office? - then our government has become an enforcement racket for thieves. Could our nation attain further depths of degradation and degeneracy? But of course! I am a reactionary! It is always possible, and usually probable, that things will become worse.

Well there is a point of principle, even a point of honor at stake here: is America so wicked that she cannot claim our loyalty?

I hope my answer is known and known bloody damn well.

It is not only the left, or the largely apolitical - or episodically political - masses, but also the right who must re-examine, must interrogate ruthlessly, even cruelly, their fundamental presuppositions. The Great Recession is at least as much a refutation of the dogmas of the political right as it is of any other faction's stale ideological tropes. The structural preconditions of the Great Recession demonstrate that low marginal tax rates do not always produce productive investment beneficial to the whole of society, that rising tides, as the quaint, and now faintly obscene metaphor would have it, do not always lift all boats. Those preconditions disprove the notion, always utterly void of any appreciation of human nature, that deregulation always yields positive outcomes. And so forth. You may rail against debt all you desire, and I will not gainsay you, save to observe that there are worse things in this world than debt, or even sovereign default, and that the origins of the debt are more complicated than the problems with deregulation.

I hoped you got that out of my comment that included how we use our military and how we do business. The right is deeply in denial in its own right.

The problem with deregulation is that it is not done in such a way as to give the average person with a marginal legal and tax education the freedom and certainty to start a business or do business on the side. One of the things that is not done, that is absolutely necessary, is a deregulation of these areas that is tightly coupled with a dramatic increase in the regulation of civil and criminal proceedings so the courts cannot introduce unnecessary uncertainty and arbitrariness.

The fish, as they say, rots from the head. For myself, I will only observe that Christ assigned the greater responsibility to those given more prerogatives, and that Scripture spends much more time in discussion of the injustices of the rich and powerful than it does expatiating on the laziness and resentment of the poor.

True, but a lot of Americans are stuck in between. The real plight is the middle class whose fortunes are stuck between the fickle and unethical behavior of the elite and the resentment of the underclass and working class. It is the middle class that provides the brunt of the professionals who make America work, who put America to work, etc. The elites may be the head of the fish, but the middle class is the circulatory system of the fish.

This is precisely the problem with our political discourse: demand that those most responsible for the Great Recession suffer the consequences, and that tonnes of flesh not be carved out of the hides of the weakest members of society, and one has become a misanthrope.

What you've been doing is lumping a lot of people unjustly into the category of Those Responsible For The Current State of Affairs. Families like mine will bear a lot of the burden, unjustly, of having to support those you consider the "weakest" and will have to do so through a bureaucracy that is legendary for its inefficiency.

As I've stated here before, this President and his supporters have succeeded in making me see some of the political events through class lenses. It is my class interests (supporting my family on one income for the sake of my wife's health) versus others'. The poor will always lose when they compete against my wife and future children because my first christian duty is to family, not the poor.

...is America so wicked that she cannot claim our loyalty?

In a word, no. America's ruling elites are not entitled to any semblance of loyalty or deference, and neither are most of those who aspire to positions within the regime; the regime - the contingent architecture of politico-economic power - of this nation is a cesspool of self-dealing, the corruption laundered through the procedural mechanisms of the rule of law, and, as such, warrants no solicitude. The American people are, in the main, confused, bewildered, lashing out in various incoherent furies, sensing in their collective gut that the 'center cannot hold', but possessing no sensible remedies for the sickness.

But the regime is not identical with the nation; we do not traduce the nation in damning the regime, or its works. If I did not love the nation, I would not trouble myself to execrate the regime.

Mike, I hear you in re: the middle classes. Truly, I do. What I believe must be grasped is that the elites are subverting the middle class to a greater extent than the underclass ever could; there is no solution to the American crisis which does not draw lines, contingent and fallible though they may be, between the "meritocracy" which hews up and burns the ladders of opportunity, and the middle classes themselves. Several years ago, when our company needed to hire a programmer, we interviewed a few dozen, most of them massively overqualified, and most of them displaced by insourced workers willing to work for a fifth of the prevailing wage. This is why young Americans do not prepare for careers in science and engineering, a veritable precondition for any sort of economic revival in this country.

Mike, I hear you in re: the middle classes. Truly, I do. What I believe must be grasped is that the elites are subverting the middle class to a greater extent than the underclass ever could; there is no solution to the American crisis which does not draw lines, contingent and fallible though they may be, between the "meritocracy" which hews up and burns the ladders of opportunity, and the middle classes themselves. Several years ago, when our company needed to hire a programmer, we interviewed a few dozen, most of them massively overqualified, and most of them displaced by insourced workers willing to work for a fifth of the prevailing wage. This is why young Americans do not prepare for careers in science and engineering, a veritable precondition for any sort of economic revival in this country.

I pointed to that behavior above in my comment about businesses. It is all part and parcel of the "gotta git mine" culture. You'll find few non-Marxists who are more openly vitriolic toward business schools and the culture they breed than me (or my wife).

But again, it's complicated. I've seen plenty of colleagues whose paper credentials are excellent and who do things like "forget to validate the XML" their code generates when a schema is supplied to them or who claim to know SQL, but who think "foreign keys" are keys to the CEO's house in Bermuda. They'll be the first to tell you too that they "deserve" a very high salary.

