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December 17, 2004

Jon Rauch Consigns Himself to Limbo for Eternity

Jonathan Rauch writes:

Social Studies (12/17/2004): Bush's agenda differs markedly from Thatcher's (and Ronald Reagan's): Thatcher wanted to reduce both the demand for and the supply of government. Bush seems to think he can spend his way to smaller government, reducing the demand for government while, at least in terms of spending, increasing the supply. His approach, while arguably more cynical than Thatcher's, may prove more politically successful....

This paragraph is intended to send two different messages to two different sets of audiences:

To Bushies, the paragraph is supposed to say:

Democrats and deficit hawks claim that Bush's big-deficit conservatism is immoral--that it weakens the economy and impoverishes the future by reducing the rate of economic growth while shifting the costs of today's government programs onto tomorrow's taxpayers. But what do they know? Economics isn't a science. And who cares: Bush wins. He thus may well be more successful in the long run than Thatcher or Reagan.

To Democrats and to the scattered remnants of grownup Republicans, the paragraph is supposed to say:

Everyone with half a brain knows that Bush's big-deficit conservatism is deeply immoral--that it weakens the economy and impoverishes the future by reducing the rate of economic growth while shifting the costs of today's government programs onto tomorrow's taxpayers. Whatever you think of Thatcher and Reagan, Bush is a much lesser figure than either of them.

The paragraph, as written, places unbearable stresses on the words "differs markedly" and "arguably": are they supposed to trigger a positive, neutral, or negative? The paragraph is artfully written to preserve the maximum of possible ambiguity. But the time for ambiguity about George W. Bush is *long* past. If Trent Lott can call for Donald Rumsfeld to spend more time with his family, Andrew Sullivan can out-Krugman Paul Krugman as a shrill unbalanced critic of George W. Bush, and Brent Scowcroft can say that Bush's Iraq policy is a "failing venture," Jon Rauch can at least tell us which banner he is following.

As was once written by an Italian poet of the thirteenth century:

And I looked again, and saw a banner,
  Which, whirling round, ran forward so rapidly,
  That any thought of pausing it seemed to scorn;

And after it there came so long a train
  Of people: I never would have thought
  That Death had ever undone so many...

Then I understood, and I knew,
  That this was the place of the cowardly wretches
  Hateful to both God and to his enemies...

And every one of them words rang true and glowed like burning coal...

Posted by DeLong at December 17, 2004 07:18 PM

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Comments

Hey, I was just listening to Blood on the Tracks yesterday. Signore Alighieri I presume?

charlies824

Posted by: charlies at December 17, 2004 07:38 PM


"Everyone with half a brain knows that Bush's big-deficit conservatism is deeply immoral--that it weakens the economy and impoverishes the future by reducing the rate of economic growth while shifting the costs of today's government programs onto tomorrow's taxpayers."

Question: What would the economy in 2004 be like if Bush had raised taxes instead of lowering them? What if Bush had cut government spending rather than increased spending?

Answer: The Great Depression.

Question: Why don't we educate Democrats rather than ridicule Bush? Brad, at the very minimum, get to "know thy enemy". Understand Bush's understanding of economics.

Bush understands we are on a fiat money system not a gold standard. Bush recently stated if the world wants to solve the U.S. trade deficit, all they have to do is buy U.S. products. Bush believes in any given year, if everyone's income was spent, there would be no additional "SAVINGS" and no additional "DEFICIT".

Just repeating doom and gloom about SS reform, deficits, and tax cuts does not lead to an understanding. The following 3 statements are a first step to understanding Bush's view of a FIAT MONEY system.

1) Financial deficits are REQUIRED if people desire and have the power to "SAVE" U.S. fiat money.

2) Those financial DEFICITS used to create SAVINGS can come from the PRIVATE SECTOR, you and me, when we borrow money in limited quanitities usually based on nonfinancial assets such as houses.

