Brooks and Krugman

Oh, cripes.  Remember when Bobo said he was going to venture forth to “look for America?”  Well, he went to Cuba instead.  In “Jose Martí, the National Poet” he babbles that Cuba has challenges ahead, but its national spirit is worthy of deep admiration.  He wonders whether our “national malaise” has something to do with having lost touch with our national poets.  In the comments “gemli” from Boston tried to tell him something:  “Our national malaise is the result of an attack on the American spirit by Obama-hating zealots, abetted in part by the weekly poetry of opinion pieces by David Brooks. Did he really have to travel to Cuba to see young men hanging about on the streets with no jobs, no prospects and a dismal future? He could have seen that right here in the good old USA, where entire cities have been decimated by economic abandonment, and where we lock up more of our population than any other nation on earth. Eat your heart out, Fidel.”  In “In Hamilton’s Debt” Prof. Krugman says of course the founding father should stay on the $10 bill, and that today’s policy makers could learn from his wisdom.  Here’s Bobo, writing from Havana:

Many nations have attempted the transition from revolutionary socialism toward some form of democratic capitalism; Cuba just happens to be the final one.

The country has many things going against it as it tries to make the journey. It suffers from the dysfunctions that afflict countries that have giant bureaucratic states lying heavy on society. Those at the top have been trained all their lives to regulate and control. The governing elites speak (at great length) in lifeless ideological jargon.

The current government slogan — not without haste, but without pause — suggests a steady reform process, but in fact the old people running this effort are halting and glacial. The world is changing Cuba faster than the Cuban state can cope.

The neighborhoods feel warmer and more communal than those in many other nations, but there are certainly a lot of young men lethargically hanging about all day without much to do.

Independent civic institutions are scarce. The young people, local scholars say, are disillusioned with all systems. They hope technology will save them, or moving abroad will.

But there is one big thing Cuba definitely has going for it: national pride. One encounters a fierce love of country, a sense of national solidarity and a confident patriotic spirit that is today lacking in the United States.

The patriotism has prickly manifestations. Cuban officials drop random Bay of Pigs references into their conversations with Americans, just for the ornery satisfaction of it. There is also a pervasive (and sometimes completely unhelpful) sense of Cuban exceptionalism; the idea is that no other model quite fits Cuba because the place is so remarkably distinct.

But there are glorious manifestations. A lot of that national pride is based on cultural achievements. I am here with the President’s Committee on the Arts and the Humanities, part of President Obama’s reconciliation with Cuba. Musicians like Smokey Robinson, Dave Matthews, Joshua Bell, John Lloyd Young and Usher and creative types like the playwright John Guare and the choreographer Martha Clarke, got to interact with their Cuban counterparts, while government officials negotiated future exchanges.

This is the way to see Cuba at its best. The artistic community is consistently dazzling. It’s not only the high artistic standards. There is a radiating joy in performance that glows out of each artist, a blaze from something deep in the Cuban soul.

But Cuban national pride has another source: the 19th-century poet and journalist José Martí. I was amazed how much Martí’s name came up in conversation here and how little Fidel Castro’s did. Martí is the national poet, the one who shifted the national imagination, who told Cubans who they were and what their story was. He inspired a common faith in a dignified future.

One foundation head told me: “When I’m depressed I try to read something Martí wrote. He’s a father who embraces you. I think he engages the best of Cuba.”

Martí taught by example, fighting for Cuban independence all his life. He was jailed in Cuba and exiled to Spain and elsewhere. He lived a good chunk of his life in the U.S., fighting American imperialism but writing admiring essays on Whitman, Emerson and the Brooklyn Bridge. He excelled at prose, poetry and political organization. He died in battle, fighting for Cuban independence from Spain.

He also taught through his writing, which is quoted on all sides. He believed in an independent Cuba, a moderate and democratic political system with protections to tame capitalism. His love of Cuba caused him to love all Cubans. He spent much of his life trying to unite and reconcile them. “Absolute ideas must take relative forms if they are not to fail,” he wrote.

But he was not primarily a systematic or programmatic thinker. “The problem of independence is not a change in form but a change in spirit,” he believed. He fired patriotism and self-confidence. He found inner fulfillment by serving a national project and envisioning a national purpose.

It’s hard to be too optimistic about Cuba’s short-term future. The leaders are trying to square the mother of all circles — to have a rich society but without rich people; to have an entrepreneurial class but without losing the egalitarian solidarity; to have revolutionary socialism and also outside investment and growth, risk-taking and enterprise.

