Friday, December 02, 2011

David Brooks vs. The Facts

If Brooks doesn't know the facts, and after this much time he really has no excuse, one wonders how he keeps his job. Brooks prevaricates,
Over the past few decades, several European nations, like Germany and the Netherlands, have played by the rules and practiced good governance. They have lived within their means, undertaken painful reforms, enhanced their competitiveness and reinforced good values. Now they are being brutally browbeaten for not wanting to bail out nations like Greece, Italy and Spain, which did not do these things, which instead borrowed huge amounts of money that they are choosing not to repay.
Wheras in fact,
The story so far: In the years leading up to the 2008 crisis, Europe, like America, had a runaway banking system and a rapid buildup of debt. In Europe’s case, however, much of the lending was across borders, as funds from Germany flowed into southern Europe. This lending was perceived as low risk. Hey, the recipients were all on the euro, so what could go wrong? For the most part, by the way, this lending went to the private sector, not to governments. Only Greece ran large budget deficits during the good years; Spain actually had a surplus on the eve of the crisis.
Brooks is correct to observe that it's unfair to expect the people of the nations that are not responsible for the debt crisis to fund the bailout of those who are responsible. But it's exceptionally dishonest of him to pretend that they're bailing out governments, when the primary beneficiaries of the bailouts are going to be the financial institutions that made bad loans, largely to the private sector. It's easy to tut-tut the governance of nations like Greece, but why did Brooks omit Ireland from his list? You remember - Ireland, the nation that was a shining model of the success of conservative economic theory, low business taxes and the like, right up to the day the financial crisis hit, at which time it found itself lumped in with the PIIGS (Portugal, Ireland, Italy, Greece and Spain)? And in implying that the people of nations like Greece have not been asked to compromise, is he completely ignorant of Greek austerity measures, or the replacement of Greece's Prime Minister through a process that was anything but democratic?

It's more than fair to ask that governments looking for handouts revisit some of the policies that are likely to hamper economic recovery, or even viability. But it's quite another to wag your finger at governments that in fact borrowed responsibly while ignoring the elephant in the room, giving lip service to banks as being "far from blameless" while endorsing policies that will nonetheless leave those whose irresponsible lending practices are behind economic collapses around the globe, once again, whole or possibly enriched at the expense of ordinary, working taxpayers. If Brooks doesn't believe that's demoralizing, he somehow missed both the rise of the Tea Party and the Occupy Wall Street Movements.

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