Dr. Krugman: This Patient Needs More Bloodletting

Tim Cavanaugh | June 15, 2009

New York Times columnist and Nobel laureate Paul Krugman -- who I've noticed some econ bloggers refer to as "Dr. Krugman" with no hint of sarcasm -- says now's the time to up our daily allowance of stimulis. If you know Krugman's FDR-was-a-girlyman version of Depression history, you won't be surprised to find him arguing that true economic interventionists must close their hearts to pity, their minds to logic and their eyes to evidence. But it's interesting to see the belief in action:

The first example of policy in a liquidity trap comes from the 1930s. The U.S. economy grew rapidly from 1933 to 1937, helped along by New Deal policies. America, however, remained well short of full employment.

Yet policy makers stopped worrying about depression and started worrying about inflation. The Federal Reserve tightened monetary policy, while F.D.R. tried to balance the federal budget. Sure enough, the economy slumped again, and full recovery had to wait for World War II.

The second example is Japan in the 1990s. After slumping early in the decade, Japan experienced a partial recovery, with the economy growing almost 3 percent in 1996. Policy makers responded by shifting their focus to the budget deficit, raising taxes and cutting spending. Japan proceeded to slide back into recession.

And here we go again.

Read it and weep.

I'll presume Krugman's right about the economy's growing "rapidly" from 1933 to 1937, though you should take a[nother] look at Amity Shlaes' case that the economy would have recovered sooner if the National Recovery Administration had never gotten a chance to make (almost literal) war on the U.S. economy. Even more relevant is Shlaes' point that, even if intelligently targeted stimulus were possible, there's no going back to 1933 because the size of the federal apparatus, the load of public and private debt, and the incrustation of programs have all combined to make the government less capable of robust action. You can think of all these lousy Treasury auctions as a visit to Dr. Bond Market, who keeps pleading with the old timer to slow down, cut out the desserts and get more rest.

For now, I'll just point out that Krugman's case for additional stimulus uses the same logic as Caliph Omar's decision about the good and bad books in Alexandria. If we don't stimulate and the economy tanks, it's because we're not stimulating; if we stimulate and the economy tanks, it's because we're not stimulating enough. There's no way to refute premises stacked in this way. Krugman is not a humorless character -- or at least he wasn't when he was at Slate, Bill Clinton was in the White House, and all was right with the world -- so I don't think he means to make a despotic argument. But that's what it is.

Arnold Kling made the case for Krugman in Reason last year. Michael Moynihan was less charitable in January. Reason's current cover story explains the real roots of Japan's lost decade.

And I was hoping to explain the title allusion with an embed of the transcendent Steve Martin sketch "Theodoric of York, Medieval Barber," but since I can't, amuse yourself with this bit of FDR-era pro-inflation propaganda -- which if nothing else demonstrates why the past is a permanently closed country. Imagine having to explain what inflation is to Americans in 2009, let alone trying to get them to be happy about it:

Comments

Patrick|6.15.09 @ 11:19PM|#

Why do people still listen to this guy? Here's what he wrote in August 2002:

"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."

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

hammeredHead|6.16.09 @ 12:06AM|#

This pretty much proves what I have said before; that macro-economics and climatology are akin to alchemy. They may eventually become a real science, as alchemy become chemistry, but right now they are nothing more than religious superstitions.

Right now we have little more than past correlations to go on, but the New Deal and Japan in the 1990s as compared to other recessions where little action was taken provides better guidance than Witch Doctor Krugman and his shaman degree.

Spotted Toad|6.16.09 @ 12:31AM|#

"Economists" generally don't know a damned thing about the economy.

|6.16.09 @ 12:54AM|#

who I've noticed some econ bloggers refer to as "Dr. Krugman" with no hint of sarcasm

Krugman didn't spend six years in Evil Economist School to be called "Mister", thank you very much.

|6.16.09 @ 1:25AM|#

What Krugman fails to understand is that liquidity isn't just a matter of people having enough cash. They also have to be willing to trade. Krugman doesn't know this, because he's an ivory-tower wanker who never managed so much as a taco stand.

The idea that the government can restore confidence just by counterfeiting a couple more trillion bucks is asinine.

-jcr

|6.16.09 @ 1:45AM|#

Krugman didn't spend six years in Evil Economist School to be called "Mister", thank you very much.

Ok, I'll call him "asshole", then.

-jcr

|6.16.09 @ 2:06AM|#

"Yowzer!

"What a man!"

OMG, this sounds like the lionizing propaganda we are hearing more and more often about the Big O! Are they now just dusting off the old 1930s newsreels and updating the copy for modern references?

"What does it mean to you, and you, and YOU...?"

Shades of Reefer Madness!

One thing that is amazing to me is that the propaganda film didn't flinch from the facts of inflation. The honest, well-publicized aim of the federal government was to make the dollar worth LESS, and flooding the country with cash was the way to do it. Yowzer! Pay back your debts to those greedy bankers with worthless money! That'll get 'em off your back, Farmer John! Hey, blow Simon Legree a raspberry for me, will ya pal?

Rather than the bug we view it as today, inflation in the 1930s was touted as a FEATURE!

In Reefer Madness, they lied through their teeth to justify a horrible thing (the law enforcement power-grab and demonization project eventually known as the War on Drugs), but in this film, they pretty much told the truth to justify a similarly horrible thing: the unapologetic rape of the economy. This was as truly frightening and disgusting as Reefer Madness was ridiculous. I am stunned.

|6.16.09 @ 2:14AM|#

# John C. Randolph | June 16, 2009, 1:25am | #

# What Krugman fails to understand is that
# liquidity isn't just a matter of people
# having enough cash. They also have to be
# willing to trade. Krugman doesn't know this
# because he's an ivory-tower wanker who never
# managed so much as a taco stand.

He'd know it if he watched FDR's propaganda film. They are upfront and honest about the fact that, by making the money worth less and PUBLICIZING the fact, they would scare people into spending their money sooner rather than later, so as to avoid the decline of its purchasing power.

# The idea that the government can restore
# confidence just by counterfeiting a couple
# more trillion bucks is asinine.

I agree, but again refer you to the propaganda film. The restoration of confidence was expected to come some time later, once the economy was back on track and humming along. First, people needed to further lose their confidence -- to FEAR the loss of purchasing power of the few dollars they had been able to collect during the hard times.

Gad, what a twisted scheme: Diabolical, and very ballsy, considering that Hyperinflation had devastated Germany only a decade or so before. It seems sort of like sending everyone invitations to a swine flu party.

|6.16.09 @ 2:36AM|#

For now, I'll just point out that Krugman's case for additional stimulus uses the same logic as Caliph Omar's decision about the good and bad books in Alexandria. If we don't stimulate and the economy tanks, it's because we're not stimulating; if we stimulate and the economy tanks, it's because we're not stimulating enough. There's no way to refute premises stacked in this way. Krugman is not a humorless character -- or at least he wasn't when he was at Slate, Bill Clinton was in the White House, and all was right with the world -- so I don't think he means to make a despotic argument. But that's what it is.


Best paragraph ever!


Wish joe was here to read it...

Wait did I just write that?

Sean W. Malone|6.16.09 @ 2:46AM|#

WTF WTF WTF... Paul Krugman why do you torture me so with your blisteringly inane anti-logic and your mystifying ignorance of economic history!?

Can someone just vasectomize him with a few punches to the junk already? We all need to be reminding everyone of Krugman's statements again & again right now... He's been wrong about a thousand times and a lot of his having been wrong led to disastrous results.

Fuck Paul Krugman!

|6.16.09 @ 4:02AM|#

Fuck Paul Krugman!

While you're at it, fuck the Swedish bankers who gave him that non-Nobel prize that gives him the pretense of sophistication.

Krugman is to economics as Lysenko is to biology.

-jcr

¢|6.16.09 @ 4:24AM|#

Nah. Lysenko has his own -ism. Krugman's just some already almost anonymous Court Asshole no one will remember.

Krugman is Toohey|6.16.09 @ 4:28AM|#

"What Krugman fails to understand is..."

for goodness sake! stop giving this fucker the benefit of the doubt! Of course he understands... he's a shill for big Fed. He despises his readers, knows they have the attention span of a goldfish. He's a court economist and sells whatever bullshit propaganda is required of him by his bosses... and is rewarded accordingly.

Do not for a second believe that he doesn't understand econ, he just does not give a shit.

/rant

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|6.16.09 @ 6:32AM|#

Of course he understands... he's a shill for big Fed.

Being an idiot and being a shill for the Fed are not mutually exclusive.

-jcr

Replica Watches|6.16.09 @ 6:34AM|#

I am a spammer. I should be drawn and quartered, my family should be sold into slavery, and the house I live in should be burned to the ground, and the earth salted.

|6.16.09 @ 7:32AM|#

Why do people still listen to this guy? Here's what he wrote in August 2002

Patrick, you are my favorite person on Earth for posting that. I am your servant for life. Need help moving, a new kidney, or need someone killed, I'm your man.

Chad|6.16.09 @ 8:36AM|#

For now, I'll just point out that Krugman's case for additional stimulus uses the same logic as Caliph Omar's decision about the good and bad books in Alexandria. If we don't stimulate and the economy tanks, it's because we're not stimulating; if we stimulate and the economy tanks, it's because we're not stimulating enough. There's no way to refute premises stacked in this way. Krugman is not a humorless character -- or at least he wasn't when he was at Slate, Bill Clinton was in the White House, and all was right with the world -- so I don't think he means to make a despotic argument. But that's what it is.

If we don't cut taxes and cut spending, and the economy tanks, it's because we're not cutting; if we cut and the economy tanks, it's because we're not cutting enough.

Congratulations on discovering the central problem of trying to connect your pet policies with the performance of the economy. Now if you would only realize it cuts both ways...

Rich|6.16.09 @ 8:52AM|#

"Old Black Joe and all his relations will be bending low." Of course, in these days of modern time we are more sensitive to such smears: *Everyone* will be bending low.

|6.16.09 @ 8:53AM|#

Hit and Run baby, hit and run!

RT
www.privacy-tools.4-all.org

|6.16.09 @ 8:54AM|#

James Anderson Merritt

Speaking of 30s newsreels, i remember back when the debate on Bush's SS reform debacle was going on hearing some of the 1937 stuff (I guess it was radio ads and Newsreel soundtracks) promoting Social Security.

One of the selling points was that it would make it possible for the old to retire, thereby making room for the young to move into their jobs.

I had completely forgotten that people ever talked like that. I recall that the idea was widespread when I was a teenager and early twenty-something, but like just about everything else in the sixties I guess I've been working on trying to forget it.

Funny how attitudes have changed, now instead of saying "the geezers are bogarting all the jobs" it's "I won't get a pension 'cause the geezers will have stolen all the benjamins in the Social Security Trust Fund."

spambot|6.16.09 @ 8:56AM|#

"If we don't cut taxes and cut spending, and the economy tanks, it's because we're not cutting; if we cut and the economy tanks, it's because we're not cutting enough."

Let's give it a shot, we know borrowing and spending like sailors on leave is not working.

robc|6.16.09 @ 8:58AM|#

Chad,

That analogy might hold if we had EVER cut spending. But since that is never tried...dont have to worry about making that mistake.

Chad|6.16.09 @ 9:11AM|#

Actually, we have cut spending many times, especially vs GDP, which is the most relevant measure.

http://www.usgovernmentspending.com/us_20th_century_chart.html

The economy went up, or down, or sideways. I am sure you can find an example that fits your ideology, and someeone else can find one that contradicts it.

|6.16.09 @ 9:11AM|#

If Obama gets a full unimpeded 8 years, we will see that his policies on the economy worked just fine. If the Rs regain control in 2 years or 4 and change the policies, it will slide backward again while everyone points to Obama and says 'see, I told you it wouldn't work." We didn't get into this in 6 months, and we won't fix it in a blink of the eye.

It doesn't make Krugman wrong just cause you say he is.

robc|6.16.09 @ 9:37AM|#

Chad,

Cuts are cuts, they are absolute, measured against zero. In my lifetime, which extends to the 60s, I dont think there is any year in which the total spending decreased, although playing around with your link, it looks like the budget for FY2010 might actually be lower than the actual spending for FY2009, due to TARP and etc, I guess. Does all the stimulus count in '09 regardless of when it is spent?

So, IF (and that is a big IF) 2010 spending is less than 2009 due to no more emergency spending AND the economy recovers, I wonder if the stimulus or the cuts will get the credit?

robc|6.16.09 @ 9:39AM|#

brotherben,

Krugman is wrong because he is wrong.

Look at his quote in the 1st post, you really trying to support that?

Obama's policies arent going to work because they are Bush policies plus. Now, that doesnt mean we will still be in a recession in 8 years. Time heals recessions, not policies.

Just because we recover doesnt mean the policies are responsible. Either way.

Fluffy|6.16.09 @ 9:53AM|#

Actually, I think it's better to compare Krugman to a creationist than to a climatologist.

Krugman specializes in situational positivism. When he wants to disparage economic data that favor his ideological opponents, he suddenly has a very high standard of proof: he regularly writes that we can't conclude that the Reagan tax cuts ultimately had the effect of raising tax revenue, despite the obvious data to that effect, because "there are just too many variables to consider". This is his version of "evolution is only a theory".

But that high standard of proof disappears when he wants to advocate for one of his own ideological pet causes. And that's why all of a sudden it's really easy for him to assert that FDR's policies ended the depression. Somehow there aren't "too many variables" for him to make that claim. Somehow all the data that shows a spotty record for growth under FDR doesn't complicate his proof - it's more evidence that the New Deal was working, and that it was only failure to embrace New Deal policies wholeheartedly that led to poor economic performance.

If this isn't creationism in economics [extreme doubt of all evidence, except for when ready faith is needed to protect an agenda] I don't know what is.

|6.16.09 @ 10:00AM|#

fluffy, well said. I am certainly doing that very thing with Obama. I am also suggesting that we all do that with nearly everything, everyday.

robc|6.16.09 @ 10:08AM|#

Fluffy,

That is why I prefer the Austrian approach - there are always too many variables to consider.

Gilbert Martin|6.16.09 @ 10:08AM|#

"For now, I'll just point out that Krugman's case for additional stimulus uses the same logic as Caliph Omar's decision about the good and bad books in Alexandria. If we don't stimulate and the economy tanks, it's because we're not stimulating; if we stimulate and the economy tanks, it's because we're not stimulating enough."

Since we already know that it is physically impossible for central planners to be capable of making wiser spending and investment decisions with the people's money than those people are themselves, then there's no reason to pay any attention to the notion that government is capable of improving the economy though spending money.

Sean W. Malone|6.16.09 @ 10:22AM|#

Awww cute.... Chad is trying to act like he knows dick-all about econ. This should be a fun day. If anyone can top MNG's inability to understand this stuff it's Chad.

