Throughout Pop Internationalism, Paul Krugman makes a great case for how free trade and the global economy raise the living standards for everyone. FULL ARTICLE by James E. Miller
Source link: http://archive.mises.org/17053/the-good-krugman/
The Good Krugman
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Hitler was good to his dogs. http://en.wikipedia.org/wiki/Blondi
Comparing Krugman to Hitler is stupid.
R.J. Moore II “Comparing Krugman to Hitler is stupid.”
I am glad to receive your analysis of my comment. Here is my line of reasoning:
J.M. Keynes, in his foreword to the German edition of his GENERAL THEORY OF EMPLOYMENT, INTEREST & MONEY, wrote the following, which can and should be interpreted as an appeal to the then concurrent National Socialist (NAZI) regime of Adolph Hitler to adopt the theories and policies embodied in his GT and aimed at Keynes’ nirvana-like objective of full employment..
Keynes wrote:”The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory.”
Hitler did in fact employ Keynesian economic policies of deficit spending and other measures with some macabre twists of his own demented mind (e.g., militarism, genocide, Lebensraum, etc.) to achieve Keynes’ economic nirvana: full employment–at any cost. And Germany under Hitler did achieve full employment, although no German who lived through WWII and none of those who died in it would say that that Keynes’ and Hitler’s nirvana was worth the price they eventually were made to pay for it.
I tend to get Keynes and Krugman (K&K) confused with one another. For one thing, Krugman is a self-confessed Keynesian. And for another, Krugman also wrote an introduction to a 2007 edition of Keynes’ GENERAL THEORY (An English, not German, edition.) In it he said this of his hero, Keynes, and his book:
“There has been nothing like Keynes’s achievement in the annals of social science. Perhaps there can’t be. Keynes was right about the problem of his day…Those qualities allowed Keynes to lead economists, and the world, into the light – for The General Theory is nothing less than an epic journey out of intellectual darkness.”
In Krugman’s view, the intellectual darkness was the depression and the economics profession before Keynes, and the light was Roosevelt’s New Deal and World War II. How can I say that? Because Krugman said as much himself.
In an op-ed column entitled “Franklin Delano Obama,” published in The New York Times November 10, 2008 (http://www.nytimes.com/2008/11/10/opinion/10krugman.html), Krugman admitted that another of his heroes, Franklin Roosevelt, failed to end the Great Depression with his cornucopia of Keynesian policies known as the New Deal. The reason, Krugman said: Roosevelt didn’t go far enough. “What saved the economy, and the New Deal,” according to Krugman, “was the enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.” (see http://jesus-on-taxes.com/ON_PAUL_KRUGMAN.html)
World War II an “enormous public-works project? World War II, the single most destructive economic event in the history of the world “a fiscal stimulus adequate to the economy’s needs?” To what kind of a person would the unequaled slaughter of human life and destruction of property that was WWII be described as an admirable product of his hero’s fetid, fevered mind?
There, sir, I have defended my comment. Perhaps you would care to defend yours?”
Lol, what a waste of text.
Krugman isn’t a Nazi because he’s not derived from a specific interwar ideology relating to racial and national collectivism developed as a response to the rise of Social Democratic and Communist regimes.
Just because someone is a socialist doesn’t mean they’re a commie. And Krugman isn’t even a socialist. He’s a neo-liberal progressive democrat of distinctly American type.
Throwing around the word ‘Nazi’ and ‘Fascist’ is one of the most retarded habits Americans have. See Paul Gottfried.
R.J. Moore II wrote: “Krugman isn’t a Nazi..”
Who said he was a Nazi? I certainly didn’t. As for “Fascist,” you are the one who is, to use your own metaphor, throwing that word around. However, I do not think you are retarded for falsely implying that I said or implied that Krugman is a Nazi. Nor do I find you retarded for using the word Fascist–as long as you know the meaning of the word you are throwing around, which because of your reference to Paul Gottfried I will presume you do. Furthermore, and as an aside, if you have read Hayek’s THE ROAD TO SERFDOM, you may also understand how neo-liberal, progressive democratism can and probably will eventuate into something very oppressive like, say, an American National Workers Democratic Socialism, or USA Fascism. And finally, I do not find you retarded just because you woefully misinterpreted my initial comment, which involved an ellipsis that I thought Misians would understand, but for your sake I’ll explain: The author of the article found something good in Krugman’s economics. I was simply pointing out that if one dug deep enough into anything or anyone, even Hitler, it is possible to find some good. And I would add here that the small good of Hitler’s kindness to dogs does not abate in the least his inhumanity to humans. Likewise, Krugman’s minimalist endorsement of free trade does nothing to ameliorate the damage wrought to the U,S. economy and its people by the economic policies he has championed, which politicians have adopted. In that respect, Hitler’s character and Krugman’s economics are identical. Furthermore, as I point out in my second comment, Krugman’s distorted regard for war as a productive economic policy is similar to Hitler’s judgment on the subject. So, whereas I did not compare Krugman to Hitler nor call him a Nazi, I do not hesitate to point out that Adolph Hitler regarded war as a beneficial economic phenomena–good for employment and good for the economy–much as Krugman depicts WWII as economically beneficent.