The chickens are coming home to roost. My plain is to get one in my sites and have it for dinner instead of complaining that I deserve to have one cooked for me already (which is what most of my peers do).

That said, I agree that it is mostly a cultural issue. Where I think we disagree is perhaps on how far it goes. As I say to my dad, who is a big Tea Party supporter, "if America wants to save its soul, modern America has to completely repent of being modern America."

It would be one thing for Maximos to show up here and denounce "banksters" (I mean really, do you want to be calling a group of people names like a typical leftist -- someone with your formidible vocabulary can surely do better) and make his typical case against globalization and internation finance. But is another thing for him to show up and say crazy stuff like this:

"In the Irish case, there is: The tax-shelter political economy resulted in massive accumulations of capital; given that they weren't, in the main, invested in producing anything of value, they had to be invested somehow, and they were invested in instruments of usury - hence, the Irish bailouts. Ireland chose, not merely to have a low-tax economy, but to have a low-tax financialized economy, and now enjoys the natural offspring of such an economy."

Look, even I have to agree that the Irish are in for some hard times right now and that they will be facing a number of years of high unemployment and/or declining incomes.
But in the main, the Irish have just experienced years of amazing growth in real incomes the likes of which Europe hadn't seen since after WWII. La Wik, quoting official Irish figures:

"Ireland was transformed from one of the poorest countries in Western Europe to one of the wealthiest. Disposable income soared to record levels, enabling a huge rise in consumer spending. Unemployment fell from 18% in the late 1980s to 4.5% by the end of 2007,[20] and average industrial wages grew at one of the highest rates in Europe."

Those consumers weren't spending imaginary money on imaginary goods and services. The Irish were enjoying real prosperity -- sure, it was material prosperity and like all the folks around here I believe life is much more than material goods. But living standards improved in Ireland for people and to deny this reality is to let anti-capitalist ideology cloud your mind.

I should also note that the Irish were also producing real goods for folks and weren't spending all that capital on fancy real estate in downtown Dublin (although they did do too much of that just like the U.S. did). Dell has a major manufacturing plant in Limerick, Abbott has manufacturing facilities, Bell Labs has them, Intel has them, etc. Maybe all this computer and pharma manufacturing is too high tech for Maximos? How about good old fashioned Irish products like those the Kerry Group makes (whoops -- big agribusiness) or...oh why bother. All the stats and data in the world probably won't convince Maximos that the Irish make tangible products that people use in their everyday lives -- he is too committed to his picture of Ireland as victim to "plutocratic neo-feudalism".

Earlier Maximos earnestly wished for discussion of public policy and the Right in America to become more "serious". Here's my earnest wish -- that Maximos would realize that those of us who still believe in capitalism, deregulation, low marginal tax rates, etc. are serious and demand that folks like Maximos stop hiding behind rhetoric and start making serious arguments using data, logic, and reason. When you say stuff like "young Americans do not prepare for careers in science and engineering" you sound like a ridiculous crank who doesn't know what he's talking about given the fact that a quick Google search turns up stories like this one:

http://www.nj.com/news/index.ssf/2010/09/science_engineering_fields_dom.html

Go, Paul!

Maximos says, re. the question of welfare reform:

Except that - wait for it - I'm not actually making that argument, except in Bizarro World, where my words mean something altogether different from what they normally mean in combination.

Maximos, I must have been terribly misled by your repeated references to the tragedy of unwed mothers who can't stay at home and spend time with their children but instead have to work at what you so charmingly call (showing your commitment to a traditional American work ethic) "crap jobs." Yes, that sacred trinity, in which traditional gender roles are meant to function: Mother, child, and Daddy the State. We couldn't let a need to actually earn one's living working at "crap jobs" get in the way of that!

Great facts, Jeff S.!

Speaking of Social Darwinism, William Sumner and economic arguments, I thought this would be of interest to W4 readers (Jay Richards is doing yeoman's work explaining why social and economic conservatives draw from the same philosophical well):

http://blog.american.com/?page_id=20602#hotspot

Please also note that clicking on my name will take you to a different and interesting blog that I wish to be associated with (they publish my emails from time to time). I still have a lot of respect for David Frum as a person, but I think his website just doesn't have much to offer conservatives anymore.

Jeff, Ireland had, in the main, a supercharged Celtic version of the finance-driven economy of the United States, complete with a real estate bubble. Much of the growth in incomes and consumption figures for the relevant period owed to the speculative froth of the financialized economy, which, when it disappeared as the mirage it was, left the present discontents in its wake. The United States still produces things as well as Ireland, but that does not alter the fact that the recent boom years were given their decisive character by financial speculation and asset bubbles. This decisive character is a function of plutocratic neo-feudalism.

We couldn't let a need to actually earn one's living working at "crap jobs" get in the way of that!

You're still trying to read esoteric writing that isn't there. When I said that the problem of welfare reform was more complicated, ie., a balancing of diverse goods, than simply "getting people off of the dole", that is what I meant. But at least I now know that, when such complexity confronts some social conservatives, they opt to deny it, and to valorize market discipline: the imposition of that discipline, the elimination of the moral hazard, is self-evidently better than allowing mothers to raise their own children. I don't really care about that, per se; it's the denial that this is a sphere for prudential judgments - this is what complexity entails - that I find disquieting. Ideology lurks; human complexity is to be banished by the simple, hard principle of this or that, and economic wrath will refashion recalcitrant human matter, it just will!