Chad|6.16.09 @ 10:32AM|#

Since we already know that it is physically impossible for central planners to be capable of making wiser spending and investment decisions with the people's money than those people are themselves

Really? I think a blind monkey throwing darts a wall of random spending choices would be a wiser method of allocating our resources than leaving it in the hands of those who brought us trillions of dollars worth of cheap Chinese crap and SUVs. Indeed, short of digging holes in the ground and filling them back in, I am pretty hard-pressed to come up with anything more wasteful than what the private sector decided to spend money on in the last few decades (and largely borrowed money at that).

|6.16.09 @ 10:37AM|#

It doesn't make Krugman wrong just cause you say he is.

This from the shillbot guy who says we just have to trust Obama's plan for 8 years and everything will work out fine. Just cause you say it will, right?

It's really sad to see a good poster turn into a shillbot, but until further notice you have been deemed an Obamatron and will be treated as such. Even MNG tries to make an argument once in a while but you can't even manage that these days.

Sean W. Malone|6.16.09 @ 10:40AM|#

YES!! Chad's railing against buying "CheapChineseCrap" already. It's his equivalent of LoneWhacker's MassiveImmigration schtick....


At least I'll get a good laugh somewhere today.


Shorter Chad, for the whole day: People don't make the same decisions with their money I would, so they're stupid and need to be force to buy what I think they should.

|6.16.09 @ 10:43AM|#

Krugman should be frog-prepped.

robc|6.16.09 @ 10:43AM|#

brought us

WTF? They were buying for themselves, moran.

Sean W. Malone|6.16.09 @ 10:44AM|#

Also love how he omits how we were able to borrow so much money and where all that comes from.

(Psst... Chad... Learn the words; "Federal Reserve", "Treasury", "Artificially, Government-Induced Bubble Economy" and... if you're really feeling up for a challenge "Austrian Business Cycle Theory".)

|6.16.09 @ 10:46AM|#

I think a blind monkey throwing darts a wall of random spending choices would be a wiser method of allocating our resources than leaving it in the hands of those who brought us trillions of dollars worth of cheap Chinese crap and SUVs Treasury bills that we will be paying off for the rest of our lives.

Agree/disagree? Which would you rather have, cheap Chinese crap and SUVs, are the hundreds of thousands of dollars of federal debt that are each citizen's personal share?

|6.16.09 @ 10:49AM|#

What Krugman fails to understand is that liquidity isn't just a matter of people having enough cash. They also have to be willing to trade.

Just so. Its been a few months since I talked to people who know this stuff, but I don't think its changed. The fundamental problem with the economy isn't a lack of money, its the speed of money, which has dropped to near zero.

And which the government can't do a goddam thing about. Because the government has only a hammer (in the form of printing presses), they keep bashing away as if the problem is lack of money, doing nothing to solve the current problem, but creating a new and massive problem for the future in the form of inflation.

robc|6.16.09 @ 10:57AM|#

RC,

The graph of M0 is flat out scary. I dont see how we avoid hyper-inflation (or at least super-inflation) once the velocity kicks back in.

Gilbert Martin|6.16.09 @ 11:02AM|#

"Really? I think a blind monkey throwing darts a wall of random spending choices would be a wiser method of allocating our resources than leaving it in the hands of those who brought us trillions of dollars worth of cheap Chinese crap and SUVs. Indeed, short of digging holes in the ground and filling them back in, I am pretty hard-pressed to come up with anything more wasteful than what the private sector decided to spend money on in the last few decades (and largely borrowed money at that)."

It doesn't matter what you think.

You are also physically incapable of being wiser as to how anyone else's money should be spent than they are themselves.

Duncan|6.16.09 @ 11:05AM|#

Robc,
How do we avoid hyper-inflation if the velocity of money--sell Fed assets. If you look at the Fed's balance sheet, they have plenty of assets which they could unload to shrink the money supply.

robc|6.16.09 @ 11:05AM|#

Gilbert,

I think your position may be a bit extreme. While I know what you are trying to say and I agree, I dont think "wiser" is the word you are looking for.

I can think of specific situations that dont agree with your position.

I think a moral argument over a pragmatic argument is the proper one - but then again, thats the kind of libertarian I am.

In other words, A may be wiser than B about how B should spend his money. However, it it none of A's business, so he should fuck off.

|6.16.09 @ 11:06AM|#

Better hope the market for phony shit is strong Duncan.

spambot|6.16.09 @ 11:12AM|#

Well Chad the creators of those SUVs were about to pay the price for their folly until your hero decided to bail them out.

Tim Cavanaugh|6.16.09 @ 11:13AM|#

Congratulations on discovering the central problem of trying to connect your pet policies with the performance of the economy.

I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft.

Sean W. Malone|6.16.09 @ 11:20AM|#

robc - the few situations in which someone could legitimately be said to be able to make a "wise" choice than someone else are dwarfed by the millions of times where that's not true anyway, so the pragmatic argument is just fine.

It's one thing to say, "I know better than you what kind of car you should drive." (only "one" decision, essentially) and another to say "I am capable of knowing what you should have for dinner, when you should do your laundry, what job you should have, how much you should spend at the movies versus at live music concerts, how much you should save for retirement, how much you should.... blah blah blah"

I think Gilbert's position is right on morally & practically (funny how those two always go hand in hand if you're consistent and your morality comes from principled reason). Chad is a human being, I hope, and as such he is not physically capable of having the knowledge he would need to make the right decisions for other people.

|6.16.09 @ 11:22AM|#

Maybe it's because I was raised Catholic, but I can't stop reading Krugman articles. I mean, they hurt. The process of reading them is definitely painful. But I keep heading back for more...

Gilbert Martin|6.16.09 @ 11:27AM|#

"I think a moral argument over a pragmatic argument is the proper one - but then again, thats the kind of libertarian I am.

In other words, A may be wiser than B about how B should spend his money. However, it it none of A's business, so he should fuck off."

I completely agree that it is none of anyone else's business and that is a fine approach to take about it.

But I also refuse to accept the premise of twits like Chad who like to pretend they are some sort of utilitarian geniuses.


For the concept of utility only relates as a tactic to acheive some objective that has already been chosen based on some other criteria. There is no outcome that can be proven to be superior on "utilitarian" grounds.

The relatve value of outcomes is strictly a matter of personal opinion.

robc|6.16.09 @ 11:32AM|#

Gilbert,


But I also refuse to accept the premise of twits like Chad who like to pretend they are some sort of utilitarian geniuses.


I agree with you on this. :)

The relatve value of outcomes is strictly a matter of personal opinion.

And this.

hammeredHead|6.16.09 @ 11:44AM|#

Actually, I think it's better to compare Krugman to a creationist than to a climatologist.

Good point, I forgot about that actor/lawyer/creationist/I am not really an economist but I play one on TV Ben Stein.

|6.16.09 @ 11:45AM|#

How do we avoid hyper-inflation if the velocity of money--sell Fed assets.

If the Fed starts dumping the bonds that it bought as part of its "quantitative easing" program into the market in sufficient volume to contract the money supply, it will destroy the bond market and drive interest rates through the roof.

Thus killing whatever recovery might be underway at the time.

|6.16.09 @ 12:06PM|#

Well, of course, Chad is perfectly entitled to rail against the evils of "cheap Chinese crap and SUVs".

The trouble with Chad's gang is that they're never willing to stop at preaching. It's never long before the guns come out.

That's when the Chad's of the world change from self-righteous busybodies into fascists.

One of the ironies is that after they enable the real fascists the Chads end up suffering along with the rest of us. I'll at least be able to take some comfort in the poetic justice of that.

Tim Cavanaugh|6.16.09 @ 12:06PM|#

R C, I have a new plan to get rich, based on the velocity of money. In physics, velocity = speed + direction. So all you need to do is figure out what the direction of the money is, get there first, and you get the money! For the low introductory price of $29.95 a month, my technology will show you how to move at the speed of money!

Sgt. Hartman|6.16.09 @ 12:17PM|#

Krugman, Were you born worthless, or did you have to work at it?

Sean W. Malone|6.16.09 @ 12:19PM|#

Tim;

Who needs your machine? It's clear that everyone should first become a powerful investment banker. And failing that, take $300 and a half a day and create an LLC to prove that you're a green energy start-up. Union only, of course.

Crazy Earl|6.16.09 @ 12:19PM|#

These are great day we're living, bros. We're Jolly Green Giants, walking the Earth . . . with a money printer!

Chad|6.16.09 @ 12:33PM|#

Sean W. Malone | June 16, 2009, 11:20am | #
Chad is a human being, I hope, and as such he is not physically capable of having the knowledge he would need to make the right decisions for other people

I am not making decisions for you. I am proposing changes to the rules of the game so that YOU make decisions while bearing a much larger portion of the true costs and benefits, and with proper acknowledgement concerning the needs of future generations.

I have no problem with a few people buying SUVs and McMansions. There are actually people with legitimate needs for such vehicles and homes (emphasis on few). And there is even some stuff from China that isn't all that crappy.

Sean W. Malone|6.16.09 @ 12:42PM|#

Chad, the problem is, from many of the past discussions you've had, you basically think that EVERYTHING is some kind of externality. True externalities are really kind of minimal, and most of the ones you claim are externalities you can't even measure adequately.

If you want to change the rules of the game so that people bear the costs themselves, I'm 100% for that! That means, no bailouts, no stimulus, no graduated tax system, no freebies, no subsidies, no protectionism, no tariffs, no zoning laws... AND... Stringent protection of private property & enforced contracts.

Nothing more or less than that allowing people the freedom to succeed or fail on their own terms, absent government intervention.


I've never heard you argue for that though.

|6.16.09 @ 1:01PM|#

Tulpa, here's the argument. Krugman gave 2 examples of economic recovery being derailed by meddling with the current tools being use for that fix. Obama has implemented several strategies to help our economy. If those measures are scuttled before they have time to succeed, the economic rebound will falter. Yes, Obama is using the iron fist of government to force changes in health care, energy, taxation, and in our approach to foreign countries we disagree with among other things. Since I agree with the predicted results of said changes, and in fact believe the changes necessary,I don't find his methods disagreeable.

Chad|6.16.09 @ 1:04PM|#

Sean W. Malone | June 16, 2009, 12:42pm | #
Chad, the problem is, from many of the past discussions you've had, you basically think that EVERYTHING is some kind of externality.

Almost everything in the economic sphere DOES have some sort of externality. Deal with it.

True externalities are really kind of minimal

Really? Find me a peer-reviewed estimate of the externalities of coal-powered electricity that is LESS than 100% of the wholesale "cost". Should be easy, right?



and most of the ones you claim are externalities you can't even measure adequately.

In that case, it is often still better to make our best guess than assume zero.



Nothing more or less than that allowing people the freedom to succeed or fail on their own terms, absent government intervention.


I've never heard you argue for that though.

Sean W. Malone|6.16.09 @ 1:05PM|#

Sadness fills my heart for you BB.

Sean W. Malone|6.16.09 @ 1:24PM|#

Chad, you're not going to bait me into an argument about coal power. Of course there are externalities there. But there are NOT externalities to EVERY goddamn thing under the sun. Certainly not in the sense that anyone is harmed or should have to pay for them all the time. (That's what I meant by most externalities being minimal btw, not that they're "cheap" but that there aren't all that many real examples of them.)

Besides. Your system inevitably requires some one (it always seems to be that you want it to be you) telling everyone what they should be doing. So much so that I honestly can't tell the difference between you being an enabler of dictators or a zealous, arrogant douchebag or just an idiot.

You constantly operate with this "Butterfly's Wings" mentality where any action anyone might take inevitably causes mass destruction on the rest of the world... Someone eats a cheeseburger one day, farts the next and causes a hurricane in Uruguay two months from now.

Your conception of cause and effect is an exercise in reductio ad absurdum.

Guess what dude, living creates a "footprint". And a world without said "footprints" is a world without life on it. Pick your poison man... You can have a completely "untouched", pristine world where the earth's "intrinsic value" is intact, or a world with living creatures on it who change things every day by merely acting and doing things. Sorry to break the news to you, but you don't get both.

Xanthippas|6.16.09 @ 1:24PM|#

I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft.

Anyone who can type that with a straight face can't entirely be trusted on matters of economic analysis. If you disagree, imagine me saying "All production of the people belongs to the state" and how that would go over here.

|6.16.09 @ 1:25PM|#

So all you need to do is figure out what the direction of the money is, get there first, and you get the money!

I believe this is what is known as "investing."

Almost everything in the economic sphere DOES have some sort of externality. Deal with it.

Indeed they do. Both positive and negative. This fact of life is not the lay-down argument for government intervention in almost everything in the economic sphere that you seem to think it is, though.

Really? Find me a peer-reviewed estimate of the externalities of coal-powered electricity that is LESS than 100% of the wholesale "cost". Should be easy, right?

You first. Find me a peer reviewed estimate of the net externalities of coal-powered electricity that is more than 100% of the wholesale cost. Speculative damage caused by CO2 emissions must be discounted appropriately.

|6.16.09 @ 1:26PM|#

You're citing Amity Shlaes as your authority? Seriously?

I'll take the economist with the Ph.D. and the Nobel Prize, and you can have the Bloomberg columnist with the English degree. Good luck with that.

Gilbert Martin|6.16.09 @ 1:26PM|#

"Chad, the problem is, from many of the past discussions you've had, you basically think that EVERYTHING is some kind of externality."

Yep - and he is completely incapable of proving any of it.

Gilbert Martin|6.16.09 @ 1:29PM|#

"I believe this is what is known as "investing."

Sometimes it is known as "speculatiing".

Although it seems to be getting harder to tell the difference between the two.

robc|6.16.09 @ 1:31PM|#

COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE COASE

I apologize to most of you, but every time Chad goes off on externalities, I have to post this.

|6.16.09 @ 1:36PM|#

I thought this was reason.com. Where'd all these stupid authors come from?

robc|6.16.09 @ 1:37PM|#

I thought this was reason.com. Where'd all these stupid authors come from?

DRINK!!!!

(Why wait until 5, its 4 PM somewhere)

|6.16.09 @ 1:38PM|#

"I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft."

So you don't care about the consequences for the economy? How...solipsistic of you.

If Tim doesn't actually care about the consequences of policy, maybe he shouldn't be writing about things that have policy consequences.

Caliph Omar's decision...If we don't stimulate and the economy tanks, it's because we're not stimulating; if we stimulate and the economy tanks, it's because we're not stimulating enough.

Congratulations, you've discovered the problem with economics as a historical science -- you can't run controlled experiments. There are other ways to prove a theory, and comparative history, as used by Krugman (not Shlaes, who's completely unqualified and totally unpersuasive) is one of them.

|6.16.09 @ 1:38PM|#

To Patrick at the beginning of the comments:

Not sure if you are intentionally obtuse or if you simply didn't read the entire Krugman OpEd from 2002, but he was MOCKING Greenspan and the economy geniuses that kept pushing bubble after bubble in order to continue consumer spending and investment.

