Paul Krugman laments the fact that failed economic ideas are now the conventional wisdom:When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.Go read.
How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says “I don’t think we need regulators,” about to take over a key House panel overseeing the Fed? How, after the experiences of the Clinton and Bush administrations — the first raised taxes and presided over spectacular job growth; the second cut taxes and presided over anemic growth even before the crisis — did we end up with bipartisan agreement on even more tax cuts?
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Yes, politics is the art of the possible. We all understand the need to deal with one’s political enemies. But it’s one thing to make deals to advance your goals; it’s another to open the door to zombie ideas. When you do that, the zombies end up eating your brain — and quite possibly your economy too.
It is a good analysis, but I think rather incomplete.
He seems to think that Barack Obama, in his attempts to appease Republicans, has given them cover to promulgate these failed ideas.
I think that this is too Byzantine an explanation. The simpler explanation is that Barack Obama gives lip service to these failed ideas because he actually believes in these ideas.
It explains his unwillingness to prosecute the banksters, their fraud against consumers in the HAMP, their attempts to water down financial reform, etc.
This is not cowardice. This is corporatist thinking to a degree that makes Bill Clinton looks like Karl Marx.
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