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Saturday, January 14, 2012

Countries Are Not Companies!

Paul Krugman clearly, patiently, insistently makes the obvious, indispensable, endlessly ignored basic political point yet another time:
...America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen… do not… have any special insights into what it takes to achieve economic recovery. Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line. For another, the economy is vastly more complex than even the largest private company. Most relevant… is the point that even giant corporations sell the great bulk of what they produce to other people, not to their own employees -- whereas even small countries sell most of what they produce to themselves, and big countries like America are overwhelmingly their own main customers... six out of seven American workers are employed in service industries... largely insulated from international competition, and even our manufacturers sell much of their production to the domestic market. And the fact that we mostly sell to ourselves makes an enormous difference when you think about policy. Consider what happens when a business engages in ruthless cost-cutting. From the point of view of the firm’s owners (though not its workers), the more costs that are cut, the better... But the story is very different when a government slashes spending in the face of a depressed economy. Look at Greece, Spain, and Ireland, all of which have adopted harsh austerity policies. In each case, unemployment soared... [and] the reduction in budget deficits was much less than expected, because tax receipts fell as output and employment collapsed… Mr. Romney is… claiming that his career makes him especially suited for the presidency…. [T]he last businessman to live in the White House was a guy named Herbert Hoover… [u]nless you count former President George W. Bush… Like many… I was somewhat startled by [Romney's] latest defense of his record at Bain… [claiming] he did the same thing the Obama administration did when it bailed out the auto industry, laying off workers in the process. One might think that Mr. Romney would rather not talk about a highly successful policy that just about everyone in the Republican Party, including him, denounced at the time. But what really struck me was how Mr. Romney characterized President Obama’s actions: “He did it to try to save the business.” No, he didn’t; he did it to save the industry, and thereby to save jobs that would otherwise have been lost, deepening America’s slump. Does Mr. Romney understand the distinction? America certainly needs better economic policies… [M]ost of the blame for poor policies belongs to Republicans and their scorched-earth opposition to anything constructive… [and] we’re not going to get better policies if the man sitting in the Oval Office next year sees his job as being that of engineering a leveraged buyout of America Inc.

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