Either way, pretty pathetic. There are many different ways to confront Krugman on economic policy and analysis, but intentionally or obtusely misreading his clear words does nothing more than make you look simple.

Tim Cavanaugh|6.16.09 @ 1:39PM|#

I'll take the economist with the Ph.D. and the Nobel Prize, and you can have the Bloomberg columnist with the English degree.

And he's a doctor too. You forgot to mention that he's a doctor.

|6.16.09 @ 1:42PM|#

Xanthippas, check this out.

Theft: The act of stealing property.

Stealing: To illegally, or without the owner's permission, take possession of something by surreptitiously taking or carrying it away.

In what way is taxation not theft?

Brotherben you're just a fascist. How do you sleep at night?

|6.16.09 @ 1:43PM|#

This is odd to say, but I agree with Abramoff. That was really quoted out of context. Also, I'm not a pure-blood libertarian, so I'm not sure why the Doctorate should be referred to with sarcasm. Has the invisible hand negated it somehow?

|6.16.09 @ 1:47PM|#

I'll take the economist with the Ph.D. and the Nobel Prize, and you can have the Bloomberg columnist with the English degree.

And he's a doctor too. You forgot to mention that he's a doctor.

Geesh, dude, we get it already. Stop advertising your inadequacies.

Invisible Finger|6.16.09 @ 1:51PM|#

Actually, we have cut spending many times, especially vs GDP, which is the most relevant measure.

The most relevant measure would be spending per capita.

Marmot|6.16.09 @ 1:51PM|#

So Amity Shlaes makes it into this article, but not John Maynard Keynes or algebra? Ramping up total economic activity is the game, y'all. Your wishes to the contrary should be backed up with some math.

|6.16.09 @ 1:55PM|#

Ramping up total economic activity is the game, y'all.

Over what time frame? I seem to recall the CBO saying that the stimulus was going to be a net negative over ten years.

Russ 2000|6.16.09 @ 1:56PM|#

Maybe it's because I was raised Catholic, but I can't stop reading Krugman articles. I mean, they hurt. The process of reading them is definitely painful. But I keep heading back for more...

Krugman is the Wally George of economics.

Fluffy|6.16.09 @ 1:59PM|#

I have no problem with a few people buying SUVs and McMansions. There are actually people with legitimate needs for such vehicles and homes (emphasis on few). And there is even some stuff from China that isn't all that crappy.

The automobile culture and suburbia exists at all for only one reason: a century of effort on the part of government planners to force it into existence. Period.

But after a century of claiming expanding powers in order to force the development of a commuter culture - with all its concomitant bells and whistles, like oversized vehicles and low density sprawl housing - you douchebags have decided that the last three generations of planners got it all wrong, but you'll fix it all if we just give you a whole different and new set of powers. And that even though the record of planning in general is a century of failure by your own admission, you want more power for planners.

Blow me.

Fuckers like you built the system that created consumer preference for SUV's and McMansions. But because you're too stupid and filled with power-lust, and too historically illiterate, to know this really simple and obvious fact, you're mad at the consumers involved.

Don't want people to buy SUV's and McMansions? Don't spend a century trying to force them to. Or if you do spend a century that way, don't come around complaining about the mess you made.

Sean W. Malone|6.16.09 @ 2:06PM|#

Theo... you realize that it's the Neo-Keynesians like Krugman who view the economic science from the stand point of empirical positivism right? By which I mean... it's Krugman who's trying to run "experiments" through mathematical econometric modeling...

A lot of us over here in Libertopia explicitly don't do that. Note: Austrian School

|6.16.09 @ 2:07PM|#

Actually, we have cut spending many times, especially vs GDP, which is the most relevant measure.

Actually, I let that go by until I saw Invisible's last post.

Frankly, you're going to have explain that one, because I fail to discern any relevance whatsoever.

Unless you're trying to say that the State owns some fixed portion of GDP and is giving some of it away when that take less and are taking more than is rightfully theirs when its's more, or something.

But I wouldn't want to put words in your mouth, or anything. :)

Fluffy|6.16.09 @ 2:08PM|#

So you don't care about the consequences for the economy? How...solipsistic of you.

I don't think people should be free to murder you for fun.

I hold this opinion completely independently of the utilitarian or economic consequences of it.

If someone wanted to come to argue to me that I was wrong, and wanted to haggle about some economic model that had that said that it would be good to murder you, I would tell them to save their own time and not bother making the argument, because it wasn't a question of utility to me.

So is it your position that there's something wrong with my applying this method of analysis to this particular question?

Sean W. Malone|6.16.09 @ 2:09PM|#

Someone please award copious points to fluffy.

charles austin|6.16.09 @ 2:14PM|#

Stimulus rations have been increased to $20 grand!

Tim Cavanaugh|6.16.09 @ 2:14PM|#

Not sure if you are intentionally obtuse or if you simply didn't read the entire Krugman OpEd from 2002, but he was MOCKING Greenspan and the economy geniuses that kept pushing bubble after bubble in order to continue consumer spending and investment.

Bullshit. Read the whole article. He's mocking Greenspan for not doing more to generate economic activity -- Krugman's theme of themes. And he's misusing the films of Sam Bronston and Richard Attenborough to do it:

Will the rescuers arrive in the nick of time? Not necessarily. This movie may not be ''55 Days at Peking'' after all. It may be ''A Bridge Too Far.''

A few months ago the vast majority of business economists mocked concerns about a ''double dip,'' a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. 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.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

The import of Krugman's '02 column is exactly what Patrick said it was. I love meta-sophistic readings, but the column allows no such interpretation.

Sean W. Malone|6.16.09 @ 2:17PM|#

...and points to Tim.

|6.16.09 @ 2:19PM|#

Jack Abramoff, I fail to see the mocking. Even if it was, isn't this an admission that the bubble would be created by govt ACTION instead of INACTION?

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. 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.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

|6.16.09 @ 2:30PM|#

I, too, don't see the "mocking" in Krugman's column. He appears simply to be predicting that Greenspan would need to create a housing bubble to prevent the second dip in a double-dip recession. I'm no fan of Krugman, but isn't that in fact what happened?

And why does one have to be sarcastic to call Krugman "doctor"? I know that only MDs should get that title, but as a matter of practice a lot of people with doctorates are called that all the time.

Finally, thanks for the Theodoric of York link.

|6.16.09 @ 2:35PM|#

Tim: you are correct that Krugman is mocking Greenspan (which is exactly the opposite of what Patrick wanted people to believe with the bolded section in his initial comment, so perhaps you might want to revisit your knee-jerk defense of Patrick afterall), however, the clear and unambiguous point that Krugman is making is that government financial decision makers, Greenspan being the chief clown at the time, have an implicit motivation to keep repeating happy fuzzy statements about the current (and near-future) economy in order to continue consumer spending. It then becomes a self-fulfilling prophecy: Greenspan paints rozy pictures, American consumers feel confident and continue spending, and the economy does well due to the spending. It's pretty basic.

What Krugman clearly does NOT do is advocate on behalf of more bubbles, contrary to Patrick's explicit point and your implicit point.

On a related note, it is true that Krugman's point in the current Bush/Paulsen recession is that if the government didn't do any spending, then there would be no spending, and the recession would continue to spiral the economy downwards, which is why Krugman has been advocating stimulus spending while acknowledging that there may be the risk of inflation in the future (although not near term since again, there just isn't enough consumer capital currently to create the need to raise interest rates).

Any other reading of Krugman's 2002 article is disingenuous at best.

Sean W. Malone|6.16.09 @ 2:49PM|#

Jsh:

That's exactly what I was thinking when I first saw that link last night.


Here we have Krugman, in 2002, clearly demonstrating that he recognizes the truth of the Austrian Business Cycle Theory in a practical sense. Here he is explaining that the Federal Reserve, through expansionist monetary policy could induce a bubble economy - AND here he is advocating that, even to the extent of thinking Greenspan doesn't have the balls to do it...

And now, he's out there all the time saying that the Austrian theory is retarded.

WTF Krugman. You know that the Fed can create bubbles if you are recommending that they do so!


This just makes Krugman the worst kind of Ellsworth Toohey type of evil imaginable.

|6.16.09 @ 2:49PM|#

More Krugman on McCulley, sans mocking:

http://krugman.blogs.nytimes.com/2006/10/30/credit-where-credit-is-due/?pagemode=print


Neeraj Mehra, Amritsar, India: Mr. Greenspan has done a disservice to the nation by creating the housing boom. As a layman-observer, that's the lingering thought I've had. Your article reaffirms it.

The question I have is this: Did he do the right thing - acting morally by engineering a housing boom, more as a bridge loan, until something else showed up at the horizon to shore up the economy - because he didn't have a choice, or did he undertake a path of mere political expediency? And, that's a question that's nagging me for a while.

Would appreciate it if you could shed some light.

Paul Krugman: As Paul McCulley of PIMCO remarked when the tech boom crashed, Greenspan needed to create a housing bubble to replace the technology bubble. So within limits he may have done the right thing. But by late 2004 he should have seen the danger signs and warned against what was happening; such a warning could have taken the place of rising interest rates. He didn't, and he left a terrible mess for Ben Bernanke.

Sean W. Malone|6.16.09 @ 2:56PM|#

Jack, I've read that article 4 times now and... and I've read dozens of other Krugman gems. I can't find anything in that article which makes me believe anything but he thinks Greenspan should induce a bubble and if anything questions whether or not he will have the political "fortitude" to do so.

ethan salto|6.16.09 @ 3:11PM|#

It's Dr. Krugman, Sean.

Tim Cavanaugh|6.16.09 @ 3:12PM|#

And why does one have to be sarcastic to call Krugman "doctor"? I know that only MDs should get that title, but as a matter of practice a lot of people with doctorates are called that all the time.

As George H.W. Bush said when he heard one of his staffers refer to Dr. Henry Kissinger: "The fucker doesn't make house calls or do surgery, does he?"

That's good enough for me!

|6.16.09 @ 3:15PM|#

Spending your way out of a huge deficit situation is like trying to drink your way out of a drinking problem. It just doesn't work that way.

|6.16.09 @ 3:17PM|#

And why does one have to be sarcastic to call Krugman "doctor"? I know that only MDs should get that title, but as a matter of practice a lot of people with doctorates are called that all the time.

Which simply illustrates how little you (and Tim Cavanaugh) actually know: the honorific "doctor" is used when addressing anyone who has earned a doctoral degree, and after years of original research and (often intense) peer review, it is well earned. "Doctor of Medicine" is simply one of several such degrees, all of which connote a level of expertise in their field far beyond anything someone with a mere bachelors or even a masters degree can bring to bear. (Yeah, I'm looking at you, Cavanaugh.)

|6.16.09 @ 3:17PM|#

Are there any reasonable people left here at reason? or have we become what we hate, name calling, superior, elitists? Reading this comment thread and feeling like I should be in freeperville...

|6.16.09 @ 3:19PM|#

Did the author not know that Dr. Krugman received a PhD in the 70s. The norm is to refer to people who have received a Doctorate of Philosophy as Dr. Obviously, I would not want him to perform open heart surgery on my but I would trust his take on complicated economic matters more than your average medical doctor.

ethan salto|6.16.09 @ 3:26PM|#

That's good enough for me!

When you finally realize that no one takes you seriously, this sort of thing is what you need to return to if you're performing any sort of self-analysis, unlikely as that may be.

Gary Ruppert|6.16.09 @ 3:26PM|#

The fact is, points to Tim.

Bush was awesome and I miss his USA First policies, and hate Obsama's HATE USA policies. We need more freedom.

|6.16.09 @ 3:26PM|#

Spending your way out of a huge deficit situation is like trying to drink your way out of a drinking problem. It just doesn't work that way.

Uh-huh... Two comments:

1. That's not why we're spending money, which means that this is just the usual strawman argument.

2. So tax cuts to reduce the deficit is supposed to be any better? Get real.

Distinguished gentleman.|6.16.09 @ 3:27PM|#

I've reread the Krugman article and their are only a few things he can say for sure.

1. He didn't make a definitive statement about what should be done at the federal reserve level.

2. He is sympathetic to the double-dippers ideas about the economy lagging. He says their ideas about inflating the housing bubble largely make sense, but never makes qualifications that would promote skepticism. In essence, he opens the door for their arguments and never explains why they're wrong.

3. His articles past and present of the 2002 article are completely congruent with his feelings about an active federal reserve, especially in the housing market. See Jsh's above post.

|6.16.09 @ 3:29PM|#

Tim Cavanaugh wrote:

As George H.W. Bush said when he heard one of his staffers refer to Dr. Henry Kissinger: "The fucker doesn't make house calls or do surgery, does he?"

That's good enough for me!

Wow. The author's comments are better than the article. Gives you a good picture, yep. Celebrating ignorance was less out in the open in the article, though it was there, if you consider that his entire argument consisted of basically saying "Amity Shlaes disagrees with Krugman."


Yes, who would want a person who's actually studied the subject to advise anyone on it, especially someone who won a Nobel. Better a right wing English major with a bachelor's degree like Schlaes.

Hey, but GHW Bush once said of someone else with a BA, "Bachelor? But he's married! Guffaw guffaw!"

|6.16.09 @ 3:29PM|#

but I would trust his take on complicated economic matters more than your average medical doctor

http://www.forbes.com/2002/02/13/0213karlgaard.html

We take no joy in watching Paul Krugman sink with the Enron scandal and blow his Nobel chances. (Okay, we do.)

The Princeton economics professor, as it turns out, pocketed a $50,000 "advisory" fee from the oil trader in 1999. Then he wrote a puff piece in Fortune, the fashion magazine, only weeks later. Krugman now blames George W. Bush and Dick Cheney for dragging him into this. Twice a week he stomps his feet at the gods of injustice from the op-ed pages of The New York Times.

http://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r=1&oref=slogin

And now we've reached the next stage of our seemingly never-ending financial crisis. This time Fannie Mae and Freddie Mac are in the headlines, with dire warnings of imminent collapse. How worried should we be?

Well, I'm going to take a contrarian position: the storm over these particular lenders is overblown. Fannie and Freddie probably will need a government rescue. But since it's already clear that that rescue will take place, their problems won't take down the economy....

...So whatever bad incentives the implicit federal guarantee creates have been offset by the fact that Fannie and Freddie were and are tightly regulated with regard to the risks they can take. You could say that the Fannie-Freddie experience shows that regulation works....

|6.16.09 @ 3:30PM|#

For now, I'll just point out that Krugman's case for additional stimulus uses the same logic as Caliph Omar's decision about the good and bad books in Alexandria

Whereas your case for ignoring the work of a widely-respected, Nobel-prize winning economics expert is that someone with a B.S. in English, whose understanding of economics has been shown time and time again to be, at best, sub-standard, and whose work has been thoroughly and completely debunked, disagrees with him. The rest of what you write is just content-free snark.