Use your illusions, folks.

the imposition of that discipline, the elimination of the moral hazard, is self-evidently better than allowing mothers to raise their own children.

Your argument is ridiculous for several reasons:

1) They will still raise their kids because they won't lose custody of them.

2) Their impact on them will likely not change since most of the kids' days will be away from them in a public school.

3) The moral hazard will deeply influence many of the kids' decisions.

4) The moral hazard encourages many unwed mothers to commit the same immoral and foolish choices again because there were actually beneficial consequences before (and even more waiting her with round 2, 3, etc.)

5) The mere presence of the moral hazard presents an enticing alternative for women of low ambitions.

6) It provides backup options for middle class women who become "choice mommies" when they decide they finally want kids, but can't find Mr. Right.

You need to just admit defeat here and admit that whatever isolated good may come out of this situation does not negate the harm that it does overall.

I don't really care about that, per se; it's the denial that this is a sphere for prudential judgments - this is what complexity entails - that I find disquieting. Ideology lurks; human complexity is to be banished by the simple, hard principle of this or that, and economic wrath will refashion recalcitrant human matter, it just will!

Actually, it's the opposite. You're exaggerating the complexity. The process of reform begins one step at a time. Each simple step builds on the previous one until the process looks complex in the end when people compare the before and after.

Mike, you have no idea at all what you're talking about. Many of these women, post-AFDC, are only qualified for low wage jobs, sans benefits, and earn just enough to disqualify themselves for other government assistance programmes, thus necessitating long hours, multiple jobs, and so forth.

Again, I ask, has the abolition of welfare as we knew it, prior to the mid-90s, changed the rate of bastardy? Eliminated any of the pathologies of the underclass? Restored the black family?

You're fighting against cultural declension with crude economic hammers, and everything looks like a nail. Not only will welfare reform fail to exercise the beneficent effects claimed for it, it will not serve as the foundation for further reforms, because there is no foundation for reform: none of the underlying pathologies have disappeared, and their disappearance is not in prospect. A reform that is all stick, and no carrot, will accomplish less than nothing. Conservatives profess to understand as much when discussing incentives to economic investment and innovation, but forget it all when the subject turns to the poor.

This is tedious, and I tire of it. Say what you will, how you will; I may or may not care any longer.

the imposition of that discipline, the elimination of the moral hazard, is self-evidently better than allowing mothers to raise their own children.

Mike has more patience than I do to spell things out. "Allowing mothers to raise their own children," is it? As far as I'm concerned the mothers, if they had truly cared about what was best for the children, would have placed them for adoption as infants or would have been moral and not conceived them under those circumstances in the first place. It's amazing to me that anyone would speak with such energy as if they have a right, _not simply_ to retain custody of their children (which is probably often prudentially best given the failings of foster care and CFS) but to _stay at home with them on the dole_, while meanwhile the children get the idea, since no one in their immediate family actually, you know, works for a living, that God lives in the Government and rains down goods and services on the just and the unjust, goods and services to which they are all entitled. The spiritual desert of such an entire sub-culture--a sub-culture in which, as Mike points out, illegitimate siblings will surely follow, conceived with bad-boy boyfriends who are hardly good for the existing children--hardly ought to need to be described, yet we are supposed to use the faux conservative category of promiscuous-welfare-mom-raising-the-kids to bathe it in a domestic glow. The separation from reality is pretty astonishing. And the never-ending sneers at certain jobs hardly raise your credibility, here, Maximos.

Mike, you have no idea at all what you're talking about. Many of these women, post-AFDC, are only qualified for low wage jobs, sans benefits, and earn just enough to disqualify themselves for other government assistance programmes, thus necessitating long hours, multiple jobs, and so forth.

You don't seem to realize that not only do I acknowledge this, but I consider it a feature. Long, grinding hours in $hi77y jobs is a GREAT way to show your daughters that being an unwed mother sucks more than the moonlight bunny ranch on "two-for-one tuesday."

Again, I ask, has the abolition of welfare as we knew it, prior to the mid-90s, changed the rate of bastardy? Eliminated any of the pathologies of the underclass? Restored the black family?

Has welfare actually been abolished? Of course not. It still exists in various programs in different places.

A reform that is all stick, and no carrot, will accomplish less than nothing. Conservatives profess to understand as much when discussing incentives to economic investment and innovation, but forget it all when the subject turns to the poor.

I'm open to increasing educational opportunities while abolishing welfare. One obvious solution would be to put decent daycare at community colleges and make it available to all degree-seeking single mothers who maintain at least a 2.5 GPA. The carrot, which is important, must come in the form of making the repentent single mother's ability to repent easier. Welfare is not even remotely in that category. Welfare is a hand out. It lets everyone who receives it avoid the reality of their decisions.

As one erudite blogger I read put it about the death penalty, which is more likely to make a man realize quickly that he needs Jesus, knowing he is going to the gallows in a week or will die of old age in prison? Real poverty works in the same way. The prospect of facing real poverty, crushing poverty, would sober up a lot of people. If they respond with force against society, well, there are many ways for the state and law-abiding citizens to skin that cat...

