As I’ve said before, the Conservative Propaganda Machine amazes me. Here we are in a massive economic crisis, clawing our way back to solvency — yet despite that the bulk of this crisis results directly from conservative economic policies, a large fraction of the US citizenry still buys the Republican mendacity about economics.

In any case, Paul Krugman, as usual, lays down the facts, simply, lucidly, and accurately.

Phony Fear Factor

by Paul Krugman

The good news: After spending a year and a half talking about deficits, deficits, deficits when we should have been talking about jobs, job, jobs we’re finally back to discussing the right issue.

The bad news: Republicans, aided and abetted by many conservative policy intellectuals, are fixated on a view about what’s blocking job creation that fits their prejudices and serves the interests of their wealthy backers, but bears no relationship to reality.

Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest efforts to aid the economy.

The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false.

The starting point for many claims that antibusiness policies are hurting the economy is the assertion that the sluggishness of the economy’s recovery from recession is unprecedented. But, as a new paper by Lawrence Mishel of the Economic Policy Institute documents at length, this is just not true. Extended periods of “jobless recovery” after recessions have been the rule for the past two decades. Indeed, private-sector job growth since the 2007-2009 recession has been better than it was after the 2001 recession.

We might add that major financial crises are almost always followed by a period of slow growth, and U.S. experience is more or less what you should have expected given the severity of the 2008 shock.

Still, isn’t there something odd about the fact that businesses are making large profits and sitting on a lot of cash but aren’t spending that cash to expand capacity and employment? No.

After all, why should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more. Business investment always responds strongly to the state of the economy, and given how weak our economy remains you shouldn’t be surprised if investment remains low. If anything, business spending has been stronger than one might have predicted given slow growth and high unemployment.

But aren’t business people complaining about the burden of taxes and regulations? Yes, but no more than usual. Mr. Mishel points out that the National Federation of Independent Business has been surveying small businesses for almost 40 years, asking them to name their most important problem. Taxes and regulations always rank high on the list, but what stands out now is a surge in the number of businesses citing poor sales — which strongly suggests that lack of demand, not fear of government, is holding business back.

So Republican assertions about what ails the economy are pure fantasy, at odds with all the evidence. Should we be surprised?

At one level, of course not. Politicians who always cater to wealthy business interests say that economic recovery requires catering to wealthy business interests. Who could have imagined it?

Yet it seems to me that there is something different about the current state of economic discussion. Political parties have often coalesced around dubious economic ideas — remember the Laffer curve? — but I can’t think of a time when a party’s economic doctrine has been so completely divorced from reality. And I’m also struck by the extent to which Republican-leaning economists — who have to know better — have been willing to lend their credibility to the party’s official delusions.

Partly, no doubt, this reflects the party’s broader slide into its own insular intellectual universe. Large segments of the G.O.P. reject climate science and even the theory of evolution, so why expect evidence to matter for the party’s economic views?

And it also, of course, reflects the political need of the right to make everything bad in America President Obama’s fault. Never mind the fact that the housing bubble, the debt explosion and the financial crisis took place on the watch of a conservative, free-market-praising president; it’s that Democrat in the White House now who gets the blame.

But good politics can be very bad policy. The truth is that we’re in this mess because we had too little regulation, not too much. And now one of our two major parties is determined to double down on the mistakes that caused the disaster.

Original post on the New York Times

28 Responses to “Conservative Economics: A Fantasy Land”

  1. Cyber crime unit saves UK economy £140m in six months: A Metropolitan police unit claims to have saved the econo…

  2. sharnouet says:

    I love the comedy he does, but I know there are going to be some idiots who actually believe what he says about Obama is true. Thumbs up so those idiots will have reality slap them hard in THE FACE!!!

  3. arrie jesusander says:

    Over the next two months, Florida public universities will be discussing several controversial changes aimed at boosting the number of graduates in high-tech fields — graduates that state leaders have stressed Florida needs more of to help improve its economy.

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  5. NEW YORK (AP) — The way Americans are chomping Big Macs, lacing up pricey sneakers and gulping peppermint mochas in this economy, you’d think they’re taking advantage of big holiday discounts….

  6. LOL. Check your facts. Harper inherited a massive surplus from the Liberals, and turned it into a record deficit. Not the other way around.

