When Raymond Aron wrote The Opium of Intellectuals, he wasn’t thinking of defending a perfect asshole like Paul Krugman, the Keynesian authority cited as the source for the canard secular stagnation. Nor was he thinking of Dreyfus on French Guyana, even though explicit racism and a resurgent republican ideal haunted him. Instead, Aron sought to uncover the fatal propensity intellectuals have in citing extrinsic events in abdication for failed ideas.
The west is now in free fall. The trillions in stimulus haven’t worked.
What do intellectuals do when they’ve failed? Well, if their tenured radicals they often do two things, find an excuse or cognitive dissonance. This brings me to Krugman’s canard of secular stagnation as a moral panacea excusing the failure that has become Keynesian ideology.
What Keynesians like Krugman have done is to secure an extrinsic source excusing failure to enforce a fallacy. The trope that is secular stagnation cannot be reconciled to how we arrived at this failure. Years of deficit spending, stimulative demand, quantitative easing, expansionary fiscal intervention and radical accommodate monetary policy have all contributed. We’re simply at the end of accommodative policy. All to what end?
Its now over, and it failed. The fallacy that is quickly becoming cognitive dissonance is that the west is trapped in secular stagnation and must take additional fiscal, monetary measures to stimulate demand. You read that right.
The fallacy that this trope maintains is the continued elusive authority of spent, failed ideas, namely Keynesian thought.
The Eurozone and by extension, the entire west has received extraordinary monetary assistance (stimulus) to little effect. Capital markets are now so distorted that indices no longer embody reliable measures of utility. The prolonged effort toward normalcy now rattles capital markets. Despite trillions of dollars of Q.E., despite trillions of dollars in federal deficit spending, GDP has NEVER reached 3% and workforce participation remains low.
Like cancer treatment, Q.E. is killing the patient.
How does the next President or Fed. Chair resolve this dilemma. I have an answer. Structural reform is essential. An exit strategy that respects the spheres of autonomy in a Constitutional Republic. An end to transfer programs.
To achieve this, we’re going to need an engaged, seriously well read Executive that understands what Volcker and Reagan implicitly understood at the end of the Bretton Woods debacle; a policy mix that tacitly handles the simultaneous requirements of monetary, fiscal regimes grounded in sound political reform.
There’s no time for small ball, the Republic, the Union is badly hurt. A reality that Aron implicitly understood.