Come back when you've actually got a case to make and maybe people will take you seriously. Until then, we're just laughing at you.

Invisible Finger|6.16.09 @ 3:31PM|#

Any government-induced stimulus is going to create a bubble somewhere in the economy.

|6.16.09 @ 3:33PM|#

I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft.

ROFL.... Ah, that explains a lot. Now, see, here's the thing: most people when they write something really, really stupid actually try to hide their ownership of said really, really stupid statements. You, on the other hand, seem to be quite proud of your stupidity. Thanks for confirming that you're a nut and that debating with you is a complete waste of time.

|6.16.09 @ 3:37PM|#

...ignoring the work of a widely-respected, Nobel-prize winning economics expert...

Like Milton Friedman and FA Hayek?

Russ 2000|6.16.09 @ 3:37PM|#

Mencken often used the word "doctor" derogatorily. So does my PhD sister at Harvard Med.

If one wants to use the title "Doctor", one should be carrying malpractice insurance. In Krugman's case, the premiums would force him into another line of work.

|6.16.09 @ 3:39PM|#

PaulB, please tell us in what way taxation is not theft. Your appeal to authority arguments are tiresome.

|6.16.09 @ 3:39PM|#

"Dr. Krugman" is correct English, but pretentious for every day address if he's not an MD.

|6.16.09 @ 3:42PM|#

@plasticgoat

It's really gone downhill since January. I used to check it out daily and now it is bi-monthly. Check out Gary Ruppert's Twitter feed for it's distilled essence.

Sean W. Malone|6.16.09 @ 3:52PM|#

As someone who's spent too long (certainly all in a row) in academia, I go back to what I was told by my first Composition professor as an undergraduate when I said, "Hello Dr. Snyder" and he responded: "Cut the Doctor crap right now."


If you want to be pretentious, then you affix "Dr." at the beginning of your name everytime you open your mouth or write an article (a la Krugman) you don't hear people say "Dr. Friedman", or "Dr. Hayek" or "Dr. Mises" very often... For that matter, you don't hear people saying - right now "Dr. Murphy", "Dr. Block", or "Dr. Higgs" or even "Dr. Reisman".

Yet, those are all names of prominent, and extremely credible economists who disagree on virtually 100% of what Krugman writes in his weekly columns.

Anyone who wants can keep listening to Krugman as much as they'd like but it doesn't negate the fact that the man is an insult to arithmetic and basic logic, and that he's been wrong about a bazillion times... Wrong, and/or, flat out evil.

Sam Wilkinson|6.16.09 @ 3:53PM|#

Robbie Clark,

You continue to live here, don't you? You continue to voluntarily pay taxes, don't you? You're not holed up in your house shooting it out with the police over the state's attempt to "steal" your money via taxation, are you? You're still driving on public roads, and otherwise utilizing public services, aren't you?

Quit bitching about taxation as theft. Either do something proactive about your lot in life (Somalia's nice this time of year), or accept that maybe the whole of America neither revolves around, nor cares about, your precious whims. Plenty of us manage to deal with the fact that the government does things we don't like without wailing, "Tyranny! Theft! Slavery!"

|6.16.09 @ 3:54PM|#

So, if we've established that a holder of a PhD gets the honorific "Dr." then one can refer to Krugman as Dr. Krugman with no irony. And Amity Shlaes? What did she write her Economics PhD thesis on? Or has Reason joined the anti-intellekshul wing of the conservative movement? And you're definitely not reading the Krugman article correctly. He is saying that a housing bubble would be needed to pull out of the bursting of the tech bubble, but he doesn't say it's a good idea. He's saying that a new bubble is needed to artificially inflate the economy and thus justify tax cuts. If you know anything about Krugman (and you obviously don't), you know he didn't like the Bush tax cuts. What a bullshit article.

|6.16.09 @ 3:58PM|#

"Paul Krugman -- who I've noticed some econ bloggers refer to as "Dr. Krugman" with no hint of sarcasm"

I get the fact that the man has a PhD, and is therefore entitled to the "Dr."

What I don't get is why this is called "Reason" Magazine with no hint of irony...

Sean W. Malone|6.16.09 @ 3:59PM|#

Btw, since no one likes Amity Shales (I could care less who the critique comes from provided the logic is sound and the questions are legitimate).

|6.16.09 @ 4:03PM|#

What the fuck are you talking about Sam Wilkinson? Is taxation theft or not? It's a simple question. You're buying into this PC bullshit that we shouldn't call things what they are and saying that if we do it's "wailing". Taxation is objectively theft, it is indisputable.

Following your line of questioning is completely idiotic. I'm not suicidal. I do what I can to stay as prosperous as I can be.

It's funny how so many people think being violently coerced into action is the same as doing it voluntarily. And scary.

|6.16.09 @ 4:05PM|#

Sean W. @ 3:52


I haven't seen or read him refer to himself as "Dr." or correct anyone that fails to address him that way. I'm sure someone will point out my personal and moral failings (I may even be a fascist!) if I am incorrect. I think Tim was referring to econ bloggers who called him "Dr.", I don't think there is any "a la" there.

Tim Cavanaugh|6.16.09 @ 4:06PM|#

Welcome to all commenters who seem to be new or at least are new to me. Please stick around: Even if I'm not to your taste there's a good chance others at Reason will be.

But it is customary for guests to come bearing gifts for the host, so I'd be honored if someone would send me an example of CFR Fella Amity Shlaes' The Forgotten Man's having been debunked. Real debunkings: Ad hominems and ad feminams both will be viewed as a great insult by my tribe.

|6.16.09 @ 4:07PM|#

http://blog.heritage.org/2008/07/14/who-does-paul-krugman-think-hes-fooling/

...Where to begin? First let's stipulate that Fannie and Freddie never did "any subprime lending" … but not for the reason Krugman states. Freddie and Fannie never do any lending: They buy mortgages from lenders only, so that those lenders have more cash to make other loans (like subprime ones). But Krugman is either lying or being intentionally obtuse when he says "Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income." The Washington Post reports:...

...Let's review that last paragraph again. Krugman is trying to convince his readers that Freddie and Fannie are only innocent bystanders in the housing bubble. Fannie and Freddie purchased 44 percent of the subprime securities in 2004. Does that sound like the behavior of an innocent bystander to you?

http://www.aei.org/outlook/28704

...Here Krugman demonstrates confusion about the law (which did not prohibit subprime lending by the GSEs), misunderstands the regulatory regime under which they operated (which did not have the capacity to control their risk-taking), and mismeasures their actual subprime exposures (which he wrongly states were zero). There is probably more to this than lazy reporting by Krugman; the GSE propaganda machine purposefully misled people into believing that it was keeping risk low and operating under an adequate prudential regulatory regime....

Invisible Finger|6.16.09 @ 4:07PM|#

but he doesn't say it's a good idea.

But he is NOW.

|6.16.09 @ 4:08PM|#

As for Dr. University Professors - including all of my Math, Science and Engineering ones - are referred to as Dr unless they have no Phd (unlikely) or ask students to use something else like "hey you." Now of course this can get out of hand like with Dr. Laura or maybe Dr. James D. Kennedy. Most educated people know the difference.

As for Krugman - yea, what the hell has he ever done! Why do we even listen to anything he has to say? Tim Cavanaugh is far more experienced, accomplished, widely published and read, and should be up for a Nobel next week.

Fuck Krugman.

|6.16.09 @ 4:08PM|#

Only Republicans with PHDs can be called DOCTOR. It's that SIMPLE! P.S. Obama is a sekrit mooslim!

ethan salto|6.16.09 @ 4:09PM|#

What the fuck are you talking about Sam Wilkinson? Does the sun not move around the Earth or not? It's a simple question. You're buying into this PC bullshit that we shouldn't call things what they are and saying that if we do it's "wailing". The sun moves around the Earth, it is indisputable.

Following your line of questioning is completely idiotic. I'm not suicidal. I do what I can to stay as analytically retarded as I can be.

It's funny how so many people think that our Earth could actually be going around the sun. And scary.

Russ 2000|6.16.09 @ 4:12PM|#

Ad hominems and ad feminams both will be viewed as a great insult by my tribe.

I happen to like ad hominems; they aren't a substitute for actual debunking but when used in conjunction with actual debunking they are most of the fun.

Tim Cavanaugh|6.16.09 @ 4:17PM|#

Trudat, Russ.

Sean W. Malone|6.16.09 @ 4:20PM|#

It's not an ad hominem fallacy unless it's designed to refute the argument...

I personally like to refute someones arguments on logical & factual grounds, and then call them a sanctimonious idiot.

|6.16.09 @ 4:21PM|#

My favorite part of the article, aside from the impressive bit of ignorance over the correct use of the honorific "Dr" (hint - it didn't originate with MDs), is the assumption the Amity Shlaes has completely refuted all previous analysis of the Great Depression. It's even more amusing when confronted with the fact that Dr. Shlaes doesn't even know the definition of "recession". See Tim, that use of Dr. is ironic, because Amity Shlaes has no PhD...

Jordan|6.16.09 @ 4:26PM|#

A Nobel Prize is not a magic talisman, shielding its bearer from any and all criticism. Krugman received his Nobel Prize for his work in defense of free trade, a subject which is pretty far removed from his current fixation.

Tim Cavanaugh|6.16.09 @ 4:27PM|#

Crusty, I'm countering your ad feminam with one ad hominem: In that link ya sent, Barry Ritholtz don't even know howta spell NBER.

|6.16.09 @ 4:31PM|#

Lolbertarians. Always good for a chuckle. Keep it up guys!

Sean W. Malone|6.16.09 @ 4:36PM|#

Wow, this thread turned silly somewhere along the way...

Instead of ad fem-ing Amity Shales, why don't you all head over to the myriad of journal & magazine articles by very serious economists who also think Krugman is full of shit. Or, you know... actually try to deal with the arguments as presented as if you don't know who said which and try to use your own think-boxes to figure out which ones are the most logically consistent, and which actually are presented with provable historical evidence.

Might I recommend, (Dr.) Robert Murphy?

|6.16.09 @ 4:37PM|#

but he doesn't say it's a good idea.

But he is NOW.

Where does he say that a housing bubble is a good idea? I'll certainly believe that's possible. I don't really follow Krugman all that closely, but boy, I'd sure like a cite.

|6.16.09 @ 4:42PM|#

Dr. Krugman has more smarts in his pinkie that you stupid jackasses will ever acquire.

|6.16.09 @ 4:43PM|#

Quoth Dr Krugman:

"Compare me … compare me, uh, with anyone else, and I think you'll see that my forecasting record is not great."

http://www.nationalreview.com/nrof_luskin/kts200408090930.asp

|6.16.09 @ 4:47PM|#

"Where does he say that a housing bubble is a good idea? I'll certainly believe that's possible. I don't really follow Krugman all that closely, but boy, I'd sure like a cite."

He doesn't.

What we have here is a bunch of moronic wingnut hacks jumping on the "I hate everything Obama does" bandwagon.

Obama cut taxes and the stupid fucks go on a teabagging party. TEA - Taxed Enough Already.

We are not dealing with a smart group here.

|6.16.09 @ 4:49PM|#

"Obama cut taxes"

cite?

XoX|6.16.09 @ 4:52PM|#

I'm countering your ad feminam with one ad hominem: In that link ya sent, Barry Ritholtz don't even know howta spell NBER.

Seriously? "Ad feminam?" "that link ya sent?" "Barry Ritholz don't ... know howta?"

How old are you, really? I've had more cogent discussions than this with my five year old.

|6.16.09 @ 4:57PM|#

How many of the new commenters here are Krugman sock puppets.

Hi Paul! Welcome to hit and run.

|6.16.09 @ 4:59PM|#

Agree 100% with the medical comparison. The fact is the economy is in worse condition than Obama predicted if no stimulus had been passed.

There are only two logical explanations for this:

1) they have made it worse, or;

2) they can't understand the economy enough to predict it.

And even if it is #2, that says that they don't have enough information to intelligently intervene and make sure they are not actually making it worse. so the correct answer is, "first do no harm" which means, here, if you don't know what you are doing, don't do anything.

But instead of an economic hippocratic oath, Obama seems to think that the solution is to do something, anything, and hope it works. and to some extent if the people are convinced that the economy will do better, it becomes a self-fulfilling prophesy. But it would be incorrect at this point to say that the only thing we have to fear is fear itself.

|6.16.09 @ 5:00PM|#

"Obama cut taxes"

cite?

http://www.msnbc.msn.com/id/29314485/

Geez. You been living in a cave? My visit here will be brief. I don't want the stupid to rub off onto me.

robc|6.16.09 @ 5:04PM|#

Remember when Krugman's Nobel was announced and we wondered if we were going to get flooded with people making an appeal from authority argument based on it? Yeah, me too.

|6.16.09 @ 5:04PM|#

http://www.msnbc.msn.com/id/29314485/

That's a tax "credit" that goes out whether you pay income tax or not, and is a one time deal.

Sean W. Malone|6.16.09 @ 5:04PM|#

awww... jharp, don't let the door hit you on your way out.


(look everybody, he actually thinks that Obama "cut taxes"... HAhhahahahahaha.... hilarious)

|6.16.09 @ 5:07PM|#

http://www.openmarket.org/2009/05/14/adviser-admits-obamas-tax-increases-may-kill-economic-recovery/

Still waiting for one of the Krugman apologists to make a cogent argument. Name calling is not an argument.

|6.16.09 @ 5:16PM|#

jsh | June 16, 2009, 5:04pm |

"That's a tax "credit" that goes out whether you pay income tax or not, and is a one time deal."

Ah, I get it. Tax cuts that are only for one year are not tax cuts.

How could I have not known that.

You, buddy, are an imbecile.

|6.16.09 @ 5:19PM|#

I'm just a little baffled by your post. It appears to follow a tried and true formula used throughout the blogosphere for the last couple years:

Step 1) criticize subject's position/title/credentials
Step 2) quote previous statement by subject disapprovingly, citing minor intellect as irrefutable proof
Step 3) toss in tangential argument (Caliph Omar)
Step 4) search for amusing youtube video (fail)

It's trite, thoughtless, and anti-intellectual. You'd have done great work in the GW Bush administration.

No surprise, of course, that your response to criticism consists of an accusation of sexism and ignorance of citation based typo (ad typonimum?).

|6.16.09 @ 5:21PM|#

jharp,

Still just name calling. Obama's minimal stimulus tax credit (wealth redistribution) pales in comparison to the tax increases he plans to implement.


http://online.wsj.com/article/SB124217336075913063.html

|6.16.09 @ 5:22PM|#

Jharp, a tax credit is just a tax increase down the line. The government does not have the money it is crediting you. They must print or borrow it to give it to you. Well, actually I suppose a tax credit is not even a delayed tax increase because the value of the money in the economy is reduced when the government borrows or prints.

|6.16.09 @ 5:25PM|#

Amity Shlaes is a clueless, ignorant hack.

|6.16.09 @ 5:28PM|#

Jon H,

Brilliant argument. Where can I find your blog?

|6.16.09 @ 5:28PM|#

"What Krugman fails to understand is that liquidity isn't just a matter of people having enough cash. They also have to be willing to trade. Krugman doesn't know this, because he's an ivory-tower wanker who never managed so much as a taco stand."

