Krugman on Detroit: Move Along, Folks; Nothing to See Here!

Things like this just happen. Sometimes for several city blocks!Credit: dreaming_of_rivers / Foter / CC BY-NCWe know economist Paul Krugman has taken to avoiding reading competing economic and political theories, but has he given up all reading altogether in order to perhaps avoid accidental exposure? In Sunday’s New York Times, Krugman tackles the Detroit bankruptcy and determines that the important thing is that we stop comparing America’s various fiscal problems with Greece’s:

As you may recall, a few years ago Greece plunged into fiscal crisis. This was a bad thing but should have had limited effects on the rest of the world; the Greek economy is, after all, quite small (actually, about one and a half times as big as the economy of metropolitan Detroit). Unfortunately, many politicians and policy makers used the Greek crisis to hijack the debate, changing the subject from job creation to fiscal rectitude.

Now, the truth was that Greece was a very special case, holding few if any lessons for wider economic policy — and even in Greece, budget deficits were only one piece of the problem. Nonetheless, for a while policy discourse across the Western world was completely “Hellenized” — everyone was Greece, or was about to turn into Greece. And this intellectual wrong turn did huge damage to prospects for economic recovery.

What made Greece such a very special case? Why is it so different from, say, Spain’s economic situation? Or even Detroit’s? Why is an economist saying there’s little to learn about economic policy from a failing state? All of this is simply asserted.

Krugman, amazingly, pivots to argue that Detroit’s budgets and pension obligations are not part of the problem:

Never mind the repeated failure of the predicted U.S. fiscal crisis to materialize, the sharp fall in predicted U.S. debt levels and the way much of the research the scolds used to justify their scolding has been discredited; let’s obsess about municipal budgets and public pension obligations!

Or, actually, let’s not.

Are Detroit’s woes the leading edge of a national public pensions crisis? No. State and local pensions are indeed underfunded, with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal.

What a ludicrous way of looking at the pension crisis, and obviously deliberately so. Cities are actually in the real world going bankrupt due to these pension commitments. It is not an imaginary problem and most importantly, not unique to Detroit. But you can try to present it as an imaginary problem by comparing an individual city’s budget to the size of the entire country’s economy with no context or explanation why it matters. Well, it matters to Krugman, because no doubt he sees the answer to the problem as “bailout,” which is his answer to everything. What do you mean San Bernardino and Stockton can’t pay the bills? We’ve got all this money! That the size of the pension commitments is growing is not addressed at all. “Many governments are taking steps to address the shortfall.” Yes, they’re filing for bankruptcy. Did he even look at a list of Detroit’s creditors?

But no, Krugman knows why Detroit failed. It’s because of the free market! Of course, it is:

So was Detroit just uniquely irresponsible? Again, no. Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.

What? Market forces have victims? Of course they do. After all, free-market enthusiasts love to quote Joseph Schumpeter about the inevitability of “creative destruction” — but they and their audiences invariably picture themselves as being the creative destroyers, not the creatively destroyed. Well, guess what: Someone always ends up being the modern equivalent of a buggy-whip producer, and it might be you.

Sometimes the losers from economic change are individuals whose skills have become redundant; sometimes they’re companies, serving a market niche that no longer exists; and sometimes they’re whole cities that lose their place in the economic ecosystem. Decline happens.

Y’all, it just happened! There are no policy issues here. Pay no attention to Detroit’s incredibly high tax rate! He goes on to blame “job sprawl” moving folks away from Detroit’s city center without noting anything about Detroit’s massive physical size or, you know, actual reasons that push businesses out of the city. As Reason’s own Shikha Dalmia noted, Detroit chose bureaucracy over entrepreneurial spirit, shutting down 1,500 “illegal” businesses that weren’t complying with city regulations. Detroit’s leadership did not want to provide citizens with the kind of freedom the city needs to recover, and so it did not. You can only be a “victim” of Schumpeter’s idea of creative destruction if you refuse to or aren’t allowed to adapt.

Krugman’s conclusion:

The important thing is not to let the discussion get hijacked, Greek-style. There are influential people out there who would like you to believe that Detroit’s demise is fundamentally a tale of fiscal irresponsibility and/or greedy public employees. It isn’t. For the most part, it’s just one of those things that happens now and then in an ever-changing economy.

