How the Troika, the WSJ and the NYT Keep the Public Befuddled About Austerity and Deflation

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Yves here. One issue that Robert Pollin and Dean Baker mentioned in a video we posted yesterday was how economists are doing a bad job of explaining why the US is mired in low growth. This post by Bill Black takes the position that it’s much worse than that, that important institutions are actively selling the economic equivalent of toxic medicines, and their media moutpieces are uncritically repeating incoherent explanations of the evidence like deflation of policy failure.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at “New Economic Perspectives/a>

If the troika (the European Commission, ECB, and IMF) taught sex education students would believe that storks brought children, that sex had nothing to do with pregnancy, that confident women never got pregnant, and that women should be forced to lose weight when they became pregnant.  The Wall Street Journal and the New York Times would repeat these myths as science. The NYT would employ one of the world’s top gynecologists (Dr. Krugman).  Dr. Krugman would debunk these myths nearly every week – and neither the troika nor the reporters for the NYT and the WSJ would ever listen to him.

The last several days have led to a flurry of WSJ and NYT stories about “deflation.”  I just posted critiques of some of the earlier stories here and here.

There’s only one of me, but the dual U.S. heralds of the troika employ dozens of scribes who faithfully proclaim its message without any intervening critical thought.  I’ve decided to make a bulk response to the scribes.

Three Central Defects
I offer this overall critique of the central defects of all these articles (and the troika’s policies).  Both of them fail to address three points.

1. Where does the troika think deflation comes from?

2. Given that the troika’s says that the key harm of deflation is reducing already inadequate demand, why is the troika insisting on inflicting austerity – which aggravates the inadequate demand?

3. Why is their minimal discussion of the Great Depression levels of unemployment in Italy, Spain, and Greece and no discussion of the far superior alternative of using fiscal policy to speed the eurozone’s recovery?

Five Articles: No Coherent Analytics, Economics, or Humanity

Here, here, here, here and here are the links to the flurry of articles dated June 3, 2014, that I have not already discussed in prior columns.

Demand: Several Mentions; None Coherent

One article explains that core inflation is falling because:

That reflects, above all, the high unemployment and debt burdens in much of the region, which are holding down wages, spending and demand.

The quoted sentence is almost coherent.  It is true that high unemployment holds down demand.  “Spending” is “demand” so the scribe’s grasp of the concept is poor.  “Debt burdens” reverses the accurate analysis.  It refers to the long falsified claim of the austerians that if a government has debt it lacks the capacity to spend.  Austerity is what is causing already inadequate demand to weaken further.

Another article starts strong.  It begins by answering the question of where very low inflation and deflation comes from – inadequate demand.

After a 5-year debt crisis, in a growing number of euro zone countries, businesses faced with slumping demand have been pressured to cut prices.

The article continues by appropriately emphasizing the importance of demand, but failing to understand it.

After years of a debt crisis, a number of countries in the euro zone are grappling with the effects of economic lethargy. At clothing stores, cellphone companies and factories making items as disparate as aluminum and tiles, owners faced with slumping demand have been pressured to cut their prices. In hard-hit countries, wages have also fallen sharply from precrisis levels.

Especially in the most fragile economies, the dynamic is crimping growth and dampening government efforts to pay down debt, regain competitiveness and tackle unemployment.

‘The big picture is that with low inflation, it is more difficult for debt to come down and for economic growth to come back, so you could have a period of stagnation,’ said Reza Moghadam, the director of the European department at the International Monetary Fund in Washington. He recently coined the term ‘lowflation’ to describe the euro zone’s dilemma.

Again, the strength is explaining to the reader in the second sentence that the inadequate demand causes low inflation and deflation.  The next sentence correctly notes that wages have fallen sharply and that this further reduces demand.

Then things go horribly off the rails.  The obvious analytical points and policy advice that would arise from these admissions are (1) austerity is the problem and (2) fiscal stimulus is the solution.  Instead, the article careens incoherently as it must because it repeats faithfully the troika’s incoherence.  This sentence displays the logical inconsistency:  “[low inflation] is crimping growth and dampening government efforts to pay down debt, regain competitiveness, and tackle unemployment.”  Let us count the many problems packed into this single sentence.

