Book Review: The Great UnRaveling By Paul Krugman: A

March 29, 2004 by · Leave a Comment
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Paul Krugman

Lucid, Intelligent and Frightening.
Are you ever puzzled by the fact that the Bush Administration seems to say one thing and then do another? Well this book by Paul Krugman explains the Bush Presidency not by what it says but by the consequences of what it does. Mr. Krugman’s book has been attacked by all the right wing pundits, disclosed or undisclosed, who now write book reviews on Amazon and other internet sites for the purpose of dissuading the public from reading meaningful books or books that run counter to their own views without success. Wonder why? Read this book, think and be enlightened.

This book didn’t start as a book but as columns Mr. Krugman, who teaches economics at Princeton, wrote mostly for the Op-Ed page of the N.Y. Times from 2000 to 2003. Therefore he had the benefit of a great deal of feed back from counter columns on the same page and elsewhere. His accumulated writings were then organized in topics and published in this book. His statements and concerns were tested in the public arena long before they became a book. If he were just attacking the Administration on trivial grounds or for minor compromises made to gain some larger political concession for the common good he would have been booed off the stage long ago. He was not and the reason is two fold, one, he is a gifted writer able to take complicated economic matters and political situations and make them lucid and readable and two, as an educator he has no stake to protect except that of a concerned citizen.

Why would Mr. Bush want tax cuts that send us in to mounting deficits? I always thought compassionate conservatives were against deficit spending. Well the unstated reason differs from the stated reasons of tax relief, economic stimulus, supply side capital formation for investment etc. The real reason is that the present administration wants to starve what they perceive as big, unnecessary government into small government. Something like we had in the nineteenth century. You remember the nineteenth century don’t you with its unrestrained capitalism leading to the exploitation of the public and the rape of our natural resources, the sale of tainted food products, the exploitation of labor, the amassing of great wealth by a few while average families struggled to make ends meet on six day weeks with ten hour days etc. Male life expectancy then was around forty and widows with small children were common. Also you remember the Spanish American War. A war historians are still trying to explain. Was it to free Cuba, to acquire the Philippines as a colony, to make Puerto Rico a state or just to make the world safe from the despotic rule of Spain? Does this sound like Iraq?

Mr. Krugman examines the Administrations actions and points out with logic and with factual examples the following perceptions.
The compassionate conservatives are really radical conservatives, who wish the following: shrink government by tax cuts to the size it was in the administration of Herbert Hoover, bankrupt Social Security by using the SS security trust, meant for the Baby Boomers, to pay for other programs with budget deficits because of the draconian tax cuts that benefit mainly the top two percent of taxpayers,
3. to, shrink the SEC, Labor Department, Health Education and Welfare Departments and any other perceived department or bureau charged with the protection of the public (except the military with whom these people do a lot of business) so that it has a budget so small to make it meaningless. This is especially true of any environmental protection programs that might be bothersome to the friends of the Administration,
4. to regress foreign policy back to at least the McKinley Administration.
5. to limit taxes to the income earned by ones labor, eliminate taxes on income from capital, eliminate inheritance taxes,
7. to provide as much corporate welfare as possible at the expense of the wage earning citizenry,
8. to make economic and social opportunities dependent on ones connections rather than abilities.

These actions resemble the aims of those who wish to establish a plutocracy based on inherited wealth just in case such an aristocracy is not already in place.

Does all this sound way out there? Consider that in 1983 Senator Pat Moynihan, Alan Greenspahn and others on a committee to reform Social Security recognized that the baby boom generation created a huge bubble in the population. Social Security is set up so each generation pays for the preceding generations Social Security through payroll taxes. Since there would be less people working after the baby boom generation retired adjustments were made. A two percent increase in payroll taxes was enacted to be held in trust until it was needed to pay for the baby boomers Social Security. Well Bush has “borrowed” the trust money issuing treasury bonds as security. So thirty percent of every payroll tax dollar is going into the general fund. Something like one trillion dollars has been borrowed. This method of borrowing keeps interest rates down now because the government is not competing for private capital to finance the deficit, but the debt will have to be paid by future generations and since taxes have been cut to mainly benefit the top two percent of taxpayers the burden will fall on the middle class. Also payroll taxes are a very regressive tax falling mainly on the poorest segment of society and take money out of the hands of those most likely to spend it on consumer goods so in effect the cost of financing the government is falling on those least able to do so and doing the most damage to the economy. This book tells us to stop listening to buzz words like, compassionate conservative, no child left behind etc and look to the actions of the Bush administration for the truth.

Since Bush took office the gap between rich and poor is steadily widening. Wondering why? Mr. Krugman explains the reasons for this. Do wonder if your children will have decent jobs or if you are a baby boomer, will you have a secure retirement? After you read this book you will know the reasons for your concern. When you finish this book then read Robert Rubin’s, In An Uncertain World, for a further discussion of responsible fiscal and monetary policies.