The spiritual desert of such an entire sub-culture--a sub-culture in which, as Mike points out, illegitimate siblings will surely follow, conceived with bad-boy boyfriends who are hardly good for the existing children

Statistically speaking, the men who these women bring home have a well above average rate (well above average for male family members) of harming said children. In fact, it's ironically one of the things that "men's rights advocates" are most obsessed about. They use it practically as a cudgel to beat up on those who defend choice mommies.

Why is it so easy for us on the Right to rail against envy, but so hard for us to criticize avarice? Last time I checked both were still on the list of the Seven Deadly Sins.

Maximos' critics are quick to demand that the economic losers under neoliberalism and globalization offer up the last thin threads of the safety net remaining to them, but slow in demanding any sort of accountability from those who allocate capital and make economic decisions in, and for, the country.

Maximos, unlike other commentors, I did not think your initial post was way, way out there. But let me ask you something about this response: What distinguishes " the last thin threads of the safety net remaining to them" from relatively recent Gov. bailout programs that newly offer goods for those who meet the designated tests? That is, why is a new program the "last thread"? But all of the national programs we are talking about are of recent vintage. Why is it not the case that the "last thin thread" is the help of your neighbor, or your church, or your local Lions Club, or all the things that existed LONG before welfare, and might exist now if we had not abused subsidiarity to have the the feds do a corporate takeover of human charity?

Again, I ask, has the abolition of welfare as we knew it, prior to the mid-90s, changed the rate of bastardy? Eliminated any of the pathologies of the underclass? Restored the black family?

No, but then there were at least 3 other major cultural causes involved in the rate of illegitimacy, which were left untouched by the welfare reform. And there are many more causes of the "underclass" than just welfare. As you certainly know: I don't really care about that, per se; it's the denial that this is a sphere for prudential judgments - this is what complexity entails - that I find disquieting. Ideology lurks;

Why is it ideological to insist that whatever societal efforts we take to reduce poverty (and associated problems) be efforts that are not doomed to failure because they induce laziness and irrational risk-taking? That's not ideology, that's common sense. The problem is not that conservatives don't want poor people to be helped, the problem is that conservatives see some of programs that are being offered as violating subsidiarity and being sure to induce laziness and risk-taking. These are prudential judgments about the programs, though, not an ideological reflex.

There is no reason to suppose that conservatives like Mike T and Lydia are pushing solely for financial hammers - certainly Lydia's comment about putting illegitimate children up for adoption shows that. But if one of the problems that society has to deal with is poverty, i.e. LACK OF MONEY, then naturally many of the tools are going to be financial tools. Not solely, no. There needs to be a balanced attack: a system of looking at these problems in light of both subsidiarity and solidarity.

As usual, I show up with facts and data and Maximos comes back with forceful rhetoric.

As Max might say, "whatever".

Meanwhile, while welfare reform was no magic bullet (how could it be after 30+ years of disfunction) there are hopeful signs. This is from Robert Rector:

Among blacks, the out-of-wedlock birth rate actually fell from 70.4 percent in 1994 to 68.8 percent in 1999. Among whites, the rate rose slightly, from 25.5 percent to 26.7 percent, but the rate of increase was far slower than it had been in the period prior to welfare reform.

A Shift Toward Marriage

Throughout the War on poverty period, marriage eroded. However, since the welfare reform was enacted, this negative trend has begun to reverse. The share of children living with single mothers has declined, while the share living with married couples has increased.

This change is most pronounced among blacks. Between 1994 and 1999, the share of black children living with single mothers fell from 47.1 percent to 43.1 percent, while the share living with married couples rose from 34.8 percent to 38.9 percent. Similar though smaller shifts occurred among Hispanics.19

While these changes are small, they do represent a distinct reversal of the prevailing negative trends of the past four decades. If these shifts toward marriage are harbingers of future social trends, they are the most positive and significant news in all of welfare reform.

You can find the entire 2003 report over at Heritage's website. Again, it's always nice to deal with some data in these discussions.

Jeff those claims about marriage are out of date, things have been getting worse since that report was published.

http://www.nytimes.com/2010/09/29/us/29marriage.html?_r=2&ref=todayspaper

The number of married adults has fallen to its lowest level since the government began keeping records more than 100 years ago. According to Census Bureau data in the New York Times, 52 percent of the population over 18 years is now married, as opposed to 57 percent ten years ago. That’s a drop of five percent in just a decade. For the first time in recorded history, the number of never-married young adults, between 25 and 34, exceeds those married.

This isn't directly related to welfare reform though, just about general trends.

"There have long been large racial differences in marriage rates, with blacks far less likely to marry than whites, but that difference has been shrinking as cohabiting becomes more popular with whites, Dr. Cherlin said."

"What distinguishes " the last thin threads of the safety net remaining to them" from relatively recent Gov. bailout programs that newly offer goods for those who meet the designated tests?"

Perhaps Max was thinking of things like this:

"Health benefits for low-income adults enrolled in the state's Medicaid program will be significantly scaled back beginning this week.

The Arizona Health Care Cost Containment System will cut coverage for basic health services such as physicals, most dental care, podiatry, some organ transplants and other programs.

The state also will slash benefits for medical equipment such as insulin pumps, hearing aids, cochlear implants, computer-controlled lower limbs and joints, and other equipment.