3) Those financial DEFICITS can come from the PUBLIC SECTOR, the government, who can borrow money from the Fed Reserve in unlimited quantities based on the power of the people.

Understand Bush and the Republicans, only then will the Democrats beat them. Flailing about, only makes Democrats look ... unfocused.

Posted by: Winslow R. at December 17, 2004 08:13 PM


"And when finally the bottom fell out / I became withdrawn,
The only thing I knew how to do / Was to keep on keepin' on / like a bird that flew, Tangled up in Blue."                                                                                                              
The Bush Administration really puts me to mind more of "Idiot Wind".

Posted by: Patrick Taylor at December 17, 2004 08:17 PM


"Question: What would the economy in 2004 be like if Bush had raised taxes instead of lowering them? What if Bush had cut government spending rather than increased spending?"

I'm either really, really stupid, or what you say is cynically oversimplified. The WAY that Bush cut taxes--long-term, rather than short-term--and on WHOM he cut taxes--the highest-income rather than on low- and middle-income--guaranteed that the lowest possible benefit to the great majority of Americans, would have the hugest cost. We now have a tepid economy (for most people, that is) and huge federal budget deficits as far as the eye can see.

It was never a choice between Bush's tax cuts/spending increases, and doing nothing (though quite debatable that doing nothing would have triggered the Great Depression). THAT is a false dichotomy, I believe it is called.

But you (and Bush) are good with those smoke-and-mirrors!


Posted by: chrisanthemama@aol.com at December 17, 2004 08:50 PM


"I'm either really, really stupid, or what you say is cynically oversimplified."

Winslow has dumbed down Bush's economic policy because its intellectual sophistication is hard for an economically confused Brad DeLong to understand. It's not like DeLong has ever worked at the Treasury for example, or is a professor of economics who has worked at some of America's top universities, and has three degrees from Harvard. DeLong just doesn't get it.

And it should be obvious to all the President is an intellectual, I mean, sometimes he thinks so hard he even confuses himself.

Posted by: Adam at December 17, 2004 11:33 PM


Then, where are we now to look for conservative investments? The core is always Vanguard stock and bond indexes, but even this leaves lots of possible choices.

The Federal Reserve tightened short term credit for the 5th time, and essentially promised more to come. The S&P is up about 8.5% for the year, while middle and small cap stocks are much stronger. Value stocks are much stronger than growth. Energy and real estate investment trusts are having terrific years, while health care stocks are having a moderate year but are close to catching the S&P. International stocks are up more strongly than the S&P with few few countries as exceptions. Again, international value leads growth. As for bonds, the bull market in long term bonds surprisingly continues. Quite a fine investing year.

Posted by: lise at December 18, 2004 04:08 AM


"Quite a fine investing year"?? Only for those international stocks.

After all, if the dollar value of your portfolio is going up at the same rate the value of the dollar itself is sinking, all you're doing is treading water. That's why the Eurpoean and East Asian stocks are outperforming the S&P - even if they're not going up very much in terms of their own currencies, at least those currencies are solid, so their gains are *real* gains from the get-go.

Posted by: RT at December 18, 2004 04:41 AM


There is a bull markets in stocks in domestic currencies and dollars that includes almost all of the world markets and has been going on for 2 years.

http://www.msci.com/equity/index2.html

National Index Returns
12/31/03 - 12/15/04

Australia 24.8
Canada 18.0
Denmark 28.0
France 16.9
Germany 14.1
Hong Kong 22.5
Ireland 40.5
Japan 9.4
Norway 50.3
Sweden 34.9
Switzerland 14.1
UK 18.7

Posted by: anne at December 18, 2004 05:35 AM


To honestly state that Bush has an understanding of economics, except the economics of narrow self-interest, is to be intellectually dishonest with yourself and with people trying to understand just where this economy is headed.

The numbers will tell it when fourth quarter earnins are reported and as the financial reporters are trying to put the best spin they can on the tepid shopping season that is unfolding at the lower end retailers. Bloomberg's treasury department reporter will find excuses like higher oil prices to explain away why consumers not in the top 2% of the population spent less this year than last year.