  • The “dynamic” that gratuitously forced the Eurozone into a second recession – and Italy, Spain, and Greece into a Second Great Depression – was inadequate demand induced by the troika inflicting austerity.  Low inflation may add marginally to the inadequacy of demand by causing consumers to defer discretionary purchases, but low inflation and deflation are caused by inadequate demand.
  • “[D]ampening efforts to pay down government debt” would be a very good thing that would increase demand.  The “efforts to pay down government debt” are austerity.  Austerity is the disastrous policy because it decreases already inadequate demand.  The article starts by saying that inadequate demand is the problem, and then immediately loses the plot.
  • “Regain[ing] competitiveness” is the troika’s euphemism for slashing wages in the periphery.  Look at the quotation again – it is found one sentence after correctly noting that one of the important contributors to reducing demand further was the fact that “wages have also fallen sharply from precrisis levels.”  The troika and the Nation’s leading financial papers cannot maintain logical consistency in adjacent sentences.  The troika’s bleeding of the economy and workers is a major contributor to the slashing of wages that has made consumer demand so inadequate.

The last paragraph quoted above about “stagnation” again misses the fact that inadequate demand causes both high unemployment and low inflation.  It also fails to note that because of the austerity-induced second Great Recession the eurozone suffered years of rising unemployment even when inflation was higher.

The article then veers back and presents a logical view – with no indication that the scribe understands the logical inconsistency.

“Inflation is so low,’ said Simon Tilford, deputy director of the Center for European Reform in London, ‘”because wages have fallen sharply and consumer demand and investment have been depressed.”

The final article that uses the word “demand” states:

Deflation, spurred by falling wages and depressed consumer demand, hits borrowers by raising the real value of loans, and has the potential to weaken Europe’s fragile financial sector.

“Raising the real value of loans” could make a recession more difficult to recover from, but it is far down in the ranks of potential contributors.  The far more important, and straightforward, point is that deflation and severe recessions have the same cause – grossly inadequate demand.

Even this article, which is by far the best of the five, is incoherent.

Adding to the pressure [on the ECB to act], a separate report showed the European labor market continuing to stagnate.

Note that the journalist acts as if the obscene level of eurozone unemployment is created by some unrelated (and unidentified) factor instead of inadequate demand.

Austerity: One Inept Mention

The best article notes that unemployment is at Great Depression levels in Spain and Greece and provides the only mention of “austerity.”

The job market has been hammered by the euro zone debt crisis, which ushered in an era of fiscal austerity and, some economists argue, an insufficiently loose monetary policy by the European Central Bank.

But note that even the best article gets it completely wrong.  The “job market” was not “hammered by the euro zone debt crisis.”  The eurozone job market was “hammered” first by the Great Recession and then by the troika inflicting austerity, which made already inadequate demand far more inadequate.  The largely faux eurozone“debt crisis” did not “usher[] in an era of fiscal austerity.”  The troika forced fiscal austerity in conditions we have known for at least 75 years would prove self-destructive.  The article, which is by far the best of the five articles, fails to even consider ending the bleeding the economy through austerity.

The NYT’s “Draghi as Physician” Simile

The most embarrassing of the five articles begins with this sentence.

Mario Draghi might feel like a doctor trying to treat a chronically ill patient with unproven medicines.

There are three vital things that are totally wrong about that sentence.  First, it was the ECB and its fellow troika members that forced the eurozone – as it was beginning to recover from the Great Recession – back into a gratuitous second recession and in several cases a Second Great Depression by inflicting austerity.  Second, the correct medical metaphor would be that Draghi is continuing to insist on “bleeding” the patient a century after we knew that the practice had no scientific basic and harmed the patient.  His practices were not “unproven” – they were known to be quackery.  Third, to the extent the focus is on low inflation, Draghi has been refusing to “treat” the “chronically ill patient” even though (A) the eurozone has repeatedly failed to meet the ECB’s stated inflation target and (B) there are proven fiscal means of curing the “patient” which Draghi fights to prevent from being used.  


The troika and our leading financial papers admit that very low inflation levels are caused by inadequate demand and that they are harmful because they could further reduce that already inadequate demand.  The troika and the papers, however, find it impossible to recognize that the troika’s policies – austerity and forcing large wage reductions – are self-destructive because they further reduce demand.  The troika and the papers, therefore, refuse to even discuss the ready alternative of reversing the troika’s self-destructive policies.

The WSJ scribes have obvious institutional difficulties in writing honestly about the folly of austerity.  The NYT scribes continue to perplex.  The great majority of economists think the troika’s austerity policies are self-destructive.  The NYT has a Nobel Laureate who has spent years explaining this point.  The NYT scribes do not simply get the story wrong.  Their deflation coverage rarely presents the views of scholars who make the argument against austerity.  The papers do not cite Paul Krugman on the issue or the many other economists who have a far more successful predictive record than do the troika trolls.  It remains a de facto job requirement that WSJ and NYT scribes writing about the EU austerity crisis check their critical faculties curbside.