Administrators say the cuts, which take effect Friday, are necessary to deal with the state's budget crisis and an increase in the number of enrollees during the bad economy."


http://www.azcentral.com/arizonarepublic/local/articles/2010/09/26/20100926arizona-health-care-cost-containment-system.html#ixzz11WjpHxJ8

I love how anytime social welfare is raised we immediately careen into the Welfare Queen and her brood - yet another way in which Ronald the Great managed to screw up this nation's political discourse.

Anyway Tony, your use of the term bailout is revealing. TARP was break-even (or even a slight profit) but dealt with the financial sector. The stimulus was also a break-even event as it mostly compensated for the drop in state and local spending.

That private charity covered everyone until the evil liberals used the government to crowd it out is counter- intuitive and frankly silly. Poor folk simply did with out and died as will soon be happening in Arizona. The only entity that has room to maneuver in a downturn, especially one like this or the GD, is the one that controls the money supply,

"The credit-worthiness of the Irish government is largely dependent on two related factors: the delivery of its promise to reduce the public-sector deficit from an unsustainable 14.3% of GDP in 2009 to less than 3% of GDP by the end of 2014; the stabilisation of losses at Irish banks that are being underwritten by the government."

Ireland is a victim of the austerity caucus as well as the banks. That austerity doesn't work is apparent from the behavior of Irish bonds.

Loyalty and apologetics are two different things. Our system is broken, our two political parties timid and insane respectively (I just caught an ad for a major party Senate candidate candidate that begins, "I am not a witch"), and the Senate is (terminally?) dysfunctional. All the Kendallian rationalizations in the universe won't change that which is apparent on simple observation.

As long as corporations are "persons" who can contribute cash to the political process and as long as politicians can use their elected or appointed job to audition for a lobbying job and the "real" money we will be one a downhill slide.

Unemployment is way up, 30 year paper is at less then 2% real, the country is falling apart and we go from the usurious disgrace of our financial system to bashing welfare queens.


Rob G., we fiscal conservatives believe in avarice, but we certainly don't believe it's the exclusive province of those who are usually thought of as the rich. Heard the "breadwinner" story?

http://www.desertconservative.com/2010/08/01/welfare-fraud-at-its-worse/

[A] woman in her 20’s came to the ER with her 8th pregnancy. She stated “my momma told me that I am the breadwinner for the family.” He asked her to explain. She said that she can make babies and babies get money for the family. The scam goes like this: The grandma calls the Department of Child and Family Services and states that the unemployed daughter is not capable of caring for these children. DCFS agrees and states that the child or children will need to go to foster care. The grandma then volunteers to be the foster parent, and thus receives a check for $1500 per child per month in Illinois. Total yearly income: $144,000 tax-free, not to mention free healthcare (Medicaid) plus a monthly “Linx” card entitling her to free groceries, etc, and a voucher for 250 free cell phone minutes per month.

Al, if you look back, um, you'll see that it was Maximos who brought up "the poor," welfare reform, etc., to criticize, as usual, fiscal conservatives for their crashing lack of nuance. As fiscal conservatives are one of Maximos's great hates, "the poor" now seem to be one of his mascot groups, as they are for the left. That's how we got onto that topic, not because of some sort of obsession on the right with the topic, but because of an obsession on...shall we say, the fiscal left.

Oh, and there was an interesting conference this AM,

http://voices.washingtonpost.com/ezra-klein/2010/10/will_america_come_to_envy_japa.html

Be sure to follow the link at the end of the item linked here and know gloom.

al,

Michael Savage (yes, I listen to him because he's a hoot, not because I agree with him -- he's a protectionist for crying out loud) likes to say "liberalism is a mental disorder".

I finally understood what he meant when I read this from you: "The stimulus was also a break-even event as it mostly compensated for the drop in state and local spending."

Next up, al goes looking for the money that grows on his trees after Googling for stories about people who died in Arizona because they didn't have health insurance (which they probably didn't have just 10 years ago before states decided to cover everyone and their brother on S-CHIP, but al never lets facts get in the way of his stories of conservatives and Republicans killing people).

Lydia, read the post above yours. Most safety net programs benefit the working poor/working class and intact families. Mention any social welfare item and some conservative will always go right to the welfare queen and her kids. That is a small part of things and yet it will always dominate. Follow the Arizona story and one of the victims in a father in an intact family who is going to die because Arizona cut a lousy 20 million from the medicaid budget and the Republicans and Blue Dog Dems cut aid to the states when interest rates are 0.

It will be interesting to see how soon the replies veer back to the welfare queen.

"Next up, al goes looking for the money that grows on his trees..."

Jeff, when you can get money for 10 years at less than 2.5% nominal and the Fed has hardly been serious about QE, money is growing on trees.

Poor folk simply did with out and died as will soon be happening in Arizona. The only entity that has room to maneuver in a downturn, especially one like this or the GD, is the one that controls the money supply,

Ah, yes, but even during the era of the Great Government Benificence, there have always been poor folk who do without and died. Al, I actually agree with you that the notion that private charity covered everyone before Welfare is wrong. That fact helped push us toward Welfare. I AGREE.