And the housing market? There is just so much pristine beachfront property left to build on. Once the people reaping those large tax cuts run out of room or areas on which to build those vacation homes, the housing starts will flatten out and the true picture of the American economy will start to emerge.

This isn't about voodoo economics anymore, it's about the basic survival of millions of people. And something that scares me silly is looking at the recent UNICEF report and seeing the US next to last above Mexico in the area of children living in poverty. Kind of like Texas's ranking compared with the rest of the country while Bush was governor.

Posted by: Matt at December 18, 2004 05:54 AM


I've got to disagree with Brad's comment that "The paragraph, as written, places unbearable stresses on the words 'differs markedly' and 'arguably'." Any stress is relieved by the words "politically successful" at the end. Rauch doesn't seem to be saying that Bush's plan will succeed economically. He only says that it may well succeed as a political program. You are not necessarily Bush's friend if you don't explicitly say: "Bush eeevil" in every paragraph. Although the Bush propaganda machine might twist it that way.
Of course, if Rauch is correct, we may all be in a far worse place than economic limbo. I hope Adam Smith is right: "There is much ruin in a nation." Maybe we will survive the Bushies, even if they are politically successful. Maybe.

Posted by: Joe S. at December 18, 2004 07:28 AM


"And I looked again, and saw a banner,
Which, whirling round, ran forward so rapidly,
That any thought of pausing it seemed to scorn."

The poet is describing in hiimself the reaction that he will next condemn as weakness.
Economists treat everything as simple intention, and art critics don't have that luxury. Neither do philosophers, in my opinion, but saying that always gets me into trouble.
Strange world.

Posted by: seth edenbaum at December 18, 2004 08:13 AM



Chrisanthemama wrote:

" The WAY that Bush cut taxes--long-term, rather than short-term--and on WHOM he cut taxes--the highest-income rather than on low- and middle-income--guaranteed that the lowest possible benefit to the great majority of Americans, would have the hugest cost. We now have a tepid economy (for most people, that is) and huge federal budget deficits as far as the eye can see.."

I'm in agreement. Deficits could have been better directed. This is why the Republicans should have been beaten in 2004 but the chance was bungled.

Adan wrote:

"Winslow has dumbed down Bush's economic policy because its intellectual sophistication is hard for an economically confused Brad DeLong to understand. "

I doubt it. There are important reasons for SS reform besides destroying SS, I'd like Democrats to be part of the process, and not screw it up like they have during past reforms. It is just a hope. For example, Bush's economic thinking says a SS surplus is not a necessary goal or even good one, for the middle class or business.

Isia wrote:

"Quite a fine investing year."

What are you advertising?

Matt wrote:

"The numbers will tell it when fourth quarter earnings are reported and as the financial reporters are trying to put the best spin they can on the tepid shopping season that is unfolding at the lower end retailers. "

I agree things are not looking good. Why do you think Bush is trying to get more business tax cuts, allow offshore profits to be repatriated at 5.3% rates etc. and create a huge hole in the budget with SS reform? He is scared silly.

Posted by: Winslow R. at December 18, 2004 08:20 AM


If there was eternal damnation for intellectual dishonesty, there'd be a whole bunch of candidates right about now.

Posted by: sm at December 18, 2004 09:37 AM


Rauch's article sounds like something a nuanced French homosexual would write.

Posted by: Bobo at December 18, 2004 09:41 AM


Winslow shucks and jives, but can't escape the essential dishonesty of his position.

As pointed out, the actual impact of Bush's tax cuts was minimal to non-existent in terms of boosting the economy. One need only look at what Bush said his tax cuts would do and compare that to what actually happened. Job creation was negative for most of his first term, slightly less than flat toward the end of it, and headed back toward negative territory now. GDP growth was fair compared to any previous presidency of the past half century. And, of course, the federal deficit has ballooned out of control.