As for my “text”, as you call it, please tell me, what is there about it that causes you to laugh out loud? Can you offer an intelligent critique of anything therein, or is throwing brickbats your best and, economically speaking, your cheapest shot?
Finally, can you tell me what it is that is “a neo-liberal progressive democrat of distinctly American type,” and is anyone other than Krugman one of ‘em.
Free trade? What free trade? A free trade agreement is an oxymoron, an agreement on how to manage trade and restrict it from truly being free. And given that this non-free trade exists in the dollar-cartel atmosphere of currency manipulation and artificially low interest rates, not to mention protectionism, how do we really know comparative advantage is working for us? It is quite possible that the current state of global trade is indeed resulting in wealth creation and a net gain for the world as a whole, but not in a net gain for American citizens.
“As our manufacturing became more efficient and productive, thus driving down costs, it left more capital to be invested in the service sector.”
Or to be invested in rent-seeking and financialization and emerging economies outside of this country. There are lots of places to put capital other than to re-invest it in the domestic productive economy of goods and services. Rather than a service sector, our economy seems to be built around a debt-service sector. We gave up making cars to make car loans. Future?
@noah
I agree completely with the notion of free trade agreements being an excuse to really control trade, but Krugman still does a decent job in the book outlining the benefits of free trade and moving capital to more skill intensive industries.
You may not agree that capital was reinvested wisely into what you call the “debt-service sector,” but clearly that is what looked profitable to do. The Fed, FDIC, and government guarantee for banks has incentivized the public to take on more debt, so it makes sense capital was dedicated to the “debt-service sector.”
I understand that it makes sense for those with capital to move it to the place with the best returns, but that’s my problem: how can we promote “free trade” when it doesn’t exist in reality and we perhaps are no longer realizing all the potential gains of comparative advantage? In a different regulatory world it might make sense to re-invest more of that capital back into the productive economy, to everyone’s advantage, and once again what is good for GM would be good for the rest of us.
Or to put it another way, since we appear condemned for the forseeable future to live in a world riddled with government intervention, isn’t it possible we need to counter the financialization of our economy with “corrective” intervention? (And by intervention, I do not mean outright protectionism.) Maybe “people in the Clinton administration who claimed that the American government needed to adopt a broad industrial policy” were correct.
Which is not to say those people would have any idea what that policy should be.
“Which is not to say those people would have any idea what that policy should be.”
And therein lies the problem of trusting a decent industrial policy to come from the government. As for the other assertion, why promote the abolition of the Federal Reserve, central banking, the huge military apparatus, and entitlement programs when in reality most won’t happen without forced bankruptcy? Just because something is hard to do doesn’t mean it isn’t worth advocating for. We may never see truly free trade, but why not try to advocate and educate people on it? Isn’t that what the Mises Institute is for?
“And therein lies the problem of trusting a decent industrial policy to come from the government.”
The only problem in trusting an industrial policy from the government is that the government is controlled by industry!
Otherwise, a fairly elected government would probably have a much better plan for industrial policy than any single industry would, that’s why industry lobbies governments so hard and throws money their way to slant the system in their favour — or in other words, to suck as much money out of you, me and everyone else as possible!
Wonderful free markets, eh!
There is still a lot of Liberty in the world, and look at the Tea Party. Some common people still rise in anger at the political corruption. We aren’t dead yet.
“a fairly elected government would probably have a much better plan…”
Why the need for a central plan at all? Without a government plant there would be noone for the industries to lobby.
No government is ever controlled by industry (or unions for that matter). The chain of pretend command goes in the exact opposite direction, at all times in all parts of the world.
Also, claiming that bureaucrats could ever possibly know an industry better than those employed within that industry is Chavez-style ignorance.
Yes, indeed, free markets are wonderful — that’s why socialists of both the corporatist and collectivist variety do everything possible to undermine them.
