This was posted on prudent bear. I did not write this nor agree with where this guy is coming from, but there is a lot be said for it:
Yesterday, after the big fall, I saw Kudlow on cnbc. As he holds many views on different economic issues, it is very important to thoroughly assess all his central attitudes, and thus comprehend the big picture of his socio-political role.
First of all, Kudlow was a big supporter of Reagan. I believe he was in his administration, though I'm not sure. Whatever the case was, he was a big backer of Reagan's "supply-side" pro-affluent tax cuts. He still backs them and believes we need more capital gains tax cuts, cuts in the top marginal tax rate, cuts in the corporate tax rate, etc. All these attitudes put him firmly on the right side of the spectrum, and clearly identify him as a proponent of the prerogatives of big business.
Watching him on TV several years ago (probably 3 years ago), he made several key assertions. One was that productivity growth was understated during the 1990s, thus inflation was really 0% per annum, not 2% per annum, and that real GDP growth was really 6% annually, not 4%. Kudlow attributed this solid performance to tax cuts, deregulation, etc., which he admitted had started late in the Carter administration, and continued through Reagan, Bush, and Clinton. His argument was: given the non-inflationary boom, we need more pro-affluent tax cuts, more monetary stimulus, etc.
Yesterday, on CNBC, he kept on saying the Fed should use "real time" price signals like the CRB index in making monetary policy decisions. He opined that the Fed relied too much on "backwards-looking" or lagging indicators, like last quarter's GDP report. In the context of making this ststement, he noted that the government had revised down 1998-2000's GDP and productivity numbers. He used these relatively weak numbers to argue for: pro-affluent tax cuts and more monetary stimulus (what else???).
Kudlow is a shill for the monied classes, nothing more, nothing less. He is deeply concerned about the stock market's stagnation, and realizes that this financial market weakness is indicative of broader real economy weakness. Kudlow is reactionary, but not stupid; he realizes the stock market boom and the upwards redictribution of wealth were closely linked phenomena, both tied to the long-running trend of governments to increase the fortunes of the already-affluent via tax cuts, deregulation, union-busting, etc. He demands that these policies be intensified, for the simple reason that he (correctly) sees these pro-rich policies as provinding the underpinning for the historic bull-run.
But Kudlow is worried; the "pro-rich Keynesianism" he advocates, a.k.a. the trickle-down theory is still now being implemented, but the market is tanking. The inequality of wealth is still increasing, due in part to the continuing adoption of supply-side policies, yet the market is tanking. Hence, now he argues for expansionary monetary policy as a further prop for the bull-market.
The unrestrained enthusiasm of Kudlow -- who, it should not be forgotten, is the inhouse economist on CNBC -- for easy money reflects the unease and desperation of the bourgeoisie in this period of slump. Kudlow knows that printing money is, at best, a short-term solution to the problem of recession, leading eventually to inflation. He knows this, yet he has no other ideas. His steadfast support for the rich does not allow him to countenance socialist-type policies like the nationalization of industries, or even reformist measures like more social welfare spending, public works projects, higher minimum wage, etc. Thus, committed to the interests of the rich, and to the stock market on which their fortunes depend, he can only advocate easy money. That this policy has been tried a zillion times in the past, and that it never doens anything more than delay the onset of recession, does worry him. He hopes, if taken far enough, maybe it will bail the market out this time. But he is deeply worried and basically out of fresh ideas. And so is the financial elite as a whole. |
