Mark Ames: Libertarian Liars: Top Reagan Adviser, Cato Institute Chairman William Niskanen: “Deficits Don’t Matter”

By Mark Ames, the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine. Cross posted from The eXiled

Another Monday, another “deficit crisis” panic. If you haven’t got the feeling yet that you’re being played like a sucker over this alleged “deficit crisis,” then let me help you cross that cognitive bridge to dissonance. It comes in the figure of the recently-deceased William Niskanen, the embodiment of how Reaganomics and the Koch brothers’ libertarian movement were joined at the hip. Niskanen was an advisor to Ronald Reagan throughout the 1970s; a board director for the Koch-founded Reason Foundation; a member and chairman of Reagan’s Council on Economic Advisers from 1981-85; and he moved directly from Reagan’s side back to the Koch brothers’ side, as chairman of the libertarian Cato Institute from 1985 until 2008.

This is a brief story about how the 1% transformed this country into a failing oligarchy, and their useful tools, starting with A-list libertarian economist William Niskanen, Chicago School disciple of Milton Friedman, advocate of the rancid “public choice theory.”

First, let’s go back to December, 1981, and news is leaking out that Reagan’s supply-side tax cuts for the rich, combined with huge increases in defense spending, caused an explosion in the deficit to unimaginable levels, from Carter’s projected deficit of $27 billion to a real deficit of $109 billion and climbing fast–this, despite the fact that Reagan ran as a “responsible” deficit hawk. Someone needed to rationalize that deficit away, and the job fell to none other than CEA director and future Cato Institute chairman Niskanen, as reported in the AP on December 9, 1981:

Faced with record-smashing deficits that could top $100 billion a year, the Reagan administration now says it can live with a torrent of red ink without reversing its strategy against inflation and high interest rates.

In a turnaround from President Reagan’s longstanding assertion that deficits are a cause of inflation, senior White House economic advisers yesterday sought to downplay that relationship. One member of the Council of Economic Advisers, William A. Niskanen, suggested the connection is virtually nonexistent.

…Rudolph G. Penner, a budget official during Gerald Ford’s administration, said there is a “certain irony” that the record deficit of $66.4 billion, which occurred in 1976, “was set by a conservative president (Ford), and the record will be broken by another conservative president.”

Actually, what Niskanen said was this: “The simple relationship between deficits and inflation is as close to being empty as can be perceived.”

And this: “There are no necessary relationships between the deficit and money growth.”

And this: “Evidence doesn’t support” the assertion that deficits crowd out private borrowers.

And finally, William Niskanen, one of the leading libertarian figures of the past four decades, said this about deficits: “The economic community has reinforced an unfortunate perspective on the deficit which is not consistent with the historical evidence…It is preferable to tolerate deficits of these magnitudes either to reinflating [the money supply] or to raise taxes. Other things being equal, I would like to see lower deficits too, but other things are not equal.”*

William Niskanen looks back on a malevolent life well spent (by the Koch brothers)

That glib, “hah-hah we fooled you!” attitude towards federal deficits–the same deficits Reagan’s people used to scare the shit out of Americans in the 1980 elections–was captured best by Ronald Reagan himself, who in 1984 quipped, ”I am not worried about the deficit. It is big enough to take care of itself.”

Hardy-har-har. Such a charming guy.

Even Der Austerity-führer himself, Friedrich von Hayek, bragged in 1985 that the deficit scare was purely political–you can almost see the little troll rubbing his troll hands together gleefully as he brags about his master plan’s success:

After remarking that his work had influenced by Reagan and Prime Minister Thatcher of Great Britain, that many of the president’s advisers had come from “circles I am acquainted with,” and that he was wearing a set of cuff links given to him by Reagan, the economist [von Hayek] commented:

“I really believe Reagan is fundamentally a decent and honest man. His politics? When the government of the United States borrows a large part of the savings in the world, the consequence is that capital must become scarce and expensive in the world world. That’s a problem.”

But, von Hayek continued, “You see, one of Reagan’s advisers told me why the president has permitted that to happen, which makes the matter partly excusable: Reagan thinks it is impossible to persuade Congress that expenditures must be reduced unless one creates deficits so large that absolutely everyone becomes convinced that no more money can be spent.”

