Ovi -
we cover every issue
newsletterNewsletter
subscribeSubscribe
contactContact
searchSearch
Philosophy Books  
Ovi Bookshop - Free Ebook
worldwide creative inspiration
Ovi Language
Books by Avgi Meleti
WordsPlease - Inspiring the young to learn
Tony Zuvela - Cartoons, Illustrations
Stop human trafficking
 
BBC News :   - 
iBite :   - 
GermanGreekEnglishSpanishFinnishFrenchItalianPortugueseSwedish
Economics and Politics in Greece and the USA: the Mixing of Garbage and Perfume Economics and Politics in Greece and the USA: the Mixing of Garbage and Perfume
by Dr. Emanuel Paparella
2015-07-18 11:11:50
Print - Comment - Send to a Friend - More from this Author
DeliciousRedditFacebookDigg! StumbleUpon

 papa01_400_03

Professor Paul Krugman, Nobel Prize in Economics and New York Times Columnist

I find it is extremely ironic that the likes of congressman Paul Ryan, who fancies himself an expert on economics and is the highest ranking member on the House’s Finance Committee, lately has been sounding the alarm for his fellow citizens, warning them that if they are not careful with the national debt and budget (read that as austerity for the poor and the dismantling of the social programs while simultaneously cutting taxes for the rich) and if they do not implement urgent reforms, they will inexorably go the way of Greece and find themselves with a financial disaster on their hands. This of course is sweet sounding music to Putin’s ears who would like nothing better than to see such a scenario come to fruition.

 papa02_400_01

Republican Congressman Paul Ryan showing the path to prosperity

Not being an economist or an expert in financial matters, far be it from me to critique the honorable Ryan’s analysis or even impugn the integrity of his intentions, but, given the Republicans’ and Ryan’s previous track record, it must be said that it smells as a partisan one sided, biased analysis having little to do with objective economic realities. To say so is not me, but none other than a Nobel Prize winner in economics, professor of economics at Princeton University and New York Times columnist Paul Krugman who recently has accused Republicans of supporting policies that are “likely to deliver a Greek-style economic disaster here to America.” Krugman maintains that  if a disaster does indeed occur, and it is a big if, it will be due to the bad analysis and policies of the Republicans in Congress and academia.

What Kruger argues, and convincingly so, is that the Greek “formula for disaster” involved the toxic combination of austerity with hard to get money, and that most of the Republican Party wants to “impose that kind of toxic policy mix on America.” It is exactly because America did not embrace austerity as the only solution that it finds itself in a better financial position than the struggling democracies on the other side of the Atlantic being manipulated by their bankers.

 papa03_400_01

For example, Krugman goes on: “just about everyone in the GOP demands that we reduce government spending, especially aid to lower-income families,” while at the same time they are “incessantly attacking the Federal Reserve for its efforts to boost the economy, delivering solemn lectures on the evils of ‘debasing’ the dollar.” Some of them even “hanker for a return to the gold standard, which would effectively put us into a euro-like straitjacket.” Which means that instead of worrying that the United States might happen to “turn into Greece, you should really focus your concern on America’s right,” who are actively pursuing policies to ensure that it will.

As Krugman explains it in purely economic terms, to understand the real lessons of Greece, you need to be aware of two crucial points. The first is that the “We’re Greece!” crowd has a truly disastrously remarkable track record when it comes to economic forecasting: They’ve been wrong about everything, year after year, but refuse to learn from their mistakes. The people now saying that Greece offers an object lesson in the dangers of government debt, and that America is headed down the same road, are the same people who predicted soaring interest rates and runaway inflation in 2010; then, when it didn’t happen, they predicted soaring rates and runaway inflation in 2011; then, well, you get the picture. It’s like a mantra: even when things seem to get better they keep repeating: it’s all Obama’s fault.

The second is that the story you’ve heard about Greece — that it borrowed too much, and its excessive debt led to the current crisis — is seriously incomplete. Greece did indeed run up too much debt (with a lot of help from irresponsible lenders). But its debt, while high, wasn’t that high by historical standards. What turned Greek debt troubles into catastrophe was Greece’s inability, thanks to the euro, to do what countries with large debts usually do: impose some fiscal discipline and austerity, yes, but offset it with easy money that could circulate and start new business ventures.

 papa04_400

In effect, what Krugman is warning us about is that it is conservative economics, the sort that has been practiced on Greece in the last few years by the EU’s bankers and bureaucrats with its apparent consequences, that will in effect turn the USA into another Greek disaster on a major scale, with all its disastrous implications for the global economy. We have ample reason to be skeptical that Republicans in Congress will respect science and listen attentively to the expert voice of a distinguished economist. Indeed, precious few listened to Cassandra on that fateful day on the Trojan beach, but Marx, who was wrong on some issues was certainly right in prophesying that those who do not learn from their history are bound to repeat it.   

 


     
Print - Comment - Send to a Friend - More from this Author

Comments(0)
Get it off your chest
Name:
Comment:
 (comments policy)

© Copyright CHAMELEON PROJECT Tmi 2005-2008  -  Sitemap  -  Add to favourites  -  Link to Ovi
Privacy Policy  -  Contact  -  RSS Feeds  -  Search  -  Submissions  -  Subscribe  -  About Ovi