Starbucks' CEO and a Double Shot of Misunderstanding

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The New York Times

Starbucks' CEO and a Double Shot of Misunderstanding

One of the enduring fantasies of the pundit class – most dramatically demonstrated by the ludicrous Politico piece on What Insiders Know – is that all we need to fix our economic problems is to get the great and the good together and bypass those pesky elected officials. Business leaders, in particular, are presumed to have the know-how to deal with all the important issues.

But the reality is that the business leaders intervening in our economic debate are, for the most part, either predatory or hopelessly confused (or, I guess, both).

I’d put Fix the Debt in the predatory category; it’s quite clear that the organization (which is yet another Pete Peterson front, this time explicitly dominated by corporate interests) has an agenda more focused on cutting social insurance and corporate taxes than on reducing the deficit per se.

Meanwhile, Howard Schultz, the CEO of Starbucks, exemplifies the hopeless confusion factor. By all accounts, he’s a good guy, with genuinely generous instincts. But in his message to employees, urging them to write “come together” on coffee cups, he gets the nature of the fiscal cliff completely wrong. In fact, he gets it wrong in two fundamental ways. He writes:

As many of you know, our elected officials in Washington D.C. have been unable to come together and compromise to solve the tremendously important, time-sensitive issue to fix the national debt.

OK, first of all, the fiscal cliff is NOT A DEBT PROBLEM. In fact, it’s the opposite: the danger is that with expiring tax cuts, expiring unemployment benefits, and the sequester, we’ll reduce the deficit too fast. Deficit scolds are having a hard time reconciling their sudden concern about excessive deficit reduction with everything they were saying before – and evidently Mr. Schultz hasn’t gotten the message that we are now at war with Eastasia, and always have been.

And then, on top of that, he has the politics all wrong, in the characteristic centrist way: he makes it sound as if the problem was one of symmetric partisanship, with both sides refusing to compromise. The reality is that Obama has moved a huge way both in offering to exempt more high-earner income from tax hikes and in offering to cut Social Security benefits; meanwhile, the GOP not only won’t agree to any kind of tax hike at all, it also has yet to make any specific offer of any kind.

So that’s a double shot of total misunderstanding. And you could say that there’s yet a third error in Schultz’s message – amongst his errors? For he sends people, in the name of public-spiritedness, to Fix the Debt – who, as I’ve already pointed out, are not good guys at all.

It’s quite sad, really. And it’s also an indication that Republican extremism isn’t the only source of our dysfunctional response to economic crisis, that the awesome inability of Very Serious People to come to grips with either political or economic reality is another huge source of our failure.

Paul Krugman

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, The Return of Depression Economics, and his most recent, End This Depression Now!.

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