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Stiglitz brings the shrill, and Izvestia reminds us of the limits of permissible discourse

a little night musing's picture

Joseph Stiglitz has a new book out, you may have heard of it? Freefall: America, Free Markets, and the Sinking of the World Economy.

Some of its important themes were addressed in two op-eds Stiglitz wrote for the NY Times: A $1 Trillion Answer [Nov 2008], in which he laid out what he saw as the approach Obama needed to take to address the country's economic meltdown; and Obama's Ersatz Capitalism, a critique of the Obama administration's approach to the banking crisis, which was privatizing profits and socializing losses. In the latter op-ed, he described the Obama administration approach as "far worse than nationalization". Keep those words in mind.

SocProf has a great post up (with graphs!) commenting on some of what Stiglitz has been saying recently, in the book and in his TV appearances: Ersatz Capitalism and Anomie 2.0. A must-read.

And then, in the Books of the Times section last week, Michiko Kakutani reviewed Freefall: America, Free Markets, and the Sinking of the World Economy. (Weirdly, or not, Kakutani's review mentions, but does not link, the two op-eds from her very own newspaper.)

The review is entitled "Skepticism for Obama's Fiscal Policy". I recognize that authors are not always responsible for the titles given to their articles, so it may not be her fault that what she describes from the book is considerably more than "skepticism":

Considerable criticism in this book is directed at the Obama administration’s handling of the recession. Mr. Stiglitz contends that the president and his advisers chose “to muddle through,” to rearrange only slightly “the deck chairs on the Titanic” instead of boldly trying to “solve the structural problems of the banking system.”

He writes that both the Bush and Obama administrations “underestimated the severity of the recession” and that the Obama stimulus “made a big difference” but “was too small” — that “too much of it (about a third) went to tax cuts, too little went to help states and localities and those that were falling through the holes in the safety nets.”

Echoing Colin L. Powell’s doctrine of overwhelming military force, Mr. Stiglitz writes that “when an economy is weak, very weak as the world economy appeared in early 2009, attack with overwhelming force.” Tackling the problem with what he sees as “insufficient ammunition,” he adds, “was a dangerous strategy, especially as it became increasingly clear that the Obama administration had underestimated the strength of the downturn, including the increase in unemployment.”

The result of the administration’s application of underwhelming force, he glumly predicts, will be a slower recovery, and “we will emerge from the crisis with a much larger legacy of debt, with a financial system that is less competitive, less efficient and more vulnerable to another crisis.”

Kakutani concludes, however: [my emphasis]

Some of the suggestions that Mr. Stiglitz makes in these pages for reconfiguring the American economy (and American society) stray far from the realm of practical policy recommendations that actually have a chance of winning broad public support or being enacted by Congress. He writes about how a “redistribution of income” and more progressive taxation might help stabilize the economy and calls for a new global reserve system. He contrasts Bhutan’s concept of G.N.H. (“gross national happiness”) with America’s focus on G.D.P. and talks about the “moral deficit” that Americans’ “unrelenting pursuit of profits” and self-interest have created.

Such remarks not only give ammunition to conservative critics who want to dismiss Mr. Stiglitz as a European-style liberal, but they also have the unfortunate effect of diverting the reader’s attention from the many shrewd assessments that he makes in “Freefall” about the causes and consequences of the great financial meltdown of 2008.

Shorter Kakutani: If you try to push the Overton Window to the left, you risk criticism from the right. Fear criticism from the right!

The risk of criticism from the right makes your argument weaker. But there is no irony in arguing thus in a review of a book which is criticizing from the left. Of course not.

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madamab's picture
Submitted by madamab on

Kakutani critiques the policy recommendations on their alleged political merits, not one whether they're good policy or not?

Gosh, who died and made her Queen of the Political Universe?! Heaven forfend that we should ever stray from "voodoo" economics. That would be double-plus ungood.

a little night musing's picture
Submitted by a little night ... on

Kakutani critiques the policy recommendations on their alleged political merits, not one whether they're good policy or not?

You've got it!