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Home Publications Blogs Beat the Press Thomas Friedman, the High Priest of Austerity

Thomas Friedman, the High Priest of Austerity

Sunday, 28 November 2010 22:25
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Thomas Friedman told Congress to just shut up and reduce the living standards of the vast majority of the population. In his column today Friedman said that Congress should quickly embrace the cuts in Social Security and Medicare proposed by Erskine Bowles and Alan Simpson, the chairs of President Obama’s deficit commission, and get on with the rest of Friedman’s agenda. Friedman has apparently decided there is no other way to move forward than to force moderate-income retirees to take big cuts in their living standards.

Of course others might point out that there are enormous potential savings to Medicare and Medicaid from allowing beneficiaries access to the more efficient health care systems in other countries. The government and private sector could also saving hundreds of billions of dollars a year from replacing the system of patent support for drug research with more efficient mechanisms.

In addition, the government could easily raise more than $100 billion a year from taxing the excesses in the financial sector, a route even advocated by the International Monetary Fund. This would require the sector most responsible for the economic wreckage the country is now experiencing to pay for the damage.

And, those who know basic economics (forget Friedman here) know that the current deficits pose no burden whatsoever. Deficits run in times of high unemployment do not displace private sector production; they simply utilize resources that would otherwise be idle.

And, there need be no future tax burden associated with the interest on this debt. There is no reason that the Fed can’t simply buy and hold the bonds issued to finance the deficit. This would mean that the interest paid on the bonds would go to the Fed, which would in turn refund it to the Treasury. This means that the interest imposes no net cost to taxpayers.

But Friedman doesn’t have time for thinking about these alternatives to cutting Social Security and Medicare. After all, each of these would involve confronting wealthy and powerful interest groups, Thomas Friedman doesn’t get paid to cause these people trouble.

 Friedman’s line is to tell Congress to shut up and go after those high-living former schoolteachers and factory workers. After all, what business do these people have enjoying a decent standard of living when Thomas Friedman has an agenda to pursue?   

Comments (13)Add Comment
He "married into one of the 100 richest families in the country" - the Bucksbaums
written by Scott ffolliott, November 28, 2010 10:52
As the July edition of the Washingtonian Magazine notes, Friedman lives in "a palatial 11,400-square-foot house, now valued at $9.3 million, on a 7½-acre parcel just blocks from I-495 and Bethesda Country Club." He "married into one of the 100 richest families in the country" - the Bucksbaums, whose real-estate Empire is valued at $2.7 billion.

As they say, he earned his money the old fashioned way, he married into it.
Flat Earth Friedman Preaches Competition: Then Misses the Big One
written by izzatzo, November 29, 2010 12:56
From the NYT article, this quote by Friedman:
I think what is driving people’s pessimism today ... is that people intuitively understand that what we need most now is nation-building in America. They understand it by just looking around at our crumbling infrastructure, our sputtering job-creation engines and the latest international education test results that show our peers out-educating us, which means they will eventually out-compete us.

Friedman thinks the 'pessimism' is driven by a belief that our peers will eventually out-compete us.

Friedman is a national columnist for the NYT and isn't aware that our 'peers' have been stomping the economic crap out of the USA for decades in terms of superior health care at half the cost.

Friedman isn't aware that the single largest driver of unsustainable debt is exactly where peer countries have been the most globally competitive for decades - in health care - instead citing it to arrive 'eventually' to 'out-compete us'.

Friedman misses the single largest driver of debt - health care, then misses its single largest solution - competitive health care, then joins with Bowles and Simpson to score the Village Idiot Trifecta for solutions to problems that don't exist, like cutting Social Security.

Write a lot about competition do you Mr Friedman, especially the global, flat earth type, the same version endorsed by Bowles and Simpson that created the housing bubble for example? You know, the competition that's for everyone else but you?

If the three of you had to compete for a living and actually add value to the economy instead of subtracting it, you'd be in the food stamp and unemployment line about now, no doubt giddily chatting away on how well competition works under trickle down economics to move resources to their highest valued use. Exactly where you belong.
Scott says,
written by diesel, November 29, 2010 1:09
"As they say, he earned his money the old fashioned way, he married into it."

Too bad intellectual clarity can't be acquired the same way.
written by PeonInChief, November 29, 2010 9:26
Friedman's blather isn't that different from that of David Brooks. I kept expecting to find some paean to the virtues of punctuality and order.
No need to be a "deficit dove"
written by Matt Franko, November 29, 2010 10:42
There really is no need to figure out who "can pay for it".

