The article originally appeared on the Daily Capitalist [9].
COMMENTARY
Arianna Huffington just wrote an "important" op-ed, "Delevering in a Delevering World [10]".
I know flummery when I see [10] it:
On Monday, I was in Newport Beach to speak at the annual client conference of PIMCO, the world's largest bond investment company -- whose CEO Mohamed El-Erian is a frequent and very popular HuffPost blogger. More than 300 of PIMCO's clients gathered for a three-day retreat around the timely theme of "Delivering in a Delevering World."
After tossing out the names of her good friends El-Erian and Bill Gross (both of whom I have previously awarded our Crony Capitalist of the Month accolades), she launches into the dogma being tossed around in Krugmanite neo-Keynesian circles that capitalism needs to be "compassionate" and fiscal "austerity" is "keeping us from growing."
If this were a serious piece by her she wouldn't have to rely on the pejorative style of composition to make her point. But she does and as such it becomes Party-speak. Here are some of the value-laden words she uses to describe the "problem" of "excessive" government cost cutting:
- "relentless emphasis on cutting"
- "misguided approach to delevering"
- "imprudent delevering"
- "premature austerity"
- "excessive delevering"
- "we also need delivering from the obsolete dogmas of the past"
- "dysfunctional political and economic systems of the present"
- "capitalism without conscience"
I'll cut to the chase and tell you that her argument is that those governments (including the U.S.) which have gone broke by borrowing massive sums supported on a sea of fiat money to fund welfare programs for their favorite constituents, and which have run into a wall trying to roll over their crappy paper, need to borrow and spend even more because "imprudent", "excessive", and "misguided" attempts to cut spending will set back any recovery because only government spending can get us out of this mess.
This approach to fundamentalist Keynesian economics believes that somehow it is government that creates wealth in an economy and that without the benevolent hand of the government we would just sink back into the muck. Instead of understanding that the bond markets are trying to tell us something about these economies, their cure is more of the same thing that got these economies in trouble in the beginning.
But no, these attempts at fiscal sanity aren't "compassionate" and capitalism without government's oversight has no conscience and causes prolonged unemployment and misery. Actually what will cause prolonged unemployment and misery are the policies she favors. If long-term stagnation, inflation, high permanent unemployment, and high taxes are your goal, then she and her friends have the right formulary.
And then she has the gall to quote Adam Smith's Theory of Moral Sentiments as supporting her concept that capitalism lacks conscience.
I haven't read that work by Smith but I doubt Mrs. Huffington has either. I think she uses it as an intellectual embellishment to suit her argument and to give her an air of profundity. I did look up a paper on Theory of Moral Sentiments by Professor Jeffrey Hebener, ("An Integration of The Wealth of Nations and The Theory of Moral Sentiments [11]") who describes the work this way:
... Smith discussed four ways in which capitalism "ennobles human nature." First, capitalism develops the impartial spectator (both internal and external). Second, it simultaneously develops self-command and humanity (the awful and amiable virtues). Third, Smith gives examples of how it develops virtue in man. Finally, capitalism develops a set of general rules of conduct that lead to moral activity.
Hebener concludes his study by saying:
When joined in this way, capitalism is the environment that prompts the prosperity of man's material and moral statures. Furthermore, this completes Smith's system. the Wealth of Nations contains his political ethics and Moral Sentiments constructs his views on personal ethics; integrating the two books reveals a real world environment for achieving his ethical goals.
In other words, Smith determined that capitalism, as he does properly define it, engenders moral virtue and material well-being. Mrs. Huffington suggests the opposite.
What can one expect from the publisher of the Huffington Post. She and some wealthy liberals founded it with big bucks to counter what they (amusingly) felt was the dominance of the "right wing media." They wished to make money too, so she turned a corner and sank into LCD (lowest common denominator) with articles on entertainment, celebrities and their divorces, nude photos, "business" (i.e., how the little guy is getting screwed), fashion, gay life, and things you would generally enjoy in a tabloid. She still does politics but the site is morbidly liberal.
She succeeded beyond anyone's wildest dreams (good luck, AOL). She took a successful formula from the British tabloids and applied it to the Web. I admire her success. Yes, she has a right to speak her mind on her site and to overtly promote herself and Huffpo.
But she's just parroting the liberal economic catechism that her claque are whispering in her ear; let not anyone think that her views on economics are anything but fluff and puff.