Thursday, July 21, 2011

David Brooks, "The Grand Bargain Lives!": Compare With Paul Krugman's "The Lesser Depression"

David Brooks in his latest New York Times op-ed entitled "The Grand Bargain Lives!" (http://www.nytimes.com/2011/07/22/opinion/22brooks.html?hp) takes a step back from his prior column (see: http://jgcaesarea.blogspot.com/2011/07/david-brooks-road-not-taken-compare.html), which oozed impending gloom and doom.

Much of my life has been spent moving from one crisis to another, both military and economic, and unlike Brooks, I have become inured to the inescapable process inherent in reaching a settlement, which requires a deadline to force reason upon the parties. This morning, Brooks appears to have regained his sanguinity regarding the prospects of achieving an accord involving the deficit ceiling, and he explains why Republicans and Democrats should both support compromise:

"At the last minute, two bipartisan approaches heave into view. In the Senate, the 'Gang of Six' produces one Grand Bargain. Meanwhile, President Obama and John Boehner, the House speaker, have been quietly working on another. They suddenly seem close to a deal.

. . . .

You are being asked to support a foggy approach, not a specific plan. You are being asked to do this even though you have no faith in the other party and limited faith in the leadership of your own. You are being asked to risk your political life for an approach that bears little resemblance to what you would ideally prefer.

Do you do this? I think you do.

You do it because all the other options are worse. Doing nothing could lead to default and the end of American economic supremacy."

Compare, however, the Brooks op-ed with that of an irate Paul Krugman, who, in "The Lesser Depression" (http://www.nytimes.com/2011/07/22/opinion/22krugman.html?hp), rejects any settlement that constrains spending:

"For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed.

. . . .

There’s an old quotation, attributed to various people, that always comes to mind when I look at public policy: 'You do not know, my son, with how little wisdom the world is governed.' Now that lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on."

Unlike Krugman, who thinks he knows better than anyone else, I would be unwilling to gamble away all of my remaining chips on stimulus, which has thus far failed to stimulate. This is not 1931, and Americans, many of whom suffer from obesity and diabetes, cannot be sent off WPA-style to work on construction and park projects. More than 80 years since the onset of the Great Depression, in an era of globalization, personal computers in every household, Internet and instant information interchange, I don't cling obsessively to solutions from the distant past.

Among my answers: Develop American oil shale and bring the ground forces home from Afghanistan, but then who's listening? After the debt ceiling crisis is behind us, Democrats and Republicans will again be at one another's throats as they position themselves for the 2012 elections.

Can Obama be reelected with unemployment over 9% and no record of achievement? Possibly. Even probably, if a dysfunctional Republican Party nominates a new Barry Goldwater. Yes, there are still lessons to be learned from bygone years, although we live in changed times.

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