The "not willing to trade" part is why we had a stimulus package, dumbass.

Sean W. Malone|6.16.09 @ 5:29PM|#

Jharp;

A tax credit in no-way can be considered a "cut" unless it's permanent... you imbecile.

But more to the point, Obama's token tax credits have come in the form of $1.8+ trillion dollar deficit spending, or hadn't you realized you'd have to pay for that at some point? He's also already raised literally dozens or perhaps hundreds of taxes in the process, so as cute as it is that you think one measeley "credit" constitutes a tax cut - your tunnel-vision has prevented you from realizing that, much like the "budget cuts" which were about 0.01% of the money he was planning on spending (which was already +200% from the year before mind you), he's done nothing but raise taxes on everyone.

As have all the states for that matter. I've recently seen (as a Californian) hikes in my sales tax, income tax & property taxes... not Obama's fault on those, but the idea that taxes have been "cut" is making you my personal laughing-stock of the day. And that's in a tough field of competitors.

|6.16.09 @ 5:31PM|#

Jon H, remember what you just said so in a year or two you can think about whether it worked. Hell you can think about it now.

Sean W. Malone|6.16.09 @ 5:31PM|#

Jon H.

Everyone is willing to trade at the right price (dumbass!)... Prices need to come down after an artificially (Federal reserve) created bubble. And that's what our boy Obama & friends aren't letting happen.

|6.16.09 @ 5:32PM|#

"A tax credit in no-way can be considered a "cut" unless it's permanent... you imbecile. "

Anyone who thinks a tax cut can be "permanent" is an imbecile.

MattXIV|6.16.09 @ 5:32PM|#

It's quite confusing that Krugman insists we're in a liquidity trap, since it's very easily verifiable by the presence of 0 or near 0 noninal interest rates due to deflationary pressures swamping real interest rates, which we don't see. Without nominal interest rates hitting the 0% barrier, there can't be a liquidity trap since a liquidity trap doesn't occur unless it is more profitable to hold cash than invest - holding cash instead of investing reduces the velocity of money, lowering prices, making holding cash more attractive. A liquidity trap requires an expectation of persistent deflation, but inflation expectations can trivally be determined by comparing the yields of TIPS and normal treasuries for the same time period - in a liquidity trap the normal treasuries should have lower yields than TIPS. This isn't the case in the current US economy, in contrast with when Japan actually did experience a liquidity trap and it's nominal interest rates did go down to essentially zero. Krugman is quite aware of this - his writings on Japan repeatedly explain the significance of the zero nominal interest rate barrier in creating a liquidity trap.

There's a huge quality gap between Krugman's academic work and his column, and the driver of it seems to be intentional dishonesty. I don't agree with all of Krugman's academic stuff (I think his conclusion that spending will work where monetary policy doesn't in liquidity traps is flawed since doesn't consider that the same time preference shift in reaction to uncertainity that causes excessive savings also impacts how Ricardian people's reaction to unfunded spending will be, but that's a whole other debate), but his columns are pretty much just politically convenient bullshit.

|6.16.09 @ 5:32PM|#

Can any of you Krugman apologists make any sense? Make an arguement. Do you have anything.

Go ahead call me names. I can take it.

|6.16.09 @ 5:33PM|#

Anyone who thinks a tax cut can be "permanent" is an imbecile.

OK, instead of 'permanent', how about "without a scheduled end date, particularly without being scheduled to last just this one year"?

|6.16.09 @ 5:34PM|#

"Everyone is willing to trade at the right price (dumbass!)... Prices need to come down after an artificially (Federal reserve) created bubble. And that's what our boy Obama & friends aren't letting happen."

And this has what to do with the Stimulus? It's not being used to support housing prices. Hell, half the damn thing is tax cuts.

Russ 2000|6.16.09 @ 5:34PM|#

I never understood why Barry Ritholtz gets any accolades. He not completely stupid, he does make a few good observations so it's not like he isn't ever worth reading. But then he quotes stupidity like this from the NBER as if its valid: "Expansion is
the normal state of the economy."

Expansion is what we all normally LIKE, but EXPANSION AND CONTRACTION is the normal state of an economy.

Sean W. Malone|6.16.09 @ 5:39PM|#

It has everything to do with the stimulus Jon...

Ugh.

*raps skull*

The stimulus is predicated on the idea that if we dump a ton of money into the economy, then the "good times" of the bubble won't have to end, but they do, because they were built on a false foundation.

|6.16.09 @ 5:40PM|#

" Without nominal interest rates hitting the 0% barrier, there can't be a liquidity trap since a liquidity trap doesn't occur unless it is more profitable to hold cash than invest"

One form of "more profitable" is "safer". ie, "I think this bank is in trouble so I'm not going to lend it money", "I'm going to cut this guy's credit limit because I need to reduce my risk".

You have noticed that credit limits are being cut all over the place, right? How is that not an aspect of a reduction in liquidity? The banks are deciding it's more profitable to *not* make more money available to customers.

|6.16.09 @ 5:41PM|#

Sean W. Malone writes: "The stimulus is predicated on the idea that if we dump a ton of money into the economy, then the "good times" of the bubble won't have to end, but they do, because they were built on a false foundation."

The stimulus is predicated on keeping recession job losses from resulting in a downward spiral as consumers and businesses stop spending, and lay off employees, leading other consumers to stop spending and other businesses to lay off employees.

|6.16.09 @ 5:43PM|#

"Expansion is what we all normally LIKE, but EXPANSION AND CONTRACTION is the normal state of an economy."

In a constant population, maybe. In a growing population, it won't be a 50/50 split between expansion and contraction. Contraction is less frequent.

Or are you going to claim that US GDP has been flat since 1800?

|6.16.09 @ 5:45PM|#

Tim has a degree but it's written in crayon on the back of a Mad magazine fold-in.

|6.16.09 @ 5:45PM|#

Robbie Clark | June 16, 2009, 5:22pm | #

"Jharp, a tax credit is just a tax increase down the line."

More wingnut idiocy.

Now a tax credit is a tax increase!

Good fucking grief. Please, you can't be that stupid. Can you?

|6.16.09 @ 5:46PM|#

the creators of those SUVs were about to pay the price for their folly until your hero decided to bail them out.

Building the SUVs wasn't where they fucked up, it was in accepting unsustainable deals with their unions. There's no way for them to be profitable with their current cost basis.

-jcr

|6.16.09 @ 5:49PM|#

I don't want the stupid to rub off onto me.

Gosh, what a clever gybe! Do the undergrad girls swoon over you as you parrot the hogwash that Krugman spews?

BTW, perhaps you missed the tiny little detail that presidents neither raise nor lower taxes. That power lies with the congress. All the president can do in that regard is ask them to do his bidding, or huff and puff about it if they don't.

-jcr

|6.16.09 @ 5:49PM|#

When the government is in debt and running deficits, how can a tax credit (money from thin air) possibly be a tax cut? Remember, Bush tried this same thing in 2008 and it didn't do a damn thing good.

|6.16.09 @ 5:56PM|#

"Building the SUVs wasn't where they fucked up"

Agreed. With George Bush and the republican Congress offering tax incentives to buy SUV's they were simply filling a demand.

The fuck up was offering the tax incentives on gas guzzlers. And lo and behold the price of oil skyrocketed and killed the demand for SUVs, a disaster for the auto industry.

Who could have ever thought that increasing our dependence on foreign oil might not turn out too well?

Sean W. Malone|6.16.09 @ 5:58PM|#

Ok Jon, thank you for paraphrasing me...?


I suppose I have to be the token representative for ABCT here, but basically Jon, the point is...

Spending & credit is predicated on savings. If there is no actual savings, but instead the Federal Reserve lowers interest rates and pumps up our banking system with a ton of spontaneously generated cash (as they did in 2002-2003 and have every other time we've experienced a bubble as such), then it appears in the system as if we have money to lend (as if there was savings). However... it's all fake.

What this means though, is that all that money goes into one industry or another, often predicated on what seems in vogue or what special incentives government has set up - i.e. housing, etc.

SOooooooo... we allocate tons of resources into this sector of the economy. BUT... since it's all built on a false foundation, it can't last. Prices get pumped up, people get hired to do work that we can't actually justify with hard assets, and then people get hired around the sides of the bubble...

Basically, we've misallocated labor & capital to a massive extent. So when the bubble collapses, people get fired, and we have surpluses of some goods which are now overpriced (housing) and not enough of other goods (since we were using labor & capital to make other things).


NOW - flash forward. The bubble bursts.

People get fired. The economy needs to readjust. Prices need to come down, capital & labor need to be reallocated to more productive/wanted uses... Which can't happen if government tries to hard to keep the bubble going - which is what the Stimulus is about. The government won't succeed however, the market is made of hundreds of millions, and now thanks to globalism, maybe billions of people... It will adjust. But government can slow the adjustment, making it drawn out and much much more painful. Like ripping off a bandaid a millimeter at a time.


There's more... but... I mean... c'mon, it's a comments thread.

|6.16.09 @ 5:58PM|#

jharp,

Let me get this right:

Bush tax cuts bad:

http://krugman.blogs.nytimes.com/2005/10/18/the-bush-tax-cuts-and-the-deficit/?pagemode=print

Obama tax cuts good.

Face it, Krugman is no longer working as an economist. He is a partisan hack.

|6.16.09 @ 6:00PM|#

Bush tax cuts bad:
Obama tax cuts good.

Obama's tax 'cuts' are tiny and swamped by tax increases. They're 'good' in the sense the are a lie to keep the rubes quiet.

|6.16.09 @ 6:06PM|#

jharp,

Let me get this right:

Bush tax cuts bad:

http://krugman.blogs.nytimes.com/2005/10/18/the-bush-tax-cuts-and-the-deficit/?pagemode=print

Obama tax cuts good.

Yeah, that pretty much nails it. Obama cut the working class in a time of economic catastrophe. Bush cut taxes for the wealthiest in a time of growth.

You DO see the difference, right?

|6.16.09 @ 6:07PM|#

Face it, Krugman is no longer working as an economist. He is a partisan hack.

This implies that he was once an economist, which is not the case. As a Keynesian, his entire career has been pandering to power-grabbers.

-jcr

Sean W. Malone|6.16.09 @ 6:09PM|#

Again... Jharp... are you functionally retarded or what? The "tax credit" you speak of, is the equivalent to Bush's $300 stimulus checks. Nothing more... People (I assume) like you hated and mocked those, and they at least weren't accompanied by a 2 trillion dollar deficit in the middle of a recession which is going to be paid for primarily by middle class people & their children for the next 2-3 generations.

Sean W. Malone|6.16.09 @ 6:11PM|#

And... also, notably - as I said... on the scale of taxes...

+100
-1
=
+99


Not a cut, just, a slightly smaller increase. And in this case, by slightly, I mean - invisibly.

|6.16.09 @ 6:21PM|#

"Again... Jharp... are you functionally retarded or what? The "tax credit" you speak of, is the equivalent to Bush's $300 stimulus checks."

No, I am not retarded. I have an accounting degree from a Big Ten University with a minor in economics.

And yeah, you're right Obama's tax credit is pretty much the same as Bush's refunds.

Albeit Obama's are over the course of a year and Bush's were one check.

So what is your point? That Obama didn't cut taxes?

McLieberman|6.16.09 @ 6:23PM|#

Hey Krugman... How did the economy grow through the 1930's?

Inflation BeeAtch... take a look at what the FED, UST, & FDR did to America.

"When the swindle began to fall, the bankers knew it in advance and withdrew from the market. They got out with whole skins and left the people of the United States to pay the piper."

Because the exact same thing happened during the Great Depression that is happening today, US Treasury Secretary actions should not come as a shock to any student of history. In fact, not only are the actions taken by the elite banking cartel during the Great Depression a "playbook" for what is happening today, it is a virtual blueprint.

John Maynard Keynes:
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Unemployment jumped from 14.3% in 1937 to 19.0% in 1938 and manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels so 1938 was a disaster.

I'll leave y'all with a hint: William Alexander Julian US Treasurer

Go and find what he thinks about Stimulus, Spending and the success of the FDR/FED 30's.

Krugman is a far left shill AssHat... he should go back to something he knows even less about, International politics. Maybe NYPD can hire him to muckout the stalls for the horse patrol?

|6.16.09 @ 6:23PM|#

you don't hear people say "Dr. Friedman", or "Dr. Hayek" or "Dr. Mises" very often... For that matter, you don't hear people saying - right now "Dr. Murphy", "Dr. Block", or "Dr. Higgs" or even "Dr. Reisman".

You'll pry the title Dr. Dunkenstein from my cold dead hands, fascist.

Sean W. Malone|6.16.09 @ 6:29PM|#

Again, no, Jharp - it's not a tax "cut", it's a massive net tax increase. It's disingenuous at best to suggest that there's anything at all being "cut" right now by the Obama administration.

Sean W. Malone|6.16.09 @ 6:32PM|#

Touche Voros, touche...

|6.16.09 @ 6:33PM|#

Sean W. Malone | June 16, 2009, 6:29pm | #

"Again, no, Jharp - it's not a tax "cut", it's a massive net tax increase. It's disingenuous at best to suggest that there's anything at all being "cut" right now by the Obama administration."

You have got to be kidding.

It most certainly is a tax cut. Plain and simple. Simply because you say it isn't does not make it so.

Geez.

Sean W. Malone|6.16.09 @ 6:43PM|#

Ok... You're an accountant, yes? Do some fucking basic math Jharp, this is just arithmetic buddy.

Obama & friends have/are in the process of raising taxes across the board.

Your pitiful little one-time credit doesn't scratch the surface of what we're going to be paying in tax increases. The fact that you call it a cut just speaks to your own ability to reclassify things in stupid ways and not to the reality of what's going on here.

AGAIN: I'll clarify my earlier math metaphor, "X" = where we started as of Obama's presidency, day 1.

X+(100-1) = X + 99... NET INCREASE, not a cut.

Fuck this is simple, perhaps you would have been suited to another field.

Sean W. Malone|6.16.09 @ 6:46PM|#

It's ironic that you are pretending I'm making the case that it's a net increase "just cause I say so", when you can offer only one example of a one-time stimulus-related (meaning paid by debt and a giant net loss when you factor in interest) as a cut in the face of billions of dollars in tax increases. One of us is playing with semantics here buddy and it ain't me

|6.16.09 @ 6:52PM|#

Sean,

You stupid fuck.

Simply because you believe Obama is going to increase taxes does not equal Obama has raised taxes.

He has cut taxes.

Gettin a little testy there son? We call folks like you sore losers.

