Poor Old Krugman

He’s getting glummer by the minute.

I can see why.

All the evidence piling up suggests that the best part of this recovery is now over, and that we are now entering a long, hard, and risk filled period of poor economic gains.

Not only this, but our policy options are in tatters. The sensible, text book approach is more stimulus. Then again the sensible, text book approach was massive stimulus back when it could stave off this malaise.

Oh well.

Moreover, the sensible approach to the banking crisis was the state takeover and cleaning up of the failed banks – Citibank I am looking at you – instead of this long drawn our and endless subsidization through the back door. It would have been painful and politically fraught. But we would have a healthy flow of credit right now instead of the dribs and drabs we now are faced with.

But since ‘nationalization’ is a nasty word, and since we lack the spine to deal with problems in a simple forthright way, we have condemned ourselves to years of weak and fraught activity.

Those among us who cry out that politics prevented strong action – the GOP seems hell bent on sinking the economy for their own electoral gain – should be quiet. We needed leadership. And got trimming. There is no excuse. As someone once said, countries get the leadership they deserve. We deserve mediocrity because we have drunk deeply the false truths at the free market well. We are collectively doomed to endure rather than prosper because we refuse to be strong together. We would prefer to fail apart.

The inadequacy of the economic policy team Obama relies upon has now been revealed by events. They tried to ‘get by’, and led us into the muck instead. We are given bureaucracy and paper clips, when we need declarative words and sharp knives.

The pile of debt we will accumulate in order to break the back of this crisis is huge. It could have been less had we acted decisively. The indenture we are handing forward is a token of our failure. The indebtedness a sign of our collective ineptitude and meager store of moral courage.

Throughout it all poor old Krugman has tried to point out the errors. He has been proven correct. But he has been far too nice. And now he’s glum about the future. Not because there are no solutions, but because he cannot see us deploying those solutions.

We are too weak.

So, please, no comments about ‘decline’ or anger about ‘Chinese competition’. No more wailing about the loss of manufacturing jobs. No more commentary on the diminished middle class.

The American economy is the world’s largest, most dynamic, and urgent. That we cannot muster the courage to use those qualities to restore ourselves to health is not due to the lack of anything other than spine.

So where is it?

Addendum:

Naturally Krugman is not alone. He is simply the most prominent. Other voices of economic sanity include Brad DeLong and Mark Thoma two of Krugman’s fellow travelers. Indeed the list of people complaining about the totally ineffectual nature of our nation’s leadership – in politics and in business – is very long.

The pity is that we are beset by a disease: bureaucracy has robbed us of an ability to be bold. Everything has to be ‘run by legal’. Everything has to be done by the book. Everything is reduced to jargon infested gobbledygook. Responsibility is diffused into ‘team’ rather than focused on individuals. We are a nation of face lifts, boob jobs, veneers of all kinds, fear, psychiatry, and denial. We are the age of analysis, when we need to be that age of ideas and action.

No wonder Krugman is so glum.