What I don't agree with is that a corporate shove against subsidiarity, with means-testing alone instead of means-and-value testing, was better, as it was bound to increase the dependent class, all other things being equal. And the fact is that it did in fact increase the dependent class. I don't view this as an better state of affairs than a smaller dependent class.

While it is, for the single individual, better to be taken care of by another than to simply die, it is not better for the individual to learn dependence as a way of life and hand that on to his peers. And if a person must needs be dependent, it is better for him to be dependent on individuals making acts of charity, and on private institutions organizing acts of charity, and on LOCAL communities acting in concert (even by government) than that to be dependent on the federal government directly. And for society as a whole, it is better for any individual who IS dependent on others to be expected eventually to become independent if he is not impeded by health problems. So, the test of a good aid program is that it be designed to NOT foster indolence and risk-taking (which increase the dependent class), but rather fosters growing independence of the individuals it helps. I AM NOT in principle opposed to all forms of government aid. But it is hard to have a formal program in place that does not encourage people to take some unreasonable risks, saying "well, if I lose my job, I can get welfare, so I can be late one more time." Short-circuit that mentality with a program design, Al, and I may just get behind you and cheer you on.

(By the bye, I neither hold a candle for any of the bailouts / TARPs / Stimuli, nor hold a principled position against them - they were complex in ways that I don't expect to grasp. I do generally protest against government support of individual businesses or industries, just as much as I do against warped government support of individuals.)

Oh, right now my trees have apples which i pick - and eat, because that is what a prudent person does (especially if they like apples. Likewise, in the present economic environment a prudent government borrows and a prudent central bank buys bonds.

Tony, for the most part we are dealing with programs that effect folks who are WORKING. The bulk of your post is a just-so story, designed by ideologues, to cloud your mind. The world you describe bears no relationship to the one in which we live.

"...they were complex in ways that I don't expect to grasp..."

And yet you vote (I assume). Tony, with all respect, these are things you can't ignore and the basics aren't that complex. The dishonesty and mendacity coming from the right on these issues are too obvious. The corruption that comes from allowing treating corporations as political persons and allowing the drone-like financial sector to suck at our production trough is empowered by ignorance.

Sorry for the multiple posts but the IMF has a new report out which may be of interest to some and which points out some of the problems austerity in the present climate.

http://www.imf.org/external/pubs/ft/weo/2010/02/index.htm

Al, the first time I posted on the strange death of European Keynesianism, you immediately assumed that I favor austerity and cheer death of Keynesianism; having been corrected on that point, I am puzzled by your continued misreading here.

But, for your benefit I will register my conjecture as to why austerity has become so popular:

The recession forced millions of private businesses and households into a period (which continues to this day) of considerable belt-tightening. The collapse in private sector demand reflects this. But the spectacle of governments taking the opportunity to race off on wild spending sprees is bound to breed resentment. When private firms and household cannot get credit, must lower their expectations of prosperity and face straitened times, while the government can borrow and spent at will, dedicating the capital to immensely inefficient projects ($60 billion in infrastructure out of a $700 billion stimulus bill) -- yeah, normal people we react to these conditions with some bitterness. If Krugman and the boys can only manage to answer "you people are stupid!" well, I suspect austerity will carry the day.

That the USG can borrow at such extraordinarily low rates is also a reflection of the retrenchment of private demand and private investment opportunities. It works out pretty well for (a) the USG and (b) the financiers in New York and London. The government gets access to cheap capital, which can them be thrown around to buy votes and such; and the financiers can profit by playing the yield curve with leveraged capital backstopped by the government.

As I titled this post, the usury crisis continues.

Jeff, I find it disquieting that your reaction to an accurate characterization of recent political economy, a characterization that would be accepted, with variations, by virtually every sane economist, is that is it mere rhetoric.

As I have said, use your illusions. I have better things to do than enter into disputations with the incorrigible.

As regards this adoption idea some have floated in various threads concerning the underclass, I will say only that, were it incorporated within a systematic approach to the dilemmas of poverty, an approach concerned with the flourishing of human persons, and not with circumscribed ideological criteria, it might be defensible, if condescending, paternalistic, and vaguely unnerving; in combination with the other politico-economic fetishes of the political right - for structural adjustment, dismantling the vestiges of the social welfare state, abolition of even minimum wages, tolerance of non-remunerative employment, and so forth - it has a disturbing, almost despotic quality about it, as though we would return to the ethics of Sir James Steuert and Jeremy Bentham, forcibly re-engineering raw human materials that won't conform to the economic strictures imposed upon them by their (so-called) betters. No, thanks.

al,

All that debt has to be repaid sometime. Here are some alternative thoughts on austerity:

http://reason.com/archives/2010/09/20/austerity-agonistes

Maximos,

I find it disquieting that you think using the word "bankster" is appropriate for a serious discussion of public policy issues and I also find it disquieting that you think describing the creation of real wealth and income over the past 20 years or so in Ireland to be nothing but a process of "the speculative froth of the financialized economy." I don't think any serious economist I would be interested in reading (i.e. an economist that is not a Marxist) would describe the Irish economy in such a manner. You continue to use fancy rhetoric as a bludgeon, as if that is all you need to advance your argument around here, but I refuse to be beaten down. You should learn a thing or two from Paul, who engages his intellectual opponents with data and a carefully crafted argument -- I may not always agree with him but I've always respected his ideas for being well argued.