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  1. Jose

    This piece is misleading – Eurozone Austerity doesn’t result from a lack of understanding of economics.

    It’s just a policy choice of European elites.

    Sadly, many well-meaning American observers still fail to understand this.

    1. Swedish Lex

      I beg to differ.

      We are six years into the crisis and there is still no uniform view in the EU about what has gone wrong, why and what the cure is. Quite an achievement.

      The German misconception of the situation is what is ultimately driving the EU’s policy response. “Driving” is polite for “bulldozing”. The Germans loved the Reinhardt-Rogoff trash and sincerely wished to punish the Club Meds for borrowing the money that the Germans banks were lending to them at über-low interests rates, decided by the ECB to relaunch the German economy 10 years ago.

      Here is where I agree: The only realistic response to the euro crisis would be to go full federal since the euro is not viable (and never was) without the appropriate federal super-structures. But no politician dares to go there, so they in effect prefer, through a tacit concensus, bad and stupid policy choices as a cover-up to hide the fact that the only real alternatives are 1) break-up och 2) the United States of Europe.

      1. Gibby the Fifth

        Conclusion: Germany should instantly be expelled from the EU, and never, ever allowed to return.

        1. Benedict@Larger

          The only thing that might save the Euro is the departure of Germany and their mercantilism. Then a least the Eurozone might be able to establish a real central bank capable of doing what a genuine currency needs to be functional during crisis economic periods.

      2. Jose

        I dont think a full federal structure is needed to make the euro “work”.

        It would be enough to have the ECB proceed like the Fed, by habitually purchasing the government debt securities of the 18 member states on the secondary markets. This step would eliminate the default risk premium on euzone government debt.

        If the ECB had supported sovereign debt since the inception of the euro there would never have been a “sovereign debt” crisis in the eurozone. And this crisis was the Achilles heel of the EMU, because it forced austerity on the affected member states.

        Schematically we could describe the genesis of the euro debt crisis the following way: financial crisis -> ECB does not normally intervene on secondary markets to support sovereign debt -> markets, lenders panic -> yields on periphery sovereign debt reach unheard of heights -> governments are forced to ask for financial support -> the “troikas” demand austerity as a price for that support.

        Suppose the ECB had in place the same institutional features and operating procedures of the Fed by the time the financial crisis erupted in 2008. Markets would have kept evaluating sovereign debt as risk-free, as they had done since 1999. Yields would stay put instead of skyrocketing – perhaps they would even decrease, because the panic-stricken markets would look forward to buying riskless securities guaranteed by the ECB ; as a consequence, absent any pressure on yields, the reluctant governments of the periphery would not have to accept that austerity be imposed on them.

        A way forward from now on would be for the ECB to copy the Fed. One should point out that a revision of the Treaties is needed for this. There is nothing in the present laws to prevent the ECB from supporting debt on secondary markets.

        The periphery governments should just demand, in the most forceful and vociferous manner possible, this operational change in the monetary policy procedures of the ECB – and do it in the name of logic, common sense and preservation of their economies. Aterwards, once the ECB starts imitating the Fed, the governments of Portugal, Greece, Spain, Italy et alia will be finally free to cease disastrous austerity, because their debts will definitely become as sustainable as those of the U.S., the UK or Japan.

          1. Jose

            There would be 18 Treasuries with their own fiscal policies and a common Central Bank guaranteeing the debt of each of them.

            This is likely the only solution capable of ending austerity within the legal framework of the present Treaties.

    2. Eeyores enigma

      Jose – I believe you are close to correct. What started the global crisis was hitting the resource wall. Global growth was on a tear, going exponential (blade of the hockey stick) then we simply could no longer extract resources at the rate required to maintain that growth. So global growth fell way back then after the financial wizards threw everything they had at the issue growth stopped receding and started plowing along barley able to achieve a plateau.

      TPTB understand that we will never get back to exponential (even 1% is exponential) growth for the majority as there simply is not enough resources for that. But there is still enough for a percentage of the population to live quite well thank everyone very much.

      If the media told the true story they would have to admit that all money is loaned into existence out of thin air, but those who borrow must pay back all of it plus some to those who have been given the monopoly to created it. This reality has nothing to do with markets, demand, production, or anything else. It simply makes everyone a sort of slave working for the money creators and when there is not enough for everyone, the money creators simply withhold money from the majority through all the processes mentioned in the article which leaves more resources for the wealthy few.

