JONATHAN CHAIT AUGUST 17, 2011
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Jared Bernstein argues that Rick Perry's violent tight money views reflect a class-based view of inflation:
[W]hat’s really behind conservatives view on this issue is that the wealthy get hurt a lot more by inflation than by unemployment, and visa-versa for the middle class. ...
Why just last night, I was on the Kudlow show arguing against someone who wanted us back on a the gold standard (!!), the natural conclusion of sentiments like Gov Perry’s, and a fine way to cut the Fed off at the knees and ensure deflation at a time like this.
It's clearly true that the very differing affect of inflation on rich rentiers versus wage earners plays a huge role in the historic association between tight money views and right-wing politics. But Bernstein is overrating the role of ideology and underrating the role of partisanship. In 2001, when the economy faced a far milder downturn under a Republican president, Republicans crusaded for looser money.
If you want to grasp Perry's mentality, read his full statement and focus on the parts about politics:
“If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion.”
Perry is viewing this through a political lens. Monetary stimulus reduces unemployment and boosts President Obama's reelection prospects. I doubt Perry is consciously embracing an economic doctrine that he believes will harm the economy. But the partisan impulse is clearly driving his thinking.
Few people have well-defined views on issues like monetary policy. There's always some long-term cost associated with loose money. However tiny or remote the threat of inflation may be, it theoretically exists. When faced with the obvious reality that boosting growth will harm your party, it's very easy to persuade yourself that the long-term costs of inflation are actually large.
The GOP's embrace of loose money in 2001 is one way to test this hypothesis. Another would be to observe their behavior if they win the White House. I predict that, if they do, the party's brief infatuation with goldbuggery will fade away quickly.
10 comments
Once again you were tripped up on affect vs. effect, Jonathan. The goldniks are ate the fringes. This is a strategy and not an ideological position.
- liberalref
August 17, 2011 at 11:55am
I have heard goldbuggery for a long time from fringie types. What has happened was in 2010, the GOP made a cynical deal with the devil and brought out and gave aid and comfort to all these people and more like birthers, Glenn Beck, etc. to fire up their base to get the evil socialst Muslim Kenyan anti-colonialist. Now I am hoping this strategy is going to bite them in the behind as the 2012 elections unfold.
- MikeB.
August 17, 2011 at 11:59am
This suggests that Republicans cannot be trusted with appointments to the Federal Reserve anymore. Of course, that doesn't mean that they'll let up on blocking Obama's appointments, but this is probably the best indiciation that they can no longer make even vaguely non-political appointments in this sphere. Note that when conservatives concoct litmus tests for judges and try to force presidential candidates only to appoint judges who will do X, Y, and Z, this should disqualify them from higher office, too. On the other hand, it's simply the natural extension of the sophistry of Chief Justice Roberts "calling balls and strikes" that overwhelmingly align with certain interest group's preferences. If the law crosses the threshold from implicitly favouring certain parties (and their positions) to explicitly doing so, then the Supreme Court is so undermined that it loses its position as court of last resort and the ultimate Constitutional arbiter. After all, at that point it's really just "what rich people's lawyers think".
- chaitless
August 17, 2011 at 12:03pm
Inflation as big scary bugaboo is also a concept that's going to resonate more with people who lived through the 1970s (if not the Weimar Republic) than it is with younger voters. More key: another group of people inflation is scary to are those who possess just enough knowledge of economics to think "If we just start printing money and devaluing our currency we'll pay off our colossal debt, but it'll be a disaster! Think of all I have invested in bonds!" Alas, I suspect many, many politicians fall in the "just enough knowledge" grasp of economics set to have this fear, but not any larger understanding economics. Thus inflation is very scary because the inflation-as-deficit-cure is understandable to moderately intelligent Republicans (like, oh say, the current governor of Texas) and they live in terror of it.
- mtinora@me.com
August 17, 2011 at 12:05pm
Oh it's not a problem. We'll just trundle around with our gold bars, take them to the supermarket, what's the big deal.
- Sophia
August 17, 2011 at 12:46pm
Besides, if someone tries to mug you on the way to the supermarket with your gold bars, you can club them with the bars. Then when the market runs out of food, you can eat the bar.
- skahn
August 17, 2011 at 12:50pm
Jon when will you stop having faith that the GOP are not consciously trying to shaft the economy? "I doubt Perry is consciously embracing an economic doctrine that he believes will harm the economy. But the partisan impulse is clearly driving his thinking." The GOP doctrine is to the harm the economy because it serves both the GOP apparatchiks and their task-masters who drive the bus from the backseat. The entire economic policy of the GOP is to hollow out the core of the America for profit's sake.
- singlspeed
August 17, 2011 at 12:54pm
"I doubt Perry is consciously embracing an economic doctrine that he believes will harm the economy." Really? I think there is a very fuzzy line between a nutty conviction that the Federal Reserve is a communist plot against America and a willingness to push policies that will deliberately cause economic disruption in order to make life more difficult for a president who wants/needs some tangible signs of recovery in an election year.
- ironyroad
August 17, 2011 at 12:56pm
I second the comments of singlespeed and ironyroad. It's high time that Chait stopped pulling his punches when referring to the motives of Republicans. The GOP would happily put this country into a full-scale depression if they thought it would be to their long-term political advantage. Of course, a depression might harm the rich, so the Republicans would have to clear things with their right-wing puppet masters before proceeding to destroy the economy.
- DAVIDDREIER@EARTHLINK.NET-old
August 17, 2011 at 2:44pm
I concur with everyone. But I wonder, DaveyD, if JC isn't being a bit wide-eyed in his comments, "I doubt Perry..." (etc.) as a tool of cold, angry wit. I think so. BTW way JC - I do hope you get a "Best Headline Writer" bonus for your masterpieces.
- WandreyCer
August 17, 2011 at 3:31pm