Sunday, April 28, 2013

The Sequester, Air Traffic Controllers, and Republicans’ Magical Thinking

To anyone interested in how economism plays out in shaping U.S. policy, events of the last couple of weeks are a good example, as Congress found bipartisan resolve in telling the FAA to stop furloughing air traffic controllers and end flight delays—but without finding any new funds for the FAA.

A bit of background. It seems now to be clear that the more liberal economists, who warned that the increasing stridency of deficit-reducing talk on Capitol Hill boded ill for the sputtering economic recovery, are being proved right. Projections showed that the sequester would probably cause about 700,000 jobs to be lost in the public sector, and that this would slow down economic recovery. While the effects of the sequester are only just starting to be felt, the increase in payroll taxes from January is apparently already having an effect and is reflected in worse economic numbers—see several stories at this past week, for example.

The effects of the sequester also have to be seen against the background of the total Federal workforce. A while back, in 2010, Ed O’Keefe at the Washington Post (sorry, they seem to have taken down the page) provided a calculation of how many civilian Federal workers there were under each president since Kennedy, compared to the size of the population. Between Kennedy and Carter, there were roughly 13 Executive Branch employees per thousand population. That started to drop with Reagan and now as of 2010, under Obama the number was 8.4. Put another way, between 1982 and 2010 the U.S. population grew by 34% but the number of Executive Branch civilian employees declined by 4%.

Liberals like me should be embarrassed by how many years could go on with these cuts in Federal workforce without any serious repercussions—suggesting that conservatives were right under Reagan to claim that the government was bloated. But the idea that you can simply cut and cut some more, and never will there be any damage done, has to be a form of magical thinking rather than rationality. In my work I have to follow what’s happening at the FDA, and the inability of the FDA to inspect foreign plants that make the chemical components of the American drug supply, and to be sure that foods are safe, has been increasingly well documented.

When the sequester was being considered, the FAA made it clear that under the rules, they’d have no choice but to lay off controllers and probably cause flight delays, as well as possibly unsafe conditions at smaller airports. The Republicans in Congress could not buy this. They assumed that every Federal agency has way too many workers, still, and that you could cut the budgets without harming essential services. They believed this was true not because of any facts, but because it has become an article of right-wing faith—smaller government is always better.  

So the sequester went into effect, and the furloughs occurred, and as predicted, bad things like flight delays happened—especially to business travelers, a group the Republicans worry about. With very little hesitation, Republicans joined Democrats in Congress and a bill to end the furloughs was immediately pushed through. Of course there was no increase in FAA funding; they simply allowed the agency more flexibility in deciding where to take the budget cuts. This almost certainly means that instead of important public services being cut in a visible way, services will be cut behind the scenes where the bad consequences won’t be obvious for several years. (And of course the other dire consequences of the sequester, that don’t hurt folks right away who are likely to vote Republican, remain unaddressed in Congress.)

Government services exist for a reason, and the public good (something that economism more or less denies exists) will be harmed when such services are severely constricted. The continuous cutback in the federal workforce since the 1980s argues for the danger that we’ve already reduced services to a dangerous extent. But if your magical thinking requires that cutting government spending is the solution to every conceivable problem, then you won’t be bothered by mere facts.

Economism as Religion—Krugman’s Near-Acceptance

Readers of The Golden Calf know that I cite Paul Krugman more than any other contemporary economist, perhaps because his New York Times column is so readily accessible, as well as because I think he usually makes the most sense. In that book I also had a bit of fun with Krugman because in earlier columns, he came right up to the main thesis of the book—that economism is really disguised religion, and not economics at all—but refused to go all the way to his own argument’s logical conclusion.

He’s at it again, as shown by his April 25 column, “The 1 Percent’s Solution” (subscription may be required):

He states in this column that the answers are now in—the so-called austerians are simply wrong in arguing that more austerity, rather than short-term economic stimulus, was needed to get the economy back on track after the big recession. Specifically, several authoritative reports favoring austerity have been recalculated and shown to be riddled with errors. So why, Krugman asks, is the austerity position still so widely proclaimed, and why is no one calling for more stimulus?

He has two answers. His main answer, as his title suggests, is that the wealthy find the austerian position to be in their selfish short-term interests, and what the 1 percent want is what the economists, by and large, proclaim to be true. (I guess those are the folks that donate the big bucks to the university economics departments and the economics think tanks.)

But along the way Krugman offers a second answer:

Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price. Economists can explain ad nauseam that this is wrong, that the reason we have mass unemployment isn’t that we spent too much in the past but that we’re spending too little now, and that this problem can and should be solved. No matter; many people have a visceral sense that we sinned and must seek redemption through suffering — and neither economic argument nor the observation that the people now suffering aren’t at all the same people who sinned during the bubble years makes much of a dent.”

In short, people want to make their economic theories match certain religious preconceptions about God’s plan for the world—exactly the thesis The Golden Calf offers for how economism is rooted in some major religious traditions, and functions logically like religion rather than economic science.