America on the wrong foot

BOOKMARK

Why does economics get associated with the heavy industry of the mind? Is it because it belongs to the fine old tradition of academic studies that renders the subject either boring or incomprehensible or both? May be because it seeks to explain why something that works perfectly well in practice does not do so in theory.

Yet economics matters to people! It is, as John Maynard Keynes put it, "dangerous for good or evil," in a way that literary studies or even history are not. All the same people are put off by the manner it is put across "" all equations, diagrams and impenetrable jargon.

With the rare exception of Paul Krugman, an outstanding practitioner and brilliant populariser whose earlier two books The Accidental Theorist and The Return of Depression Economics (there were others too) acknowledged him as "probably the most creative economist of his generation."

Now he has come off with an equally lucid and plucky analysis of the jiggery-pokery of the Bush administration in The Great Unravelling: From Boom to Bust in Three Scandalous Years (Allen Lane, The Penguin Press, £ 15).

The book is, first of all, a chronicle when it all went wrong, again. When the heady optimism of the late 1990s gave way to renewed gloom. Specifically, how a $ 230 billion surplus the Bush administration inherited was converted to a $ 300 billion deficit "" and "that's an underestimate."

It is also an attempt to explain the how and why: how was it possible for a country with so much going for it to go downhill so fast and why the Bush team made such bad decisions.

So, the book is, in large part a story about American leadership, "incredibly bad leadership in the private sector, and in the corridors of power." And, of course, it is, in particular, a damning indictment of George W. Bush who, a White House correspondent has described as "the worst President in all American history."

A lot has happened in the past three years' stock market decline and business scandals, energy crisis and environmental backsliding, budget deficits and recession, terrorism and now finally war that is costing $1 billion per month. All these things have been written from an economic point of view. But to talk about economics requires, more and more, to write about politics.

So there is a political story that runs through much of what has happened to America lately "" the story of the rise and growing dominance of America's political Right that now effectively controls the White House, much of the judiciary and a good slice of the media. So the five sections of the book are mainly about "economic disappointment, bad leadership and the lies of the powerful."

But the current crisis in American capitalism, Krugman says, isn't about the specific details "about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been played on behalf of insiders. And the Bush administration is full of such insiders. "You could quite legitimately call it 'crony capitalism.'"

Nowhere was the sheer mendacity of the Bush leadership that has come to be known as the 'Bush doctrine' better reflected than in the on-going Iraq war. Intervention in Iraq and the legitimisation of preemptive strikes on other countries, as a regular policy, that didn't fall in line with American policies had been drawn up much before September 11. It was "part of a pre-existing and much more radical agenda."

A war with Iraq was at first justified by the alleged link between Saddam Hussein and al Qaeda. When no evidence was found for that link, despite intense efforts, the issue became Saddam's alleged nuclear programme.

Eventually, the case for believing in an Iraqi nuclear programme was discredited. There's a pattern here: pretty much the same story could be told about Bush's domestic policies, straight lies told with a straight face.

But to make the lies stick, the media had to be taken along. And it was quite willing to come along by merely focussing on the politics of personality and avoiding explaining the issues.

Besides, most Americans get their news from TV. But that's not the whole story and the images TV doesn't show are anything but heartwarming. You must remember that America as a social and political organisation is committed to a cheerful view of life. A full picture would show politicians and businessmen behaving badly "" but that wouldn't sell in a market-driven economy.

You could say little of this is new. Some would even disagree with some of it. But few will fail to be stimulated by Krugman's thinking and lively style.