The bulk of your post is a just-so story, designed by ideologues, to cloud your mind. The world you describe bears no relationship to the one in which we live.

Maybe you're right Al. Maybe the overall statistics, if properly collected and aggregated, (I know a little about statistics because of my job, I know how easily they are mis-construed and abused) would support your claim and not support mine. But 30 years ago I had a cousin tell me in just about so many words exactly the "just-so" story to explain why he only worked half the time. He effectively chose to be on vacation the other half, living off the system. You can't tell me the motivation isn't there, I have seen it directly. Where the motivation exists, so also - at least in some cases - the action will follow. Can you show me that the contrary motivating forces overwhelm this force?

Jeff, when you can get money for 10 years at less than 2.5% nominal and the Fed has hardly been serious about QE, money is growing on trees.

The thing that makes this almost tragically comedic is the fact that al doesn't recognize that the "money being lent" in this situation is just a fiction. The private wealth that would back it is gone. Burned up and then some in the great loss of deposits we suffered 2 years ago.

With the banking sector already another $3T in the hole after the bailouts, the chickens are coming home to roost.

Maximos, for the record, I have gone on record as saying that unwed mothers should only be encouraged to adopt, not that their legal custody of their children should be called into question just because they had the child out of wedlock and did not put the child up for adoption.

I say what I say about their lack of true understanding of and consideration for the best good of their children because I believe it _true_, not because it is part of some other plan to re-engineer recalcitrant economic human materials or anything of the kind. I think these children are seriously harmed by their present situation and that it was an unloving act to conceive them as they were conceived. In other words, I disapprove of promiscuity and the bastardy that result for ethical reasons related, among other things, to the good of the children conceived. Adoption can go a very _great_ way towards rectifying the evil that has been done, as I know to be true in my own case as an adopted child.

This really isn't principally about economics, from my perspective. But what I believe to be true about these ethical matters does make me indignant when unwed and even totally promiscuous mothers who keep their children are held up and spoken about as if they are perfectly normal mothers and as if all the assumptions we make about married mothers apply to them, when this isn't the case from the get-go.

I hope that's clarifying.

"we fiscal conservatives believe in avarice, but we certainly don't believe it's the exclusive province of those who are usually thought of as the rich."

Absolutely -- having taught in an inner city school for a number of years, I know plenty about welfare fraud. But when I hear a certain type of conservative defend huge corporate profits, giant CEO salaries, etc., it makes me wonder if they really think avarice is such a bad thing. It is, after all, the root of the usury crisis, yet it certainly doesn't get much play in the conservative media. When you hear Hannity, Rush, etc., day after day opine that what's good for big business is good for America, it's hard to conclude that they think greed is much of a problem. And whatever you think of guys like Rush and Hannity, they are the de facto mouthpieces for American conservatism right now.

"As fiscal conservatives are one of Maximos's great hates"

'Hates' is undoubtedly too strong a word. In any case, I suspect that Max's dislike for certain "fiscal conservatives" comes from the fact that they are, in fact, a species of libertarian, and hence not actually conservatives, but right-liberals.

I find it disquieting that you think using the word "bankster" is appropriate for a serious discussion of public policy issues and I also find it disquieting that you think describing the creation of real wealth and income over the past 20 years or so in Ireland to be nothing but a process of "the speculative froth of the financialized economy."

I find it disquieting that you don't think that the term "bankster" is at all appropriate, given the agency problems, perverse incentives, fraud, corruption, and socially useless usury pervasive in finance capitalism.

And, of course, I did not write that the "creation of real wealth and income" in Ireland was "nothing but" speculative froth, merely that "speculative froth" described the specific character of the Celtic "Miracle"; this should be obvious given the current state of Irish political economy: if actual productive activity had been the dominant trait of Ireland during the bubble years, Ireland would now be more like Germany, emerging from the crisis largely intact. However, it is not, precisely because the dominant trends of the economy were speculative and worthless. It is tragic and unjust that many productive enterprises in Ireland must now suffer, owing to the excesses of the financiers, speculators, tax cheats, and so forth.

Maximos, for the record, I have gone on record as saying...

I'm happy to have a potential misunderstanding corrected.

This really isn't principally about economics, from my perspective.

