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Krugman on the policy elites

by Robert Teitelman | Published May 9, 2011 at 4:04 PM

Paul Krugman launches an attack Monday in The New York Times on what the headline of his column calls "The Unwisdom of Elites." Well, I can agree with that. This is a Krugman column, however, that has almost very little to do with economics, technical or otherwise, and everything to do with political polemics. It involves the classic straw man lead, followed by a series of simplistic statements and a quivering finger pointed at the bad guys. We could be on cable television. First the straw man. Krugman tackles the big question: "How did it all go wrong" in both the U.S. and Europe? He, of course, answers himself. "Well, what I've been hearing with growing frequency from members of the policy elite -- self appointed wise men, officials and pundits in good standing -- is the claim that it's mostly the public's fault. The idea is that we got into this mess because voters wanted something for nothing and weak-minded politicians catered to the electorate's foolishness." But au contraire, he goes on to argue, "The fact is that what we're experiencing right now is a top-down disaster. The policies that got us into this mess weren't responses to public demand. They were, with a few exceptions, policies championed by small groups of influential people -- in many cases, the same people now lecturing the rest of us on the need to get serious."

Who has Krugman been listening to? Well, undoubtedly Republicans of the Paul Ryan deficit-reduction rump, which means he's been watching far too much Fox. (Krugman makes a parallel argument about Europe, which I'll set aside because it's a) confusing and b) involves matters I don't know as intimately.) After all, he's pretending that that argument, which is hardly as monolithic and noisy as he would suggest but does exist, stems from some "policy elite," to which he, of course, with his Nobel, his teaching job at Princeton and his New York Times column, does not belong. This notion of public blame is also not a new argument, but rather a continuation of one that suggested that consumers contributed to the mortgage meltdown by overleveraging and speculating on real estate. But Krugman takes a fairly nuanced position that posits a number of different causes of the crisis (and of today's deficit problems) -- regulators, policymakers, politicians, globalization, innovation, trade imbalances, and, yes, overleveraging and speculation on Wall Street and Main Street -- and radically simplifies it down to "you're blaming blameless victims so just shut up."

Krugman reasonably locates three policies at the heart of the current mess: the Bush tax cuts, the Iraq War and fallout from the financial crisis. All three, he argues, were foisted secretly upon America by elites -- or through "a highly deceptive sales campaign." You can believe, as I do (and did), that all three were problematic policies and still not accept his Manichean view of all this, which depends on making the great mass of ordinary Americans chumps prone to endless manipulation. It's not that Republican or Democratic pols are sainted. It's just that there are no saints here at all anywhere. After all, Americans voted for Bush, which would presumably mean his tax cuts and his war, in 2004. True, large parts of the country opposed these policies; but even larger parts embraced them. Krugman may default to the "deceptive sales process" for any policy he dislikes that gains support, but to do so suggests that this democracy is broken beyond repair. Indeed, it's to see the great mass of voters out there not just as irrational, but as pawns. Why, if that's what he really believes, does he even bother to write his anti-elite, elite jeremiad?

More disturbingly, it also takes him to a place he shares with large parts of the right: into the mental landscape of conspiracies and plots, of small groups of influential men, where you can only retain your fondest hopes of a just and rational nation by imagining that the great gentle herds of Americans have been (and have to be in the future) manipulated. I would argue differently. Americans that I know seemed to understand what the Bush tax cuts meant and the post-Sept. 11 context of the Iraq War. Many of them opposed both; some favored one or the other or both. That latter group was not blind. They may have been wrong, or they may have been consumed by their perceived self-interest, and indeed they may have believed the White House on supply-side wonders and Saddam Hussein's threat to humanity, but they were no more manipulated than other folks who accepted Barack Obama as the Second Coming. They all made judgments, drew conclusions and, for better or worse, acted in their own rational self-interest -- just like the folks I know who used their homes as piggy banks or engaged in flipping. None of them -- not Krugman, not Bush, not Carleton Sheets -- could predict the future, could see how tax cuts would hollow out the revenue-generation capacity of the state, could foresee how Iraq would go so wrong or, indeed, how deregulation and a dozen other factors produced the Great Recession. They took their chances; they imagined different outcomes. American history is one long cleanup, like a parade that just keeps circling the block.

Krugman shares something else with some of his ideological foes, this time on the economics side. He is defining the public in strict utility-maximizing, rational terms, just like the disciples of the school of rational expectations. Politics is not game theory. Because he cannot accept a public with a variety of contrary ideas, dreams and preoccupations -- some rational, some irrational, some, like a Shakespearean play, millennial, prosaic, greedy, fantastic, stupid, tragic, comic -- he has to posit "deceptive sales practices" as the explanation for not only the wayward course of American politics and history, but for the public's failure to listen to, well, the likes of him. This democracy thing is a very messy process, far more than whatever goes on in a lecture hall at Princeton. - Robert Teitelman

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