Tag: Paul Krugman

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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Paul Krugman, taxes, Social Security

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased. 

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-​winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-​increasing tax burdens.

Serious people should confront facts … and avoid Krugman.

This is Common Sense. I’m Paul Jacob.

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Illustration created with PicFinder​.ai and DALL-E2

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Dead Economists Walking?

Paul Krugman, economist, propaganda,

Zombies don’t exist. Not like in the movies.

Or like in the pages of The New York Times.

The Times’s economist Paul Krugman has a new book out, Arguing with Zombies, and, if I ever had the tiniest margin of utility nudging me towards reading it, John Goodman’s review in Forbes has dissuaded me. For Krugman doesn’t argue with anyone — he argues against economists whom he mischaracterizes.

No, that’s apparently too kind. He argues against, says Goodman, economists who don’t exist. “Zombies are economists who believe that every tax cut pays for itself with increased revenue,” Goodman explains. “They hate the poor. They are closet racists. They do the bidding of billionaire puppet masters who pay their salaries and fund their research. Their goal in life is to make the rich richer and the poor poorer.”

Goodman concludes by noting that Krugman knows better, for “if you are thinking that Krugman has never met a Republican, you might be inclined to cut him some slack.” But no, “it turns out Krugman actually worked in the White House during the Reagan administration. That means he knows the tax cuts weren’t devised by economists whose motivation was to make the rich richer. He knows his fellow economic advisors to the president weren’t puppets, doing the bidding of billionaires. He knows they weren’t closet racists. He knows they didn’t hate the poor.”

Krugman — a Nobel Laureate — calls his enemies the worst names imaginable. Yet, Krugman the Zombie Hunter is one reason our political culture is so monstrous right now.

Not zombie-​monstrous, partisan-monstrous. 

Meanwhile, the two sides that hate each other are united at least in one way, in creating another monster: the $2.2 trillion bailout, and the record new deficit.

This is Common Sense. I’m Paul Jacob.

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Paul Krugman, economist, propaganda,

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free trade & free markets media and media people too much government

A Former Economist

Paul Krugman, libertarianism, libertarian, freedom, shutdown

Paul Krugman, New York Times columnist and former economist, tested our patience last week with “Trump’s Big Libertarian Experiment.” How many non sequiturs will squeak past the Gray Lady’s editorial department? 

Loads — and all about how the federal government shutdown gives limited government folks what they want: less government.

Subsidy checks to farmers aren’t going out, as “libertarian organizations like Cato” have long advocated. Sure. But it’s no policy change.

As soon as there’s a budget deal, those checks will be made up.

Further, “businesspeople are furious that the Small Business Administration isn’t making loans.” 

Well, it’s high time businesses were weaned off the SBA teat — and a few whiners do not a case for subsidy make.

And then there’s the Food and Drug Administration, which can no longer inspect foods. Since “there’s a long conservative tradition, going back to Milton Friedman, that condemns the F.D.A.’s existence as an unwarranted interference in the free market” libertarians must be pleased, eh?

There is also a long tradition among economists that says businesses don’t get rich poisoning their customers, and that there are many mechanisms in place — and, barring the FDA, more would be in place — to ensure customers that they won’t be infected by eating … Romaine lettuce.

Which then Krugman admits … as if he had belatedly recalled Friedman’s lesson in Capitalism and Freedom. He concedes that the shutdown is not the way Friedman would go about limiting government. Besides, “libertarian ideology isn’t a real force within the G.O.P.”

So what’s the point?

Krugman ends with talk of a smell test: does lack of food inspections smell like freedom?

Something stinks here. But it isn’t spoiled food. Or freedom.

This is Common Sense. I’m Paul Jacob.

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Paul Krugman, libertarianism, libertarian, freedom, shutdown

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Accountability folly free trade & free markets ideological culture media and media people national politics & policies

Next Bubble to Pop?

bubble, Paul Krugman, recession, student loans, debt, folly, David Stockman

There was a great and wondrous moment, a decade and a half ago, when economist Paul Krugman, Nobel Laureate and New York Times’s unregistered shill for the Democratic Party, suggested that what the economy really needed was another housing bubble. 

What he wrote, specifically, was this: “To fight this recession, the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Krugman later reinterpreted that statement in a clever (if not convincingly honest) way. After the subprime loan industry collapsed in 2008, he attributed that bust to financial market malfeasance, not the Fed-​inflated bubble we got … and that he had previously called for.

Now we are looking at several ready-​to-​burst bubbles:

  • The student loan debt problem seems scary. 
  • The sovereign debt problem is undoubtedly more dangerous and far larger, but is perhaps still able to take on more fake money — all the world’s 1s and 0s have to go somewhere! 
  • So the current bets seem to be on a huge auto loan industry bubble, about to pop.

Loan terms have increased in duration, and the average amount new car buyers are financing has jumped over 17 percent in five years. The idea has been “to continually lower monthly payments,” says David Stockman, “so people can get behind the wheels of vehicles they can’t really afford.”*

Which bubble does Krugman favor? I don’t have the stomach to check.