Sean W. Malone|6.16.09 @ 6:56PM|#

I LINKED YOU TO THE TAXES HE'S ALREADY PUT IN MOTION TO RAISE YOU FUCKING MORON.

So did half a dozen other people!

We like to call folks like you retards who apparently cannot do basic arithmetic.

MattXIV|6.16.09 @ 6:56PM|#

Jon H,

Well, you've demonstrated that you have no idea what a liquidity trap is. Read http://web.mit.edu/krugman/www/spiral.html and http://en.wikipedia.org/wiki/Liquidity_trap.

I also take back the statement that Krugman doesn't consider Ricardian equivalence. He does in his notes on Japan, but he does it in a segment casting doubt on the the effectiveness of fiscal stimulus to solve Japan's problems. So, Krugman is both smarter and a bigger hack than I remembered.

Sean W. Malone|6.16.09 @ 6:57PM|#

For those like you Jharp who are too fucking lazy to click on the damn link:

"President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals."

God damn.

Sean W. Malone|6.16.09 @ 7:00PM|#

I'm supposed to feel good about a pitiful tax-credit for a few people, simply because of a time lag???


You disingenuous prick.

|6.16.09 @ 7:33PM|#

Real quick: Obama cut taxes for everyone making under $250k per year, or over 95% of the American population. You make more than that you get no tax cut. The tax increases referred to by several on this board are to the people in the highest tax bracket, those making over $250k, and to allowing dividend and cap gains to revert to Reagan levels (again, very few Americans have any real monetary benefit from a reduction in taxes of that nature).

The link to Jake Tapper's numbers include over $200B in anticipated tax revenue for "international enforcement", i.e., collecting from corporations who have moved offshore to avoid paying US taxes due and owing, which even by the largest stretch of imagination would not apply to the average consumer.

So yes, there will be tax increases to individuals that show over $250k in annual AGI, most of whom can afford accountants that have already reduced their tax obligations below that of the middle class with tax offset structures. There has been article after article reflecting the fact that people like Buffett and Mellon-Scaife and Coors and Sheldon have an effective federal tax rate of 16%, far below that of their significantly less affluent fellow-citizens.

End of the day, Obama's tax regime benefits most Americans, Reagan's and Dubya's tax regime benefited very few Americans. Pretty simple.

And please don't bother arguing trickle down and supply side, it's been debunked ad naseum and is a waste of everyone's time.

Sean W. Malone|6.16.09 @ 7:37PM|#

Gosh, except for all those pesky taxes on commodities, cigarettes and corporate taxes which apply to everyone regardless of what they make, not to mention all the proposals for levying taxes on gasoline, "unhealthy" foods and alcohol.

Those don't count as tax increases though, of course, because they're not on income.

Sean W. Malone|6.16.09 @ 7:38PM|#

And I doubt a single person here is a "supply-sider".

Sean W. Malone|6.16.09 @ 7:39PM|#

(You'll have to talk to Obama's boy Larry Summers about that one)

robc|6.16.09 @ 7:40PM|#

very few Americans have any real monetary benefit from a reduction in taxes of that nature

Bullshit.

I was also point out that Obama promised NO tax increases for people under $250k, not "very few".

|6.16.09 @ 8:09PM|#

Just to be clear Sean, I really don't have a problem with Obama raising taxes even though it is quite clear that at this point he has done nothing except cut taxes.

It blows my mind that ElDrugbo, Hannity, and Fox News has you wingnut morons convinced that Warren Buffet paying 17% in taxes on his 46 million in income whilst losers like yourselves pay 30% on your 60 thousand somehow is in your best interest.

Sean W. Malone|6.16.09 @ 8:14PM|#

You sir, are in the wrong place and a fucktard.

We aren't "conservatives" here and, though I can't speak for anyone else... I don't have cable TV and thus don't watch Fox News, I've never watched Hannity and don't listen to Limbaugh.

We're libertarians here... I'm sorry your brain can only wrap itself around a false dichotomy, thereby preventing you from experiencing the world of ideas that don't fit into your preconceived box, but unfortunately, you've come to the wrong place if you think we're republicans.

|6.16.09 @ 8:15PM|#

It blows my mind that ElDrugbo, Hannity, and Fox News has you wingnut morons convinced that Warren Buffet paying 17% in taxes on his 46 million in income whilst losers like yourselves pay 30% on your 60 thousand somehow is in your best interest.

That extra 13% of Buffet's income would be more money for the idiots you support to buy votes with, hence my support for Buffet keeping it.

Sean W. Malone|6.16.09 @ 8:15PM|#

And... Income taxes are not the only taxes we pay, so your 17% figure is a canard to begin with, and since we generally oppose all taxation (or nearly all), I doubt a one of us here thinks that 30% taxation on our $60k a year salaries is acceptable.

Sean W. Malone|6.16.09 @ 8:17PM|#

Jsh: Plus, Buffet took $40 Billion and committed it to actually making people's lives better. Government could have taken that $40 B and put it towards what... Bombing brown people? Sweet.

Sean W. Malone|6.16.09 @ 8:26PM|#

"even though it is quite clear that at this point he has done nothing except cut taxes."


So, you don't really like to read, check linked sources or pay attention to world events do you? Pity.

|6.16.09 @ 8:26PM|#

"since we generally oppose all taxation (or nearly all)"

Interesting. So how do you propose we pay our bills?

You are aware that the United States has probably the lowest tax rates in the industrialized world.

M. Bouffant|6.16.09 @ 8:35PM|#

Let's see, DOCTOR Krugman has a Ph.D. in economics, Amity Shlaes has a B. A. in English. Which do I choose for my economic advice?

Why, Reason, of course. It's not as if they're a bunch of sad, doctrinaire hacks or anything.

|6.16.09 @ 8:38PM|#

Let's see, DOCTOR Krugman has a Ph.D. in economics

Do you assert every PhD agrees with Krugman?

Sean W. Malone|6.16.09 @ 8:48PM|#

"You are aware that the United States has probably the lowest tax rates in the industrialized world."


*Sigh*... First off, that the tax rate is on the whole lower in the US than it is in Europe has no bearing on what the tax-rates "should" be. We don't have a monarchy either, and most other Industrialized countries do... should we crown Obama king? (Don't answer that).

Secondly, I don't think it's going to be remotely possible for me to explain the ins and outs of libertarian philosophy to you in a comments board post. It's positively staggering to me that you haven't encountered it before however, especially if you are an accountant and think you know a thing about economics. Have you never read any of Milton Friedman's books? George Reisman? Thomas Sowell? Walter Williams? Ludwig von Mises? FA Hayek? Anyone?


Jesus.

Oh and yeah M. Bouffant: Those names I just listed. Not/weren't & wouldn't ever be fans of Krugman, yet... There's 6 Ph.D's & 2 Nobel Prizes right there. Make a real fucking argument next time.

|6.16.09 @ 8:53PM|#

Here are a bunch of others who disagree with The Krug:

http://www.cato.org/special/stimulus09/alternate_version.html

With all due respect Mr. President, that is not true.

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

|6.16.09 @ 9:03PM|#

"Have you never read any of Milton Friedman's books? George Reisman? Thomas Sowell? Walter Williams? Ludwig von Mises? FA Hayek?"

Yes. So what is your point?

And I have encountered Libertarians before. I've found them to be republicans who like smoking dope. And people who like the blame the worlds woes on poor people.

Jordan|6.16.09 @ 9:09PM|#

So you prefer to deal in caricatures than understand what we truly believe. The mark of somebody whose not too secure in their beliefs.

|6.16.09 @ 9:09PM|#

And people who like the blame the worlds woes on poor people.

Not all of them, just the ones dumb enough to vote for the likes of the Empty Suit In Chief.

Jordan|6.16.09 @ 9:10PM|#

Preempting the spelling police: whose = who's

Tim Cavanaugh|6.16.09 @ 9:16PM|#

Well it's been about a hundred posts since I asked for it, so I guess the Shlaes debunking doesn't exist. Lord knows Viscount Krugman did a big nothing when he tried, and the Times guy who reviewed the book punted like Ray Guy. It shouldn't be that hard to put a lowly English major without a Nobel prize back in her place, should it?

|6.16.09 @ 9:43PM|#

If you think what he wrote in 2002 was offensive, then you'll really get annoyed reading what he wrote in 2001.

German Interview, undated



http://www.pkarchive.org/global/welt.html





"During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn't you lower interest rates?"





July 18, 2001



http://www.pkarchive.org/economy/ML071801.html



"KRUGMAN: I think frankly it's got to be -- business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she -- or I should say he and she, can they bring back this economy?

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don't know.

"



August 8th 2001



http://www.pkarchive.org/economy/ML082201.html



"KRUGMAN: I'm a little depressed. You know, inventories, probably that's over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven't fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It's not a happy picture."





August 14, 2001



http://www.pkarchive.org/column/81401.html



"Consumers, who already have low savings and high debt, probably can't contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates - and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn't 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.



October 7, 2001



http://www.pkarchive.org/economy/ML071801.html

"Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package.

"



Dec 28, 2001



http://www.pkarchive.org/column/122801.html



"The good news about the U.S. economy is that it fell into recession, but it didn't fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed's dramatic interest rate cuts helped keep housing strong even as business investment plunged."

Sean W. Malone|6.16.09 @ 9:56PM|#

Yeah... Jharp:

1. I've never smoked pot or done any other drug in my life.
2. I've never voted, nor considered voting for a republican in my life.
3. Liberty encompasses far more than smoking dope and it sure as hell does have to do with economics.
4. If you've read Milton Friedman, then I'm curious as to how you could possibly be confused on the basics of libertarianism. And boy are you.

Congratulations on being a monumental rejects however. I hope that works well for you.

And...

DAMN Ben! A+

|6.16.09 @ 10:27PM|#

Ben, all those posts seem prescient. There was a housing led recovery, though it did turn into a bubble. Krugman may not have foreseen the bubble when he was writing those columns, but he did foresee it before a lot of other economists. In fact, when I used to read him (pre-bubble-bursting), he wrote about it so often and stridently I started to think he was crying wolf.

ethan salto|6.16.09 @ 10:30PM|#

It's Dr. Krugman.

|6.16.09 @ 10:47PM|#

Ah, poor Mr Cavanaugh, still the third-worst editor of Suck.com.

Amity ain't going to do you, no matter how hard you bat your eyelashes.

Tim Cavanaugh|6.16.09 @ 10:57PM|#

Ben, all those posts seem prescient. There was a housing led recovery, though it did turn into a bubble. Krugman may not have foreseen the bubble when he was writing those columns, but he did foresee it before a lot of other economists. In fact, when I used to read him (pre-bubble-bursting), he wrote about it so often and stridently I started to think he was crying wolf.

Yes, and in one of the comments above Krugman is quoted saying that lighting a real estate fire in 2002 was good, but that now it's gone too far. I don't know what year he got around to expressing regret, and who gives a shit, because the argument is as preening and bogus as the liberal hawks' whining about how they wanted a war in Iraq, just not one where people got killed. Intervention is a blunt tool: You choose it, then you bend over and take it good and hard. Krugman established what kind of man he was in the 2002 column; everything after that is just haggling over the price.

Jesse Walker|6.16.09 @ 10:58PM|#

Tim: Andrew Cohen made a reasonable case that Shlaes oversimplified the story of the Schechter brothers. Not that his version of the tale makes the NRA look any better.

Or at least it looks like a reasonable case to me. I haven't read the Shlaes book, so I can't speak to its quality. I have read a lot of the academic work she's popularizing -- stuff written by people with bona fide doctorates! -- and I have yet to see any critiques of Shlaes that put a dent in the original material.

Wile E. Quixote|6.16.09 @ 11:09PM|#

John C. Randolph write:

While you're at it, fuck the Swedish bankers who gave him that non-Nobel prize that gives him the pretense of sophistication.

No kidding, fuck those goddamned Swedish bankers. Do you know who else they gave their little non-Nobel prize to? A certain asshole named "Milton Friedman". Now, all of the libertarians out there just love Uncle Milty's economic policies, but what those libertarians don't know is that Uncle Milty is the man behind income tax withholding. Yeah, that's right, he's the S.O.B. who invented income tax withholding.

http://www.reason.com/news/show/29691.html

Now, since the Nobel Prize in economics, actually the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is invalid because it was given to Paul Krugman, who everyone here hates because he's Paul Krugman and he doesn't like to get naked and jack off to a semen encrusted copy of "Atlas Shrugged", and to Milton Friedman (who went through years of school to get his PhD and sometimes was called "Dr. Friedman" or "Professor Friedman" without any hint of sarcasm whatsoever) who invented income tax withholding it obviously means that the Nobel Prize in Economics is total crap and that anyone who ever won it is a total shithead who is to economic thought what Lysenko was to biology or Ayn Rand was to writing believable, three-dimensional characters. So when someone tells me that libertarian economist F.A. von Hayek won the Nobel Prize in Economics I'm going to say "so fucking what, so did Paul Krugman." Or when I'm told that libertarian economist James M. Buchanan won the prize for his work on public choice theory or that members of the University of Chicago Department of Economics have won, or shared in winning, 8 of the 40 Nobel Prizes in economics awarded I will say "Yes, and since the Nobel Prize in Economics was awarded to Paul Krugman it obviously means that neo-classical, free-market based, classical liberal economic theory is utter shit and nonsense."

So fuck those Swedish bankers and their little prize, and fuck the libertarian economists who won it, because they're all probably total crapsacks, I mean they must be, because Paul Krugman won it too!

|6.16.09 @ 11:14PM|#

Yes, who would want a person who's actually studied the subject to advise anyone on it, especially someone who won a Nobel.

Somehow I sense that you don't have the same reverence for another economist with a Nobel - Milton Friedman.

Sean W. Malone|6.16.09 @ 11:31PM|#

"but what those libertarians don't know is that Uncle Milty is the man behind income tax withholding."


Actually... we all did already know that. Thanks for playing though.


I can't think of a better advocate for freedom than Milton Friedman, but in his youth, he worked for the government coming up with fantastically Keynesian ways of fucking us over... Because that was his job back then during the depression. But ya know what, he spent the rest of his life atoning for that, and I've since forgiven him. The Austrian School hasn't, but that's ok... They've been more consistent the whole way through - but then, they're now more obscure and not listened to at all and at least Friedman made it on TV all the time.

ethan salto|6.17.09 @ 12:05AM|#

It's Dr. Krugman.

Automonic|6.17.09 @ 3:07AM|#

I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft.

Please go out and live in the forest with your friends, building your ideal society without taxes, or whatever you view as your Utopia. The rest of us would like to live in, and contribute to, a functional society.

|6.17.09 @ 7:36AM|#

I don't want tax cuts because I think they'll help the economy. We want them because taxation is theft.

Whose picture is on your money? Who makes it?

The difference between money and paper is that the government says one of them has value.

ay|6.17.09 @ 7:45AM|#

"The difference between money and paper is that the government says one of them has value."