Thus, the economist said, Reagan “hopes to persuade Congress of the necessity of spending reductions by means of an immense deficit. Unfortunately, he has not succeeded.”

The way von Hayek brags that he and his little circle of free-market Nazis swindled the world is just stunning–really stunning, as in it’s almost impossible to respond to it’s so vile. But as Yasha Levine and I reported in The Nation in September, swindling the public and shameless hypocrisy–that’s how Friedrich von Hayek, and his sponsor Charles Koch, roll:

Publicly, in academia and in politics, in the media and in propaganda, these two major figures—one the sponsor [Koch], the other the mandarin [Hayek]—have been pushing Americans to do away with Social Security and Medicare for our own good: we will become freer, richer, healthier and better people.

But the exchange between Koch and Hayek exposes the bad-faith nature of their public arguments. In private, Koch expresses confidence in Social Security’s ability to care for a clearly worried Hayek. He and his fellow IHS libertarians repeatedly assure Hayek that his government-funded coverage in the United States would be adequate for his medical needs.None of them—not Koch, Hayek or the other libertarians at the IHS—express anything remotely resembling shame or unease at such a betrayal of their public ideals and writings. Nowhere do they worry that by opting into and taking advantage of Social Security programs they might be hastening a socialist takeover of America. It’s simply a given that Social Security and Medicare work, and therefore should be used.

Like typical Randroid libertarians, they find the public’s gullibility and good faith contemptible. This is something that Americans still can’t get their heads around about the free-market libertarians who’ve ruled us and ruined us over the past three decades. Here, for example, is how a middle-of-the-road guy, New York Times columnist Tom Wicker, described von Hayek’s cynical boasting about the big deficit swindle back in 1985:

While some Americans may agree that a shrunken government makes a deliberately created deficit “partly excusable,” such a deficit still reflects a reckless deception with worldwide consequences yet to be calculated. And congressional Democrats should realize the source of the pressure they’re under to sell their political birthright.

Poor earnest Tom Wicker’s problem here, we all know now, is his lack of rank cynicism; he still believes that these people care about “consequences” for anyone but themselves; he still believes in fantasy-Democrats who will “wake up” or get wise to the swindle. Keep waiting, Mr. Wicker. Yep, they’ll get wise all right.

A couple more things I want to say about Niskanen, who just died a few weeks ago of a stroke (he was still chairman emeritus of the Cato Institute up to his last breath). He not only was a cynical bastard who helped screw this country over, but he also had that other nauseating libertard trait: The faux-maverick contrarian dickhead trait.

In October 1984, just weeks before the election between Reagan-Bush and Mondale-Ferraro, libertarian economics adviser William Niskanen spoke before a meeting of women’s groups to tell them that the wage gap was all their own fault, if it even existed at all:

Wage Plan Is Labeled As “Crazy”

(AP) — White House economist William Niskanen, tackling a sensitive political issue, yesterday criticized Walter Mondale’s support for the concept of comparable pay for men and women and said it was “a truly crazy proposal.”

Niskanen, a member of the president’s Council of Economic Advisers, also told a meeting of Women in Government Relations that the wage gap between the sexes was largely due to women interrupting their careers for marriage and children.

…Niskanen was asked for elaboration by one woman in the audience who said his remark had caused “bristling in the back of the room.”

“Comparable worth is an idea whose time, I think, has long passed,” he responded, adding it was based on the “rather medieval concept of a just pay and a just wage.”

Mondale’s response when he heard what Niskanen said is poignant, because it’s pretty much every sane American’s response to every batshit crazy, pernicious idea and “maverick” poison that Republicans and libertarians have been puking on this country–like that spitting dinosaur in Jurassic Park–for lo these past few decades. Here’s Mondale’s reaction:

“He said that?” Mondale asked incredulously.

Yep, he sure did.

You know what makes Niskanen so cool? He’s not “politically correct.” Nosiree, he’s a mavericky maverick (when he isn’t pushing his nose deep up Charles Kochs’ ass, that is)

In 1985, Niskanen left Reagan’s side for the comfort of a lifelong sinecure in the Koch welfare program, safely protected from the ravages of the free-market, just like Hayek, just like all the pus-humpers in the libertarian nomenklatura.

