Austerity advocate Robert Samuelson is a Paul Volcker fan. According to Samuelson, it was Volcker's unpopular austerity program under Reagan that squelched run-away inflation and ignited an economic boom. But now Samuelson questions the soundness of Paul Volcker’s new mission to restore public trust.
He believes The Volcker Alliance errs in attributing the trust deficit to the behavior of our politicians. According to Samuelson we should blame the government itself:
Since World War II, American government has assumed more responsibilities than can reasonably be met. Some are unattainable; others are in conflict. Government is, among other things, supposed to: control the business cycle, combat poverty, cleanse the environment, provide health care, protect the elderly, subsidize college students, aid states and localities… As I’ve written before, government becomes almost “suicidal” by pervasively generating unrealistic expectations. The more people depend on it, the more they may be disappointed by it.
Samuelson thinks the problem with Volcker’s new mission comes to this:
What he’s creating is an institute that will focus on the “nuts and bolts” of implementing policies effectively: for example, having better-trained bank examiners. Although this cannot hurt, it’s not the essence of our problem, which is being more rigorous about defining what government can and should do. Democracies must have the capacity to take actions that, though unpopular and painful in the present, are desirable for the society’s ultimate well-being. This defined the triumph of Volcker and Reagan in the 1980s. It’s conspicuously missing today.
Setting aside the apparent fact that government is only transformed by acting politicians who must be trusted, there's truth in Samuelson's criticism I do believe. But how de we get to the promised land from here? We're in a situation where we can't even produce a budget. Perhaps we must find a way to produce runaway inflation…