And jails you if you try to use something else...

McDuck|6.17.09 @ 7:51AM|#

"Please go out and live in the forest with your friends, building your ideal society without taxes"

No, I'd rather stay around, not pay taxes and with the money I save I might even give you a loaf of bread when your govt. promised pension disappears like Madoff's billions... I'm just generous like that.

McDuck|6.17.09 @ 7:53AM|#

"Please go out and live in the forest with your friends, building your ideal society without taxes"

...and I'll keep playing golf with good ole Timmy and Ben, even 'though I think they are awful hypocrites for keeping their offshore money in the same bank as I do, 'coz I'm tolerant like that....

McDuck|6.17.09 @ 8:01AM|#

"The rest of us would like to live in, and contribute to, a functional society."

Enjoy! Tell me how that works for you!

|6.17.09 @ 8:41AM|#

The rest of us would like to live in, and contribute to, a functional society.

So would I, which is why I want people to ignore The Krug.

Kipling|6.17.09 @ 9:23AM|#

"We never pay any one Dane-geld,
No matter how trifling the cost,
For the end of that game is oppression and shame,
And the nation that plays it is lost!"

|6.17.09 @ 12:48PM|#

"Whereas your case for ignoring the work of a widely-respected, Nobel-prize winning economics expert is that someone with a B.S. in English,"

Lest we forget, Schaeles got shitcanned from the FT for a column praising GWB for the heckuva job he was doing responding to Katrina. The FT, not being a fan of having its op-ed column being cribs from RNC talking points memos, thought otherwise.

"whose understanding of economics has been shown time and time again to be, at best, sub-standard, and whose work has been thoroughly and completely debunked, disagrees with him."

Here's a neat trick: try to find GDP in the index of Schales' book. I'm sure it was just a oversight by Dear Amity. I'm sure the reason why she doesn't talk about the GDP numbers under FDR from 1933-1941 is because she just forgot, and not because the 8% average annualized GDP growth rate from 1933-1941 is better than any GOP president, including St. Ronnie, ever achieved in any single year since 1930 (which is as far back as the BEA GDP statistics go).

What fucking use is a history of the Great Depression if doesn't talk quantitatively about GDP growth? This is the book you folks are fetishizing. This is the author this magazine is saying should be considered more credible than a Nobel Laureate and stellar economist.

You sure do pick your experts well.

|6.17.09 @ 3:31PM|#

Friedman was right about some things (the relationship of liberty to prosperity, for example), and tragically wrong about other things (like his beliefs that trade deficits don't matter, or that we could keep giving inflated paper dollars for chinese goods forever with no adverse consequences.)

Nevertheless, Friedman's reputation derives from his work, not from the prize. It's rather like the Nobel peace prizes, which have been given to people deserving of recognition, as well as Machiavellian creeps like Kissinger or murdering thugs like Arafat.

-jcr

|6.17.09 @ 3:35PM|#

when someone tells me that libertarian economist F.A. von Hayek won the Nobel Prize in Economics

Hayeks' reputation is in no way enhanced by that prize. His stature derives from his many correct predictions, one the biggest being that the Soviet Union would collapse due to the impossibility of efficiency in a centrally-planned economy.

-jcr

seanf|6.17.09 @ 3:35PM|#

wow, what happened to Reason?

There used to signs of intelligent life here. Now, all that's left appears to be dogmatic hacks.

And Jesus, Tim, how petty can you get?! Shameful. And instead of apologizing, you try to defend your crap.

Whatever happened to Radley and co.?

Sean W. Malone|6.17.09 @ 4:17PM|#

What crap is that exactly seanf?


For the bazillionth time, we've all showed our work around here. Time to show yours.

Sean W. Malone|6.17.09 @ 4:27PM|#

I do have one question for Tim Cavanaugh though (assuming you're still reading) - Why link to Amity Shlaes and not Murray Rothbard's "America's Great Depression", or Robert P. Murphy's "Politically Incorrect Guide to the Great Depression & New Deal"?

It seems like those two (which say a lot of the same things as Shlaes' book but were written by much more hardcore academics) would have deflected some of the idiot ad homs and those comments like that of "Sock Puppet" above.

|6.17.09 @ 4:40PM|#

"His stature derives from his many correct predictions, one the biggest being that the Soviet Union would collapse due to the impossibility of efficiency in a centrally-planned economy."

His prediction about the Atlee government's social democratic program leading to dictatorship didn't work out so well though, eh?

|6.17.09 @ 4:58PM|#

"I do have one question for Tim Cavanaugh though (assuming you're still reading) - Why link to Amity Shlaes and not Murray Rothbard's "America's Great Depression"'

Rothbard's book focuses on 1929-1933, it's a critique of Hoover, and doesn't address Roosevelt's programs in any detail.

Sean W. Malone|6.17.09 @ 5:25PM|#

Yes Sock Puppet, I know... I've read it... It does, however, cover how the Depression started, and addresses issues related to government policy (much like those of Bush & Obama) exacerbating crises.

|6.17.09 @ 6:52PM|#

"It does, however, cover how the Depression started, and addresses issues related to government policy (much like those of Bush & Obama) exacerbating crises"

Yeah, but it doesn't cover the same ground as Schlaes' opus. So citing it wouldn't help Tim: it's not salient to Krugman's argument re. the New Deal. It doesn't talk about the GDP growth from 1933-1941 at all, frex.

Sean W. Malone|6.17.09 @ 7:04PM|#

Did you notice how I mentioned both that book AND Robert Murphy's? You did right?

Sean W. Malone|6.17.09 @ 7:18PM|#

The reason I mentioned both, btw, was because it's just as important to understand that Hoover & FDR basically did the same things, and that if Hoover had actually done what Krugman says he did regularly, we might have never experienced the 10 years of malaise that followed, as it is to understand why the depression continued throughout the 30s. Kind of key to note what the Federal Reserve/fractional banking system was up to pre 1929, and what the government's response was, starting with Hoover.

|6.17.09 @ 8:50PM|#

Tim, per your request re: Amity Schlaes debunked, here's Jonathan Chait:

http://www.tnr.com/story_print.html?id=82c53220-7594-4ece-a136-a3b2f54243ec

"Now here is the extremely strange thing about The Forgotten Man: it does not really argue that the New Deal failed. In fact, Shlaes does not make any actual argument at all, though she does venture some bold claims, which she both fails to substantiate and contradicts elsewhere. Reviewing her book in The New York Times, David Leonhardt noted that Shlaes makes her arguments "mostly by implication." This is putting it kindly. Shlaes introduces the book by asserting her thesis, but she barely even tries to demonstrate it. Instead she chooses to fill nearly four hundred pages with stories that mostly go nowhere. The experience of reading The Forgotten Man is more like talking to an old person who lived through the Depression than it is like reading an actual history of the Depression. Major events get cursory treatment while minor characters, such as an idiosyncratic black preacher or the founder of Alcoholics Anonymous, receive lengthy portraits. Having been prepared for a revisionist argument against the New Deal, I kept wondering if I had picked up the wrong book."

Sean W. Malone|6.17.09 @ 11:29PM|#

You seriously used a book review as a "debunking"? That's it? Ok... Well, wow, I gotta say. Hard-hitting stuff you quoted there.

Lame.

Also... Debunk Robert Murphy's "PIG: Great Depression & New Deal" instead. That'll be more fun. You can just start with this radio interview.

McLieberman|6.18.09 @ 12:14AM|#

Here's the Krugman in the past:

The Conscience of a Liberal: New York Times Columnist Paul Krugman on Healthcare, Tax Cuts, Social Security, the Mortgage Crisis and Alan Greenspan

http://www.democracynow.org/2007/10/17/the_conscience_of_a_liberal_new

Another Krugman FAIL:

Krugman in 2002: Greenspan Needs to Create a Housing Bubble
http://freethemarketman.wordpress.com/2009/06/16/krugman-in-2002-greenspan-needs-to-create-a-housing-bubble/

Krugman = FAIL
Krugman = FAIL
Krugman = FAIL

|6.18.09 @ 3:20AM|#

"Here's the Krugman in the past:"

"Krugman = FAIL
Krugman = FAIL
Krugman = FAIL"

Well, rather that citing columns from Krugman back in 2001 in the middle of the dot-bust, let's look at more recent work, eh? Here's Krugman in 2005: http://www.pkarchive.org/column/081205.html

If you read it, it's pretty fucking prescient. To the point that if you're used it as a basis for whether or not to invest in real estate, it'd have made or saved you a lot of money. And he was calling the bubble before most economic commentators.

Excerpts:

Does anything else in the U.S. economy rival housing as a source of job creation?... . Given reasonable estimates of the effect of tax cuts on spending, however, they were probably a smaller force for job creation than the military buildup, and dwarfed by the housing boom.

So it's an economy driven by real estate. What's wrong with that?

One answer is that it has been a pretty disappointing recovery. ...

Still, the economy is expanding. But because that expansion depends so much on real estate - without the housing boom, the economic picture would look dismal indeed - you have to wonder how much to trust it.
[snip]

I've written before about the reasons to believe that current house prices in much of the country represent a bubble. When that bubble begins to deflate, so will housing-related employment.

Beyond that, there's the disturbing point that we're paying for the housing boom (and the military buildup and tax cuts) with money borrowed from foreigners.
[snip]

How solid, then, is America's economic recovery? The British have a phrase that applies: "safe as houses." Our economy is as safe as houses. Unfortunately, given current prices and our dependence on foreign lenders, houses aren't safe at all.

|6.18.09 @ 3:23AM|#

"The reason I mentioned both, btw, was because it's just as important to understand that Hoover & FDR basically did the same things,"

Except for taking us off the gold standard, nationalizing banks, setting up the FDIC, and dumping balancing the budget as a policy goal. And that's just for starters.

|6.18.09 @ 3:28AM|#

"You seriously used a book review as a "debunking"? That's it? Ok... Well, wow, I gotta say. Hard-hitting stuff you quoted there."

Exactly what's wrong with using a book review as a debunking? I don't see anything wrong in what Chait says about Schlaes' book: she *doesn't* produce substantive evidence to support her thesis.

That's not really surprising: she was without doubt the crappiest, most banal columnist at the FT during her tenure there, and it was a relief when they replaced her with Chris Caldwell to give the U.S. conservative perspective, who knew how to write and argue well.

Sean W. Malone|6.18.09 @ 5:27AM|#

FDR didn't take us off the gold standard, first off, though damn he sure tried. And FDR was to Hoover what Obama is to Bush - the same basic ideas magnified X100

But on Krugman...

First off, suggesting that you would find a better explanation of what Krugman was advocating in 2002 by reviewing his statements from 2005 is simply asinine. If you want to know what he was referring to and what he was advocating, then you'd want to read more of his work in 2001 through perhaps 2003 when it was actually applicable to policy at the time... but whatever, you want to play that game, I have one from 2006 for ya (courtesy jsh):

"Krugman was asked: Did he [Greenspan] do the right thing - acting morally by engineering a housing boom, more as a bridge loan, until something else showed up at the horizon to shore up the economy - because he didn't have a choice, or did he undertake a path of mere political expediency?

Krugman replied: As Paul McCulley of PIMCO remarked when the tech boom crashed, Greenspan needed to create a housing bubble to replace the technology bubble. So within limits he may have done the right thing. But by late 2004 he should have seen the danger signs and warned against what was happening; such a warning could have taken the place of rising interest rates. He didn't, and he left a terrible mess for Ben Bernanke.

By 2004, Greenspan should have "warned" people of the risks, but otherwise, Krugman, as late as 2006 lays it right out in the open for ya Socky... The bubble was a good idea.

I don't really get why you continue to try to defend Krugman. The man applied Bastiat's Broken Window fallacy to the Trade Towers falling 3 days after 9/11... That right there should be enough to indict him as a horrendous economist all by itself. Krugman is nothing but a partisan hack. And worse, he's a smug, pretentious one at that. His logic is painful, his modus operandi is ham-handed revisionism, he clearly recognizes that the Austrian Business Cycle Theory has merits (since he recognized in 2002 and later that the Federal reserve can use interest rates & monetary policy to inflate or deflate bubbles) yet he regularly derides the theory as a "hangover" theory in his columns.

What more do you need? Why do you have such a desire to defend such an incompetent, yet self-righteous douche?


You are also clearly losing this specific battle. Krugman, without a doubt, advocated that Greenspan pump up a bubble in housing. There is article after article and quote after quote demonstrating that so clearly it's absurd. And no, I'm not blaming Krugman - I'm blaming Greenspan & Bush fundamentally, Krugman was and is a hack columnist and didn't actually set the policy... but he sure as hell thought it was a good idea at the time. Which makes him a fucking retard.

It's also exactly what I'd expect from any Keynesian since a perpetual series of bubbles is basically the name of the game.


I just don't see what you're adding to this. And frankly I've never read Shlaes' book and I couldn't give a shit about it or her. She may not have produced substantive evidence, but a book review is a pitiful "debunking" tool... Especially when the quote from the review itself contained 0 facts. Regardless, go debunk Murphy, Rothbard, Higgs, Tom Woods, DiLorenzo, & Walter Block. I doubt very much you'll succeed.

But seriously... what do you get out of towing the Krugman party-line here?

|6.18.09 @ 11:03AM|#

"FDR didn't take us off the gold standard, first off, though damn he sure tried."

Well, I'd read Executive Order 6102 (forcing private sales of gold bullion to the gubmint) and abrogating the gold clause in contracts as essentially taking us off the gold standard, with Nixon just putting the stake in its undead heart later. But hey, if you want to believe that Just Like Hoover did, feel free.

Let's ask Amity Schlaes opinion, eh?

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/30/AR2008123002660.html: "But other policies were more arbitrary. Using emergency powers, FDR yanked the country off the gold standard."

"You are also clearly losing this specific battle."

In your own mind, I suppose.

"Krugman, without a doubt, advocated that Greenspan pump up a bubble in housing."

So why was he warning about a housing bubble in 2004 and 2005? Can you show me an economic commentator with the standing of Krugman warning about the housing bubble prior to 2005? Would you agree that had the housing bubble been popped in 2005, when the volume of subprime-mortgage backed securities was an order of magnitude smaller than at the peak of the bubble and housing prices about 2/3s of their peak (i.e. roughly the value they have now), the consequences to the economy would have been much smaller?

Do you understand the difference between saying in 2001 [paraphrasing]: "As most of the rest of the economy is moribund, the only part of the economy that will respond to interest rate stimulus is housing", and in 2004 & 2005 saying "right, the asset-price inflation in housing prices is a risk to the economy: we need to slow things down there".

"I just don't see what you're adding to this. And frankly I've never read Shlaes' book and I couldn't give a shit about it or her. She may not have produced substantive evidence, but a book review is a pitiful "debunking" tool"

I see. You haven't read the book, or even picked it up, but feel free to opine that a book review is insufficient to show that the book is weak. Jesus wept.