And within a year, chief pus-humper himself, William Niskanen, chairman of the libertarian Cato Institute, was attacking Catholic bishops for daring to allege that Christianity is not all about free-markets and enriching the 1-percent:

A former economic adviser to President Reagan says the nation’s Roman Catholic bishops are ignoring the Bible as well as sound economics in their call for more government help for the poor.

…In a lengthy teaching letter approved last month, the bishops declared that significant poverty in such a rich nation is “a moral and social scandal that must not be ignored.” They said government as well as individuals and businesses should do much more to help the poor and powerless take part in economic life.

Niskanen, identifying himself as “an economist and a Protestant,” said, “one has reason to question the moral authority of a letter that has little apparent basis in the Scriptures of our shared religious heritage. The letter seeks to provide an agenda for the state. The New Testament is a message of individual salvation through Christ,” he said. “The bishops encourage us to seek justice through political action. Jesus counsels us that the Kingdom of God is not of this world.’ The central theme of the letter is economic justice. The New Testament provides no concept of secular justice, economic or otherwise,” he said.

Now William Niskanen is dead. For all I know, Niskanen may be in Heaven, bouncing on Calvin’s lap. Or maybe–one hopes–he’s dealing with a very Guantanamo-like wrathful god. The only thing we can say for sure is that William Niskanen did everything possible to create a kind of Hell on earth for the 99% of Americans who weren’t as blessed with Koch-funded sinecures as he.

May the bastard writhe in pain.

* Source: Reagan’s Ruling Class: Portraits of the President’s Top 100 Officials by Nina Easton and Ron Brownstein.

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  1. F. Beard

    Some deficit spending is good but no National Debt is required to do so. Let’s eliminate all government borrowing and see who still insist that “Deficits don’t matter.”

    1. traderjoe

      Thank you for being a consistent reminder of that fact. I’m always a bit surprised on this site to see people go only back to 1981 (or some other supposed right-wing transgression) to seek justice. The system really started in 1913, when the private banking cabal was granted a monopoly on money creation and started loaning said money back to the sovereign at interest. After this, all PTB – left, right – are in on the gig.

      I’m also surprised that a MMT-leaning site spends so little time discussing this private money creation fraud, and even suggesting solutions from within the system.

      Sovereign countries do not have to borrow. To do so is a fraud against the people.

  2. John Hall

    To say Hayek was part of a group of Nazis is incredibly offensive to his Jewish friends who had to flee Austria.

    To say that Niskanen was wrong for criticizing the idea of a “just wage” is ridiculous.

    Niskanen makes three limited points about deficits. Two are related basically to money growth and one is related to deficits impacting private investment.

    There are reasons why large deficits can lead to money growth that Niskanen ignores. However, we have not had that problem in this country. If you were to run a regression, you would find no relationship. I don’t know anyone who has said that large deficits in America have led to inflation. Inflation’s like 3%. Nevertheless, that does not invalidate economic theory (Sargent has a great paper on this) that how you finance deficits can impact future price growth. If you finance deficits by printing money, then it can lead to hyperinflation depending on how large your debt service is. We just haven’t had that problem and so long as debt service is a limited part of GDP, then they won’t spiral out of control and lead to hyperinflation.

    To say that Hayek approved of those deficits is laughable.

    Someone like Hayek was critically aware of how deficits can lead to money growth, which can lead to inflation. Associating them together is absurd if you know anything about Hayek’s economics. For instance he said this:

    Hayek disagrees with the contention that private investment won’t be crowded out. He’s not giving praise, he’s basically saying he is disillusioned and doesn’t support the idea.

    1. F. Beard

      If you finance deficits by printing money, then it can lead to hyperinflation depending on how large your debt service is. John Hall

      If all sovereign deficits were funded (as they should be) with sovereign money printing then there would be no sovereign debt and thus no sovereign debt service.

    2. larryberko

      When I graduated high school in 1974 a new car was $3500. Today it’s $35,000. A house on Long Island was $35,000 and today it’s $350,000. This is over a period of 37 years. That is not 3% inflation unless you have re-written the rule of 72?

      1. Ye Olde Eric

        Beat me to it. I gave my nephew $100 for Christmas, and didn’t want to ruin it by telling him it was like getting $10 when I was his age.

      2. aet

        But the lion’s share of the house price increase occurred prior to Ronald Reagan finishing his term of office, right?

        And how about the price of computers and computing? How have they gone since 1972?