“Shit happens” is apparently valid economic theory. It’s also undoubtedly the only argument you could use if you want to argue that Detroit should get a federal bailout.

Oh, and a postscript: Greece’s latest bailout from international lenders is tied to a commitment to reduce the size of its public employee work force. No, certainly, there’s no comparison.

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  • Rrabbit||

    Paul Krugnuts shows how little understanding is necessary to get a Nobel Prize in Economics

  • Anders||

    Look at who they give the Nobel Peace Prize to.

    Terrorists, tyrants, and that dude who claimed he could have been Trayvon's Daddy.

  • some guy||

    I'm convinced that Paul Krugman, the economist, had an evil twin brother, who we'll call "Raul". Paul's parents kept Raul locked up for his whole childhood. Paul did the same after their parents passed away. As Paul's career took off, Raul's envy grew and grew. By the time Paul had won his Nobel Prize he had grown complacent. One night he forgot to check the lock on Raul's cage after the evening feeding. That was the end of Paul Krugman, the economist and the beginning of "Paul" Krugman the politico-economic commentator.

  • SweatingGin||

    Hibbert: You know, isn't it interesting how the left -- or sinister -- twin is invariably the evil one. I had this theory that... Wait a minute. Hugo's scar is on the wrong side. He couldn't have been the evil left twin. That means the evil twin is, and always has been... Bart!

  • some guy||

    Don't look so surprised.

  • Almanian!||

    Wow. WOW. This is even more retarded than normal for Krugnuts.

    Wow....

    *shakes head*

  • Fluffy||

    It's pretty clear that Krugman's first and last interest are payments in the present to leftist constituencies, and he believes those payments in the present should always continue until the last possible moment.

    What he refuses to acknowledge about Greece is that Greece's fiscal situation disintegrated in a matter of months based on extraordinarily minor moves (historically speaking) in interest rates. I'm sure that on the very last day before the Greek collapse began, Krugman would have told you that everything was fine. "Crisis? What crisis? We can still pay for everything! You evil mean spirited libertarians just want people to suffer!" That is what he will say right up until the end, because fuck the future, union workers are hungry now.

  • John||

    That is because progs like Kruginuts no long have a coherent ideology. They are actually more irrational than the old Communists. The Communists understood that communism had to be world wide to work. That if you had it in one city or one country, the capitalists would exploit it out of existence. Taking from the productive and giving back to each according to need, only works if the productive have no where to go and can be transformed into a new soviet man who works for the collective. If the productive and the exploiters can leave the country, you suffer brain drain and you are left with just the unproductive and the sick. So you have to either build a wall or have the entire world be socialist.

    1989 deprived modern progs of the ability to advocate for world wide communism. But the original communist understanding of the need for communism to be world wide to work is still true, progs just can't admit it. So they are left having to pretend that their policies are not what cause productive people to leave places like Detroit.

  • Rrabbit||

    World wide communism would not "work" either.

  • Lord Humungus||

    c'mon, it just needs one more chance to work!

  • John||

    No shit. The point is, even communists admitted you couldn't do it in one place.

  • Rrabbit||

    They communists were simply trying to keep their own population quiet. The "brain drain" was mainly a result of basic economics; the communist countries had much higher wages for physical labor than for scientists and doctors.

  • PapayaSF||

    Depends on the communists. Part of the Trotsky/Stalin split was about "permanent revolution" vs. "Socialism in one country."

  • db||

    I think it's clear that Krugman's first and last interests are payments in the present to Krugman's bank accounts from leftist interests.

  • Caleb Turberville||

    OT: http://m.huffpost.com/us/entry.....lp00000003 But Ruth Bader Ginsburg in 1953. YOWZA!

  • Outlaw||

    Holy shit.

  • John||

    She was cute.

  • Killazontherun||

    Cute? I'd slit my own side and offer my liver to a 22 year old Bader. She was incredible.

  • ||

    Jesus bro, get out more. I see hotter women than that every time I go to the grocery store.

  • Hyperion||

    Now you see what 60 years of ugly leftist thought pattern does to someone.

  • MJGreen||

    Scroll down to find a picture of present-day Liz Warren squeezing out a turd on stage.

  • Hugh Akston||

    Well, it matters to Krugman, because no doubt he sees the answer to the problem as “bailout,” which is his answer to everything.

    When your only tool is a hammer...

  • ||

    Ahhh...