There is no possible way to spin any of this. The evidence is clear that Bush's policy is based entirely on ideology and a complete disregard for the results or effects in the real world.

You ask that Brad (and Democrat in general) "understand Bush's understanding of economics." All of the evidence accrued thus far demonstrates conclusively that Bush has not the slightest understanding of economics. Consider his Social Security "reform" which will create certain huge and immediate deficits in an effort to combat small and uncertain deficits at some indeterminate time in the distance future. A rough analogy would be having your teenager's teeth extracted because he or she might someday suffer from tooth decay or periodontal disease.

Posted by: Derelict at December 18, 2004 10:36 AM


Derelict wrote:

Winslow shucks and jives, but can't escape the essential dishonesty of his position.

*You forget the boogie woogie?

As pointed out, the actual impact of Bush's tax cuts was minimal to non-existent in terms of boosting the economy.

*Look at short-term effect of tax cuts in summer of 2003 and no one will agree with you.


One need only look at what Bush said his tax cuts would do and compare that to what actually happened.

*Bush got the direction, he overestimated the result, election year poltics.

Job creation was negative for most of his first term, slightly less than flat toward the end of it, and headed back toward negative territory now.

*Right, past stimulus is running out of steam.

GDP growth was fair compared to any previous presidency of the past half century.

*Agreed.

And, of course, the federal deficit has ballooned out of control.

*Out of control ? What does that mean?


There is no possible way to spin any of this.

*It happens every day.

The evidence is clear that Bush's policy is based entirely on ideology and a complete disregard for the results or effects in the real world.

*Agree and disagree, it got him reelected didn't it?

You ask that Brad (and Democrat in general) "understand Bush's understanding of economics." All of the evidence accrued thus far demonstrates conclusively that Bush has not the slightest understanding of economics.

*The economy is still going though it is running out of steam. The fact that Bush is trying to further increase deficit spending says he realizes he's in trouble.

Consider his Social Security "reform" which will create certain huge and immediate deficits in an effort to combat small and uncertain deficits at some indeterminate time in the distance future. A rough analogy would be having your teenager's teeth extracted because he or she might someday suffer from tooth decay or periodontal disease.

*In your analogy your teenager will suffer extreme pain immediately and loss of chewing function in the future, not so with SS reform you need have no pain except the "possible" pain of inflation which is painful to savers because their fiat money will be worthless, and a relief to debtors as they are able to pay off their debts in worthless money. If the Democrats got involved in could have the added benefit of reducing payroll tax rates, a regressive tax.

Posted by: Winslow R. at December 18, 2004 11:25 AM


The idea that Bush is scared to death doesn't hold water. If he didn't have a pathological case of self-confidence, he wouldn't be in half the trouble he is now. And the rest of us with him.

Posted by: sm at December 18, 2004 11:50 AM


Didn't Reagan spend his way to smaller government? Except that it was actually bigger if you count the military? Isn't that the secret (open secret but no one discusses it) that both Reagan was and Bush II is intent on increasing the size of the largest, least responsible part of the government, and will sacrifice anything to the goal? Including soldiers and even victory itself?

Posted by: sm at December 18, 2004 12:18 PM


What does it mean that the deficit has ballooned out of control? How about ever-increasing record deficits for as far as anyone (including Bush) can project?

Winslow contends that Bush was indeed concerned with the effects of his policies--but only to the extent that the publicizing of those policies effected his re-election bid. By that reasoning, I guess you wouldn't be too upset if your financial advisor hands you a bunch of fraudulent documents when it's time to rollover your 401(k). After all, the fact that he skipped town with your retirement savings is less important than the fact that he got you to rehire him.

As for the teenager tooth-pulling analogy, it's a perfect fit. The kid gets immediate pain, we get immediate massive debt increase. The kid loses future chewing ability, future retirees lose the only functional safety net against complete destitution.

You can dig through the pile of horseshit that is Bush's economic policies all day long, but you're never going to find a pony--just more horseshit.