        A four-function pocket calculator was a status symbol way back then!

  3. Bruce Bartlett

    You might have noted that Bill Niskanen was exactly correct in saying that deficits have no effect on inflation. If they did, we would presently be suffering from inflation, which we are not.

    1. Jim A

      Well changes in the CPI are moderate. However P/E ratios have been going up and bond rates are going down. So the price of future money has gone up. THAT’S what happens when you give more money to the wealthy: They “invest” it. It’s a classic case of more money chasing fewer goods. But in this case, the “good” in question is future dollars. Of course higher prices for equities fuel the illusion that they are a good investment, rather than an increasingly bad one, causing a bubble. Even when the professionals are aware that the market is forming a bubble, since the average investor thinks that they are smarter than average, they think that THEY will be able to cash out before the crash.

      1. aet

        During the double-digit inflation of the late seventies and early eighties , “wage inflation” got the blame for it, and the “solution” was “wage austerity”. ( Sound familiar?)

        “Asset-price inflation” was not a concern then at all. In fact, the removal of ALL taxes on so-called “capital gains” was a major plank of the same package of “economic reform” which called for “contract modifications to combat the inflation brought on by ever-increasing costs of labor wages”.

        High inflation? They call for austerity.
        Deflation threaten? They call for austerity.

        But THEIR fortunes have continued to grow throughout, and faster than ever, and yet the “good times” in the future, promised to the general public in exchange for “austerity now” – then in their labor contracts, now in their government supports – never do arrive for those being “austerized”.

        We know, because we have seen this sorry old plot play out before in human history.

  4. scraping_by

    Reagan was the shining example and turning point in Neil Postman’s _Amusing Ourselves to Death: Public discourse in the age of show business_ as part of a discussion of turning from facts in the public sphere.

    Reagan was famously bad with factual information, telling so many lies and making more mistakes per paragraph to the point his speech was almost random noise. His aides started out trying to “clarify” his “misstatements” but soon just settled for characterizing his fantasies as “feelings” and “viewpoints.” The press decided that “the decline in interest by the general public” meant they no longer had to deal with factuality, and the lack of it, at least with Reagan.

    But Postman was premature in declaring facts dead. Years later, Gore, and to a lesser extent Biden, where held to public ridicule for counterfactual braggadocio. Their “lyyyyying” was all you heard about during their campaigns. Even today, the press’s fabrications about their truthfulness are more widely known than the reality of being fabrications. Bob Somerby over at the Daily Howler is treating the War against Gore at book length.

    The commercial media creates a distorted, elite-coddling world view that doesn’t control most people as much as block them off from realities that don’t serve the elite. Even now, it’s rare to hear of the crackdown in Zuchotti park without hearing the tag “to clean the park.” Which is a lie, but it’s a widely repeated lie. Facts do not, generally, serve the 1%, so wall of lies has to be created. It’s part of the fog of politics.

    1. LeonovaBalletRusse

      scraping_by – there was a method to the *madness*.

      Guido Giacomo Preparata: “THE IDEOLOGY OF TYRANNY: Bataille, Foucault, and the Postmodern Corruption of Political Dissent” (New York, Palgrave Macmillan, 2007). Academics were eager to buy Postman, Illich, et al. After all, G.H.W. Bush’s *new world order* included the funding of American Academia by the Rhodes Trust.

      It was the 30-year plan, beginning with Lewis Powell’s Memo before he was elevated to the Supreme Court.

    2. lambert strether

      I’ve heard the argument made that the original sin of this generation of the press was concealing Reagan’s increasing dementia from the public. I believed him on Iran-Contra; he probably didn’t remember a thing.

  5. James

    Having lived through Reaganomics and all the rest – albeit a bit incredulously – I can only add: why continue whipping the admittedly all to opportunistic pols and pseudo-academics of the time for doing what they did? They all had their chance to have their say, and say it they either did (and were rejected) or did not. Either way, it’s not like we haven’t had AMPLE chances for course corrections along the way; and yet, HERE WE ARE!

    Blame? SURELY there’s MORE THAN ENOUGH to go around!

    Me? I start with the peculiarly “American” brand of malignant capitalism that has invaded the world and go from there. The ROT is at the CORE, and the patient as currently incarnated is DOA! Ain’t no amount of expensive life support gonna save the rotting corpse now. Best to pull the plug, fuel the pyre, and BURN BABY BURN!