    Speechless.

    *shakes head, walks away dumbfounded*

  • albo||

    It's a place that has one-party rule consisting of politicians who are dependent upon public employee unions for their election. It's a recipe for disaster for Detroit as it is for the place I'm sitting at right now, Harrisburg, PA.

    (Did you hear? We auctioned off the $8 million in wild west artifacts the previous mayor had purchased to create a wild west museum. I think we'll get 40 cents on the dollar back. Which will retire 1 percent of the city's debt.)

  • ChrisO||

    When I think of the wild west, I naturally think of Harrisburg.

  • albo||

    Yeah. He was also going to build a sports museum, too.

    The mayor did get to build one museum, the National Civil War Museum.

    It's relatively appropriate: The city's 45 minutes from Gettysburg, and the town across the river was actually the furthest north the confederates skirmished.

  • Citizen Nothing||

    I can't wait for the tag sale at the Detroit Institute of the Arts.

  • Citizen Nothing||

    The National Civil War Museum in Harrisburg is actually pretty good, but touring it, I couldn't help thinking -- "so this is why they can't pick up the trash in their neighborhoods."

  • SweatingGin||

    The best part of the DIA is they just managed to pass a property tax milage on the three local counties (Wayne, Oakland, and Macomb) to pay for the DIA, with residents of those getting free admission.

    The city could have privatized the DIA years ago and made it not vulnerable to a bankruptcy, but they didn't.

    I'm betting it ends up as a slimmed down museum, and the admissions tax ends up going into the general hole of Detroit funds.

  • ||

    the town across the river was actually the furthest north the confederates skirmished.

    You live near Shrute Farms?

  • rob63||

    I really enjoyed the National Civil War Museum.

    However, as I walked around this amazing museum that was nearly empty - I counted 6 other people besides myself in the entire place - I thought to myself that only the government would build a museum in a location where obviously nobody cares about it when a mere 45 minutes away is a place full of people that passionately care about the subject.

  • Hugh Akston||

    Lucky for me that I live in California then.

  • some guy||

    Is Detroit run truly by a single party or does it have DC style "one-party rule" that is always two personality cults viciously fighting over the primary?

  • SweatingGin||

    It's all Dems. It's more or less a free-for-all. Until a few years ago, all of the city council was elected at large.

    Name recognition is the most important (so, Monica Conyers got her seat.) Dave Bing was a basketball player (and remarkably uncorrupt it seems, if a bit ineffective.)

    Kwame was the mayor that really took the corruption to a new height, though.

  • tarran||

    You know, I knew a really beautiful girl in college, who bounced some checks, and literally exclaimed "I can't be out of money, I still have checks left".

    A couple of the guys sat her down and explained how to balance a check book.

  • tarran||

    Crap, lost the last paragraph...

    Someone should do that to Krugman. Although due to his lack of sex appeal I just don't see it happening.

  • ||

    A coworker has a terrible debt problem and I was asking her what her strategy for getting out of it was. I asked her if she was using the snowball method (zero out the smallest debts first to give oneself a sense of accomplishment and give oneself the hope that one can get out of debt), or paying down the highest interest debts first (for obvious reasons). She looked at me quizzically and said "I keep hearing 'interest rates' what does that mean?" Her office mate's jaw nearly hit the desk and I spent the next hour giving a basic math lesson.

  • Night Elf Mohawk||

    "How do you not learn about interest? That's just crazy. It would be in any basic math class, wouldn't it?" -- my 12 year old when I read you post to her after asking her to define "interest."

  • ||

    My math-for-dummies class just stared blankly when the professor asked the class to define simple and compound interest. That was the point I realized I should've been less lazy and tested into a skill-level appropriate math class instead of taking the lowest one that squared away my math requirements.

  • SweatingGin||

    You should have used it as an opportunity to start a loan sharking business.

  • mr lizard||

    That reminds of being in the navy and having to constantly educate new guys about used car lot financing and rent-to-own furniture. It drove me up the wall cuz we were a non-stop broken record to the point we were sick of hearing ourselves. Well sure enough about once a year we would hear about a kid with a crappy car + 19% interest rate loan it.

  • T||

    Jesus, don't remind me. That and the "just because you have checks doesn't mean you have money" lecture.

