Really, one should only read NY Times columnist David Brooks for the pictures–and since there are no pictures in his columns, you would be better off not reading them at all. Brooks hyperventilates (boldface mine):
Every generation has an incentive to borrow money from the future to spend on itself.
But, until ours, no generation of Americans has done it to the same extent. Why?
A huge reason is that earlier generations were insecure. They lived without modern medicine, without modern technology and without modern welfare states. They lived one illness, one drought and one recession away from catastrophe. They developed a moral abhorrence about things like excessive debt, which would further magnify their vulnerability.
Recently, life has become better and more secure. But the aversion to debt has diminished amid the progress. Credit card companies seduced people into borrowing more. Politicians found that they could buy votes with borrowed money. People became more comfortable with red ink.
Today we are living in an era of indebtedness. Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble.
I wonder if the Times Overlords will ever let Krugman fully off the leash against this bozo. He would have a field day with who is responsible for the ‘fiscal bubble’ (hint: it’s not the middle class).
But there’s a deeper confusion about debt–which isn’t surprising since Brooks loves himself some morality fable. Private debt is not the same as public debt. With private debt, you either have to pay it back, depressing future earnings, or go bankrupt, which usually inhibits future earnings (and you often loose your remaining stuff in bankruptcy proceedings). But federal public debt is different–the government can’t run out of money. It’s a currency issuer. As long as no one plays shenanigans with rolling over the debt, we can’t go broke. No one is going to show up with a giant tow truck and repossess California.
There are issues with debt–if the debt is increasingly concentrated in the hands of the wealthy (individuals or corporations), debt payments will further increase their wealth. But right now, government securities are losing money (but not as badly as holding cash), so that’s not an issue. Likewise, government spending can be bad for either macroeconomic reasons (crowding out, inflation when real economic limits are reached) or policy reasons (misallocation of resources, exacerbation of inequality, or just bad policy).
But a “fiscal bubble”? Right now, our problem is high unemployment and stagnant wages. We need that fiscal bubble, since we’re in a ‘fiscal depression.’ Spend the damn money.
What is frustrating is that a fool like Brooks gets prime real estate to spout his idiocy. He is granted the imprimatur of the Grey Lady, and thus is deemed Very Serious, even though he’s ridiculous. I suppose the NYT, in order to have a balanced op-ed section, needs to find balance by employing people who are wrong.
This is yet another reason why we can’t have nice things.