William K. Black
On March 18, 2013, Lawrence O’Donnell stated that John Boehner’s admission that the U.S. faces no current debt crisis vindicated Paul Krugman, who O’Donnell described as “a lonely voice opposing austerity.” It is true that Krugman has been a strong opponent of austerity and has been proven correct. It is also true that MSNBC has frequently portrayed Krugman as an isolated, virtually sole opponent of austerity.
I wrote about one of these MSNBC efforts in a November 12, 2012 column entitled: “Chris Matthews Embraces Self-Parody by Calling for Obama to Ignore Krugman.” The context was that Krugman was supporting our warning that Obama’s efforts to achieve a “Grand Bargain” would impose destructive austerity, heavy cuts to vital social programs, and begin to unravel the safety net (which is why I call it the “Grand Betrayal”). Matthews was enraged that Krugman opposed Obama’s proposed betrayal. The key passages from my article relevant to O’Donnell’s remarks are:
“On Friday, November 9, 2012, Matthews advised his viewers that it was essential to ignore Paul Krugman’s objections to the economic impact of the Grand Bargain because he was on ‘the far left.’ (Matthews then danced around that label.) At no time did any of the MSNBC hosts ask anyone with economics expertise whether austerity and beginning to unravel the safety net would be harmful or helpful to the nation. The logical incoherence I have explained was never mentioned. The only time an economist was mentioned was Matthews’ fact and logic-free denunciation of Krugman. Matthews did not explain why Krugman opposed the Grand Bargain.
Matthews claimed that it was essential for Congress and the public to ignore a Nobel Laureate in Economics’ warnings that what was being proposed was a bad plan that would harm our economy. Matthews said that Obama (a lawyer and politician) must tell Krugman that he was going to ignore Krugman’s economics warnings because “I’m President, you’re a columnist.”
Matthews has again proved one of our family rules – it is impossible to compete with unintentional self-parody. Let’s try a slight variant of Matthews’ motif. If a Nobel Laureate in Physics writes a column warning that the President is proposing a bad plan to send humans back to the moon because the plan relies on bad physics the President should respond: ‘I’m President, you’re a columnist’ – and proceed to ignore his warning.”
Another lead MSNBC commentator – and his more liberal co-host – also portrayed Krugman as far outside mainstream economics and suggested that anyone opposing austerity as a response to the Great Recession must be so obviously wrong that his views should be dismissed. Joe Scarborough wrote a column on January 28, 2013 in Politico denouncing Krugman’s opposition to austerity. His title said it all: “Paul Krugman vs. the world.”
“Mr. Krugman’s view is that Americans would be better off if its government ran deeper deficits and ignored its longterm debt. That, of course, runs counter to conventional wisdom across the Western world….
[I]t was fascinating having Mr. Krugman on for the reason that his worldview runs counter to almost all mainstream economists and he got a Nobel Prize for his efforts.”
Scarborough stressed that Krugman’s views shocked his more liberal co-host, Mika Brzezinski and adopted her reasoning that not imposing austerity today – during a recovery from a Great Recession – because we might have deficits in safety net programs years from now was analogous to not reducing carbon emissions now on the grounds that global climate change did not yet inflict grave injury on the world. Her metaphor was that Krugman was a deficit-denier analogous to a global climate change denier.
I trust that the reader, unlike Scarborough and Brezezinski, can see that this metaphor is not remotely analogous. Here is a hint on how to make their metaphor more analogous. Would we, because of global warming, cut off heat to public housing units during a terrible blizzard in January and let the most vulnerable die and millions of others suffer in agony? Even that revised metaphor is not fully analogous because while a barrel of oil not used today could be available five years from now, money is not like a barrel of oil. If we do not spend a dollar today to increase demand and speed our recovery from the Great Recession we do not reduce future deficits. The opposite is true. The “paradox of thrift” in response to a recession is a well-known economic response that causes austerity to reduce growth, which can increase current and future deficits. What Scarborough and Brezezinski revealed with their metaphor is that they lack even the most basic understanding of money, which means they cannot understand budgets, the impact of austerity, or the nature of an economy like the U.S. with a sovereign currency.
In sum, O’Donnell could be excused for believing that Krugman is a “lonely voice opposing austerity” if O’Donnell is getting his economic news and analysis from his MSNBC colleagues. (O’Donnell plainly does not get up early on Saturdays and Sundays to watch Chris Hayes – who has been excellent in explaining why austerity is an insane, self-destructive policy.)
What O’Donnell got wrong is not Krugman’s opposition to austerity. Krugman has explained that as he came to understand more fully the nature of money in a Nation with a sovereign currency he has moved strongly in the correct policy direction by increasingly opposing austerity as self-destructive. What O’Donnell, Matthews, and Scarborough all miss is that Krugman was never a “lonely voice” in opposing austerity. The reality is the opposite of Scarborough’s claims in his column – Krugman’s position that austerity in response to a Great Recession is a self-destructive, insane policy is the normal position of economists. Economists overwhelmingly support automatic stabilizers (which work in the opposite direction of austerity). While Republicans like Scarborough worship austerity now with the Obama administration in power, Republican administrations of the modern era have consistently refused to inflict austerity on the economy when they controlled our policy response to recessions.
The fact that a liberal commentator like O’Donnell thinks that Krugman was a “lonely voice” opposing austerity tells us something vital about the modern media and the economic policy incoherence of the Obama administration about austerity. What is true is that the “serious” media assumes that austerity is the only “serious” policy. What is true is that former Treasury Secretary Timothy Geithner, a man with no expertise in economics, finance, or money and a track record of catastrophic failure as a financial regulator, became Obama’s principal economic advisor. Geithner loved austerity. The result is that the administration constantly contradicts itself about austerity. Half the time, the administration praises austerity and takes “credit” for increasing austerity. MSNBC, again with Chris Hayes as the great exception, typically supports the administration’s policies. Here is a thought experiment: who is the Obama administration spokesperson who appears frequently on MSNBC and explains why Krugman is right about austerity? There is none.
It is very harmful to the Nation that MSNBC has led people to believe that there is only one, presumably hopelessly weird, economist in the world who opposes austerity as a response to the Great Recession. Krugman’s view is the norm among economists – and the minority of economists here and in the EU who support austerity is made up overwhelmingly of the people whose policies have proven over the last three decades to be so criminogenic that they produced the epidemics of control fraud that drove the second phase of the S&L debacle, the Enron-era scandals, and the ongoing crisis.
MSNBC could do the Nation a great service by routinely presenting the economic views of those with a track record of predictive success. I do not urge that we be the sole guests, but O’Donnell’s remarks about Krugman show that the exclusion of the many experts who got things correct has been so extreme that even O’Donnell is unaware that there is a consensus among economists against austerity – and that the degree of that consensus among the experts who have repeatedly been proven correct is extraordinary.