"Debt and Dumb"

Monday, October 17, 2011

Economists Simon Johnson and James Kwak discuss their article “Debt and Dumb,” in the November issue of Vanity Fair. They argue that today’s Tea Party is a betrayal of the foundation of American fiscal policy as established by Alexander Hamilton and has nothing in common with the Boston uprising it claims to honor. Alexander Hamilton, the first secretary of the Treasury, believed that good credit, based on the power to tax, is essential to a nation’s security.


Simon Johnson and James Kwak

Comments [16]

amalgam from NYC by day, NJ by night

@ David - Fair enough that you disagree with the perspective of Johnson/Kwak on the Hamiltonian role of government. Their political economy bias are just as valid as yours are and, to Mr. Hoegland's critique (below), the battle over political-economic philosophy in the U.S. is as old and American as apple pie.

One note: The Jeffersonian ideal is impressive and remains with us in many ways, but even if the U.S. took them whole cloth, there undoubtedly would have to be a move towards more centralization. You may not like that notion, but governance needs some efficiencies especially with increasing growth and complexity.

Oct. 20 2011 12:08 PM

It figures that these two ignoramuses would pick the one Founding Father who believed in a big centralized Federal government. And look at the wonderful warfare/welfare state we have today thanks to Hamilton.

Here's a real critique of this monster:

Oct. 18 2011 02:05 AM
William Hogeland

I very much appreciate Mr. Lopate's mentioning my book The Whiskey Rebellion and quoting my critique of Johnson and Kwak's grasp of founding-era economics. My whole blog post criticizing their Vanity Fair article is here:

Oct. 17 2011 12:55 PM
Jef from princeton

PS on the back of the sign it says
make Wall St pay

Oct. 17 2011 12:39 PM
don from Brooklyn

First thing the "Tea Party" needs to do is change its name; all I think of when I hear the name is an imaginary event staged by a four year old girl, or the kind of herb indulgence parties so many of the pathetic, nostalgic elder-bohos latching onto this rudderless (though not totally undeserved) Wall Street/bank bashing party. BTW, why was the residence of the hideous George Soros "skipped" during their protest visits uptown??

Oct. 17 2011 12:38 PM
Ralph Roy from Connecticut

Several issues discussed did not cover other aspects that gave rise to them:

- Tea Party - It was not just about not paying taxes, yet the use of tax money. For example, the start of the movement included the unfairness felt by people who "behaved correctly" and paid their mortgages and saw the Federal Government bailing out people who did not behave correctly (taking out equity loans and buying new cars, then found their loans exceeded the value of their house).

- Reagan - Before raising taxes, there was an attempt to reign in spending by limiting the amount of tax money being gathered. The objective was to force reduce spending.

Just some examples. - R

Oct. 17 2011 12:38 PM
Jef from princeton

The sign i came up with that i carry at ows is aimed at government and the banks--who share the blame for the bailout

Mr Obama Tear Down This Wall (using the Wall Street sign in place of the word "wall"

i have to say about 2,000 people took a picture of the sign

Oct. 17 2011 12:37 PM

Before it was co-opted by Republican party and ridiculed by liberal media like Lopate show, the Tea party started as totally grass root movement.

Most people were concerned about government spending and evaporation of their savings with inflationary moves like TARP, stimulus, etc. Similarly to OWS, many were upset about influence of money on politics, "too big to fail", etc.

Oct. 17 2011 12:36 PM

Re: Reagan and your mother

Maybe your mom forgot that Reagan raised taxes to sustain Social Security and even expanded Medicare in his last year in office.

Oct. 17 2011 12:34 PM
Johnnjersey from NJ

I wonder if the Tea Party folks in Congress or their supporters would be in favor of a law that said a state can not receive more money from the federal gov't than it pays in taxes. That might keep taxes low right?

Or it might make all those red states in the South realize they are the beneficiaries of socialism on a grand scale.

Oct. 17 2011 12:31 PM
LL from UWS

When Reagan was elected my late mother said: Watch, you'll see. They'll run up the deficit and then say, Ooops! Nothing left for social spending!! But they will never come out in the open and say that their true aim is to kill The New Deal.

Oct. 17 2011 12:28 PM

Boston Tea Party was a totally protectionist act.

Tea was a popular drink in the colonies. The East India company was planning to sell tea at the prices below the prices set by American merchants effectively pricing them out. These merchants went on the ship and dumped the tea overboard.

Compare this to Walmart importing cheap products from China.

Now talk among yourself...

Oct. 17 2011 12:28 PM
LL from UWS

Guest comment about protests mixing ideas from both left and right.....

Molly Ivins tried to get us to realize that the real issue isn't left vs. right but rather who is up and who is down.

Oct. 17 2011 12:26 PM
John A.

Thank-You for this segment, even if I cannot follow in real time. Progressive taxation, yes!, even if it includes me.

Oct. 17 2011 12:21 PM

The assertion that taxation without representation is not an issue in most of the USA misses a major point of both the Tea Party and Occupy Wall Street movements. That is that when major political and economic institutions become corrupt and intertwined the general electorate is represented nominally but not effectively.

Oct. 17 2011 12:16 PM
LL from UWS

1. Was The Whiskey Rebellion funded by the equivalent of the Koch Brothers?

2. The Boston Tea Party--What about the key issue of unfair tax breaks given by the British Crown to the multinational corporation that was putting American mom-and-pop business at a severe disadvantage? See:
Thom Hartmann on what the real Boston Tea Party was about:
see also references and links:

Summarized, with citations:
"Boston Tea Party Hit Corporate Monopoly"

"Historian Benjamin Carp’s latest project is a book on the Boston Tea Party, and he’s taking a global perspective"
The British East India Company was the main purveyor of tea to Europe and to the American colonies. The company did business in Bengal, where it was blamed for making a devastating famine worse by hoarding rice, resulting in price increases.
“The company was getting rich off Bengal and behaving poorly,” Carp says. “Americans knew about this and worried they would be next.”

Oct. 17 2011 12:12 PM

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