The Pasty Little Putz is still taking whatever drugs he and Bobo prefer. Today he’s produced an opus dopus he calls “A Return to Normalcy” in which he actually says that the lame-duck session brought back bipartisanship to Congress. Words fail me… Prof. Krugman, in “The Finite World,” says world commodity prices have risen by a quarter in the past six months. What’s the meaning of this surge? Turns out it’s not unalloyed bad news. Here’s The Putz, gawd help us all:
Over the past three years, American politics has been dominated by a liberal fantasy and a conservative freakout.
The fantasy was the idea that Barack Obama, a one-term senator with an appealing biography and a silver tongue, would turn out to be Franklin Delano Roosevelt, Robert F. Kennedy and Mahatma Gandhi all rolled into one. This fantasy inspired a wave of 1960s-style enthusiasm, an unsettling personality cult (that “Yes We Can” video full of harmonizing celebrities only gets creepier in hindsight) and a lot of over-the-top promises from Obama himself. It persuaded Democrats that the laws of politics had been suspended, and that every legislative goal they’d ever dreamed about was now within reach. It was even powerful enough to win President Obama a Nobel Peace Prize, just for being his amazing self.
The freakout, which began in earnest during the long, hot health care summer of 2009, started from the same premise as the fantasy — that the Obama presidency really was capable of completely transforming American society and that we might be on the brink of a new New Deal or a greater Great Society. But to freaked-out conservatives, this seemed more like a nightmare than a dream. So they flipped the liberal script: Where Obama’s acolytes were utopian, conservatives turned apocalyptic, pitting liberty against tyranny, freedom against socialism, American exceptionalism against the fate of Nineveh and Tyre.
This wasn’t a congenial climate for bipartisanship, to put it mildly. The fantasy ensured that the Democrats would go for broke (quite literally, judging by the budget figures) on domestic policy — anything else, after all, would have been a waste of their world-historical moment. The freakout ensured that Republicans, more or less in lock step, would resist every proposal and vote “no” on every bill. (After all, to compromise with tyranny was no better than surrendering to it.)
So Democrats hailed the death of conservatism and the dawn of a glorious new liberal epoch and then griped that Republicans wouldn’t lend their support to its fulfillment. Republicans denounced President Obama as a Marxist and shrieked “you lie!” at him in the House chambers, and then they complained that he wouldn’t listen to their ideas.
But in the past month of lame-duck activity, we’ve witnessed a return to political normalcy. The Republican midterm sweep delivered the coup de grâce to the liberal fantasy by dramatically foreshortening what many pundits expected to be an enduring Democratic majority. But it also dropped a lid, at least temporarily, on the conservative freakout. (It’s hard to fret that much about the supposed Kenyan-Marxist radical in the White House when anything he accomplishes has to be co-signed by John Boehner.)
In this brave new postelection world, lawmakers on both sides stopped behaving like players in some Beltway version of the battle at Armageddon and started behaving like, well, lawmakers. They cut deals, traded horses, preened (and sometimes whined) for the cameras, and cast their votes on a mix of principle, pique and political self-interest, rather than just falling into line for or against the Obama agenda.
Partisanship didn’t disappear, but moderation repeatedly won out. Congress cut a big bipartisan deal on taxes and spending and then shot down a more partisan liberal budget. One of the most controversial items on the lame-duck agenda — the Dream Act, offering the children of illegal immigrants a path to citizenship — was defeated by bipartisan opposition. Two of the less controversial items — the repeal of “don’t ask, don’t tell” (supported by some 75 percent of Americans, according to various polls) and the New Start arms control treaty (supported by nearly every Republican foreign policy hand) — passed by healthy margins.
This return to normalcy is good news for fans of bipartisan comity and centrism for centrism’s sake. And it might be good news for the country. In the end, some sort of bipartisanship will be required to pull America back from the fiscal precipice, and the productivity of this lame-duck December shows that cooperation between the two parties isn’t as impossible as it seemed just a few months ago.
But when it comes to the hard challenges ahead, comity won’t be enough. Real courage is required as well. And this month’s outbreak of bipartisanship was conspicuously yellow-bellied. Republicans and Democrats came together to cut taxes, raise spending, and give free health care to the first responders on 9/11. They indulged, in other words, in the kind of easy, profligate “moderation” that’s done as much damage to the country over the years as the ideologies of either left or right.
If that’s all that the return to normalcy delivers, we’ll be back to fantasies and freakouts soon enough.
Putzy, baby, you’re prima facie evidence that the freakout continues apace. You should be off doing something constructive, like flipping burgers at McDonald’s, that you’re intellectually fitted for. Here’s Prof. Krugman:
Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months.
So what’s the meaning of this surge?
Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and no.
What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.
Some background: The last time the prices of oil and other commodities were this high, two and a half years ago, many commentators dismissed the price spike as an aberration driven by speculators. And they claimed vindication when commodity prices plunged in the second half of 2008.
But that price collapse coincided with a severe global recession, which led to a sharp fall in demand for raw materials. The big test would come when the world economy recovered. Would raw materials once again become expensive?
Well, it still feels like a recession in America. But thanks to growth in developing nations, world industrial production recently passed its previous peak — and, sure enough, commodity prices are surging again.
This doesn’t necessarily mean that speculation played no role in 2007-2008. Nor should we reject the notion that speculation is playing some role in current prices; for example, who is that mystery investor who has bought up much of the world’s copper supply? But the fact that world economic recovery has also brought a recovery in commodity prices strongly suggests that recent price fluctuations mainly reflect fundamental factors.
What about commodity prices as a harbinger of inflation? Many commentators on the right have been predicting for years that the Federal Reserve, by printing lots of money — it’s not actually doing that, but that’s the accusation — is setting us up for severe inflation. Stagflation is coming, declared Representative Paul Ryan in February 2009; Glenn Beck has been warning about imminent hyperinflation since 2008.
Yet inflation has remained low. What’s an inflation worrier to do?
One response has been a proliferation of conspiracy theories, of claims that the government is suppressing the truth about rising prices. But lately many on the right have seized on rising commodity prices as proof that they were right all along, as a sign of high overall inflation just around the corner.
You do have to wonder what these people were thinking two years ago, when raw material prices were plunging. If the commodity-price rise of the past six months heralds runaway inflation, why didn’t the 50 percent decline in the second half of 2008 herald runaway deflation?
Inconsistency aside, however, the big problem with those blaming the Fed for rising commodity prices is that they’re suffering from delusions of U.S. economic grandeur. For commodity prices are set globally, and what America does just isn’t that important a factor.
In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.
And those supplies aren’t keeping pace. Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental.
Also, over the past year, extreme weather — especially severe heat and drought in some important agricultural regions — played an important role in driving up food prices. And, yes, there’s every reason to believe that climate change is making such weather episodes more common.
So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.
But that’s for the future. Right now, rising commodity prices are basically the result of global recovery. They have no bearing, one way or another, on U.S. monetary policy. For this is a global story; at a fundamental level, it’s not about us.