But, be certain, as we play pop goes the bubble, he’ll play pop goes the weasel.

This is Common Sense. I’m Paul Jacob.

 

* Stockman seems to be echoing warnings made by Eric Peters, of Eric Peters Autos.

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ideological culture

The Inequality Problem

Ah, the Paul Krugman Problem! How does Nobel Laureate economist-​cum-New York Times progressive-​blogger come to his conclusions?

The other day, the eminent Scott Sumner noted — in “The power of wishful thinking?” — that in the space of one year Krugman seemed to gain a great deal of certainty about how vital it is to reduce inequality.

Sumner quotes Krugman from a year ago, when he frankly admitted that he’d like to agree with Joe Stiglitz’s thesis about inequality, but just wasn’t able to persuade himself.

Unfortunately, Krugman hasn’t given us a lot of reason to follow his “lead,” his new-​found faith in Stiglitzian equality. Sumner cites a possible “inspiration” for Krugman’s new tune: Krugman’s employer, the New York Times, has, as editorial policy, shifted leftward on such issues. And then Sumner waxes philosophical:

Sometimes an economist will change his view on a single issue because of some new empirical study (although that actually doesn’t happen as much as you’d think, or as much as you might like). But what about when an economist suddenly swings sharply to the left or right on a whole range of unrelated issues?

Many people do go through radical conversions; you can find interesting conversion testimonies of a religious nature, if not so many in political economy.

As for me, the subject of inequality continues to fascinate, like picking at a scab.

I suspect that rising inequality is caused by the very institutions that Paul Krugman regards as bedrock: institutions that redistribute money from one group to another; institutions that regulate behavior for the benefit (we’re told) of the worse off; institutions altogether “progressive.”

Surely there would be more downward mobility for the rich and upward mobility for the poor in a freer society than in a more Krugman-​approved society.

This is Common Sense. I’m Paul Jacob.

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media and media people

Countdown to Zero

The New York Times has a timeline of the progress of Obamacare.

It’s okay as far as it goes. Which is not too far, since only the most recent dates seem readily accessible. And since the Times editors blindly favor the Obama-assault.

But sure, labor leaders have both criticized and praised Obamacare (9/​12/​13), some states have fought it (or “moved to undercut” it) (9/​18/​13); Pennsylvania State University has decided not to fine employees $100 a month for being too reticent about personal details on “wellness” questionnaires (9/​19/​13). Etc.

A headshake-​worthy aspect of the chronology, however, is its showcasing of opinion published in the Times itself — as if each Times-punditarian rebuke of opposition to medical serfdom were another epochal event in the steady march of the wonderful Obamacare. So Gail Collins “chastises Republicans” for jeopardizing global stability to oppose Obamacare (9/​19/​13). Paul Krugman avers that the GOP, “hysterical” over Obamacare, is changing from stupid party to crazy party (9/​20/​13).

Fine, fine. But toss in some pro-​free-​market, anti-​socialist and anti-​Krugman events also, okay? Like the first publication of Ludwig von Mises’s comprehensive, devastating critique of Socialism (1922). The publication of Ayn Rand’s Atlas Shrugged, sweeping saga of social collapse as feverish proto-​Krugmaniacs stamp freedom out of existence (1957). The day Mike Tanner elaborated “Why Freedom Is the Key to Health Care Reform” (9/​5/​09). And let’s not forget John Goodman’s seminal post, “When It Comes to Healthcare Issues, Paul Krugman Is Wrong 100% of the Time” (5/​30/​13).

All that being said, a timeline is one thing, “progress” quite another. The word implies a good goal. Though hey, doctors do sometimes speak of the “progress” of a cancer or a fatal disease.

In the end, a timeline of Obamacare must include its own demise.

This is Common Sense. I’m Paul Jacob.

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national politics & policies

Making the Rounds

The “trillion-​dollar” coin proposal hit big in the last few months, even garnering a smile, a wink, and a nod from Paul Krugman. The idea was for the government to mint a high face-​value platinum hunk of token money and sell it to the Federal Reserve — to weasel around congressional approval for raising the debt limit.

Something very much like it was floated by Populist and inflationist Bo Gritz back in the early ’90s, when he was running for the presidency.

Though the current president has dismissed the notion, people like it so much — perhaps because of its “just so goofy it might work” aspect — that the whole meme is still making the rounds.

As a technical matter, a one trillion dollar coin would probably be too unwieldy. If actually given the go-​ahead, the Treasury and the U.S. Mint would likely opt for smaller amounts, cranking out a batch of them — a big batch, to cover the federal government’s rising debt.

My modest proposal? Mint coins at the legal tender amount of $666 million each.

The effigy of Liberty could sport a 666 tattoo on her forehead, and a neat UPC symbol on her wrist, which she could hold up instead of a torch.

