When I watched a debate between Robert Reich, the former Secretary of Labour under President Clinton, and David Stockman, former Budget Director under President Reagan, onFareed Zakaria's GPS on Sunday, I was struck by the beating given to the "Keynesians" by Stockman. While Reich was expressing the need for government to stimulate the economy, in order to generate jobs and thereby increased revenue for government through taxes, Stockman was saying things like, "the Keynesian era is over and we have to stop spending given the $800 billion we have spent on 'foreign wars' and the danger to the entitlement programs like Medicare and Social Security.
Reich, on the other hand, was reminding Stockman that (President) Hoover made the same kind of statements before FDR changed the approach to the depression in the 1930's and by stimulating the economy through federal works projects, and infrastructure projects got people back to work. Reich also reminded Stockman that corporate tax rates were between 50% and 70% in the (Republican) Dwight D. Eisenhower administration, and have fallen significantly since then.
With one in ten people in the U.S. currently out of work, and with the Federal Reserve Chairman yesterday forecasting a long-term struggle to bring that number down, the U.S. is in for a very long decade of human distress before there are enough jobs to accommodate enough workers to bring the unemployment rate down to a more tolerable 4%-5%.
But if Reich and Stockman were expressing the views of their respective parties, now both sound like ideologies that have become "dogma" from which neither debater would or will deviate, it will take an earthquake of the size of the one that decommissioned those nuclear reactors in Japan (it was the tsunami that really did them in) to shake the foundations of both republican and democratic parties in order to bring the debt and deficit down, and to raise the debt ceiling by the first week of August, before the U.S. bond rating is threatened.
And neither Reich nor Stockman was interested in condemning the Wall Street miscreants for their devious, and unregulated (as a result of both Democratic and Republican administrations, Clinton and Bush 2) shenannigans of credit defaults and bundled mortgages sold as phoney 'paper' to many investors around the world. When will the ponzi scheme that was perpetrated by Wall Street find and prosecute the perpetrators, so that some meagre semblance of justice can be restored to the confidence of the American people.
Is the altar of Wall Street too sacrosanct, and too untouchable and too important a cash spiggot for both parties, that the perpetrators know they will never be prosecuted and will never have to account for their tragic and preventable and "wild-west" hooliganism?
Economic theory did not prevent those actions, except that both parties were and remain complicit in their execution, simply by creating a playing field that was open to abuse. And now that the hands of both parties arae covered with the stain of that debacle, who is there in Washington to "bell the cat" as it were? Neither Reich nor Stockman, it would seem, wanted to touch that radioactive political nuclear rod.