    What’s next? Rising stars out there (you KNOW who you are)? Hello! Rise and shine baby! NOW’S your time. The whole world’s waiting for your insights.

    1. LeonovaBalletRusse

      Thanks for the link. The author seems to ignore the reason for *no inflation* for 30 years: the FIX was in, and kept there by Ayn Rand’s Alan Greenspan.

      1. Cheyenne

        Negative. Greenspan was in private practice until he replaced Volcker in June 1987. The meme of “deficits don’t matter” was six years’ strong before AG got involved.

    1. LeonovaBalletRusse

      ELR, you may have missed *stealth history* for forty years, when the Third Reich morphed into the Fourth on our soil.

    2. scraping_by

      Well, in truth, Hitler’s Nationalist Socialism was part of a larger European movement that included Franco’s Spanish Nationalism and Mussolini’s Fascism in Italy. Among the things they agreed on was a corporatist economic model, where private enterprise and government were the same institution. In theory a unified whole, or industry as the tool of the government fulfilling a national destiny. In reality, of course, the rich used money power to run the government like a division of a conglomerate, but never mind. Theory, you know.

      The other aspects — militarism, gaga racial theories, belief in the ubermensch, cocaine, harems of blondes, etc. — were there but if you want a serious right wing theory of government without the Randist fig leaf, you could do worse than study the economics of that very very bad period in Western civilization.

      1. LeonovaBalletRusse

        You know your history. And don’t forget the *Lebensraum*: by military means then, by financial means now.

        1. scraping_by

          Yeah, it may have a Deutschland über alles thing to it (many observers have grokked that) but it’s also got an Illuminati feeling to it. One Europe under one intellectual/economic elite. Hard to tell from this side of the pond. The Europeans I know aren’t saying. A lot like the Iranians back in the Shah days.

    1. LeonovaBalletRusse

      Reagan was the *twenty-four-mule-team Borax and GE* Gauleiter for the putsch for the Neoconlib Grand Plan, Global Corporate Feudalism, begun by Leo Strauss at the University of Chicago, facilitated by Friedman thereafter, with help from *Austrians* at Tulane and other NeoRepublican Universities peddling the party line, as well as and the Von Mises Institute in Mobile, Alabama (home of von Braun in Huntsville and *GermanAuto* in Tuscaloosa and Birmingham.

      You may think me cynical, but I was there for the radical transition.

    1. LeonovaBalletRusse

      barrisj, thanks for the link. And here’s what nobody wants to mention: the *sine qua non* for the passage of the Bush tax cuts was the STIPULATION that they expire on a date certain, which date has already passed. This was the *quid pro quo*.

      Thus, the extention of the tax violated that law. And Obama’s *alternative* is a gift to his grifter bosses.

  6. rotter

    “Nowhere do they worry that by opting into and taking advantage of Social Security programs they might be hastening a socialist takeover of America”

    Because at the root of the various, freemarket,right-libertarians thinking is the usually unspoken assumption that they are entitled to whatever benefit they happen to be exploiting. If its Medicare they earned it.If its social security its because its their money anyway.If its increased police and fire protection its because they are more important. If its road improvements, they need and deserve them more.Its the reason they cant ever give a reasonable response to the question, In the libertarian ultra minimal govt world (the idea of which is already a betrayal of their “moral” code)…who mows the lawn? (for lack of a better total metaphor) they cant give a good answer becasue they dont want to say, “my lawn will be mowed, because i deserve it, its really you and people like you who need to fend for yourselves and leave me alone”.
    They are nearly all hypocrites in this staggeringly hypocritcal way. You will also notice that the few who will really answer ” if no one voluteers to, even though it means the rest of us are free riders, then no one mows the lawn no matter how badly it needs it because that would be wrong” usually happen to be, obviously mentally ill.

    1. LeonovaBalletRusse

      Another case in point: They hate *government* and agree it should be reduced to fit into a bathtub, but try taking the federal largesse in *education* given to their *special needs* children or their own *disabilities*.

      Hell will freeze over before they come to grips with that hypocrisy. The just *cannot* digest it.

