The economic debate is a little too bloodless

The current economic policy debate seems stuck in a bloodless academic dispute. We are caught between the case for throwing more resources into remedying a present disaster and the fear that at some future date the costs will become excessive. The Administration sees signs of hope and recovery and urges patience. Critics see unemployment edging up toward 10 percent and call for further stimulus. Republicans purport to see nothing but failure in the stimulus policies.

 

At the center of this debate is the deficit. Those who fear the economic and political consequences of prolonged high unemployment see the need for more stimulus as overriding concerns about the deficit. Republicans say the deficit is the principal concern and invoke fears of out-of-control inflation and a collapsing dollar.

 

In short, we have a clash of economic models. I claim no particular expertise on the issue. My sympathies are wholly with the more conventional Keynesian position which calls for more stimulus. But what I find most troubling about the debate is the lack of outrage and passion. Our political leadership seems to be obsessing on cold statistics. I can understand the Administration not wanting to focus on the grim facts of the current situation; they naturally would like to focus on their successes. But is this wise? 

 

The current recession is devastating the lives of real people. For most of us, 10 percent unemployment may be a bloodless abstraction. But how do we measure the cost to the 8 million who have lost jobs since the end of 2007? Surely it is not just the sum of the lost wages and salaries? Business Week tells us that home foreclosure proceedings are on a pace to reach 3.5 million by the end of the year. How do we calculate the effect of this on peoples’ lives? Is it just a matter of economics – housing prices then vs. housing prices now? Do we not take into account the effect on neighborhoods and communities?

 

We hear a great about the burden that the growing debt will place on future generations, but little mention of the burden the current economic conditions will impose on the future of real people who live now.

 

For example, our schools have lost around 40,000 teachers. What is that doing to children – now and in the future? Surely the cost is much more than just the loss of teachers’ salaries. What have we taken away from a generation of students? What does it do when the cost of a four-year public college increases 6.5 percent? How many potential students are priced out of higher education? The New York Times has produced wrenching reports on the increase in runaway teenagers and their fate on the streets. How do we put this into our calculations? What is the real human cost of the cutback that states have been forced to make in Medicaid? 

 

I find it strange that there is an almost complete lack of any conservative concern over the carnage caused by the recession. A long time ago the American writer and conservative philosopher Russell Kirk attempted to sum up conservatism as “resistance to the destruction of old patterns of life, damage to the footings of the civil social order, and reduction of human striving to material production and consumption.” He attacked liberals as willing to impose abstract social and economic systems at the expense of traditional values. I wonder what he would have thought of the efficient market theory? Or about the wreckage it has caused?

 

Granted, there have been a few tepid mea-culpas from conservative quarters but most of the conservative leadership lacks even the grace of a bad conscience over this experiment in economic ideology. There certainly has been no great rush to undo the damage. Conservative political leaders have done nothing except try to block the Administration’s efforts. Most conservative economists have been content to indulge in the fears of future inflation and a collapsing dollar. Indeed there has been no small amount of concern that the current policies might result in higher taxes on the very rich.

 

There is no end of irony in that J. M. Keynes took his approach to current problems from his political hero and conservative political philosopher, Edmund Burke. Robert Skidelsky, Keynes’s biographer, found this quote from an undergraduate paper Keynes wrote at Cambridge:

 

"Burke ever held, and held rightly that it can seldom be right ... to sacrifice a present benefit for a doubtful advantage in the future .... It is not wise to look too far ahead; our powers of prediction are slight, our command over results are infinitesimal. It is therefore the happiness of our own contemporaries that is our main concern; we should be very chary of sacrificing large numbers of people for the sake of a contingent end, however advantageous that may appear ... We can never know enough to make the chance worth taking ...."

 

It is not hard to imagine Burke’s reaction to economic policies driven by an almost insanely abstract ideology or to the invocation of that ideology to avoid mitigating the devastation it caused to our social and economic order.