      Its not really conspiracy its simply how things work when you structure society under a system where money creation is the sole right of a small portion of the population.

      1. washunate

        I’m curious, what resource wall are you talking about?

        The issue in the Western world of the past few decades, and in particular the past two in the US, is distribution, not aggregate growth. We have witnessed a crime spree, a massive concentration of wealth and power, not a lack of resources.

        1. Eeyores enigma


          2006, ’07, ’08 the world ran out of diesel fuel in many areas after the price soared to $5.00 first. Walmart’s warehouse on wheels collapsed. ALL agricultural inputs (FF based and other wise) soared in price some 10 fold. Vertually every key resource is at the point where we mine 10 tons to get 100 lbs, even oilsands.

          Water, perhaps the most precious resource, came up short due to over expansion and constraints from climate change. Water is the top resource used in extracting and processing just about all other resources and energy.

          This is what I find the most worrisome is the fact that everyone thinks it is all just about money and finance whenit is ALL about resources.

    3. bluntobj

      Further misleading items:

      ” “Debt burdens” reverses the accurate analysis. It refers to the long falsified claim of the austerians that if a government has debt it lacks the capacity to spend”

      It refers to this statement:

      “That reflects, above all, the high unemployment and debt burdens in much of the region, which are holding down wages, spending and demand.”

      Which if you will note does NOT refer to a government. Instead, it refers to people and companies, NOT governments. People, when they have debt, lack the capacity to spend, especially when banks refuse to lend due to the debtor’s ability to pay and likelihood of future default.

      Original statement is accurate analysis, argument against is invalid due to strawman of “government debt”

      Oh, and it’s best not to link to two items that are behind paywalls, and the other three articles that are free do not have the quoted phrase. Provide context or argument is still invalid.

  2. /lasse

    Merkel, Barosso and so on probably don’t understand better, but how was they entrenched in this entire misapprehension.

    The 1 % or the very top that have the power to influence what is the going truth in economics ae doing better and better. They now have the golden era they have paid and fought for since decades. The ideology that rule EU actions is enshrined in the EU treaty, constitutional law in the member countries. It didn’t happen by coincidence.
    The Powell Memo

    1. ThisOldMan

      The Powell Memo was about the USA. More relevant to the EU situation is that it is a union created by the bankers for the bankers, but largely not of the bankers. In the present, the motivation for the studied incomprehension (a standard trick in politics, in case you didn’t know) is that deflation favors lenders at the expense of borrowers. The more they have of it the more they’ll find they like it, although they’ll never admit that. As a side-effect, deflation is also good for the environment, since it reduces consumption and pollution, but there are many less painful ways to do that, and the bankers certainly don’t give a hoot about it anyway!

  3. steviefinn

    Weimar re-run as in austerity policies that caused serious deflation in 1930 & a certain carpet muncher a 12 seats foot in & the rest is seemingly forgotten history :

    “The [sc. Weimar] German government struggled, however, within the confines of the rules of orthodox finance, that is, the gold standard. As the downturn began due to the combination of American and German policies already described, the German authorities responded to their external difficulties by depressing their internal economy. Schacht, president of the Reichsbank until March 1930 and chief German negotiator for the Young Plan, had consistently pursued a deflationary strategy. Hans Luther, his successor at the Reichsbank, followed suit, keeping the discount rate well above the rates in London and New York in attempt to reduce the bank’s continuing loss of gold … the fiscal authorities were even more aggressive in their deflationary efforts. The move toward highly restrictive government budgets came in the beginning of 1930. Heinrich Brüning, chancellor from March 1930 to May 1932, continued this, relentlessly attempting to deflate the economy to restore equilibrium in the manner of the gold standard. Germany, unable to pay its foreign bills at gold par, had to reduce internal prices until it could” (Temin 1989: 30–31).

    “Economic breakdown [sc. during the Great Depression] led to political upheaval which in turn destroyed the international status quo. Germany was the most striking example of this complex interaction. Without the depression Hitler would not have gained power. Mass unemployment reinforced all the resentments against Versailles and the Weimar democracy that had been smouldering since 1919. Overnight the National Socialists were transformed into a major party; their representation in the Reichstag rose from 12 deputies in 1928 to 107 in 1930. The deflationary policies of the Weimar leaders sealed the fate of the Republic” (Adamthwaite 1977: 34).

  4. Jim Haygood

    ‘Fiscal stimulus is the solution.’

    Never in history have lenders told overextended debtors, ‘Go ahead, spend freely.’ One can quibble that the macroeconomic effects are counterproductive. Nevertheless, lenders stolidly refuse to advance more funding to debtors who don’t at least have a plan to balance their budgets.

