Shock: Krugman Turns on 'Elites'
By Staff News & Analysis - May 11, 2011

Well, what I've been hearing with growing frequency from members of the policy elite – self-appointed wise men, officials, and pundits in good standing – is the claim that it's mostly the public's fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate's foolishness. So this seems like a good time to point out that this blame-the-public view isn't just self-serving, it's dead wrong. The fact is that what we're experiencing right now is a top-down disaster. The policies that got us into this mess weren't responses to public demand. They were, with few exceptions, policies championed by small groups of influential people – in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. – New York Times/Paul Krugman

Dominant Social Theme: We have to level blame where it belongs, just not too much.

Free-Market Analysis: This is a fairly remarkable article that uber-liberal New York Times media star Paul Krugman (left) has written. Imagine even a few years ago that an article by one of the Times' most prestigious analysts would frankly castigate America's ruling class and one begins to get a sense of the growing panic that must be circulating at the top of the proverbial heap. Krugman, who evidently and obviously rubs shoulders with these people, tells us that fingers are starting to be pointed – not at others in the US ruling class but at the larger civilian population. He wants to make clear he disapproves.

Krugman is not merely trotting out the normal dominant social theme of the elites that one would expect at such a time. As we have suggested in the past, the normal elite playbook blames the private sector and "bankers" for what has gone wrong when the business cycle inevitably turns away from fiat money. The idea is always to blame industrial "greed and corruption" for the problems and thus accrue more power for the state, which is actually to blame through a variety of price-fixing mechanisms and central banking stimulation that eventually add up to a ruinous burden.

But in this editorial, Krugman comes perilously close to blaming government and the military industrial complex, which is a startling perspective. Either Krugman wrote the article clumsily or blame is to be cast beyond the normal boundaries. As analyzers of dominant social themes, we think an article like this is significant. The strategy seems to be changing. Instead of the usual Blame Capitalism rhetoric, we are apparently witnessing a new strategy, the Limited Hangout.

A limited hangout is where powers-that-be release some information but not too much in the hopes of defusing a crisis or media-fanned uproar. The idea is that a pliable press will treat the limited information as definitive, write articles using that information and then move on. In this case, Krugman's limited hangout is being applied to what we call the Anglo-American power elite. He doesn't mention them of course, which is why this article of his qualifies as a limited hangout. He is directing people's frustrations toward establishment functionaries, those who carry out elite policies, including economists, politicians, corporate moguls and even Presidents (Barack Obama in this case).

But this is news nonetheless, in our view. And at Krugman's level we would suggest that nothing happens by accident. Krugman doesn't simply sit down and dash these editorials off by himself. He may not even write them at all, even though his name goes on them. Thus, such an editorial – appearing in the US "paper of record – may begin to a signal that unrolling sociopolitical disasters afflicting the US and the West have reached a more critical stage. Apparently, the powers-that-be – and this is an important point – may have decided that what has gone wrong in the West is not about to be easily rectified after all.

The blame game is an especially difficult affliction for those who cluster about the power elite. It is when they learn the difference between power that is held and power that rubs off. There are hundreds of functionaries that cluster close to the power elite in the City of London. There are thousands in the next concentric ring, and so on. All benefit from the radiance of those intergenerational banking families at the center of the system, but when times are tough and scapegoats are needed the blame is apportioned outward, much as it is in the military. Those at the center remain unscathed while those in the outer rings are exposed to injury.

Krugman, a functionary himself, has begun a new process of blame. Perhaps by doing so he hopes to avoid guilt-by-association, though no one has been a more faithful proponent of the current disastrous system than Krugman. But with the Anglo-American elite's wars stalled abroad and Western economies stagnating or worse at home, Krugman must be feeling the pressure too.

And Krugman surely is in the blame mode. The past three years have been a disaster for most Western economies, he writes. "The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe's single currency is coming apart at the seams. How did it all go so wrong?"

Krugman focuses (predictably) on the Bush Administration, which he claims was responsible for creating a good deal of America's disastrous budget crisis. The Bush tax cuts were part of the initial problem, he writes. And the deficit was deepened further by wars in Iraq and Afghanistan. Finally there was what he calls the Great Recession. (Why not call it a depression and be done with it?)

Krugman's main point – an unusual one to find a high profile in an elite platform such as the Times – is that all three of these decisions were engineered by a small coterie of American "elites." The tax cuts benefited only a few of the very wealthy; the decision to go to war was endorsed by a small military-industrialist circle clustered around Bush and the Great Recession was a product of Wall Street's recklessness. We don't agree with all of this but it is beyond argument that in each case Krugman is blaming a small cluster of elites. Here's some more from the article:

So it was the bad judgment of the elite, not the greediness of the common man, that caused America's deficit. And much the same is true of the European crisis. Needless to say, that's not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it's not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.

The real story of Europe's crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters. Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?

One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn't be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn't be giving lectures on responsible government. But the larger answer, I'd argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they'll do even more damage in the years ahead.

We would argue Krugman's argument is qualitatively different than the normal one that blames capitalist greed. He writes of "policy elites" and goes out of his way to castigate the Eurocrats as well – and "European policy makers." Definitively, then, Krugman is blaming government not just the private sector. He wants to blame the policy elites otherwise "they'll do even more damage." For such language to appear in the New York Times from a primary exponent of top-down federalism is remarkable.

Is Krugman's article a sign that the true powers-that-be – the intergenerational banking families and their religious and corporate facilitators – are starting to panic? It is of course hard to read the proverbial tea-leaves, but this is what elite meme-watching is all about. One has to be sensitive to changes in language and strategy, especially at major elite mouthpieces such as the New York Times.

After Thoughts

If what we are suggesting is actually taking place, then we would have to assume that the elites are becoming seriously troubled by the failure of their dominant social themes and are prepared to sacrifice intimates to ensure the blame does not reach to the very top where it belongs. We would submit that this is qualitative strategic difference and has numerous ramifications in terms of the world's larger crises and the elite's ability to control them. Blame the Internet?