  7. serr kanada says:

    Demonstrating how to tie a dog to the roof a car? (c.berlet/publiceye.org) Like college kids the morning after a Bacchanalian bender, bleary-eyed Republicans have been stunned to wakening by the head-pounding pain of a bright midday sun. The light does not lie. This is not a fevered dream. Their entire bodies ache, but there is no escape. They have to drag themselves through hungover torpor or attempt to go back to sleep, even as they know the latter would be but a temporary respite. But even that may preferable to spending the next 10 months with Mitt Romney as their leader, their standard-bearer, and the embodiment of their political identities. Republicans had quite the time attempting to find a rhythm for their drumbeat of hatred for President Obama, and their agenda of obstruction and destruction coupled well with the new administration’s political and policy clumsiness. Potentially good policies were diluted or scuttled; the economy never found…

  8. Don’t try to be like me. There is only one Jackie. Seriously, go study computers and economy. – Jackie Chan

  9. st_jamsey kunamori says:

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    Filed under: America, Mexico Mexico gets bad press for a number of reasons causing travelers to use extra caution when visiting south of the border. Attractions, like UNESCO biosphere sites along the Baja California Peninsula, draw travelers but a newly thriving coral reef is under threat from a mega-development planned for the area, adding environmentalists to Mexico tourism’s list of foes. In Cabo Pulmo, Mexico, the shallow reef was a typical degraded reef 17 years ago that had been damaged by commercial boats dragging their anchors through the coral to get at valuable species that lived there. “We noticing there were fewer fish, and we were having to go out,” says Judith Castro, a local commercial fisherman. “We just saw the reef as a garden. We didn’t know the of it.” Aided by local residents, the economy was gradually transformed from fishing to ecotourism, and the amount of life on the reef blossomed, increasing by 460 percent. Now, a new…

  12. stenmanna says:

    I don’t care what kind of doomsdayer u want to be, the economy IS RECOVERING! Where’s ur brand positioned to take the lead as sales improve?

  13. The WaPo’s hit piece on LED lights – – was so stupid it drew a statement from the normally reticent Jeff Bingaman.

  14. and you are also a dumbass if you believe statements like that from Russian military. they lie up the ass

  15. KARACHI – The CGMA Global Economic Forecast, a survey of more than 600 senior management accountants from around the world, has found a cautious level of optimism for the global economy over the coming 12 months. The overall index score is up seven points to 65, from 58 in the last according to research from the Institute of Management Accountants (CIMA) and the …

  16. burggraver angan says:

    By investing in alternative energy, we are investing in our economy and our habitat. I may only be 12, but it sounds good to me. Every one of us has a great gift we can use to help the Everyone, at any age, can do something.

  17. I reckon economy headed into freefall….at teh same time I credit the common American with enough sense to elect right person

  18. onov haharrock says:

    (EurActiv) — France’s new president François Hollande arrived in Berlin for his first meeting with German Chancellor Angela Merkel only hours after his inauguration yesterday (15 May). The two expressed broad agreement over the necessity to the European economy but they also had to acknowledge differences over their concepts of growth. Hollande’s first trip […]

    To continue reading this click on the headline.

  19. When you mention Romney’s jobs record in Massachusetts, they say he inherited a bad economy and had a difficult legislature. Sound familiar? –

  20. Economy wasn’t W’s fault or Obamas fault. Bank of America, is the super villian, the banks are the serial killers.

  21. mosepple says:

    The income stagnation of the last decade stems, in simplest terms, from the economy’s overall sluggishness and the concentration of its modest gains among a small share of the population.

  22. Obama sighs when people ask him about the economy ’cause even HE is tired of the same ol’ B.S. he says.

  23. nisauvrayo fermanson says:

    BBC News

    China industrial profit slide puts stimulus in focus
    Reuters
    BEIJING, Aug 27 (Reuters) – China’s industrial sector posted a sharp profit drop in July, offering a fresh sign that slackening domestic and external demand has weighed on corporate earnings and reinforcing calls for more policy easing to …
    China job loss fears grow as industrial profits fallThe Australian
    China industrial firms see profits dip as economy slowsBBC News
    all 21 news articles »

  24. When you are worrying about how the economy can afford green measures, read this – green ideas can boost business:

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  26. shum dulatner says:

    Greek Economy to Grow by End of 2013: Barroso… And Barroso from May 2011: “Eurozone not destined for a double-dip” …

  27. Economy? What bad economy? BOTH Obama and Romney had spent a BILLION, campaigning. (Corporate media loves them – and those billions).

  28. economy trumps all other concerns when goes wrong, so can’t compare abs level on immgn with 07 – still a top concern

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