But America's wealthy don't seem to mind.
Aging baby boomers may
remember a 1960s rock band that sported an all-time great name. That
band — Question Mark and the Mysterians — may now have a worthy
rival on the name front. Make way for Reinhart-Rogoff and the Austerians.
Harvard economists
Carmen Reinhart and Kenneth Rogoff don’t make smash records. They write learned
economic papers that make champions of austerity happy — and help smash the
life prospects of average working families.
Austerians preach the
absolute necessity of whacking away at government spending. We must, they
solemnly intone, discipline ourselves to reduce government deficit and debt, no
matter the pain austerity may bring us.
And austerity does
bring pain. People lose access to basic services. People lose jobs. People even
go hungry. But some people — extremely rich people — don’t mind austerity at
all.
These affluent
Americans don’t send their kids to public schools. They don’t visit public
parks. They never ride public transit. These wealthy folks don’t need public
services and resent having to pay taxes to support them.
Austerity works for these wealthy Americans. Cutbacks in public services generally won’t inconvenience or complicate their daily lives. And if austerity should create some unanticipated discomfort, they can always get their friends in high places to intervene — as Americans saw recently when lawmakers rushed to undo air traffic controller budget cuts that had rich travelers cooling their heels in airports.
Austerity cutbacks,
notes Center for Economic and Policy Research economist Dean Baker, promise
even greater payoffs — for the rich — down the road. Any cut in programs like
Social Security, he points out, “opens the door for lowering tax rates on the
wealthy in the future.”
If social commitments
can be chopped, Baker writes, “then the wealthy can look forward to being able
to keep more of their income.”
All this may help
explain why pollsters have found, as economist Paul Krugman points out, that
rich Americans “by a large majority” consider budget deficits “the most
important problem we face.”
America’s wealthy make
their preference for austerity equally plain to the politicians who seek their
favor. These politicians want to be helpful to their deep-pocketed patrons. But
they also have needs of their own. They need “evidence” they can use, Dean
Baker reminds us, to show the general public that “austerity serves the general
good and not just the rich.”
Three years ago,
Harvard’s Reinhart and Rogoff supplied that “evidence,” via an academic paper
that purported
to show a grave danger whenever government debt hits 90 percent of Gross
Domestic Product.
This paper rushed to
the “top of the charts” in elite public policy circles. Austerians worldwide
cited the paper as an unassailable justification for cutting government
spending quickly and deeply.
Reinhart and Rogoff
made no meaningful move to discourage the austerians. They basked instead in
their global celebrity — until a team of unorthodox economists at the University of Massachusetts exposed their paper as
essentially a sloppy scholarly fraud.
This Massachusetts
work has just gone viral. Reinhart and Rogoff’s spreadsheet snafus
have even become fodder for late-night TV comics.
End of story? Not
quite. We have much more here than a spectacularly failed attempt to make the
case for a doctrine that suits the sensibilities of the richest among us. We
have still another indication that inequality corrupts every corner of
contemporary societies, even our ivory towers.
The peers of Reinhart
and Rogoff, the scholars who hold the nation’s most prestigious endowed chairs
in economics, never subjected the Harvard pair’s findings to any serious
scrutiny. The unraveling of their bogus case for austerity started with the
digging of a skeptical grad student.
The lesson in all
this? In a staggeringly unequal society, as Paul Krugman sums up, “what the top
1 percent wants becomes what economic science says we must do.”
The rest of us, of
course, don’t have to listen.
OtherWords columnist Sam Pizzigati is an
Institute for Policy Studies associate fellow. His latest book is The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class. OtherWords.org