      1. rotter

        Libertarianism is truly lipstick on a pig. It arose as an “ism” during the 70’s when openly classist, openly racist expressions of paleo conservatism, and traditional rationalizations for caste systems and extreme inequality (such as Karma or Original sin,divine right)had become indefensible in polite company.You may notice the economic and political outcomes of Libertarianism and Old Fashioned Monarchism are the same. If your lucky enough to be born near enough to wealth, come on in, if not, then tough luck. If it couldnt be the will of God anymore then it was a lack of desire, or motivation, or talent. Thomas Jefferson said(incredibly) that we are all born equal so if your not rich then you must not want it bad enough. Its actually even more cruel than the idea that God made you poor, because, it least then it was Gods fault. At least there was some aknowledgement that you got a bad deal, even if all you could do was suck up and accept it and pray to get into heaven. Now there is no heaven.

  7. BillD

    This article is vile. I don’t understand how any of the arguments adds to a reasonable discussion of the issues. You don’t have to have an ounce of charity towards anything Reagan or libertarian to come to this conclusion. Do you read this crap before you post it?

    1. rotter

      Whats not reasonbable are the events themselves, the history of them laid out like a train wreck.How is that the authors fault. I agree its vile though, from the first word to the last. But why should anyone show “charity’ to people who gladly, happily, proudly deny it to others?

      1. psychohistorian

        Thanks rotter.

        It seems like BillD is another one of those children that didn’t learn sharing in grade school but was allowed to progress in spite of this failing.

        Reagan was a very effective tool of the global inherited rich. I have a picture of Reagan with an Einstein hairdoo on the side of a doubledecker bus in England from 1986. It is a calculator ad that said:

        “Sharpe calculators can make anyone a genius.”

        I will be pious about Reagan when we get the T-bills for SS back in the fund they were in before he, Greenspan and our bought congress critters took them out and replaced them with a budgetary promise….they are now trying to get out of.

    2. Yves Smith Post author

      I did, and you must not be familiar with Ames. He and Matt Taibbi, at eXile in Russia, elevated vileness into an art form:

      This deliberately offensive style seems useful in cutting through the anesthetizing media blather of a rotting plutocracy.

      And I notice all you did was offer an ad hominem attack. You appear to be telling me you object to the article but are unable to rebut its substance.

      1. BillD

        I questioned your judgement in posting this article, which is the central point of my argument. This is not the definition of an ad hominem logical fallacy.

        This article is full of nasty ad hominem attacks. Starting with the Hayek and Nazi comparison. Ending with hoping a guy is in hell. Why would you want to discuss issues with someone who writes in completely bad faith?

        Again, how does this kind of writing help to clarify or persuade anyone? The author is preaching to his echo chamber.

        If you want to develop the plutocracy idea, then actually the public choice theory is a good place to start. The politicians are all looking after themselves first. They don’t actually care very much about policy or constituents.

        More Bill Black, less this crap.

        1. andrew hartman

          bill d:

          thanks for a little sanity. i thought mark thoma’s crowd was unhinged, but
          this place is over the top.

          1. weinerdog43

            Exactly. We must never, ever hurt conservative’s fee fees. Even when they don’t even know how to spell ‘judgment’.

        2. Efroh

          I have to agree with this. This post and the comments here excoriating those who post their disagreements with it are a disappointment.

      2. DP

        Yves, I’m with Bill D. It’s disappointing this trash and even more disappointing that you’d ask somebody to refute the arguments in it. When I encounter a one sided vile rant, whether it’s this guy or Rush Limbaugh or Keith Olbermann, I pass over it or change the channel because I’m not going to fact check every claim made and try to figure out all the points counter to the rant were intentionally left out.

        This kind of unhinged tabloid trash is best left to Zero Hedge.

          1. DSP

            Ah,I know,late again.
            I’m sorry but I can’t track this site continually.I understand how someone might not like the language of this article, but….the sophisticated liberal left seem to think that politics is a polite debate in a book-lined library.It isn’t.Above all it’s a street fight,and one you have been losing for thirty years.
            Someone has to show passion and aggression and take the fight to the Forces of Darkness.Mike Lofgren wrote an article in Truthout which contained his observations on the Liberal tin-ear.
            Mark Ames has that passion.I,for one,am somewhat tired of the relentlessly mild liberal sparring in what is an Apocalyptic dog-fight.It’s a fight for the future and of the future.
            And just in passing,there appeared to be a small movement to support Mic check for President.Couldn’t that effort be put into actually organising behind a real person?

