Sunday, November 21, 2010

Political responsibility for the crisis

Kevin Drum nicely summarizes the political responsibility for the current crisis:
The facts of the past decade are pretty clear, after all. George Bush inherited an uncommonly vigorous economy from Bill Clinton: growth was high, business was booming, wages were growing, and the federal government was running a surplus. This ended in 2001, but it ended with one of the mildest and shortest recessions on record and provided Bush with a chance to fully apply Republican orthodoxy to the economy: multiple rounds of tax cuts, light regulation, and the most business friendly atmosphere from the White House imaginable. The result was catastrophic. The Republican expansion from 2001 through 2007 was the weakest since World War II: productivity and GDP gains were mediocre, employment growth was weak, and wages were stagnant. Only corporate profits prospered. And this period of historically weak growth was ended by a financial disaster worse than any since the Great Depression. That's the Republican legacy of the aughts: a strong economy turned first anemic and then completely crippled.
My only quibble is that I would argue that the seeds of the crisis were laid much earlier, in the deregulations and tax-cutting of the 1970s and 1980s. These policies inaugurated the intertwined processes of deindustrialization, growing inequality in income and wealth, and exploding personal debt that are at the root of the crisis.

But these too were projects and policies of the right, so in terms of political score-keeping, this longer history only buttresses Drum's analysis.

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