    One snowflake got himself in trouble with his checkbook. His squad leader was on leave, so I got the job of spending payday ferrying him around so he could pay everyone he bounced checks to. He came out of the pizza delivery place and showed me a receipt for $86 dollars. I was all "How many pizaas did you buy, moron?" Turns out he bought one 6 dollar pizza. By the time they finshed submitting the check twice and tacking on fees, he was up to 86 bucks for his pizza.

  • OldMexican||

    Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.


    Yes, those market forces are like tsunamis - you never know when they will strike and make victims of unsuspecting overpaid unionized leeches.

    Now, the truth was that Greece was a very special case,


    "It totally screws my narrative, so I simply dismiss the case as 'special'"

    Why is an economist saying there's little to learn about economic policy from a failing state?


    Because said economist has made it his labor of love the incredible negation of statist economic policies having to do with economic crises.

  • ||

    the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal

    What about the other $750-odd billion in federal unfunded pensions, are they a big deal? Do you know how many years it would take for the bottom 46% of the tax base to fund these liabilities? Infinity! It's a trick question, the bottom 46% don't pay anything in federal income taxes. But it's just not a big deal.

  • ChrisO||

    Krugnuts doesn't even have to try anymore. He knows his target audience won't question anything he says.

  • albo||

    He is to left wing millenials what Howard Zinn is to Sean Penn.

  • ||

    with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal

    I realize that he's indicating that $25 billion isn't a big deal compared to a $16 trillion economy, but putting $1 trillion right above that gives some perspective. He's acknowledging that there's a pension shortfall equal to 1/16 the total economy. That seems like a big deal to me.

  • KPres||

    "But many governments are taking steps to address the shortfall."

    If so, it's only because evil Republicans agitaded so much about budget shortfalls, while the Krugmanites either wanted to sweep it under the rug hoping it would go away or screamed about children dying in the street.

  • buddhastalin||

    The government can access that $16 trillion in GDP whenever it wants, kinda like a checkbook, right? So government mismanagement to the tune of $1 trillion? No biggie!

  • PapayaSF||

    I've also read that the total pension/unfunded liability shortfall is actually more like $220 trillion.

  • Hyperion||

    I would guess that the house in that picture was built before property tax existed.

  • EDG reppin' LBC||

    Yeah. Built by German/Polish immigrants, too. Milwaukee, Chicago, Detroit, Cleveland, Cincinnati, Pittsburgh have some of the most incredible homes. With a basic level of maintenance, those homes would last 300 years. It's a goddamned shame that such beautiful design, masonry, and manpower will be left to rot in the urban hellholes of the rust belt.

  • Hyperion||

    In Baltimore, there are block after block, after block of once beautiful and occupied, stone row houses.

  • Mike M.||

    Cognitive dissonance is a real bitch, and Chony Krugnuts is suffering from it in spades.

  • ||

    "But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal."

    I think I found the problem.

    "It's no big deal" is another major favorite phrase used by the clueless.

  • Locke||

    "What difference, at this point, does it make?"

  • Raston Bot||

    But this year Bing made Pink FlamInGo-style harassment his official policy by launching Operation Compliance.

    The program seeks to cure the city's blight by shutting Detroit's 1,500 "illegal" businesses — tire shops operating from backyards, second-hand appliance stores perched in abandoned warehouses — if they fail to comply with city regulations. But worrying about blight in a city fast returning to the wild is insanity.

    Bing is just another moron in charge of Detroit.

  • ||

    They elected Tony?

  • Adam330||

    "Never mind the repeated failure of the predicted U.S. fiscal crisis to materialize,..."

    He's actually writing this in a column about the latest event in the slowly unfolding US fiscal crisis?

  • ||

    I wonder, as it really starts to unravel, if those who caused it will eventually come to the conclusion that it was their failed policies and attempt to fix them, or if they will continue in a state of denial, continuing to double-down?

    I think the answer to that question will determine the fate of the USA. If they try to fix it, there may be hope of salvaging some of it. If they double-down, we'll see a meltdown similar to Atlas Shrugged and will be required to start from scratch.

  • Tony||

    Read another book.

  • ||

    There's my answer.

  • Swiss Servator - past LTC(ret)||

    And it took only 2 minutes to get a perfect one at that.

  • Red Rocks Rockin||

  • Hyperion||

  • mr lizard||

    Wow.... Just wow. I have already observed section 8 funded white chasing to the suburbs. Meanwhile they gentrify the inner core then all those condos/townhouses go under.