      3. Stubbins

        I have some sympathy for those objecting to the tone of this post. I remember the first time I turned on Air America and found myself listening to Garafalo (who I like very much as a comic) trash talking the right with the same vicious, thought-free gusto as Limbaugh. What was the point of that, I asked, and turned it off for good.

        It’s a question of degree I guess. Taibbi is perhaps slightly less yellow than Ames and I enjoy his regular bank rants. When the hatred that’s encouraged seems to foreclose on rational thought, that’s when I think we’ve taken a step backwards, and maybe even towards the left/right dual polarization that keeps us divided.

        I have no love for Randian nonsense, or amoral looters of any kind. I just don’t want to be blinded by a two-minute hate either.

        In the end Yves, it’s your show. Please continue to post whomever and whatever you like. I welcome and appreciate diversity, and your taste.

  8. Hugh

    Economics is the servant of kleptocracy. Reagan wasn’t a libertarian. He wasn’t really anything. He was the quintessential empty suit. He set the bar, a bar that Bush II smashed with a vacuity that no one thought possible. The rich like the Kochs make use of people like Reagan and Niskanen, or Bush and Obama, to give cover to their looting. The only liberty they are interested in is the liberty to loot.

    1. aet

      Don’t confuse “liberty” or “freedom” with “licentiousness”.

      Accurately drawing that distinction seems to have become difficult for some Americans, and that in turn can lead to serious problems.

      For people – quite rightly – hate and resent other people for their licentiousness.

      And not, mind you, for their freedoms.

  9. mac

    I found myself becoming better off with the Reagan years than at any time in my life.
    As much as I disliked Bill Clinton his years were goo to me.
    Obummer has so far been bad.
    So that is how I judge these economies.

  10. salvo

    yep, free maeketeers (to me they are just psychopaths) are not fascist per se, to them fascism,that is to say the absence of a real democracy, is just a tool to ensure what they call a free market. What has become evident by now, is the the so called free markets are incompatible with a real democracy, because they produce an ever increasing asymmetry of power

    btw it’s spelled raison d’être, though I know right wingers don’t really care for any truth

    1. kxmoore

      It seems to me that so called socialism is incompatible with real democracy too. You people stuck in the lefty vs. righty thing suffer from a lack of deep insight and are boring to boot.

      1. psychohistorian

        Maybe nobody told you but capitalism as we have it now is the sickest form of socialism ever imagined.

        1. Hal Roberts

          “There are no necessary relationships between the deficit and money growth.”

          Wall Streets 12000.00 DOW Less 20x Leverage = 600.00 DOW. The rest is False Profit

  11. GlibFighter

    Bruce Bartlett: Are you having fun hanging out with this crowd? It would seem a fine time for you to share warm memories of the “Reaganomics: Supply-Side Economics in Action” and “The Supply-Side Solution” days.

    1. aet

      Reagan got elected thirty-one years ago, right?

      How well I remember, back in the early 1980s, how we often discussed Eisenhower’s economic policies from the 1950s and how they were still then profoundly affecting us…..hahahahaha.

      Actually, that NEVER happened.

      What’s with the obsession with what’s in the rear-view?

      Oughtn’t discussions of economic policy concern themselves with the here-and-now and the future? It’s not like anybody can change anything about the past – save for how they themselves choose to consider the events which comprise the past, I suppose.

      Nevertheless, how’s that exercise useful for determining which policies WE should adopt now, in order to maintain and increase our society’s prosperity into the future?

      Other things I just don’t understand. IMHO, vitriol ought not to be wasted on the dead; but such would seem out of place in discussions of policy in any case.

      1. Calgacus

        What’s with the obsession with what’s in the rear-view? Well, the Reaganoids themselves were obsessed with the past, with overturning the New Deal / Great Society institutions.

        Although they were still popular enough, and memories still fresh enough that they had to tread more carefully than now. Now the past-obsessed rightwingers have rewritten history so that many now believe that the post Reagan Great Moderation (Great Stagnation) was more prosperous than the New Deal / postwar era, that WWII was a time of poverty rather than prosperity for the USA, etc.

