Anything economist Alan Blinder gripes about is just that, Blinder griping
Blinder is just another empty suit. An academic economic empty suit. But not one without an agenda.
In today's WSJ opinion page, "Enough With European Austerity, Bring on the Stimulus," Blinder rolls out MSM's tried and trite criticism of austerity. The object of his objections is none other than those rule-abiding Germans, Keynesians everywhere love to criticize--and secretly abhor.
Usually I don’t gripe about other countries’ economic policies—at least not on this page. It’s their own business. Besides, there is normally more than enough bad policy right here at home. But I have to make an exception for current macroeconomic policy in the eurozone, for two main reasons. One is that it is impacting other countries, possibly even our own, though that effect is often exaggerated. The other is that the mistakes are so painfully obvious.
European economic performance since 2008 makes the lackluster U.S. look marvelous by comparison. Unemployment in the eurozone today is higher than it was in 2009-10. Not only is real GDP still below its 2008 level, but it hasn’t grown for more than three years and may be heading down again. Meanwhile, deflation is more of a worry than inflation.
Coming from a guy who was Vice Chair of the Federal Reserve Bank under Greenspan during the creation of one of the worst stock market bubbles that was so painfully obvious in history, if his comments weren't so pathetic, they'd be laughable. That's for openers, Mr. Blinder.
Blinder then tackles Germany's current economic picture.
But what about Germany? Isn’t it the success story of Europe? Well,
cumulative German GDP growth over the five-year period 2008-13 is a
paltry 2.2%. That’s not 2.2% a year, but 2.2% in total. Germany looks
good only because the rest of the eurozone looks so bad. Furthermore,
Germany’s comparative success can be traced mainly to reforms made prior
to the financial crisis, not to what’s happened since.
This is the old economic apples-to-oranges sham, the equivalent to the question: If you're so rich, why aren't you smart? To which the answer is: If you're so smart why aren't you rich? The two are about as unrelated as academics are to common sense.
But here's the best part of Blinder's rant. Notice the word creative in his description of ECB President Mario Drahgi's Keynesian-MIT-trained leadership.
First, Germany’s central bank, the Bundesbank, is doing its level best to restrain the European Central Bank, which, under
Mario Draghi
’s creative leadership, would like to do more to spur growth.
“More” includes quantitative easing along Federal Reserve lines, which
in Europe might mean buying sovereign debt, corporate bonds, or
asset-backed securities. But Bundesbank President
Jens Weidmann
objects strenuously to further ECB stimulus, recently telling
this newspaper that purchasing more government bonds would be moving
down a “dangerous path.”
Whatever Keynesians do is creative, those who favor economic common sense are obstreperous and obstructive.
Then Blinder tosses out the real those-damn-stubborn-Germans hate bomb.
Second, the German government is cajoling other European governments to
continue (or resume) the budgetary austerity programs that have held
back European growth in recent years. Earlier this month Finance
Minister
Wolfgang Schauble
opined that “the worst thing we could do would be to repeat
yesterday’s mistakes” by using deficit spending to boost growth. No, the
worst thing German policy could do would be to push Europe, including
Germany, back into recession.
The damage done, Blinder then resorts to one of the ploys of one of the left's most hated political figures, Richard Nixon, when he once noted: "I like Kennedy. I don't know why he doesn't like me."
To be fair, the Germans are not alone in paying homage to fiscal
austerity. You hear that sentiment in other countries, too—even in the
U.S. But Chancellor
Angela Merkel
,
Europe’s most powerful leader by far, has hitched her luminous
political star to balancing the budget, and her nation is Europe’s
dominant economy. If Germany says no, it is hard to get to yes.
There's no semblance of anything even remotely fair in the minds of political-economic-agenda wonks like Blinder.
Make no mistake, these are dangerous people to the everyday health of everyday Americans and the WSJ ought to be ashamed of itself for printing such tripe.