That would indicate, by commonly understood symbology, just how dangerous America’s debt really is, and how anti-​American the whole idea of the high face-​value coinage debt ceiling workaround would be.

Another way to go would be to carve each coin out of coprolite. Another fitting symbol for the last days of our fiat currency.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture too much government

Estonia’s Success

When I was coming of age, the economic ideology of Keynesianism was going bust. Keynesians couldn’t explain the stagflation of the 1970s. Monetarists triumphed and the Austrian School experienced a resurgence.

Now, monetarist disputes are hard to follow, and the Austrian Theory of the Business Cycle is not exactly a piece of cake. But Austrian economists’ preferred policies possess a kind of common sense: The thing to do is prevent false booms. Once you hit bust, it’s too late: we are going to experience the pain of readjustment, “recalculation,” as we find new prices and levels. I riffed on this theme last weekend, in my column “Dead Hobo in Trunk.”

Keynesians, now back in the limelight, have it easier, promising “less pain.” They offer drugs to make us feel better: Borrow, go further into debt, and spend, spend, spend!

So you can see why today’s Keynesians would hate Austrian wisdom. Not inflating the money supply, not engaging in deficit spending? Risible! And “austerity”? Keynesian shill Paul Krugman never tires of pillorying that program.

Which brings us to Estonia.

The little post-​Soviet Baltic state was one of the few countries to actually restrain spending after the 2008 bust, freezing pensions and cutting public employee salaries by 10 percent. Krugman infamously blogged about it, noting that the country’s current recovery hasn’t yet reached the height of the pre-​bust boom. He thinks this tells against “austerity.”

But to Estonian economists, the height of the boom was a false prosperity that couldn’t last. They’re glad their country’s rid of it, and note that their current recovery is above the pre-​2005 levels.

In other words, Estonians not only understand their country and their situation better than does Paul Krugman, they understand economics better.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture media and media people national politics & policies

Learning from Krugman

We often have much to learn from our intellectual opponents. But some opponents we must deal with only because they are there … in some inescapable way.

Paul Krugman, for instance, is a Nobel Laureate economist. We deal with him not because his technical work is more relevant than the work of a hundred other economists, or because he wrote a really fine essay on the law of comparative advantage. Or because some Swedes thought enough of him to give him a big award and cut him a huge check.

We deal with him because he has a column and a blog at the New York Times.Paul Krugman, economist of a different color

And for the Times he’ll commit almost any sort of fallacy or public foolishness. Thanks to the New York Post, you can read a grand demolition of Krugman’s modus argumenti. “Krugman is a most unusual economist,” Kyle Smith writes:

Others may measure their words, issue caveats, acknowledge that the research isn’t conclusive, admit that their biases influence their reading of facts. Not Krugman.… He changes the subject, ignores inconvenient evidence and plays playground bully to people he sees as ideological enemies (a list longer than Nixon’s). He blasts away at others’ work without even providing the basic courtesy of a link to what he’s talking about.…

And Smith goes on, in part to review Krugman’s new book, End This Depression Now! (turnabout being fair play, no link from me). Not surprisingly, Krugman’s advice is a Democratic politician’s delight: spend more. Lots more.

Smith’s destruction is funny, and devastating. My complaint with Krugman has long been his relentless partisanship. But Smith reminds me that we have something to learn from Krugman, too: How not to promote a cause we regard as good.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies too much government

Ups and Downs

Inflationism is the ideology of increasing the money supply to spur economic activity and “growth.” In the 19th century, economists were generally against it, though certain “innovators” (cranks) thought that increasing the supply of money would “increase aggregate demand” with no bad repercussions. “Cross of gold” kind of nonsense; “free silver” idiocy.

In the 20th century, alas, inflationism went mainstream.

Today, a few respectable economists — high-​profilers like the New York Times’s Paul Krugman and U.C. Berkeley’s Brad DeLong, for example — embrace inflationism. Occasionally their arguments sound sophisticated, but all are just warmed-​over rehashes of very old errors.

It’s the economic equivalent of the “perpetual motion machine”: the eternal quest to get something for nothing, progress on the cheap. It inevitably fails — but only after fooling people by “working” for a while.

Reason’s Tim Cavanaugh, discussing declining housing prices, notes that “it’s becoming harder for the Fed, HUD, the Treasury Department and the National Association of Realtors to pretend the 25-​year real estate inflation was anything but a $15 trillion rip-​off.” He welcomes the deflation of housing prices. The idea that one’s house should increase in value by always increasing in price — that’s really just a recipe for social disaster. It endured as long as it did only “through government subsidized debt.”

Thank Congress; thank their Fannie and their Freddie; thank the inflationist Fed.

“Creating” money and loosening credit tends to nudge up prices … but not all prices equally. It signals people to over-​invest in certain sectors, often real estate. This creates a sector boom … that then must “bust.”

The alternative? The honesty of sound money.

This is Common Sense. I’m Paul Jacob.