...Month by month, the discourse has gotten more primitive; with stunning speed, the lessons of the 2008 financial crisis have been forgotten, and the very ideas that got us into the crisis -- regulation is always bad, what's good for the bankers is good for America, tax cuts are the universal elixir -- have regained their hold.

On the face of it, this seems bizarre. Over the last two years profits have soared while unemployment has remained disastrously high. Why should anyone believe that handing even more money to corporations, no strings attached, would lead to faster job creation?

Nonetheless, trickle-down is clearly on the ascendant -- and even some Democrats are buying into it......link

Came across this excellent op-ed on Sunday in the WaPo:  What History Teaches Us About the Welfare State.

The whole thing is worth reading, which makes it hard to put up an excerpt, but here is a portion:

In the face of economic calamity and skyrocketing unemployment, the government did, well, nothing. No federal unemployment insurance eased families' suffering and kept a floor on demand. No central bank existed to fight deflation. Large-scale government stimulus was a thing of the distant future.

As demand collapsed, businesses slashed payrolls and reduced wages, and a ruinous period of deflation began. By 1879, wholesale prices had declined 30 percent. The consequences were catastrophic for the nation's many debtors and set off a vicious economic cycle. When economic growth eventually began, progress was slow, with periodic crises plaguing the economy through the end of the century.

Neither political party offered genuine solutions. As historian Richard Hofstadter put it, political parties during the Gilded Age "divided over spoils, not issues," and neither Democrats nor Republicans were inclined to challenge their corporate masters.

[snip]

The vast disparities between rich and poor, the spectacular concentration of wealth amassed by the richest Americans in the previous two generations, and the inability of government policies to mitigate the crisis brought the nation to the edge of class warfare and social disintegration.

The specter of a European social order, with societies irredeemably divided between aristocrats and a permanent underclass, seemed to have arrived on U.S. shores. Wealthy Americans began to fear for the stability of the social order.

What force, the wealthy asked in desperation, might mitigate the social chaos and misery, and mute what one public official called "the antagonism between rich and poor"?

Today, new fortunes have been accumulated that rival those of the Gilded Age. Some of that wealth, possessed by people like Charles G. Koch and David H. Koch or Peter G. Peterson, has been used to promote cuts to social spending. Before these opponents and their allies in Congress move forward with the dismantling of the welfare state, however, they might think harder about the reasons such policies were put in place.

The Gilded Age plutocrats who first acceded to a social welfare system and state regulations did not do so from the goodness of their hearts. They did so because the alternatives seemed so much more terrifying.

But that's largely because I believe all critiques of Obama that aren't critiques of his macroeconomic management are slighting the role that poor macroeconomic management has played in exacerbating everything else. It's certainly true that his team has faced an unprecedented level of non-cooperation from Republicans. But at the same time, Obama hasn't shown much in the way of so-called "Rooseveltian resolve" to keep trying things and appears to have quite sincerely pivoted toward deficit control and structural reform last winter even with unemployment stuck at sharply elevated levels.

Thinkprogress

There is a lack of accountability problem in this country...the GOP is not held accountable, Wall St is not held accountable, Bushco is not held accountable...etc.  On top of everything else, that is a direction that Obama and his team decided to take.  

Now Republicans and Democrats say I told you so for different reasons.  Republicans because they never thought it would work and dems because it wasn't big enough.

I don't understand the economic magic math that Krugman holds onto but who cares.  Does it matter anymore?

We can all agree it failed.   Now what?

NIMBY opponents now have the ability to tie things up in court forever.  Environmental activists can halt projects for years with various objections.  You might favor some (or even most) of that, but it definitely takes a poleaxe to any use of government money for short term stimulus purposes.

Never mind the higher level discussion of whether infrastructure spending works for stimulus purposes; we can't even get there.  Projects now take so long to unfold that there's no possible way they can stimulate anything.

2nd, his supposed problems with government spending are never mentioned in his own textbook - in fact it appears to say the exact opposite.   John Taylor (and Robert Hall), Macroeconomics, 5th ed.: pp. 190 ff.: "We now know that an increase in government spending... increases the interest rate and increases income.... [T]he increase in government demand increases GDP through the multiplier.... [But] interest rates must [also] rise to offset the increase in money demand.... This increase in interest rates will reduce investment demand and net exports and thus offset some of the stimulus to GDP caused by government spending. The offsetting negative effect is crowding out.... An expansionary fiscal policy will have a relatively strong effect on aggregate demand if interest rates don't rise by much [when government spending increases]..."

Perhaps, Robert Hall wrote that part of his textbook, and Taylor disagreed with it, but Taylor acquiesed anyway?  Anyway, I hope Taylor amends his book in the next version so that readers don't get misinformed that "expansionary fiscal policy will have a relatively strong effect on aggregate demand if interest rates don't rise by much [when government spending increases]" as his own textbook says.

3rd, as he mentioned, his own article says tax cuts didn't work, because "the tax cuts that made up much of the stimulus were probably largely saved."  But then he says the way to fix this is to "enact more permanent reductions in tax rates".  Presumably, he would say the Obama tax cuts were not permanent enough, and that was causing the problem.  But, of course, America is a (supposedly) a democracy.  No Congress can prevent a future Congress from changing taxes ie there are no "permanent" tax cuts.  The Fed is (supposedly) an independent body so it can make permanent policy changes and people might actually believe they're permanent.  Congress is elected by the people and it changes its policies anytime people change their mind.

None of these concerns properly apply to the current case of a brush with 19th-century style depression.