Smashing the Status Quo
As Paul Krugman noted yesterday, in the wake of Hank Paulson's disastrous TARP Part I last fall a consensus emerged among economists like Krugman, Dean Baker, Nouriel Roubini, that the stimulus had to be huge, somewhere in the $1-$2 trillion range. [More...]
Yet the actual stimulus turned out to be much smaller, in the 700 billion range. Putting aside all the sausage making on Capitol Hill that made the stimulus much smaller, it's clear, as Krugman notes, that the advice of he, Baker, Roubini etc were all ignored by Obama's economic team.
The Obama team also seems, as the Financial Times' Martin Wolf put it "too politically frightened" to admit that the U.S. banking system is essentially insolvent.
Conventional thinking has great pull elsewhere. Stephen Walt wrote a stellar post over at Foreign Policy arguing that the Obama administration must press hard--now--for a two-state solution because the prospects for such a deal are sinking quickly. But Walt is not optimistic that the Obama administration is politically bold enough to do so:
"If the two-state solution dies, as seems increasingly likely, the United States is going to face a very awkward set of choices. Thatís one reason why Obama and his team -- as well as Israel's friends in the United States -- should move beyond paying lip-service to the idea of creating a Palestinian state and actually do something about it. But it's hard to be optimistic that they will."
I am writing all this not because I want to tar Obama administration as a "failure" just a few weeks into his presidency. Instead, I'm deeply, worried that our democracy is simply not up to the task of real change in a number of areas, from economics to foreign policy to drug policy. And we're simply not in a place where we can afford to make the same mistakes--or ignore the experts who know how to correct those mistakes--anymore.
So: how do we smash the status quo?
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