Brooks and Krugman

In “The Russia I Miss” Bobo wails that gone is the  depth of soul that influenced Western culture for 150 years.  Prof. Krugman, in “Japan’s Economy, Crippled By Caution,” says that respectability creates a trap for policy makers.  Here’s Bobo, writing from St. Petersburg:

People who came of age after the end of the Cold War may not realize how powerfully Russia influenced Western culture for 150 years. For more than a century, intellectuals, writers, artists and activists were partly defined by the stances they took toward certain things Russian: Did they see the world like Tolstoy or like Dostoyevsky? Were they inspired by Lenin and/or Trotsky? Were they alarmed by Sputnik, awed by Solzhenitsyn or cheering on Yeltsin or Gorbachev?

That was because Russian culture had an unmatched intensity. It was often said that Russian thinkers addressed universal questions in their most extreme and illuminating forms.

In his classic book, “The Icon and the Axe,” James H. Billington wrote that because of certain conditions of Russian history, “the kind of debate that is usually conducted between individuals in the West often rages even more acutely within individuals in Russia.”

Russian influence was especially strong in America. There were certain mirror image parallels. Both nations didn’t quite know what to make of the sophistication and polish of Western Europe. Both countries had Eurocentric elites who copied Parisian manners, and populist masses who ridiculed them. Both nations had mental landscapes defined by the epic size and wild beauty of their natural landscapes.

But Russia stood for something that America has never been known for: depth of soul. If America radiated a certain vision of happiness onto the world, Russian heroes radiated a vision of total spiritual commitment.

“The ‘Russian’ attitude,” Isaiah Berlin wrote, “is that man is one and cannot be divided.” You can’t divide your life into compartments, hedge your bets and live with prudent half-measures. If you are a musician, writer, soldier or priest, integrity means throwing your whole personality into your calling in its purest form.

The Russian ethos was not bourgeois, economically minded and pragmatic. There were radicals who believed that everything should be seen in materialistic terms. But this was a reaction to the dominant national tendency, which saw problems as primarily spiritual rather than practical, and put matters of the soul at center stage.

In the Middle Ages, Russian religious icons presented a faith that was more visual than verbal, more mysterious than legalistic. Dostoyevsky put enormous faith in the power of the artist to address social problems. The world’s problems are shaped by pre-political roots: myths, morals and the state of the individual conscience. Beauty could save the world.

Even as late as the 1990s, one could sit with Russian intellectuals, amid all the political upheaval in those days, and they would talk intensely about the nature of the Russian soul. If it was dark in the kitchen at night, they wouldn’t just say, “Let’s replace the light bulb.” They’d talk for hours about how actually the root problem was the Russian soul.

Many of Russia’s most charismatic figures were on a lifelong search for purity. For the elder Tolstoy, you could live with material abundance and rot inside, or you could live the pure, simple rural life of the peasant. Solzhenitsyn wrote, “It makes me happier, more secure, to think … that I am only a sword made sharp to smite the unclean forces, an enchanted sword to cleave and disperse them.”

All of this spiritual ardor, all of this intense extremism, all of this romantic utopianism, all of this tragic sensibility produced some really bad political ideas. But it also produced a lot of cultural vibrancy that had an effect on the world.

While the rest of the world was going through industrialization and commercialism and embracing the whole bourgeois style of life, there was this counterculture of intense Russian writers, musicians, dancers — romantics who offered a different vocabulary, a different way of thinking and living inside.

And now it’s gone.

Russia is a more normal country than it used to be and a better place to live, at least for the young. But when you think of Russia’s cultural impact on the world today, you think of Putin and the oligarchs. Now the country stands for grasping power and ill-gotten money.

There’s something sad about the souvenir stands in St. Petersburg. They’re selling mementos of things Russians are sort of embarrassed by — old Soviet Army hats, Stalinist tchotchkes and coffee mugs with Putin bare-chested and looking ridiculous. Of the top 100 universities in the world, not a single one is Russian, which is sort of astonishing for a country so famously intellectual.

