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Tuesday, October 07, 2014

'The Deficit' Is Not 'The Economy'

Where have I seen this game played before? This is from Chris Dillow:

"The economy", by Chris Dillow: On the Today programme yesterday, Nick Clegg said (2'11 in)... Then on PM yesterday (about 17'402 in), Carolyn Quinn said...

In the context she's using the word, she clearly means not "fix the economy" but "fix the deficit".

Now, I had thought that Clegg had merely mis-spoke. But it's unlikely that two people would mis-speak in exactly the same way within hours of each other. I suspect something else is going on - the construction of a hyperreality.

They are trying to equate the deficit with the economy, to give the impression that good economic policy consists not in boosting real wages, cutting unemployment, or addressing the threat of secular stagnation but merely in "fixing the deficit." ...Clegg ... and Quinn ... are both in the same Bubble pushing the same quack mediamacro.

Worse still, by "fixing the deficit" they mean some type of austerity. But there's a big difference between the two. We could - perhaps - fix the deficit by state-contingent fiscal rules, or by adopting a higher inflation target (or NGDP target) and thus using monetary stimulus to inflate our way out of government debt. ...

Instead, the only economic policy permitted by the Bubble is the fake machismo of "tough choices." Not only are these tough only for other people - mostly the most vulnerable - but they don't even work in their own terms; one lesson we've learned since 2010 is that "tough decisions" to cut the deficit don't actually do so as much as their perpetrators hope. But then, in the Bubble's hyperreality, neither justice nor evidence count for anything.

It's sad that so many people think the way to fix the economy, or the deficit, is to help the people who don't need it rather than helping those who do. Austerity that hurts those in need trickles up -- austerity financed tax cuts help those at the top -- but very little trickles back down again. Tax cuts for the wealthy do little to help the economy, and tax cuts certainly don't help the deficit. The claim that they somehow pay for themselves and reduce the deficit has no foundation in actual evidence, it is also "quack mediamacro" designed to fool people into supporting policies that benefit a key GOP political contingency.

    Posted by on Tuesday, October 7, 2014 at 08:13 AM Permalink  Comments (25)


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