  • Tony||

    Don't see why you guys should have a problem with the idea that Detroit is the victim of creative destruction in the market. Globalization killed Detroit. It was the drop in population due to the loss of jobs that started the problem, not public pensions. Now, Detroit should have had a more diversified economy, but in principle you guys should see cities going bankrupt as a natural occurrence in the marketplace.

    Of course economic realities are not the main attraction for the right-wing. Detroit, like Chicago, is a symbol in their narrative about the world. It's not the ebbs and flow of the market that occasionally cause problems: it's (black) people in their cushy government jobs.

  • John||

    The drop in population was mostly due to the complete meltdown of city services, the rise in crime, and the rise in taxes. The Dem machine, destroyed the schools, stopped protecting the populace from crime, and raised taxes and everyone who could left. There are still plenty of people in the suburbs outside of Detroit. Gross Pointe isn't going bankrupt. Detroit proper is. And that is because all of the people who could left. And they didn't all or even most of them leave because of jobs. They left because the city government was so bad, you couldn't live there anymore.

  • ||

    Dumbass shit like this is why it's obvious that Tony isn't a real person. Even the dumbest TEAM BLUE dipshit would be able to find out some of the more obvious facts here, such as the fact that Detroit has suburbs.

  • Bo Cara Esq.||

    -The drop in population was mostly due to the complete meltdown of city services, the rise in crime, and the rise in taxes.

    This is the crux. I don't think it was the employees so much as the people in charge. They ran the city terribly for a long time and it has failed. What can one expect?

  • ant1sthenes||

    But the people in charge were the public employee unions...

  • SweatingGin||

    Another thing that's really helped bring down the city is corruption. We talk a lot about corruption, and how you don't see it so out in the open in the US, mostly. In Detroit you do.

    As I always bring up, my Congressman's wife just got out of prison for taking a bribe while on the Detroit city council. The biggest thing about it? Billion dollar contract (1.2 billion, I think). How much of a bribe? $6k. 6 fucking grand (unless there was more that wasn't found).

  • ||

    but in principle you guys should see cities going bankrupt evolving as a natural occurrence in the marketplace

    FTFY

  • Bo Cara Esq.||

    -in principle you guys should see cities going bankrupt as a natural occurrence in the marketplace.

    Well, I sort of do. To the extent cities are tied to certain industries, when those industries fail the cities are going to either have to be extremely well and tightly managed or they will have to fail too. The key here is no one should bail out either.

  • Rasilio||

    Yes, just like the collapse of the whaling industry did in Boston.

    Oh wait, that's right cities do not collapse due to creative destruction because cities are diverse places where people, when given the freedom to, will start up new industries.

    There are basically 2 problems with your statement.

    First it assumes that Detroit was a victim of creative destruction, this is not in evidence because the Car Manufacturing industry in the US remains quite strong. There was no Globalization involved, the auto manufacturing did not move to Japan, it moved to South Carolina and other states with less union friendly laws.

    Second, there is no legitimate reason why the talented engineers in Detroit had to flee the city in such numbers as the local auto industry moved on, they just as easily could have been a direct competitor to Silicone Valley or the research Triangle in Durham, or they could have become the aerospace hub that Houston has become, they could have become dominant players in industrial robotics, etc. There are any number of industries that could have use the free'd up resources in Detroit (abandoned auto factories, skilled engineers and workers, etc.) as a base of operations to grow into but poor leadership spending all their time catering to the auto makers and their Unions combined with an anti business agenda on the City and State made Detroit an unattractive place to start a new business so those induistries ended up elsewhere causing the workers to relocate.

  • Adam330||

    There are actually a number of rust belt cities that have seen their way through declines in their major industries. For example, Pittsburgh is now a major health, research, and education hub. Even if it were true that the auto industry had relocated overseas, there's no reason Detroit couldn't have done similarly.

  • SweatingGin||

    Metro Detroit still isn't terrible. Oakland county boasts some of the richest zip codes in the country. Auburn Hills/Rochestor area have a substantial amount of tech (HP, GM tech center, Chrysler).

    It's just -- no one wants to live or work in the city. Why pay a 2.4% income tax for residents, and 1.2% just to work there? And not get anything for it.

