Krugman vs. Stockman

By Mike Whitney

It was no Rumble in the Jungle, that’s for sure. There were no blindside blows to the ribs, no bone-crushing roundhouse punches, and no blood-spattered warriors sprawled out on the canvas for the mandatory 10-count. But by the time ABC’s 15-round bareknuckle extravaganza was over, just one man was left standing, David Stockman, TKO champ of ”This Week’s“ Sunday morning political blabberfest.

The anticipation for the main event had been building for more than two weeks, ever since Reagan’s former budget director had delivered his hyperbolic libertarian manifesto on the editorial pages of the New York Times. Stockman’s incendiary treatise took a sledgehammer to Washington, Wall Street, “mutant crony capitalism”, FDR, the ballooning budget deficits, Lyndon Baines Johnson, the droves of debt-encumbered, consumption-addled Americans and, of course, Beelzebub Satan himself, the perfidious John Maynard Keynes.

Here’s a clip from Stockman’s sepulchral screed aptly titled “State-Wrecked: The Corruption of Capitalism in America”:

“Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.

Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.”

It’s a great read, particularly if you think the country is circling the plughole, which most people do. And Stockman doesn’t pull his punches either. He “kicks ass and takes names”, and the name that looms larger than all others inkjet Ben Bernanke, public enemy #1. The micromanaging central planners at the Fed take a real beating in Stockman’s diatribe, according to him– their scatterbrain printing operations and gluttonously-lavish bailouts are at the very heart of all that ails the nation.

That’s not to say that I agree everything Stockman says. (balanced budget, a “means-tested safety net”, etc) I don’t. But I do think he is dead-on in his overall analysis that corrupt institutions have ”turned the economy into a giant casino” and “have brought America to an end-stage metastasis.” More important, he’s captured the mood of the times, which he sees as relentlessly bleak. Who would dispute that? When he refers to our present epoch as ”sundown in America”, he speaks to the vast number of 99 percenters who’ve seen their jobs, their homes and their future prospects go up in smoke in the last decade as more and more of the country’s wealth is carted off by ne’er-do-well plutocrats and scotch-guzzling fund managers.

Read the rest here.