Austerity never works: Deficit hawks are amoral — and wrong

Sun, 05 May 2013 16:00:00 +0000

In this, the fifth year of a prolonged downturn triggered by a financial crash, the prevailing view is that we all must pay for yesterday’s excess. This case is made in both economic and moral terms. Nations and households ran up unsustainable debts; these obligations must be honored — to satisfy creditors, restore market confidence, deter future recklessness and compel people and nations to live within their means.

A phrase often heard is “moral hazard,” a concept borrowed by economists from the insurance industry. In its original usage, the term referred to the risk that insuring against an adverse event would invite the event. For example, someone who insured a house for more than its worth would have an incentive to burn it down. Nowadays, economists use the term to mean any unintended reward for bad behavior. Presumably, if we give debt relief to struggling homeowners or beleaguered nations, we invite more profligacy in the future. Hence, belts need to be tightened not just to improve fiscal balance but as punishment for past misdeeds and inducement for better self-discipline in the future.

Game, set, Obama

Wed, 17 Oct 2012 13:30:00 +0000

President Obama did what he needed to do tonight. He took the debate to Mitt Romney. He was relaxed, even jaunty, as he scored one point after another. He seemed to be enjoying himself at Romney’s expense. He looked more comfortable and commanding as the debate wore on, while Romney looked more stiff, edgy, and salesman-like.

Obama needed to remind voters that Romney is a very rich man out of touch with regular people, and he did that well. He got in Romney’s face and he got under his skin, but stopped just short of being overly aggressive.

You could tell right from the beginning that this was a very different Obama. When Romney touted his five-point plan to fix the economy, Obama responded scornfully, “Governor Romney doesn’t have a five-point plan, he has a one-point plan” and that plan is more tax breaks for the very rich who are allowed to play by different rules.

Salon.com > Robert Kuttner

Austerity never works: Deficit hawks are amoral — and wrong

Game, set, Obama