Tuesday, July 6, 2010

Austerity vs. Stimulus: Another Round

Well, a great weekend for economic debate:

  1. In an almost head-to-head matchup, both Paul Krugman and Niall Ferguson appeared on Fareed Zakaria's Global GPS (the best public affairs show on TV for my money). They appeared separately, but Zakaria is a capable questioner and understands the issues, so I think that the issues were well joined. I haven't seen it to the end, so I don't know where Zakaria comes down between the two (and perhaps it really is between them).
  2. Dave Brooks weighed in today, and Paul Krugman promptly blogged a response (he's quick with that blog!). It seems to me that all of Brooks' doubts could be laid on the austerity folks, so his uncertainty about theories on one side (the demand side/Keynesians) applies equally, if not more so, to the austerity crowd. Brooks quotes Keynes, but I find that a bit ironic, for the Demand Side theorists (as he refers to the Krugman crowd) are really looking to Keynes and the problem of a liquidity trap that monetary policy can't address. By the end, Brooks does make some concessions, such as unemployment benefits and the need for the states to receive some help in providing basic services.
  3. Robert Frank weighed in yesterday in the NYT with his usual good sense, recommending targeted fiscal policies to stimulate the economy. We don't want something like WWII, which helped pull us out of the Depression, and long-term debt is a bad thing, but Frank recognizes the need for further stimulus, which if wisely appropriated, will provide many benefits, including long-term debt reduction. Of course, the likelihood of Congress acting appropriately is slim. Here's what Frank writes:

    [A]s the nation struggles to emerge from the most severe downturn since the Great Depression, such cuts are the last thing we need. There is no conflict — absolutely none — between our twin goals of putting the economy back on its feet and reducing long-term deficits. On the contrary, government could take many steps that would serve both goals simultaneously.

  4. Someone out to be shouting off the rooftops, screaming bloody murder, about cuts to education. My personal connections with many educators aside, isn't it as clear as the hand in front of your face we need to spend more money on education?. Why are we laying off teachers? Because we don't have enough money? No! We don't want to spend the money. It's a choice; it's not something forced upon us. It's shameful and stupid.

For the Fourth: Beinart’s The Icarus Syndrome

It's my custom to read a work of American history in celebration of Independence Day. Normally, I pick up a classic work or something relating directly to the founding of the Republic. However, this year I chose a recent publication, Peter Beinart's The Icarus Syndrome: A History of American Hubris (2010, 465p.). I normally wait to write about a book until after I've completed it, but I'm enthusiastic about this book, and I have a lot to share already, so I'll set aside precedent for this occasion. In this book Beinart, smarting from his early support of the Iraq War, meditates on three occasions on the 20th century where he finds that American policy makers reached too far based upon hubris. The first occasion comes from Woodrow Wilson's actions in taking the U.S. into the First World War. Beinart doesn't argue that the U.S. shouldn't have joined the effort on the side of the Allies, only that Wilson provided the wrong motives for prosecuting the war and the wrong principles for establishing a post-war peace. Henry Cabot Lodge and Theodore Roosevelt (who died before the armistice) provided a realist, balance-of-power rationale for American involvement, and Lodge, in the Senate, offered terms of the League of Nations that would have represented a more realist basis for that institution, and thereby, American membership. Another interesting aspect of this conflict came from the effect that it had on the American intellectual elite. John Dewey, Charles Beard, and Walter Lippmann began as supporters of the war, but by the end, and even as WWII approached, they became pacifist, isolationist, and realist, respectively. Randolph Bourne saw the tragedies that the war would bring the American polity, but he died young and rejected by the end of the war.

Beinart continues his narrative through the interwar years, including discussions of diplomatic history (France, much more that Germany, was seen as a belligerent power in the 1920's). He also keeps abreast of foreign policy thinking, for instance, he notes the rise of Reinhold Niebuhr as a critic (not always fairly so) of Dewey's approach, which still posited some degree of human perfectibility. Of course, Wilson comes into contrast with FDR, who, while using some Wilsonian rhetoric, nevertheless maintained a quiet realpolitik perspective on the postwar world.

After the WWII, American policy makers faced new threats. In dealing with this era, Beinart discusses the work and perspective of George Kennan, among others. Beinart provides an informative and insightful introduction to Kennan the man, a mixed bag of knowledge, insight, hypochondria, and prickliness, as well as Kennan's influential work at the beginning of the Cold War. Beinart relates a history of Kennan's work and influence that I find similar to the perspective provided by Garry Wills in Bomb Power earlier this year. Kennan, perhaps wanting a bit too much to curry favor with his patron, James Forrestal, failed to adequately define and limit his idea of containment in his famous "X" article in Foreign Affairs, thereby creating a military monster when in fact Kennan intended a much more political, diplomatic, and economic perspective for the concept. Kennan, when he tried to get the genie back into the bottle, was marginalized and quickly shunted aside. After Wilson's the "hubris of reason", the U.S. moved into the "hubris of toughness". Ike kept a lid on this through his low key style (shall we say "no drama Ike"?), but with the election of JFK, the cult of toughness hit full stride—and marched us right into Viet Nam.

This is as far as I've gotten in the book, but I think you get the gist of Beinart's thesis. To give a bit away, part three, which addresses the Iraq War, becomes the "hubris of dominance". Beinart is writing history in the manner of Garry Wills' Bomb Power and the works of John Patrick Diggins: as a reflection and assessment through which we can view the present. It's not original historiography, but a historical essay from which we can greatly benefit.

For those of you who might like a fuller review, George Packer has provided a very useful and well-considered review in the New Yorker. You can also get a sense of Beinart's work in a part of the book that I haven't gotten to yet: an essay on Ronald Reagan in Foreign Policy. In this essay (adopted from the book), Beinart takes a position on Reagan very similar the description that I received from reading Jack Matlock's Superpower Illusions, with its extensive discussion of the end of the Cold War under Reagan. Both authors provide an account of Reagan that differs from both conservative and liberal myths of the man. Finally, Leslie Gelb reviewed the book in the NYT. (Packer's review, however, is the more useful.)