  12. GlibFighter

    Yves said Ames and Taibbi “elevated vileness into an art form.” Yes, Dostoevsky, Joyce, Proust, Celine, …., and Ames & Taibi.

  13. Hal Roberts

    “Actually, what Niskanen said was this: “The simple relationship between deficits and inflation is as close to being empty as can be perceived.”
    And this: “There are no necessary relationships between the deficit and money growth.”

    Wall Streets 12000.00 DOW Less 20x Leverage = 600.00 DOW. The rest is False Profit

  14. Woodrow Wilson

    Sadly amusing when authors portray the Left v. Right/Democrat v. Republican split. It’s possible someday that these people will wake up and understand that both sides are playing them, and The People.

  15. Timothy Straus

    this is one of the most repulsive commentaries I have seen on what I thought was a respectable, intelligent and important website. I have supported it in the past, but this display of vitriol and callousness is beyond reprouch. Regardless of your personal opinion, which is thankfully not shared by your 99%, to throw your garbage about on the graves of others is repugnant, perhaps you do so to your deceased realtives as well?

    This crap should not be allowed on a respected blog, period. Yves, control your flow better in the future please. Who supports the 99%, certainly not the corrupt Obama administration–he is only the left wing faction of the same damn party the rules this country–the Fascist Party of the Empire of the United States. Do not kid yourself he and all his cronies are not of the same ilk that you so grotesquelly have attacked as humans not as representatives of a disagreed upon ideology.

    1. aet

      “I have supported it in the past, but this display of vitriol and callousness is beyond reprouch.”

      As I commented above in another context, some things I just don’t understand. I am afraid that sentence of yours is amongst them.

    2. Yves Smith Post author

      You apparently don’t pay attention. I attack Obama and the Administration far more often than I do libertarians.

  16. Ye Olde Eric

    Reagan was a senescent fart who countenanced crimes that got high-ranking officials convicted of felonies, and he would have been impeached but for the cravenness of the Democratic leadership. Yet he has been transformed into some kind of demigod by faithless, lying scoundrels abetted by a pliant media. The magnitude of the chutzpah and dishonesty of a PR campaign to rehabilitate Reagan and his familiars makes my head spin almost as much as the gullibility of the people who buy it. Maybe the vitriol in this article is over the top, but compared to deceiving hundreds of millions of people in order to justify policies that drain away the last vestiges of their wealth? Please.

  17. Steve Jacobs (Starving Steve)

    It was Reagan and ARTHUR LAFFER who told the country that deficits wouldn’t matter because deficits spur growth of the economy, and economic growth would allow deficits to shrink in a relative sense to the growing and larger economy. This economic insanity was known as, supply-side economics, and the message was intoxicating.

  18. Alex

    Your post here carries very little substance. You attack libertarians as Nazis (there could be no one further from Nazis). Nazis were nationalistic socialists, please read your history books. You do not say anything in this post that contradicts the basic tenets of libertarian (classical liberal) thinking or prove that a free market with minimal state intervention (what the US had for the first 135 years of its existence) is inferior to a totalitarian state, which you seem to implicitly advocate.

    1. Foppe

      Huh? Since when does it still need to be said that the minimalist state is no more than class warfare, and not in any way a defensible position? Did I miss something?
      Refuting Hayek is just as much of a waste of time as much as taking Rand seriously is.

  19. different clue

    A little quibble . . . people mistakenly thinking that Ames is accusing Hayek and his free marketroid fellow-travelers of being “nazis” may not fully be aquainted with idiomatic forms in American language. I believe Ames is using “nazi” to mean “extremely extreme extremist”. Just as people refer to fanatical musclebuilding excercisers as “body nazis”; Mr. Ames is referring to Hayek and his free marketroid disciples as “free market nazis”.

    Of course, if Mr. Ames is still reading these comments so long after publishing the article, and if I am wrong about “free market nazis” being a kind of figure of speech; he is free to correct me if he even thinks it to be worth his time and trouble.

  20. Random Blowhard

    “Deficits don’t matter” in the same way that falling off a hundred story building does not matter, until you hit the ground.

    The real issue, as demonstrated most recently by the PIIGS and the eurozone is that the “business as usual” tactic of endless spending and printing is now starting to matter and matter alot.

    The United States SPENDS 42% MORE than it earns. Look at the failed bond auction Germany had yesterday, crunch time will soon be here, get ready.

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