We could easily switch over to a 'no bonds' type of approach.

You sort of actually help make Freidman's case when you pay mind to the concept of 'who has to pay for it' in general.

Check with Prof. Galbraith.....

Friedman says,
written by diesel, November 29, 2010 11:38
"so that never again will we see polls that indicate that half the country thinks our best days are behind us."

Why not? What the heck? Why don't we just give up and say "to hell with empire". Let's just forget the imperial domination thing and resume our place as just one nation among many. Unexceptional. We don't have to live up to this fantasy version of ourselves that we project into a past that really never existed and a future that really has no claim on us. This collective conscious or unconscious memory is a myth perpetuated by cheerleaders like Friedman.

Lay it down. Put it aside. Just try to be the best we can be within the limitations of our own self-possessed nature. Marathon runners know what it means to "run within yourself". It means to not taking off at a wide eyed gallop, inspired by the phony rush of bravado or illusions. It means to marshall your inner resources and pace yourself, not letting your ambition outrun your talent and training.

Maybe we're flat out just not competent enough to lead the world--or even our deluded version of it. Laying down one's illusions can be ultimately liberating. Let's forget the superlatives and just concentrate on building a fundamentally decent place to live.

written by Frank, November 29, 2010 1:04
The Fed buying and holding the bonds (I realize the MMT'ers feel this is only a self-imposed requirement). The money to buy them, would that come from the Fed's portfolio or the "ex nihilo" creation, and how does this differ from the prohibition against the Fed financing spending (not arguing, just asking).
Thomas Friedman to Middle Class: Suck on This
written by Lumpy Rutherfurd, November 29, 2010 1:55
Thomas Friedman to Iraqis/ to liberals & progressives/ to members of the fact-based community/ to non-Neocons/ to Middle Class, Working Class, Poor Americans/:

"Suck. On. This!"

written by diesel, November 29, 2010 3:12
Gee Lumpy, I went to the youtube site you cited and winced through Friedman's strange use of the term "bubble" applied to terrorism and was duly appalled when he painted the picture of American "boys, and girls" going house to house etc. etc. "suck on this" blah, blah...

Speaking for myself, there is (apart from the torture photos) no more shameful mental image of America's presence abroad than the footage of the door to door midnight rousting of innocent Iraqi women and children, American servicemen barking commands at them in English while waving their automatic rifles about, the Iraqi's dumb, imcomprehending reactions. The utter humiliating shame our troops have brought upon our country.

But then again, I still haven't gotten over the murder we committed upon people who lived in (literal) straw huts in rural Vietnam. Our brave boys surely distinguished themselves torching those thatched roofs. I still don't understand how the Vietnamese rural poor could so threaten the existence of such a great super power, but then, I'm a slow learner.

written by Mark, November 29, 2010 6:49
"And, there need be no future tax burden associated with the interest on this debt. There is no reason that the Fed can’t simply buy and hold the bonds issued to finance the deficit. "

Wow! what magic! I had no idea that all we needed to do was print money to get out of this recession (which is what happens when the fed monetizes the debt). ..what an idiot..
Reply to Frank, November 29, 2010 2:04 PM
written by Benedict@Large, November 30, 2010 11:37
The money comes out of thin air, so to speak, but the Fed receives the bonds in return. As these bonds mature, they then offset the thin air money until it disappears, leaving (roughly) a zero balance of thin air money. Add to this that all interest on those bonds is simply returned to Treasury, and the net effect of the entire tranaction is to simply advance the maturity date on the purchased bonds to the date of transfer to the Fed.
Frank and Benedict@Large
written by Ralph Musgrave, December 01, 2010 3:58
Frank and Benedict@Large, An alternative system, which amounts to the same thing, is to dispense with government bonds altogether, and have the Fed let Congress spend extra money (created ex nihilo) when the Fed thinks inflation is not a danger. Milton Freidman advocated a “zero national debt” system of this sort. See http://nb.vse.cz/~BARTONP/mae911/friedman.pdf Warren Mosler advocates something similar. See 2nd last para in particular here: http://www.huffingtonpost.com/...32105.html

Conversely, when inflation loomed, the Fed would need to do the opposite, i.e. demand that Congress raise taxes and/or cut spending. The money collected would be “un-printed”, or “sent back to nihilo”. Though there are other deflationary measures that might do instead, e.g. raise interest rates.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.