But it’s exciting to see a nation that has a palpable sense of its own soul. It’s interesting to see what a powerful force a national poet can be. Long dead, Martí is a precious resource who unifies amid disagreement and fortifies in hard times.

Every nation needs to know who it is and what its collective story is. I wonder if the current U.S. malaise has something to do with the way we have lost touch with our own national poets, or even a common sense of who they might be.

Let us now all pause and consider the glory of Bobo calling Cuba “socialist.”  For decades he and his ilk have called Cuba “communist.”  I wonder if he’s now suddenly singing a different tune because of a certain Presidential candidate?  Nah, unpossible…  Here’s Prof. Krugman:

The Treasury Department picked an interesting moment to announce a revision in its plans to change the faces on America’s money. Plans to boot Alexander Hamilton off the $10 bill in favor of a woman have been shelved. Instead, Harriet Tubman — one of the most heroic figures in the history of our nation, or any nation — will move onto the face of the $20 bill.

She will replace Andrew Jackson, a populist who campaigned against elites but was also, unfortunately, very much a racist, arguably an advocate of what we would nowadays call white supremacy. Hmm. Does that make you think about any currently prominent political figures?

But let me leave the $20 bill alone and talk about how glad I am to see Hamilton retain his well-deserved honor. And I’m not alone among economists in my admiration for our first Treasury secretary. In fact, Stephen S. Cohen and J. Bradford DeLong have an excellent new book, “Concrete Economics,” arguing that Hamilton was the true father of the American economy.

Full disclosure: I know next to nothing about Hamilton the man and his life story. Nor, I’m sorry to say, have I managed to see the musical. But I have read Hamilton’s pathbreaking economic policy manifestoes, in particular his 1790 “First Report on the Public Credit,” a document that remains amazingly relevant today.

In that report, Hamilton proposed that the federal government assume and honor all of the debts individual states had run up during the Revolutionary War, imposing new tariffs on imported goods to raise the needed revenue. He believed that doing so would produce important benefits, which I’ll get to in a minute.

First, however, I think it’s interesting to ask how such a proposal would be received today.

On the left, it would surely be denounced as a bailout — a giveaway to speculators who had purchased devalued debt for pennies on the dollar, and would reap large capital gains. Indeed, a fair bit of the report is devoted to explaining why trying to prevent such windfall gains, via “discrimination between the different classes of creditors,” would be impractical and unwise.

Meanwhile, on the right — well, Hamilton was calling for a tax increase, which modern conservatives oppose under any and all circumstances. Luckily for him, there was no Club for Growth to demand his impeachment.

But why did Hamilton want to take on those state debts? Partly to establish a national reputation as a reliable borrower, so that funds could be raised cheaply in the future. Partly, also, to give wealthy, influential investors a stake in the new federal government, thereby creating a powerful pro-federal constituency.

Beyond that, however, Hamilton argued that the existence of a significant, indeed fairly large national debt would be good for business. Why? Because “in countries in which the national debt is properly funded, and an object of established confidence, it answers most of the purposes of money.” That is, bonds issued by the U.S. government would provide a safe, easily traded asset that the private sector could use as a store of value, as collateral for deals, and in general as a lubricant for business activity. As a result, the debt would become a “national blessing,” making the economy more productive.

This argument anticipates, to a remarkable degree, one of the hottest ideas in modern macroeconomics: the notion that we are suffering from a global “safe asset shortage.” The private sector, according to this argument, can’t function well without a sufficient pool of assets whose value isn’t in question — and for a variety of reasons, there just aren’t enough such assets these days.

As a result, investors have been bidding up the prices of government debt, leading to incredibly low interest rates. But it would be better for almost everyone, the story goes, if governments were to issue more debt, investing the proceeds in much-needed infrastructure even while providing the private sector with the collateral it needs to function. And it’s a very persuasive story to just about everyone who has looked hard at the evidence.

Unfortunately, policy makers won’t do the right thing, largely because they keep listening to fiscal scolds — people who insist that public debt is a terrible thing even when borrowing costs almost nothing. The influence of these scolds, their virtual veto over fiscal policy, somehow persists even though their predictions of soaring interest rates and runaway inflation keep not coming true.

The point is that Alexander Hamilton knew better.

Unfortunately, Hamilton isn’t around to help counter foolish debt phobia. But maybe reminding policy makers of his wisdom is one way to chip away at the wall of folly that still constrains policy. And having his face out there every time someone pulls out a ten can’t hurt, either.

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