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05

Jun

2010

Rebuttal to Robert Kuttner's - Get a Grip: Austerity Does Not Produce Prosperity
Saturday, 05 June 2010 20:12
by James Secor

Mr. Kuttner is correct, austerity does not produce prosperity. And I wish he followed this through but, instead, he chose to engage in the most bizarre example of "thinking" I have seen since Steven Pinker' pseudo-theories of language. The more I read of the left-leaning progressive writers, the more I see this kind of intellectual disconnect, more often than not in order to push their particular idea of the good society, that is, utopian politics.

  About half way through his article, Kuttner says, "The current global economic crisis, now entering a new phase as a crisis of sovereign debt, has only one rough precedent. The last time major nations (such as Germany, its European creditors, and much of Latin America) faced insolvency, the combination of financial collapse and deflation helped create depression, dictatorship, and then World War II." He then proceeds to spend an inordinate amount of time discussing wartime economics and how war pulled the US out of recession and depression. The idea of war as the answer struck me as a repeat of The Report From Iron Mountain (Dial Press, 1967) or, rather, as a righteous support for the findings in this satire so many took for real, honest appraisal of the situation (as they did with Jonathan Swift's A Modest Proposal a few years prior). I was waiting, so I could be really ill, for his robust, blatant support of war when, instead, he said, "Today's situation is different. The origin of all the debt is not a war but a financial collapse."

  This is contrary to all that came before (three paragraphs), for first he said today's situation was similar to that of WWII and before when the situation was brought about by a financial meltdown. And yet "Today's situation is different." I am not aware of how something can be the same but different. Not even in Quantum Mechanics is the same also different. Yet it is from this contrariness that Kuttner draws his conclusion: "it is insane to think that we can recover from a financial panic and an economic recession by inducing a worse recession in the name of fiscal soundness." Suddenly, via some kind of Randian magic hocus pocus Kuttner has managed to screw his argument back to the reality he began with, that austerity does not produce prosperity. It sounds good but I cannot see the connection--or, rather, the non-connection. Kuttner has jumped off the deep end of a bridge to nowhere, a bridge built out of bricks but not built out of bricks. There is something extremely wrong here.

  Let me see if I can clear this up. . .the financial crisis and depression of the 1930's led to war and an austerity that was trumped by government programs and handouts (as the Neo-cons like to call them). More to the point, banking controls were put in place that worked just fine until the years between Reagan and Clinton, inclusive. And the situation ended in a long drawn out war. Mr. Kuttner only focuses on war.

  Okay. The present situation has been brought on by a financial crisis and has led to war. If we stay with Kuttner's parallel, there is absolutely no difference. Yet he says the present situation is different.

  And I say it is different only in that there has been no government attempt to control the situation as there was in the 1930's, either socially or financially. But Kuttner chose not to talk of these very important matters. He even intimates in his "it's different" judgment that there is no dictatorship. (He should read a little more about Hitler's dictatorship to see the parallels.)
 

  Thus, according to Kuttner, we have an exact parallel of financial meltdown and war but, according to Kuttner, we don't have an exact parallel because of financial meltdown because, as he says, the present state of the economy, the present state of the economy, the present state of war was not brought on by a financial meltdown. So, what exactly has been the financial situation since repeal of Glass-Steagall? What has been the situation since the rise of the Neo-conservatives? What has been the financial situation since--oh, let's be kind--the housing bubble burst? What has been the financial situation since the closing of banks and the foreclosures of homes and the loss of jobs and. . . ?

  Perhaps I'm living in a never never kind of land but I seem to believe--and I seem to read in all extremes of the press--that the US indeed did suffer and is suffering through a financial meltdown, a financial crisis, and that the US is in a recession that is damnably similar to a depression.

  Kuttner's title would seem to indicate that he has a solution. He does not. And, so, in reality, aside from his picking and choosing what historical data to use in his argument (a definite no-no in David Hackett Fischer's Historians' Fallacies and the writings of Carl Popper), Kuttner has nothing to say, other than repeating himself and everyone else. Rise up, oh Chorus!

  Well. . .who the hell do I think I am? I'm not famous and rich. What the hell do I know? The only thing I can say in my own defense is that if I'd written such thinking bridges in my dissertation I'd have been laughed out of the school and not taken my working class ass to the ultimate elitist degree.

  As this kind of thinking of Kuttner's seems to be the going thing, it is no wonder that the country is sinking into an atomic bomb bung hole oblivion. Thinking of this sort will never raise us up out of the mud--but it will get us published in The Huffington Post! I only have an al Jazeera pick-up article. 
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