    And it will ever be thus.

    If Kurgman were a gynecologist {an image that nearly makes me vomit), he’d probably counsel his pregnant young patient to increase her frequency of attending sloppy-drunk orgies. Yeah, that should be effective.

      1. Jim Haygood

        ‘Fiscal’ … ‘spend’ … ‘lenders’ … ‘debtors’ … ‘budgets.’

        Looks pretty fiscal to me.

        1. lolcar

          “Nevertheless, lenders stolidly refuse to advance more funding to debtors who don’t at least have a plan to balance their budgets.”
          Looks pretty much like to a solid explanation of the continued failure of monetary policy to me.

    1. Alejandro

      “The basic principle of Fraudulent Conveyance is that loans which cannot be paid under normal conditions were made irresponsibly at best, and with predatory intentions at worst. In either case they should be written down. The ethical principle is that the debtor suffers less than the creditor, especially in a world where international credit is now created electronically on computer keyboards-while repayment of such credit polarizes and impoverishes debtor economies.”
      -Excerpt from The Bubble and Beyond by Michael Hudson

  5. Moneta

    I think the general population senses that governments are mismanaged and many are convinced that public servants are part of the problem. So that would explain why many are voting for those who propose gutting government. Here in Canada, a large segment wants more efficiency but is still liberal. However their vote is getting divided between many parties and the conservatives ended up with a majority because of this divide with only 39% of the popular vote. It will be interesting to see if the same thing happens in Ontario.

    What many fail to realize is that, when it cuts, government keeps the part of the apparatus that feeds the top 10-15% and guts the part that feeds the rest. The other issue is that most people have trouble with feedback loops… they have trouble understanding that the cut expenses are also income and that they are cutting GDP twice with 1 cut.

    Governments should be cutting the fat and increasing muscle. However, they are not doing that. IMO, they can’t differentiate fat from muscle so it is quite scary that we are giving them so much power to make radical changes so quickly.

    1. EoinW

      It doesn’t matter what the population thinks because it gets no choice. it’s even worse than votes being split between “liberal” parties because none of them are actually liberal. The Chretien Liberals gave us NAFTA, GMO’s and health care it’s first major hit, not the “call me Conservative” Reform Party. Plus today’s liberals are as in bed with the 1% as any conservative would be(though a true conservative wouldn’t be). How about the NDP: 18% corporate tax level is fine. Not over 30% when we had full health care coverage but 18%. Worst of all, the “call me Conservative” Reform Party is in no way, shape or form Conservative. If anything, they are pro-American Quislings.

      They can split the votes a million ways for all I care. Elections in Canada are a sham. Don’t lower yourself by supporting them.

      1. Moneta

        I agree 100%. Qc thinks it got a liberal premier… when I used the word neoliberal a few weeks ago, those around me laughed and asked if it was another one of my invented words.

        1. Jim Haygood

          ‘Invented words’ … like the Harvard Business grad who bought Charles Ponzi’s house and was surprised to discover that he was a real person.

          Guess she thought ‘ponzi’ was Italian for ‘euchre.’

  6. skippy

    “governments are mismanaged” – how is doing the job you are payed for mismanagement pray tell?

    1. Moneta

      What the population sees is corruption…signs that many people are filling up their pockets with taxpayer money… so the assumption is that government employees must not be doing their job if money is being funneled to the wrong places while infra is falling apart. The gut instinct is to starve government.

    2. Moneta

      After decades of “let’s spend this money or else our budget gets cut” it’s hard to deny that many government jobs should probably disappear even if the incumbent is pushing that rock up the hill with sisyphean efficiency.

      Of course, many more should be created to offer what we need today, not what was needed in the 80s or 90s.

      1. skippy

        The ring fence of lobbyist, think tanks and Citizens United tells a completely different story.

        1. Moneta

          You seem to be speaking in metaphors so I am assuming what you are implying.

          Here in Canada, the people are sick of deteriorating infra while politicians and bureaucrats are filling their pockets. The thought process is that if the dead weight gets cut, there will be more money for health care and infra. The dead weight seems to be civil servants who walk slowly and enjoy huge pensions. Applying the same logic, lower taxes would probably starve government and put more money into households’ pockets. I am not condoning this logic but that is what I am seeing.

          I have a child with special needs and I can attest to the inefficiency of the services. Since the 90s, governments have been cutting the net and now it is quite raggedy and full of holes. What they have done is cut in an ad hoc fashion. More often than not the services don’t mesh anymore. I would even argue that the way they are being offered are of dubious added value. However, they are costing us a fortune.