Neither is this principally about economics, from my perspective; I do not believe that the ethical and the politico-economic can be segregated, or even disaggregated so that discrete questions can be addressed without messiness. The ethical and the economic are inextricably bound together; they provide context for one another, and implicate one another in countless ways. It is not necessarily invidious, and quite possibly highly ethical, to encourage unwed mothers to surrender children for adoption; in the context of many elements of American political economy, which have decimated the opportunities of the working classes, not to mention many of the bugaboos of the political right - no minimum wages, benefitless jobs, no entitlement to even a public minimum level of health care, and so forth - that encouragement seems rather different in character to me. That context bids the poor and working classes to fend for themselves in a globalized, deregulated, deunionized, unsupported labour market, earning wages determined by a "natural market rate", to perhaps hope for a little charity, if some rich persons should condescend to them, and thereby undermines the material basis of family formation. Then, this cultural context, partly real, partly hypothesized, bids them not to do anything irresponsible by forming families; this is not primarily a question of marriage, but rather a question of finances: they can marry or sire bastards, and in either case, they don't really have the resources to sustain a family. The living wage, or any semblance thereof, has been repudiated as a socialist construct. We've had those arguments here; they're tedious, and I have no desire to revisit them. Hence, my reference to early political economists, like Steuert and Bentham, who sought to render to dispossessed peasantry more "suitable" for employment by Whiggish capitalists, and conceived of various punitive, disciplinary expedients towards this end; this is the context of which I speak, the analogy I draw between early industrial capitalism and the present: the lower orders are largely stripped of their means of remunerative provisioning within the system; they become pauperized and manifest various cultural dysfunctions; then, "enlightened" carceral policies are imposed to "reform" them, to make them amenable to the conditions imposed upon them. Is encouragement of adopting out one of these carceral policies? No. I'm not making that argument. But encouraging adopting out will be perceived in a definite way by the lower classes, as a statement that they are not entitled to much of anything from society, and aren't really entitled to have children, either. At least, they shouldn't have them. As I argued above, the economic incentives of such a situation are perverse, and militate against longer-term thinking; it is difficult to survive, married or not, and so men become reckless in pursuing the Main Chance, often criminal, and women opt to fulfill the biological imperative early. Apart from the ethical context, which I find dubious, we're warring against human biology. And when we fight biology, we will almost always lose. Biology will trump the ethics, as it already has, and it will trump the economics, unless the privation becomes catastrophic.

I have a fear - not a political one, since there is no reasonable prospect of this occurring in the actual American political system - but a theoretical one, about social conservatives; that fear is that, confronted by a policy programme of socially-conservative social democracy, such as existed in Sweden before the feminists took over, which would emphasize the male breadwinner family, living wages, cultural support for larger families and motherhood, the proscription of abortion, and so on, American social conservatives would opt against it. They would probably argue that they think it impossible, on any number of technical economic grounds; some would argue that the economic programmes themselves would be unjust (no use denying this). But here's the thing: they aren't willing even to attempt it, to meet halfway, or a quarter of the way. No, it's all unvarnished classical liberal economism, however arrayed in rhetorical finery, whether libertarian, neoliberal, whatever. Political economy should not take into account the human flourishing of the lower orders, not as an object of the art; no, what happens in The Market happens, and hopefully charity will help out at the margins. If it doesn't maybe people will feel guilty and/or generous; if they don't feel guilty and/or generous, them's the breaks. The ethics of the economic are univocal: obligations are towards The Market System, and from the poor to the system and the rich.

So, why is this my fear? Because, apart from my ethical estimate of the matter, I think that American social conservatives are tipping their hearts, showing where their treasures, and hearts, lie. That's perhaps harsh. But, as I have argued all along in my blogging career, we should be willing to accept a lesser degree of economic efficiency for the sake of justice. I believe that there are good philosophical arguments for this claim; there are also some technical economic ones, to the effect that a less efficient, but less unequal, system will be more stable in the long run. I also believe that there are theological and biblical arguments for this claim; certainly, the Bible speaks often about doing justice to the least of these; I don't recall it speaking nearly as often, or as forcefully, about chastising the lazy poor. I realize that virtually everyone here disagrees with these claims, and that's fine, really it is. Of the making of these arguments, there will be no end. But I stand by my claims: social conservatives should be willing to compromise a bit on the economics, in order to support families, but I don't see much willingness to compromise.

But I stand by my claims: social conservatives should be willing to compromise a bit on the economics, in order to support families, but I don't see much willingness to compromise.

The problem is that the liberals have thoroughly discredited social democracy by their unwillingness to put even the slightest restraints in place to protect the system from abuse. It completely turns off social conservatives to see people like MZ snidely downplay the inherent problems in a welfare system that treats people equally regardless of why they need public assistance. Social conservatives have also learned from experience that this attitude is mainstream on the left. That fact, combined with the relentless obsession that the left has with tearing down any boundaries leaves them with the unshakable feeling that any ground the cede to the left will be used against them.

Jeff, austerity can work on an individual basis if a nation is in control of its currency and is able to devalue that currency and hence improve its trade balance. The problem is that every nation can't devalue its currency and improve its trade balance at the same time and that is the situation we now confront.

I notice the Barro thing was mentioned - 'nuff said there.

I just hit ctr F and typed in "zero" and got the red and a clunk. When the folks writing articles like the one you linked bother to acknowledge our current flirtation with the zero bound, I will take them seriously.

As for repaying it, so? Rebuild our infrastructure on really cheap borrowed money while employing lots of people
As for Europe consider this from PK,

" Oh, and don't tell me that Germany proves that austerity, not stimulus, is the way to go. Germany actually did quite a lot of stimulus — the austerity is all in the future. Also, it never had a housing bubble that burst."

"And with all that, German GDP is still further below its pre-crisis peak than American GDP. True, Germany has done better in terms of employment — but that's because strong unions and government policy have prevented American-style mass layoffs."

BTW, the austerity we need to do now is, like Germany, make it clear legislatively that we are committed to fixing the deficit. That takes us back to politics, and Paul, until we acknowledge that our system is corrupt and broken and fix it we are unlikely to do that.

Of course we have to pay it back but borrowing for things that need to be done soon anyway at the lowest rates is good business. And, as recovery progresses and (hopefully) inflation kicks up a bit we will owe even less.

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