Robert Barro’s disgusting piece in the New York Times
One would think Harvard University would be more than a bit embarrassed to have such a right wing hack as Robert Barro out in public. That a professor (of economics) could write such drivel as he has today is an indictment of our educational system, the economics profession, and the mainstream media.
He titles the piece “How to Save the Economy”; it should be called “How to Save Oligarchy”. The article could easily have been written by any 19th century servant of aristocracy and can’t possibly be considered “economics” if, by that term, we mean some form of quasi-objective science.
He begins with the standard oligarchic call for selective austerity: “Today’s priority has to be austerity, not stimulus”… and “fiscal discipline has to start now”. He calls for an increase in the eligibility age of Social Security and Medicare, a decrease in future benefits through stricter inflation indexing, the elimination of various deductions that mostly benefit the middle and upper middle classes, and of course a quite non-austere lowering of the marginal income tax rate for individuals. He then proceeds to recommend an austere consumption tax of 10% and a non-austere elimination of both the corporate and estate tax.
Barro pathetically brings Keynes into his argument.
…John Maynard Keynes understood in his 1936 masterwork, “The General Theory of Employment, Interest and Money” (the first economics book I read), the main driver of business cycles is investment. As is typical, the main decline in G.D.P. during the recession showed up in the form of reduced investment by businesses and households.
What drives investment? Stable expectations of a sound economic environment, including the long-run path of tax rates, regulations and so on. And employment is akin to investment in that hiring decisions take into account the long-run economic climate.
If Barro actually read this work he’s in desperate need of a refresher. Yes, Keynes determined that investment was the main driver of the business cycle but, completely counter to Barro, his major conclusion was that we could not at all rely on private investment to be sufficient and needed instead to substantially socialize it. Keynes provides exactly zero support for Barro and it’s completely disingenuous to bring him into his argument.
Barro calls his recommendations “market-friendly” but that’s completely false since the capitalist society he supports is a near pure oligopoly having little to do with what we normally think of as a “market”. Contra Barro, 21st century capitalism, along with its merry band of well fed supporters, are best described as market-hostile. The corporations that dominate the globe – just 500 corporations account for an incredible 40% of global revenue – do everything within their great power to minimize and restrict the competition that true markets require. If Barro truly sought market-friendly policies, he would need to push for drastic regulation or break ups of all the major corporations in the world today. The “market-friendly” label is just a quasi-democratic sounding fig leaf designed to hide his real class based agenda.
How is it remotely possible that a sane response to the collapse of global capitalism could be a further cut in worker purchasing power through consumption taxes and attacks on vital retirement and health programs? Or cuts in the tax rates of an oligarchic class that’s never been richer or smaller and has no idea what to do with its existing hoards? Barro has no claim to science and, unless Harvard has a Department of Propaganda for Oligarchy, should be dismissed immediately.