          IMO, they should destroy the whole thing and rebuild it from scratch. But unless we get a revolution that won’t happen.

          1. skippy

            “You seem to be speaking in metaphors so I am assuming what you are implying.”

            Huh? what part of the political class is beholden to the wealth class can be construed as a metaphor.

            1. Moneta

              It was not clear to me whether you were implying that I was completely wrong in my assessment of the general population or just stating that those 3 groups don’t reflect the desires of the population.

              1. skippy

                That your political class has been monetized, is reflected in your governments decision making process, for some time now. That you focus solely on the second derivative of that process can only lead to faulty analysis.

                1. archytas

                  We could see M’s argument as coming from lived experience. One might see providing for special needs kids and disabled people as GDP growth (especially as we now estimate much less worthy black services) rather than as an automatic cost. M might be able to tell us of more sophisticated accounting (we used to use net exchequer cost) in real life experience. Metaphors are usually OK – M is explaining something of the operation of myths.

                  1. skippy


                    Moneta’s personal experiences are not relative to my statements and I find them a poor attempt to draw away from the objective point, I was making. By special pleading in evoking sick children, rather than addressing the issue of governments perceived incongruity in providing too the needs of its citizens.

                    This is an artful dodge employed quite regularly by pro market sorts, an attempt to obfuscate the primary agency behind the actual failures in Government e.g. the impetus behind it all. Something you willing promote by your linking sick children to GDP groaf.

                    skippy…. “sophisticated accounting” head desk… what you really mean is the total monetization everything, even special needs kids, that’s some sick twisted stuff imo.

                    1. Moneta

                      When my son started school, I believed in full integration. According to the law, the teacher is supposed to adapt the program and a “shadow” without special education in that domain is supposed to implement it.

                      For 3 years, not one of his teachers adapted the program. They delegated everything to the shadows who were completely overwhelmed by his stubbornness and unqualified or untrained to adapt programs. The reality is that he does not cope well in large groups and integration was not good for him but that’s what “government” decided was best for my son.

                      One day while talking to another mom who was complaining about how nothing was being done to help her son, I found out he also had an IEP (individual education plan). He seemed fine to me so I was surprised and wondered how many other children had IEPs in this school serving the upper middle class. I found out there were at least 75 children with IEPs in a school of around 300 students. What’s wrong with the system when 25% are considered special needs?

                      I was invited to a summer university class on special needs education as a guest so students could get feedback from parents during the lectures. I found out that this class was an elective and there were 0 compulsory classes in the program on how to teach children with special needs despite the reality that teachers are all getting something like 3 to 5 special needs students in their classes.

                      First of all, my son is not sick. Secondly, I am not special pleading but bringing up REAL life experiences in dealing with red tape, ideologies and a hodge podge of services that have offered no added value.

                      I do not want services for people with special needs to be cut and privatized. I just want to be offered services that ADD VALUE.

                    2. skippy

                      The conversation was about –

                      “That your political class has been monetized, is reflected in your governments decision making process, for some time now. That you focus solely on the second derivative of that process can only lead to faulty analysis.”

                      “governments are mismanaged” – Moneta’s

                      This was your original statement that I brought into question. That you segue into personal experiences about your family members is beyond me, as its a anecdotal observation with zero to do with your original statement or my comments on it.

                      Then on top of that your mate shows up further obfuscating and bandy s on about special Kids = GDP.

                      “One might see providing for special needs kids and disabled people as GDP growth (especially as we now estimate much less worthy black services) rather than as an automatic cost.” – archytas

                      Which just screams free market fundamentalism as does the comment you made that I initially engaged i.e. private sector is always better tropes.

                      Skippy… stick to the OP or its just all hand waving to distract.

                    3. Moneta

                      Your point was that a job is a job. And who cares if they are doing the job they were hired to do. If I understand correctly, you want government jobs to be protected.

                      My argument is that the system is screwed up and many civil servants are not doing what they are supposed to do and getting away with it. In many cases, rules are written at the top but end up inapplicable in the trenches…. who cares about the people receiving those services…. they are just anecdotes! LOL!

                      I could write you a book on all the civil servants who are lazy and don`t add any value. During a 1 year contract with a government agency, I felt I was carrying 2 balls and chain. I could also write you book on those who want to add value but are stopped by red tape. everywhere.

                      My personal experience has led me to see how the system works for people for special needs. For you it might seem like an anecdote but from my vantage point it is more than an anecdote. My personal anecdotal life has let me bathe in the world of special needs. A world populated by 10% of the population.