This absence leaves a mark. There used to be many countercultures to the dominant culture of achievement and capitalism and prudent bourgeois manners. Some were bohemian, or religious or martial. But one by one those countercultures are withering, and it is harder for people to see their situations from different and grander vantage points. Russia offered one such counterculture, a different scale of values, but now it, too, is mainly in the past.

Now here’s Prof. Krugman, writing from Tokyo:

Visitors to Japan are often surprised by how prosperous it seems. It doesn’t look like a deeply depressed economy. And that’s because it isn’t.

Unemployment is low; overall economic growth has been slow for decades, but that’s largely because it’s an aging country with ever fewer people in their prime working years. Measured relative to the number of working-age adults, Japanese growth over the past quarter century has been almost as fast as America’s, and better than Western Europe’s.

Yet Japan is still caught in an economic trap. Persistent deflation has created a society in which people hoard cash, making it hard for policy to respond when bad things happen, which is why the businesspeople I’ve been talking to here are terrified about the possible spillover from China’s troubles.

Deflation has also created worrisome “debt dynamics”: Japan, unlike, say, the United States after World War II, can’t count on growing incomes to make past borrowing irrelevant.

So Japan needs to make a decisive break with its deflationary past. You might think this would be easy. But it isn’t: Shinzo Abe, the prime minister, has been making a real effort, but he has yet to achieve decisive success. And the main reason, I’d argue, is the great difficulty policy makers have in breaking with conventional notions of responsibility.

Respectability, it turns out, can be an economy-killer, and Japan isn’t the only place where this happens.

As I said, you might think that ending deflation is easy. Can’t you just print money? But the question is what do you do with the newly printed money (or, more usually, the bank reserves you’ve just conjured into existence, but let’s call that money-printing for convenience). And that’s where respectability becomes such a problem.

When central banks like the Federal Reserve or the Bank of Japan print money, they generally use it to buy government debt. In normal times this starts a chain reaction in the financial system: The sellers of that government debt don’t want to sit on idle cash, so they lend it out, stimulating spending and boosting the real economy. And as the economy heats up, wages and prices should eventually start to rise, solving the problem of deflation.

These days, however, interest rates are very low in most major economies, reflecting the weakness of investment demand. What this means is that there’s no real penalty for sitting on cash, and that’s what people and institutions do. The Fed has bought more than $3 trillion in assets since 2008; most of the cash it has pumped out there has ended up just sitting inbank reserves.

How, then, can policy fight deflation?

Well, the answer currently being tried in much of the world is so-calledquantitative easing. This involves printing a very large amount of money and using it to buy slightly risky assets, in the hope of doing two things: pushing up asset prices and persuading both investors and consumers that inflation is coming, so they’d better put idle cash to work.

But is this sufficient? Doubtful. America is recovering, but it has taken a long time to get there. Europe’s monetary efforts have fallen well short of expectations. And so far the same is true of “Abenomics,” the bold — but not bold enough — effort to turn Japan around.

What’s remarkable about this record of dubious achievement is that there actually is a surefire way to fight deflation: When you print money, don’t use it to buy assets; use it to buy stuff. That is, run budget deficits paid for with the printing press.

Deficit finance can be laundered, if you like, by issuing new debt while the central bank buys up old debt; in economic terms it makes no difference.

But nobody is doing the obvious thing. Instead, all around the advanced world governments are engaged in fiscal austerity, dragging their economies down, even as their central banks are trying to pump them up. Mr. Abe has been less conventional than most, but even he set his program back with an ill-advised tax increase.

Why? Part of the answer is that demands for austerity serve a political agenda, with panic over the alleged risks of deficits providing an excuse for cuts in social spending. But the biggest reason it’s so hard to fight deflation, I contend, is the curse of conventionality.

After all, printing money to pay for stuff sounds irresponsible, because in normal times it is. And no matter how many times some of us try to explain that these are not normal times, that in a depressed, deflationary economy conventional fiscal prudence is dangerous folly, very few policy makers are willing to stick their necks out and break with convention.

The result is that seven years after the financial crisis, policy is still crippled by caution. Respectability is killing the world economy.

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