The Great Unraveling by Paul Krugman
MORRIS, CHARLES R.
MAD AS HELL The Great Unraveling Losing Our Way in the New Century Paul Kruginan W. W. Norton. $25.95, 426pp. Charles R. Morris Paul Krugman is one of the brighter stars among America's...
...That is an extreme statement of the current political situation in America, but it is the one that Krugman is expressly and vigorously making in these pages...
...The proper role of a Fed chairman at that point should have been to lean against the wind, in the jargon, and prick the incipient bubble by raising interest rates or stock margin requirements...
...Depressingly enough, he may actually be right...
...Take, for example, the central problem with the administration's plan to privatize Social Security...
...For people under revolutionary attack, though, the assumption that a common value core exists is a fatal mistake, because marginal concessions never satisfy revolutionaries...
...Whatever the reason, it is a disgrace...
...They have lied about Social Security reform, the cost of privatization, and the risks to future retirees...
...The burden of his case is that the current administration consistently and consciously lies about every important public-policy question of the day...
...Charles R. Morris Paul Krugman is one of the brighter stars among America's younger economists, which he will readily tell you himself...
...We should therefore be grateful for Krugman's rant, and for the fact that his book is a bestseller...
...They have lied about the energy crisis, whether in the case of Arctic oil drilling or the California electricity fiasco...
...Perhaps people are beginning to notice...
...One might wish that, instead of assembling four hundred-plus pages of newspaper columns- reading them is a bit like eating handfuls of breakfast cereal out of a box all day- Krugman had pulled together his case in a single short, trenchant argument...
...All stable societies are rooted in a system of core shared assumptions...
...Krugman speculates that it's because of plain laziness, or possibly a hyperconcern for "evenhandedness"-editors who don't print the administration line, including its misleading claims and projections, risk appearing partisan...
...Political opponents, in the normal case, recognize each other's common values, so conflicts are confined to a narrow range of issues outside the core...
...Revolutionaries aim to overthrow the whole core...
...Well, you get the point, fill in almost any subject at all...
...Somehow that stunning fact almost never got reported by the mainstream press...
...They have lied, outrageously and barefacedly, about the Bush tax program-whom it benefits and whom it hurts-its impact on the deficit, and its consequences for increasing the distance between the very rich and the rest of us...
...But since that would have displeased the Clinton White House, Greenspan swallowed his principles and became a leading advocate of the "new paradigm," proclaiming that the dot-com boom was forever...
...There may be more reason to be disappointed in the performance of the workaday press...
...His twice-a-week column for the New York Times, however, has become something of a rant, since he is convinced that the George W. Bush White House is determined to work a near-total revolution in the American system, vastly privileging the narrow band of people who own the country's financial capital...
...and, as an economist, as he also frequently tells you, his understanding of public-policy issues is deeper and more farseeing than that of other people...
...They have lied...
...Simplicity itself...
...But readers who tire of the choppy repet-itiveness of the newspaper format can skip the columns altogether and just read the introduction and chapter prefaces which more or less summarize the entire case...
...But if all of the money is directed to your own nest egg, where will the money come from to support current retirees...
...His rolling over for the Bush tax program is just another episode in a career of consistent spinelessness...
...In 1996, for example, he correctly flagged the "irrational exuberance" driving the American stockmarket...
...This is the same man, after all, who in the late 1980s was testifying to the sound condition of one of the worst of the savings-and-loan swindlers...
...Answer: well, there will be a $2 trillion shortfall-repeat, $2 trillion-which will have to be made up by government borrowing or higher taxes...
...Or maybe they think their readers are stupid...
...The idea is that instead of leaving your contributions in the hands of the Social Security trustees, you will build your own nest egg by choosing from a variety of mutual funds, not incidentally paying fees to the same Wall Street companies that are such heavy Bush contributors...
...To the degree that it has any plausibility, it certainly calls for some unrestrained ranting...
...Krugman argues-following Henry Kissinger-that revolutionaries often succeed because their targets don't really believe that they are revolutionaries...
...They have lied about Iraq, their reasons for going to war and the risks of the American occupation...
...The auxiliary villains in Krugman's bestiary are the administration's en-ablers, especially Alan Greenspan, who violated all the usual protocols governing the behavior of Federal Reserve chairmen by endorsing the Bush tax program...
...Charles R. Morris is the author of American Catholic, and Money, Greed, and Risk (1999), among other books...
...In the early 1980s, the system was changed, so part of your current contribution goes to fund your own future benefits, while part is still used to support current retirees...
...They lie about the underlying issues, the nature of their solutions, the impact on the country-even about the "ands" and the "thes," to paraphrase Mary McCarthy's rebuke of Lillian Hellman...
...Problem: over the course of its history, Social Security has never been self-funding...
...Each generation of workers has always paid for current retirees, with the expectation that they themselves will be supported by a new generation of workers when they retire...
...They have lied about their cozy relations with big corporations, and the consequences of their initiatives, or lack of them, at the SEC, the FCC, and the IRS...
...Krugman is a bit partisan here, for the truth is that Greenspan has always been a toady...
...In truth, one doesn't have to be an economist to understand any of the issues Krugman is complaining about-it just takes a little arithmetic and the patience to spend a few hours looking over readily available background papers...
Vol. 130 • December 2003 • No. 22