                      Since you mixed up the term “sick” with “special needs” , I will now argue that your skewed worldview most probably needs a refresh because it obviously does not include the needs of 10% of the population.

                      You want proof but many of the problems we are facing today have no research behind them becausen there is no or little money for them. Special needs is one of them.

                      Let me remind you that all research starts with a hypothesis which is often anecdotal..

                    4. Moneta

                      And I will repeat that government is mismanaged at all levels. Those at the top make decisions without considering whether those in the trenches can deliver. And those in the trenches are doing a crappy job because the bad decisions at the top.

                      And those at the receiving end are stuck with crappy services that offer no added value.

                      So what’s your point? That the services are good? Or that the quality does not matter, as long as government creates Sisyphean jobs for everyone, it’s all good?

                    5. Moneta

                      Let me also add that full integration is not an anecdote. It is an ideology that has moved from the bottom up. The top elite has limited its funding and made it had to apply but in my anecdotal world not every child with special needs thrives in full integration.

                      It’s easy to blame the 1% for all our problems but this movement came from the bottom.

                      And whether at the bottom or the top, it’s the ideologues who are the most dangerous.

                    6. skippy

                      Dancing around only shows your intrenched bias. The point you won’t acknowledge for all your venting, is why the government, is not providing what you think is adequate services.

                      My only point was who is your government beholden to, its citizens or the wealth class [including non national actors].

                      So far you have only made anecdotal observations about government services and nothing about undue influences in your governments policy or the implementation of them. The onus is upon you to prove me wrong wrt the precursor to all government policys i.e. undo influence by agency’s whose only on going concern is themselves and not the good of the country nor its citizens.

  7. JaaaaayCeeeee

    Only monetary policy, instead of fiscal policy, is often credited as the tool to restart economic growth, in nyt reporting. So sometimes there is not so much incoherence, as in the examples Bill Black, but rewriting of history and basic economics. Today, nyt said QE restarted economic growth in the USA:

    “The bank president, Mario Draghi, also signaled that he was prepared to go further if necessary. In doing so, he left the door open to employ the same powerful, albeit controversial, bond-buying program that was used to restart growth in the United States.”

    It’s next sentence says ECB’s monetary policy plans, announced 6/5/14 ” … send a strong message to investors, businesses, and citizens that the central bank is determined to put Europe on a path to stronger growth”.

    Since the EU refuses to use the tools that work, most people won’t get any message that Europe has been put on a path to stronger growth.

    Another outcome of absolving policy makers of any fiscal policy responsibility is that trade deficits can’t be mentioned, no matter their effect upon economise in the EU or USA. A twofer yesterday claiming that the US economy is gaining momentum quoted a financial consulting eocnomist,

    “Rising imports are not a sign of economic weakness,” said Joshua Shapiro, chief United States economist for MFR Inc. “To the contrary, it’s a sign of economic demand.”

    If this were true, all companies that produce anything (other than low wage, part time, expendables) should probably take advantage of tax breaks, to move to lower cost/regulation/tax countries, making products so much cheaper that economic demand would skyrocket, if anyone left here could afford to buy anything.

  8. sharonsj

    The media can spin it all they want. But when I go shopping for something I need, be it an electric recliner or partial siding ($500 for the chair, $3000 for a one-story extension) the prices asked are astounding. No one earning the new normal wage ($25,000) can afford any of it. Neither can anyone on unemployment compensation or the standard Social Security.

    These are the reasons why the Greeks are daily attempting to burn down parliament. I wonder what it will take for Americans to do the same?

    1. RUKidding

      I am ok financially; single; no kids; have not one but 2 jobs (one pays very well). I am amazed how expensive buying groceries has become – and soon to get worse with droughts in CA, where I live. I clip coupons & look for deals. I don’t know how even middle income families manage.

      What I am seeing is that it is getting more difficult for me to save. I’m doing very well financially, so this isn’t so problematic for me. But if someone as frugal & aware as I am has difficulty saving from a reasonably good salary(ies), it’s hard to imagine how those with less can do much to save for their retirements.

      Friends retired only on Soc Sec are really hurting badly these days.

  9. Vatch

    What a great metaphor! Economic austerity as quack medical bleeding or bloodletting.

    “the correct medical metaphor would be that Draghi is continuing to insist on “bleeding” the patient a century after we knew that the practice had no scientific basic and harmed the patient.”