"Regardless, go debunk Murphy, Rothbard, Higgs, Tom Woods, DiLorenzo, & Walter Block. I doubt very much you'll succeed."

I've no inclination. My first economics teacher in college was Austrian school. I topped the class, but argued with him a lot, but formed the opinion that Austrians (1) were incapable of fairly considering other economic schools thought (unlike Monetarists and Keynesians who I had later as teachers) (2) were anti-empirical in their thinking [they really couldn't hack economic data], and (3) had belief in what was primarily important in economic policy was fixated on things that are essentially abstractions two or three steps removed from improving the well-being of those living in the economy, and (4) were really narrowly read in economics [in the same way Marxists are], and hence (5) don't even have the vocabulary and tools to form an economic argument, instead resorting to invocing selected gurus, whose arguments they can't actually articulate. Subsequent encounters with Austrian school followers like your good self have reinforced those initial impressions.

Sean W. Malone|6.18.09 @ 1:57PM|#

Ironically, yes, I can point to about a dozen people from the Austrian school who were warning about the bubble prior to 2005. And of course, that's actually consistent with their beliefs that the Fed tampering with interest rates and pumping new money into circulation is a bad thing... Whereas, of course Krugman's Keynesian position would naturally be that it's the right thing to do.

As for FDR, as I said "damn, he sure tried" - meaning, he did a lot, i.e. Executive Order 6102 to destroy it, but I'm not exactly sure how that's A. relevant and B. refutes anything I've said... Way to only read the first half of my sentence and overreact though.


You are one of the more willfully obtuse partisan hacks that's come across these boards lately man. It's kind of impressive. It's like you're defending Krugman just for the sake of defending him even if it completely betrays the essence of his Keynesian world-view... To the extent that now you're trying to pretend the Keynesian position is more what the Austrian position is.... Silly.

You've managed to ignore about 99% of what Krugman has said that was clearly advocating in favor of the very policies that created a bubble...

But the real joke of all your posts, and especially the last one here is that - whether or not he thought it was a "good" idea (which obviously dozens of corroborating sources show that he did regardless of your red herring 2005 quote) - Krugman is still admitting that the Austrian Business Cycle Theory is correct in it's conception of how the central bank can and does create artificial bubbles!


Here we have Krugman, on record, saying that (now again, omitting whether or not he's "advocating" this) Greenspan had it within his power to create a bubble economy. This is what the Austrians have obviously been saying for 100 years.


As for your further ad homs on members of the Austrian school... Bravo sir. Bravo...


I will address them though:

(1) were incapable of fairly considering other economic schools thought (unlike Monetarists and Keynesians who I had later as teachers)

See: #2

Sadly, it seems clear that you can't figure out how deeper, philosophical differences in methodology might lead the Austrians to think that everyone else is doing it wrong. Their record of accuracy, and their actually fucking consistent logic is far more compelling than the contradictory nonsense you've offered up here so far however.

(2) were anti-empirical in their thinking [they really couldn't hack economic data]

Sure are. But perhaps your very epistemological conception of how to deal with sciences which study human behavior is completely wrong. My own academic & professional background is more about reading and understanding how to deal with human issues than anything else, and I've spent the majority of my life actively and closely studying and making a living off of my ability to understand human behavior and laboratory experiments don't mean jack shit. Only individuals make decisions and have values. Aggregate groups do not. Unfortunately for you, that means your econometric models need to have 300,000,000 variables instead of just the three or four that more simplistic minds may be more comfortable with.

(3) had belief in what was primarily important in economic policy was fixated on things that are essentially abstractions two or three steps removed from improving the well-being of those living in the economy

Citation needed buddy. When Krugman and his ilk advocate for basic economic fallacies & policies that clearly and unequivocally hurt the poor through limits on wages or prices, tariffs, controlling the choices they can make or, yes, consistently recommending inflationary & bubble-creating policies, what the fuck are you talking about?

You really can't see the forest for the trees, eh? By focusing on the secondary & tertiary effects policies like your boy Krugman advocates, the Austrians (and often the Chicagoans) are probably the only ones who are really doing things for real people through advocacy of liberty, sound money & limiting the state to a level where it's possible for real capital development to take place.

(4) were really narrowly read in economics [in the same way Marxists are]

Yeah... Another citation needed please? Let's just a review a couple prominent modern Austrian school guys, shall we?

1. Bob Murphy - Ph.D from NYU (I also went to NYU for graduate school though not in Econ, and know first hand the quality of place it is)
2. Robert Higgs - Ph.D from John Hopkins, visiting professor at Oxford, Stanford & the University of Econ at Prague
3. Murray Rothbard - Ph.D from Columbia... Taught everywhere, wrote dozens of books.

Ok... I thought I'd use more than three, but why bother. WTF buddy... These are the kinds of guys who are narrowly read and "can't hack the math", huh? Fuck you too.

As for me, I have a brain and the skill of being able to parse bad logic. And I started out far more in the Chicago camp until I started reading the Austrians, and realized their arguments don't have the gaping flaws in reasoning I hear from most professional economists day in & day out.

(5) don't even have the vocabulary and tools to form an economic argument, instead resorting to invocing selected gurus, whose arguments they can't actually articulate.

So I think you, again need to See: #2.

Perhaps when you actually go back and ask yourself whether or not the premise by which you view empirical positivism as the "right" method to use in Economic study then you'll understand why the Austrians use a different (older) vocabulary. Until then, it seems you will fundamentally fail to understand the basics of the school of thought and that's your failing - and not theirs my friend.


Also, I might note, that it's the Austrians who are in the minority, which as happens often when you are in the minority philosophy in academia, you actually have to be more rigorous and know your subject MORE than the people in the mainstream simply in order to survive the system.


But whatever buddy, it's been a nice chat - great to see that Krugman's supporters are as thick as he is and will follow his every word, regardless of whether or not it's self-contradictory and stupid, and when they hilariously make the case for the Austrians who you so seem to despise. Good times.

Sean W. Malone|6.18.09 @ 2:53PM|#

And by the by... I could tell there was a bubble in housing in 2004-5. Predicting such a thing accurately is something that to my knowledge none of the Austrians got wrong, many of the CATO/Chicago people recognized and frankly, it's just embarrassing that anyone didn't recognize it...

And who were those people? Oh yeah, neo-classical Keynesians & London school types.

As for Krugman, it's becoming clearer and clearer that he just says a little bit of everything and just hopes a bit of it sticks, but his Keynesian religion has had him caught with his pants around his ankles a few too many times. No one should take him seriously.

|6.19.09 @ 2:08AM|#

"As for FDR, as I said "damn, he sure tried" - meaning, he did a lot, i.e. Executive Order 6102 to destroy it, but I'm not exactly sure how that's A. relevant and B. refutes anything I've said"

Going by what Barry Eichengreen says. If he says that FDR abandoned the Gold Standard (http://books.google.com/books?id=Qk1flhynCD8C&source=gbs_navlinks_s, p337), it's good enough for me.

Sock Puppet of the Great Satan|6.19.09 @ 2:12AM|#

Goddamn, Reason's comment submission form ate two long replies I took over half an hour to compose. I'm pissed.

So, sorry that my answers to you above didn't appear, but teh internets ated them.

|6.19.09 @ 10:23AM|#

"As for Krugman, it's becoming clearer and clearer that he just says a little bit of everything and just hopes a bit of it sticks"

So, you think that one's perscriptions for the economy should be invariant, and not change with the change in the economy between 2001 and 2005?

Sean W. Malone|6.19.09 @ 12:53PM|#

Oh for fuck's sake Socky, this isn't rocket science here... if Krugman was advocating for something in 2001, & 2002 - you can't use a quote from 2005 to pretend he *WASN'T* saying what he was saying in 2002. Now, when things got worse in 2005 and he finally starts noticing the problem, it's disingenuous at best (and given Krugman's history on this front, we should not be assuming "the best" here) to go back after the fact and try to pretend he didn't say what he said.

OF COURSE if the situation changes, then maybe you want to change your short-term recommendations. But every once in a while owning up to the fact that your earlier recommendations were implemented and resulted in the problems you're now worried about would be nice. Not only nice, it would be expected of anyone who wanted to be taken seriously as an honest intellectual by people who aren't sycophantic douchebags.

Now, it's not really in Krugman's interest to do that cause if he didn't constantly make these ex post facto revisions on his position and try to convince willing fools like yourself to believe that he said something else, he might not have a job anymore. And he certainly wouldn't have the sycophants which he seems to adore.


And that's what I was referring to... Not that "OMG, Krugman in 2005 was saying different stuff than he was saying in 2002 because the circumstances had changed", but "OMG, Krugman 2009 denies ever having been Krugman 2002, what a cock!"


If Krugman was legitimately changing his mind, or saying, "Circumstances have changed, and though I advocated X before, the consequences are such that it's time to move to Y", then that would be respectable and consistent.
But instead:

Krugman 2001 says,

"We need X NOW!"

Krugman 2002 says,

"We need MORE X! Greenspan, you pussy, you don't have the balls to do X and we need it now more than ever!"

Krugman 2004 says,

"Wow, I was shocked that Greenspan was actually able to do X, good for him"

Krugman 2005/06 says,

"There may be some consequences coming from X, but X was necessary"

And now... Krugman says,

"What are you talking about, I never said do X at all! If you believe I said to do X, you're a buffoon and a conspiracy nut and everyone should call you an idiot."

Again, you're a big fan of the canards, red herrings & straw men Socky, but you're still failing to grasp the salient points. Also - I love how each continuation of this little exchange you pick the least significant part of what I've said and re-focus to that... Rather than attempting a rebuttal of my point that Krugman is implicitly recognizing the validity of the ABCT, or trying to unjam your foot from your mouth ad hom-ing the austrian school... you'd rather pretend I said something totally different about something minimally important. Well done.

I have to go write an article and then get to being productive with my weekend now.

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wholesale cigarettes|10.8.09 @ 5:12AM|#

Oh for fuck's sake Socky, this isn't rocket science here... if Krugman was advocating for something in 2001, & 2002 - you can't use a quote from 2005 to pretend he *WASN'T* saying what he was saying in 2002. Now, when things got worse in 2005 and he finally starts noticing the problem, it's disingenuous at best (and given Krugman's history on this front, we should not be assuming "the best" here) to go back after the fact and try to pretend he didn't say what he said.

OF COURSE if the situation changes, then maybe you want to change your short-term recommendations. But every once in a while owning up to the fact that your earlier recommendations were implemented and resulted in the problems you're now worried about would be nice. Not only nice, it would be expected of anyone who wanted to be taken seriously as an honest intellectual by people who aren't sycophantic douchebags.

Now, it's not really in Krugman's interest to do that cause if he didn't constantly make these ex post facto revisions on his position and try to convince willing fools like yourself to believe that he said something else, he might not have a job anymore. And he certainly wouldn't have the sycophants which he seems to adore.

And that's what I was referring to... Not that "OMG, Krugman in 2005 was saying different stuff than he was saying in 2002 because the circumstances had changed", but "OMG, Krugman 2009 denies ever having been Krugman 2002, what a cock!"

If Krugman was legitimately changing his mind, or saying, "Circumstances have changed, and though I advocated X before, the consequences are such that it's time to move to Y", then that would be respectable and consistent.
But instead:

Krugman 2001 says,

"We need X NOW!"

Krugman 2002 says,

"We need MORE X! Greenspan, you pussy, you don't have the balls to do X and we need it now more than ever!"

Krugman 2004 says,

"Wow, I was shocked that Greenspan was actually able to do X, good for him"

Krugman 2005/06 says,

"There may be some consequences coming from X, but X was necessary"

And now... Krugman says,

"What are you talking about, I never said do X at all! If you believe I said to do X, you're a buffoon and a conspiracy nut and everyone should call you an idiot."

Again, you're a big fan of the canards, red herrings & straw men Socky, but you're still failing to grasp the salient points. Also - I love how each continuation of this little exchange you pick the least significant part of what I've said and re-focus to that... Rather than attempting a rebuttal of my point that Krugman is implicitly recognizing the validity of the ABCT, cheap cigarettesor trying to unjam your foot from your mouth ad hom-ing the austrian school... you'd rather pretend I said something totally different about something minimally important. Well done.

I have to go write an article and then get to being productive with my weekend now.

christian louboutin shoes|10.8.09 @ 5:14AM|#

"FDR didn't take us off the gold standard, first off, though damn he sure tried."

Well, I'd read Executive Order 6102 (forcing private sales of gold bullion to the gubmint) and abrogating the gold clause in contracts as essentially taking us off the gold standard, with Nixon just putting the stake in its undead heart later. But hey, if you want to believe that Just Like Hoover did, feel free.

Let's ask Amity Schlaes opinion, eh?

http://www.washingtonpost.com/.....2660.html: "But other policies were more arbitrary. Usingjimmy choo shoes emergency powers, FDR yanked the country off the gold standard."

"You are also clearly losing this specific battle."

In your own mind, I suppose.

"Krugman, without a doubt, advocated that Greenspan pump up a bubble in housing."

So why was he warning about a housing bubble in 2004 and 2005? Can you show me an economic commentator with the standing of Krugman warning about the housing bubble prior to 2005? Would you agree that had the housing bubble been popped in 2005, when the volume of subprime-mortgage backed securities was an order of magnitude smaller than at the peak of the bubble and housing prices about 2/3s of their peak (i.e. roughly the value they have now), the consequences to the economy would have been much smaller?

Do you understand the difference between saying in 2001 [paraphrasing]: "As most of the rest of the economy is moribund, the only part of the economy that will respond to interest rate stimulus is housing", and in 2004 & 2005 saying "right, the asset-price inflation in housing prices is a risk to the economy: we need to slow things down there".

"I just don't see what you're adding to this. And frankly I've never read Shlaes' book and I couldn't give a shit about it or her. She may not have produced substantive evidence, but a book review is a pitiful "debunking" tool"

I see. You haven't read the book, or even picked it up, but feel free to opine that a book review is insufficient to show that the book is weak. Jesus wept.

"Regardless, go debunk Murphy, Rothbard, Higgs, Tom Woods, DiLorenzo, & Walter Block. I doubt very much you'll succeed."

I've no inclination. My first economics teacher in college was Austrian school. I topped the class, but argued with him a lot, but formed the opinion that Austrians (1) were incapable of fairly considering other economic schools thought (unlike Monetarists and Keynesians who I had later as teachers) (2) were anti-empirical in their thinking [they really couldn't hack economic data], and (3) had belief in what was primarily important in economic policy was fixated on things that are essentially abstractions two or three steps removed from improving the well-being of those living in the economy, and (4) were really narrowly read in economics [in the same way Marxists are], and hence (5) don't even have the vocabulary and tools to form an economic argument, instead resorting to invocing selected gurus, whose arguments they can't actually articulate. Subsequent encounters with Austrian school followers like your good self have reinforced those initial impressions.