Posted by: Derelict at December 18, 2004 12:43 PM


sm wrote:

"Isn't that the secret (open secret but no one discusses it) that both Reagan was and Bush II is intent on increasing the size of the largest, least responsible part of the government, and will sacrifice anything to the goal? Including soldiers and even victory itself?"

Ultimately, the reserve currency should pay for world security. It is the only currency capable of "taxing" other countries for the benefit through inflation. Most of the world's people would agree a 500 billion C/A deficit is a small price to pay for World Peace.

Derelict wrote:

What does it mean that the deficit has ballooned out of control? How about ever-increasing record deficits for as far as anyone (including Bush) can project?

*I would define the deficit as being out of control if an overheating world economy resulted in a lack of stratigic resources and resulted in an international confrontation with China, Europe or Russia.

By that reasoning, I guess you wouldn't be too upset if your financial advisor hands you a bunch of fraudulent documents when it's time to rollover your 401(k). After all, the fact that he skipped town with your retirement savings is less important than the fact that he got you to rehire him.

*You must be a "SAVER" as Brad seems to be. You should diversify your financial assets from Tsy Secs into productive investments.

As for the teenager tooth-pulling analogy, it's a perfect fit. The kid gets immediate pain, we get immediate massive debt increase. The kid loses future chewing ability, future retirees lose the only functional safety net against complete destitution.

*The kid gets a job. Sorry, but SAVERS will lose. As long as the ballot box functions, complete destitution will not happen.

You can dig through the pile of horseshit that is Bush's economic policies all day long, but you're never going to find a pony--just more horseshit.

*Instead we should just do an unfocused dance in the horseshit?

Posted by: Winslow R. at December 18, 2004 01:39 PM


I never did like it all that much, and one day the ax just fell . . .

Posted by: rea at December 18, 2004 01:47 PM


I'm pretty sure that someone has already said this but the place being described in that section of the Inferno is *not* Limbo. Limbo is the home of the virtuous heathens (i.e. people like Aristotle, not people like Jonathan Rauch). Limbo is in Hell itself whereas the "cowardly wretches" are hated by God's enemies and so are not even allowed inside Hell. They inhabit ante-Hell which lies outside the river Acheron.

Posted by: NIck at December 18, 2004 02:38 PM


WinslowR, that crack about the world's people agreeing to be taxed for the sake of peace was nonsense back in the days of the Athenian Empire and the Delian League, let alone when the revolting Americans didn't want to be taxed without representation (I notice that you aren't consulting the world's people on all this). Why on earth would anyone think it made any more sense now?


Posted by: P.M.Lawrence at December 19, 2004 12:09 AM


While I think Winslow is being ridiculous, I'm not sure Brad's right either. Certainly the key phrase is 'more politically successful'. The interesting thing is, in my opinion, Rauch is wrong too. How can you define 'more politically successful'? The most obvious method is election results. Reagan clearly was the equal of Bush in that respect, and bequeathed a Republican presidency in the form of Bush's father. Maggie did even better, winning two incumbent elections and bequeathing another to Major. Outside of elections, Reagan is now worshipped as a deity by a significant proportion of the population, including almost all of the elite of conservative politicians and journalists. Maggie is similarly revered by a large number of Tories, although not in quite as creepy a way. Admittedly she is also more openly hated by a larger section of the population and political/media elite than Reagan, but she has also fundamentally altered the political debate in Britain, such that Blair has adopted a Thatcher-lite economic policy to go alongside his reasonably liberal social policy.
Will Bush be able to say the same in 20 years time? I doubt it very much. Bush may leave a lasting political legacy admired by a majority in some areas, but his handling of the budget, government programmes and the economy and is not likely to be one of them. And if he succeeds in destroying social security as he seems intent on doing, then he will be hated with a passion by at least one generation of Americans. There's a very good reason why we have all these New Deal programmes.

Posted by: Ginger Yellow at December 20, 2004 09:37 AM


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