    1. H. Alexander Ivey

      Here’s an even better one. Money (currency and credit) are literally the “blood” of the economy. Like blood in a human, if the blood does not flow, the patient dies. If the blood pools in one spot (like being stuck in a bank), the patient dies. If the pressure of the flow (how fast money is created) is too high, the patient dies (develops bubbles, then collapses). Ditto too low (growth is inhibited).
      So economists who don’t talk about money (ignore it or ignore its flow) are like modern doctors who ignore blood and its function in the human body.

  10. washunate

    It seems to me the point of all of this is to obfuscate the point. Taking the corporate media seriously is like taking WWE seriously. Deflation and austerity and inadequate demand are not the problem. But like sex, if we all talk about late-term abortion and twerking, then we’ll conveniently not talk about the real issues.

    Europe has a very fundamental problem of political economy, which is that the leadership of the EU, and especially the EMU, has forged ahead with a set of public policies for which there is very little broadbased support amongst actual Europeans. Not to mention the increasingly creeping (and creepy) imperialism of the Anglo-American persuasion.

    Whether Greece, for example, should bail out the fraudulent German banks or leave the Euro is a political question for the people of Greece. There is no right answer; it’s a matter of personal preference.

  11. Kurt Sperry

    Time to drag this out of the closet again:
    “If is difficult to get a man to understand something when his salary depends upon his not understanding it” -Upton Sinclair

    Obviously the writers at the NYT and WSJ are constrained from pursuing or articulating truth or its logical consequences because of the currently inviolable sacrosanctity of nonsensical neoliberal ideology. They probably choose to believe or at least attempt to believe the risable BS they spout, not because it makes any real sense but because it is easier emotionally to repeat lies when one convinces oneself they aren’t. And of course because their salaries depend on their not thinking in heterodox terms, even when the failure of the explanatory power of orthodox neoliberal ideology to fit with observable reality is almost anywhere one cares to look.

    Even putatively “smart people” can easily be led to the stupid by the usual carrots and sticks.

    1. RUKidding

      Pretty much the case. Do these stenographers “believe” what they write? Who knows, and really who cares? I gave up on the NYT some time ago, although some of the primary (for lack of better term) articles end up in my local nooz paper (which I consider of higher quality than NYT, but that’s a low bar). I can nearly always tell, without looking, if it’s NYT-generated due to lack of facts or the propaganda-spin of it.

      WSJ, of course, has declined since Murdoch bought it out. Still has some limited value in terms of reporting on trends & such, plus just to see what their propaganda-spin is. I note, though, that WSJ does do some truth telling, as in, lately have had articles re the ridiculous disparity of income from those at the top v the rest of the proles, and so forth. Typically, the article lays out the facts (usually fairly correctly, too), but then offers nothing else… like why this is either a good thing, or if not, what can be done to make improvements.

      Unsure how much that info is being taken in by the masses. Doesn’t seem to make much difference from where I sit.

  12. Jackrabbit

    The occurs befuddlement across the spectrum of public policy. IMO it is more interesting to enumerate the many devices used. Matt Stollers The Con Artist Wing of the Democratic Party is a nice start.

    – selective disclosure
    – half truths
    – false narratives (“shared sacrifice”)
    – pseudo science
    – bought and paid for experts
    – misdirection
    – access journalism
    – intimidation
    – flattery (“yes we can”)

    The next big question: why do people allow themselves to fall for this bullsh!t time and time again?

    ‘The struggle of man against power is the struggle of memory against forgetting’

    – Milan Kundera

    1. RUKidding

      It seems to me that citizens really want to feel “safe.” For some reason, identifying with one branch or the other of the UniParty seems to make many citizens feel that “safety” that they seek. Safety in numbers? Safety of “big daddy” looking out for you? I have no idea. Never made sense to me, and for some reason, I started seeing the con-artistry & b.s. pretty early on.

      Other thing is that, once someone aligns themselves to believe in their cause/community/church/philosophy/ political party, whatever, they really really really really do not want to admit that they’ve been gulled, fooled, fleeced and robbed by “big daddy.” Or, at least, that’s how my family and friends behave. Some are Tea Partiers, some vote “D” and are still Obamabots. Question their belief system at your peril. Facts need not apply. That latter concept applies to anyone of any firmly-held belief system/persuasion.

  13. susan the other

    So Federalism. Our Fed is authorized to buy high quality Munis. But I’ve never seen a report saying it did so in an effort to help out states and municipalities. Only the reports on how the Fed bought up huge stinking piles of MBS to save the big banking institutions. So that aspect of federalism is equivocal, at least in this country. As are others. Name your favorite.

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