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The Paradox of Economic Stress Disorder

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Post Economic Trauma Stress Disorder is the topic today. The world leaders in Toronto have decided that reduction of sovereign debt must be addressed, but President Obama's absolutely accurate call for patience and caution was heard. Perhaps Dr. Paul Krugman's point of view is finally being heard, too, but perhaps not. Krugman (and many, many others, by the way,) is quite positive, (and so am I), that we are circling the drain of a very long, protracted, and ultimately catastrophic "lost decade" depression, all for the lack of the necessary rationality to assess our true economic position. We see in the public discourse strident calls for fiscal stringency, but these are panicked and irrational responses, and there is a reason why they appear at this juncture.

James Carroll in the Boston Globe this Monday morning seemed to be saying something very much in parallel to Krugman. He writes of the total effect of long wars and thousands of casualties on the public at large. He is eloquent in describing the narrowing of the public imagination and the search for simple answers.

But, it is not just war and vivid casualties of war that affect our national psyche, our combined mood, our daily sense (or lack of it) of promise for the future. Clearly, the economic debacle of 2008 that now continues to be holding huge, almost incomprehensible numbers of people in the U.S. and even more abroad hostage to hopeless unemployment is just exactly that sort of traumatic experience that gives us the psychological and intellectual blinders that lead us to seek simplistic answers to vital, but complex questions.

There is a paradoxical aspect to what I will call the Obama/Krugman synthesis of ideas. Krugman is writing as a journalist-intellectual and can speak much more forcefully to attract the necessary attention. President Obama on the other hand needs to be more circumspect than anyone on the planet, for in the last analysis, if anything goes wrong, the critics will be all over him. The paradox, however, is that neither of these exponents of the historically proven way out can say publicly what the benchmarks are that will guide them from current, necessary deficit spending to future necessary deficit reduction policies, BECAUSE publishing the benchmarks will lead strong unscrupulous players to simulate those conditions, to take advantage to achieve windfall profits. The situation is very much analagous to the Heisenberg Uncertainty Principle, which says that an observer cannot help but effect the outcome of an observation.

Obama's hope is that, while attempting to help the financial sector and then the industrial/commercial sectors back to their feet and to a reasonable strength of enterprise purpose that will sustain recovery, he can argue, cajole, and squeeze the leaders of other economies around the world into compliance with a system that works. He needs to do this without rubbing in their faces the obvious truth that the American economy is the strongest, leads, and must recover for all other economies to recover. At the same time he must let them know that global interdependence means that sovereign disregard for the agreed-upon way out, will mean the failure of the American recovery and inevitably the collapse of the world economy. He must convince an entire planet, a jumble of uncoordinated and purposely selfish economies, that for the long run recovery they must be rational against all the strong appeals by the traumatized and stunned to surrender to simplistic answers. It is quite a trick, but as Krugman and others correctly point out again and again, week after week, it is the only way ... short of sacrificing a generation or two of our planet's human beings to the gnawing incapacitation of unemployment.


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James R. Brett, Ph.D. taught Russian History before (and during) a long stint as an academic administrator in faculty research administration. His academic interests are the modern period of Russian History since Peter the Great, Chinese (more...)

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