    The other part is, property taxes in the city are huge. They wind up being more (in absolute terms) than you'd pay in Livonia (one of the nicer western suburbs, with, ya'know, very little crime, and city services).

    People from the suburbs mainly go to Detroit for: sports, casinos, or the Fox Theatre.

  • Rasilio||

    I was called by a recruiter about a Software Test position in Detroit just last week, he seemed surprised by the fact that I told him that it would cost an additional $20 per hour just to get me to consider moving Detroit

  • califernian||

    Only 20?

  • hotsy totsy||

    Rasilio, that is the best summary of Detroit's problems and totally refutes Krugman.

  • Michael||

    It was the drop in population due to the loss of jobs that started the problem, not public pensions.

    Not to mention a bureaucratic environment completely hostile toward anyone that might choose to pave their own way instead of seeking a job provided by someone else.

    But you knew that and just forgot to mention it, right?

  • wareagle||

    in Krugs' mind, the population drop just happened for no particular reason; folks just up and moved without cause.

  • OldMexican||

    Re: Tony,

    Don't see why you guys should have a problem with the idea that Detroit is the victim of creative destruction in the market.


    Maybe because the assertion is a classic case of "Missing the point."

    How come many other cities are NOT the victims of "creative destruction"?

    Globalization killed Detroit.


    Again, missing the point.

    It was the drop in population due to the loss of jobs that started the problem, not public pensions.


    The city asked for bankruptcy protection because of these public pensions. Denying this is the same as denying the sun is bright.

    in principle you guys should see cities going bankrupt as a natural occurrence in the marketplace.


    Not really. Cities are not businesses, they're places.

    It's not the ebbs and flow of the market that occasionally cause problems: it's (black) people in their cushy government jobs.


    Nice way to inject racism in the conversation, you race-baiter.

  • wareagle||

    what Tony fails to realize is that attept at racism is based on truth, just not the way he wants to frame it. In Detroit, black govt employees are not hard to find. That is a truism in many jurisdictions.

  • some guy||

    Don't see why you guys should have a problem with the idea that Detroit is the victim of creative destruction in the market.

    Changes in the market are only the proximate cause of creative destruction. The ultimate cause is being unwilling or unable to adapt to said changes. Detroit's government is the reason Detroit was unable to adapt to changes in the market like many other cities have been able to do over the years. So Detroit wasn't a victim of creative destruction. It was a victim of its citizens via its duly elected government.

    Now, Detroit should have had a more diversified economy, but in principle you guys should see cities going bankrupt as a natural occurrence in the marketplace.

    We do see it as a natural occurrence. We also see it as something to learn from. Instead of shrugging our shoulders and saying "Market must have done it", we actually are looking past that at the policies that caused the problem. High taxes, poor services, excessive regulation, etc. It's Krugman (and apparently you) who think there isn't much to be learned here.

  • Hawk Spitui||

    Then you have to explain why Pittsburgh, equally dependent on the steel industry and just as liberal, was just recently voted the most livable city in the US.

  • Hopfiend||

    really, you are the only one here obsessed with race. You attempt to use it as a cudgel. Nobody brought up race, you did.

    creative destruction in the marketplace is based on voluntary interactions, not predatory and coercive institutions that are used to settle scores and pay off debts.

    But persist in your ignorance. You are your only victim.

  • OneOut||

    If globalization is to blame why isn't Houston suffering the same problems that Detroit is ?

    Globalization exists in states and cities other than Detroit doesn't it ?

  • The Late P Brooks||

    "I'll get straight later, I promise. But Baby needs a fix NOW!"

  • Coach Panto||

    There's a Sopranos episode in which the gang executes a "bust-out" on a guy who owed them $50000 in gambling debt. The guy owned a sporting goods store, and the gang ordered him to buy whatever inventory he could on what credit he had left, and they simply stole the inventory and the guy declared bankruptcy, and I think later committed suicide.

    That is what Democratic government does to cities. It tempts the citizens with easy credit and overpaid union jobs and giant pensions in exchange for their vote, and the citizens take the bait and gamble on electing them. Eventually the businesses, the hosts infected by this parasitic system start to die, lose money, Dems raise taxes more, and eventually businesses quit the city. The good workers move away to where the work is, and the crappy ones stay and go on unemployment and welfare.

    Krugman refuses to see government extortion systems as having the power to kill a whole city. He has to blame capitalism or his whole egalitarian ideology and communist social life falls apart. Detroit is an Atlas Shrugged bellweather. There will be many more Detroits unless people wise up and get rid of Democrats and moderate Republican idiots like Bloomberg.

  • Coach Panto||

    Obama and Ben Bernanke are executing a massive bust-out of the whole country, with Obamacare and massive debt accumulation doing the destruction and Fed QE doing the masking of the decline by keeping housing prices inflated and buying T-bills to fund the social overspending.

    Who is John Galt? He's the CEO's of all the real companies who just saw their earnings decline. There is no recovery. We are in a socialist parasite-driven depression, and most refuse to believe it, specially propagandists like Krugman.

  • Mike M.||

    It is pretty fucking hilarious how the shrieking idiot left tell us that the markets were wildly overinflated in 2007, and then they spin around like a whirling dervish and actually expect people to believe that the even higher market levels now are fundamentally sound.

    And all because of their insane cultlike worship of some putz they think is a "Lightbringer".

  • The Late P Brooks||

    Globalization killed Detroit.

    I take it you are pretending "Detroit" = "Big Three Auto Makers".

    Shitty products and mismanagement* killed "Detroit".

    *Including agreeing to unsustainable labor contracts not related to profitably building and selling cars.

  • John||

    It didn't even kill the big three. Last I looked Ford was a profitable corporation. And GM would be too, if it had been allowed to go through bankruptcy and get out of its contracts like a normal company.

    It also wouldn't hurt if the government would get rid of CAFE standards so car companies could specialize in low mileage high margin cars rather than have to make low margin echo penalty boxes that no one wants as penance for having the nerve to make something people do.

  • EDG reppin' LBC||

    Correct.

  • The Late P Brooks||

    It's not the ebbs and flow of the market that occasionally cause problems: it's (black) people in their cushy government jobs.

    Perhaps you should consider focusing your "market" based analysis on the question of whether those cushy government jobs are a net gain or net loss for the economy as a whole.

  • The Late P Brooks||

    Read another book.

    Try the ant and the Grasshopper.

    Hint: the grasshopper is not the hero.

  • ||

    Unless you're exposure is the Disney version. You get a very different message from modern interpretations of that story than you do from the original fable.

  • Night Elf Mohawk||

    It seemed like the grasshoppers were still not the heroes in A Bug's Life.

  • ||

    I was thinking more The Grasshopper and the Ants where the ant queen has pity on the lazy grasshopper and he's saved from the cold instead of being dead at the end of the fable.

  • some guy||

    That version of the fable is an accurate reflection of the modern world, though.

  • Red Rocks Rockin||

    To be fair, the grasshopper even admits "I was wrong" at the end. Think about it--a cartoon insect has more intellectual integrity than Krugman.

  • ||

    Think about it--a cartoon insect has more intellectual integrity than Krugman.

    That's actually the least surprising takeaway from Krugman's latest tripe.

  • Bo Cara Esq.||

    -Did he even look at a list of Detroit’s creditors?

    I was disappointed to see this was simply a list of creditors. It would be more helpful to see how much the city owes to each.

  • Matrix||

    Progs don't seem very convinced of their own economic theories. If government creates wealth, and government spending helps the economy while cutting back spending hurts the economy, why not just have the government print all the money it needs without bonds or anything else. Just generate that money out of thin air, like they do anyway. Then fund the government completely that way. No need for taxes. So government creates nothing but infinite wealth, and it can continue to grow forever and ever. amen.

  • Swiss Servator - past LTC(ret)||

    Glory to the Government, and to the Lightworker, and to the Holy Animal Spirits: as it was in the beginning, is now, and will be for ever. Amen.

  • some guy||

    They don't do this because they know it wouldn't work and the country would fall apart quickly. They are running a fine line here. Take as much as you can from the productive without killing them. Frankly, I think they are getting very good at it. I'm not convinced they'll ever kill the goose, which might be the worst possible outcome of all.

  • Matrix||

    Well, they are just making the collapse more protracted and delaying the inevitable. It's gonna collapse. And they may not be just slitting the goose's throat, but they are slowly poisoning it.

  • ||

    Are Detroit’s woes the leading edge of a national public pensions crisis? No.

    Screaming "We told you so!" in this idiot's face will be cold comfort in the coming collapse.

  • ||

    Especially since he won't recognize the policies he supports as the cause of the failure.

  • RagingAlbino||

    "You see, now if there were more natural disasters that effected Detroit..."

  • Michael||

    So was Detroit just uniquely irresponsible? Again, no. Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.

    To me, the most maddening aspect of his claim is that he isn't suggesting that anything even remotely resembling a free market ever existed within Detroit itself. The accusation implicit in his statement is that free markets elsewhere are what contributed to Detroit's demise, and I can surmise just what kind of policy he'd propose to "correct" this problem.

  • Red Rocks Rockin||

    It's such passive-voiced obtuseness, too--Detroit didn't just seem to have bad governance, it unquestionably had and has bad governance, by any objective standard.

    That's the difference between Detroit and Pittsburgh, even though both underwent the relative decline around the same time of the industries that made them prosperous to begin with.

    Detroit may just be an outlier, but there's enough sick municipalities to indicate that we're in the early stages of the long slog to dissolution.

  • ||

    for the most part the city was just an innocent victim of market forces.

    Good ol' dependable Krugman still views capitalism as the enemy.

  • Invisible Finger||

    News flash for Krugabe: Detroit may have filed bankruptcy last week, but Detroit has been insolvent for 40+ years.

    This is the exact reason why I have zero empathy for Detroit's creditors. They have been playing the same game for as long as Detroit has, basically enabling the city government's insolvency to last this long.

  • Loki||

    “Shit happens” is apparently valid economic theory.

    Maybe Krugnuts will get another economics Nobel for his "theory of random defication."

  • Loki||

    BTW, I think that .gif should probably be used on every post about Krugman for the rest of time.

  • Joe Durnavich||

    Why doesn't Detroit take Krugman's advice and create jobs fixing all the broken windows?

  • InfiniteRecursion||

    When the truth doesn't fit your premises, or in krug's case, the foundation of bull-shit he's built his career on - you must lie.

  • Sébastien||

    "What made Greece such a very special case? Why is it so different from, say, Spain’s economic situation? Or even Detroit’s? Why is an economist saying there’s little to learn about economic policy from a failing state? All of this is simply asserted."
    -Shackforth has just showed that he is not qualified to respond to Krugman's column. Krugman has written probably 20 pieces in which he states why Greece's case is special and why it is not the same as Spain or USA. Anyone who is not aware of these reasons (which are widely accepted in the economics profession) is someone who is completely clueless about economic thinking with respect to the sovereign debt-crisis and the US fiscal crisis. Scott should do a little more reading (as in, about 5 minutes worth) before engaging Krugman. Krugman's column was not about Greece, however, but a column about Detroit.

  • Sébastien||

    US cities aren't going bankrupt just because of pension commitments, but also because they are blowing tons of money on things such as idiotic sports arena constructions, and tax breaks. Michigan gives out more corporate welfare per capita than any other state besides freedum-luvin-reel-murkin states Alaska, Texas and Nebraska (http://www.nytimes.com/
    interactive/2012/12/01/
    us/government-incentives.html?_r=0#LA). Detroit blew a lot of money on boondoggles, not just on $19,000-a-year pensions.

  • Pulseguy||

    Communism, while being wrong, actually had a coherent philosophy behind it. To each what he needs, from each what he can contribute. Almost sweet, actually.

    The fact it hadn't a ghost of a chance of working doesn't invalidate the original intent.

    Obama has a philosophy, and it is 'a group of people, the best and brightest amongst us, can sit together in a committee and decide what is right for everyone, and make a rule about it, and then we will all be lifted by this intelligence'.

    It isn't socialism. I think a more accurate name would be 'Bureaucratism'.

    Likewise, it hasn't got a ghost of a chance of working.

    The best and brightest doesn't work for the government and never will. It stifles them. Second, the best and brightest can spectacularly bring something forward that all people can grab onto, in a way that works for them, and thereby help society, but no one is so bright as to be able to come up with a rule that works for all people all the time.

    Last, the combined intelligence of all people each having freedom to do what seems to each to be the best thing, correcting, then trying again, and continuing to do this, eventually results in everything we have now. No one person, or group of people, are more intelligent than the combined intelligence of all people. They might send a ray of light that moves everyone in a certain direction for a brief moment, but even the absolute most brilliant can only be a spark for a brief, brief time.

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