Krugman doesn’t write his own articles anymore. His champagne-socialist harpie wife does. He’s admitted as much. The reason he was better before was because he was his own man. Now he’s a sock puppet for an ‘activist’ woman.
“champagne-socialist harpie wife”
Damn, I almost laughed up my dinner reading that.
The same thing happens to me when I read Ms. Krugman’s, urr, Mr. Krugman’s articles!
This is the end of Krugman, a mises.org compliment!
So, is Krugman an exception to Rothbard’s law?
Krugman’s specialization is….what he’s good at.
The theory of free trade is actually an example of the fallacy of composition. What is good for the trade of some items does not mean it’s good for the trade of all items. It makes sense to freely trade unique goods like coffee for apples for instance. But when it comes to essential manufactured goods there are many more variables that come into play.
Also the theory of free trade applied to a world that was assumed to be on a uniform monetary system like gold where money couldn’t be printed as easily to distort trade like for subsidizing exporters selling of products overseas below cost to put out of business their more productive competitors. Today factories are outsourced to countries that manipulate their currency so that based on paper exchange rates foreign labor is cheaper to employ with US technology. If a lot of the manufacturing jobs are being lost to automation in the US, then why aren’t there more manufactured goods that say made in the USA then?
The productivity statistics that are used to make the case that increased automation is causing the loss of manufacturing jobs is a monetary illusion. Increased money printing that pushes up the GDP number divided by less workers due to the outsourcing of jobs to countries that have manipulated currencies gives the illusion of increased productivity.
“The theory of free trade is actually an example of the fallacy of composition. What is good for the trade of some items does not mean it’s good for the trade of all items. It makes sense to freely trade unique goods like coffee for apples for instance. But when it comes to essential manufactured goods there are many more variables that come into play.” – can you please elaborate on what are the differences between those “unique goods” and “essential manufactured goods” to substantiate your claim?
“Also the theory of free trade applied to a world that was assumed to be on a uniform monetary system…” – I’m not aware that there was any such limitation. Manipulating the money supply will of course distort the market, but it doesn’t change its positive features.
“Today factories are outsourced to countries that manipulate their currency so that based on paper exchange rates foreign labor is cheaper to employ with US technology.” – if that is the case, in a way these countries tax their citizens and make their labor cheaper. In other words, producers would be subsidized by the taxpayers, who are made correspondingly poorer. That is not enough to break the case for free trade.
“If a lot of the manufacturing jobs are being lost to automation in the US, then why aren’t there more manufactured goods that say made in the USA then?” – providing there are really less goods produced, maybe it’s because the USA is producing more services? (Not taking into account debts, etc.)
“Increased money printing that pushes up the GDP number divided by less workers due to the outsourcing of jobs to countries that have manipulated currencies gives the illusion of increased productivity.” – there can be easily both phenomena working at the same time. Printing of money AND increased productivity.
What is beneficial for the trade of unique raw materials and manufactured goods is not necessarily beneficial to the trade of all non-unique goods. For things like spare parts which may be screws, washers, etc. These parts for example are necessary to maintain the structure of many capital goods. If they can’t be readily made in the home country then many issues can arise if they have to depend on importing them. If Japan followed the theory of free trade according to Ricardo, then they would have specialized in tuna farming and not be making cars, tv’s and other consumer goods. A high ranking Japanese industrialist once said that.During the time Ricardo wrote about comparative advantage; it was when money was backed by gold and silver. With money backed by gold and silver, the purchasing power of money would be more stable. Ricardo talked about the elimination of barriers to trade. The unlimited creation of fiat money out of thin air is a barrier to trade.Also to remember what is called free trade today is actually managed trade agreements that benefit some sectors at the expense of others. Some people seem to believe that these managed protectionist trade agreements that are called free trade have all barriers eliminated. These agreements are mostly just outsourcing agreements. These agreements do not eliminate all tariffs, requirements to share technology, requirements to produce abroad to sell abroad, currency manipulation, central bank subsidies to exporters so that they can dump products overseas below cost and put off business their foreign competitors, free land given to companies and etc.Outsourcing today is a monetary phenomenon. It depends on continued world inflation. The secret to offshoring is the transfer of technology to countries that create new money out of thin air faster then the US so that based on paper exchange rates foreign labor is cheaper to employ with US technology. Yes an undervalued currency is a tax on foreign workers because they should be consuming more of what they make. However, the goal of this policy is really for CEOs to make bonuses off outsourcing capital to other countries with artificially cheap labor based on exchange rates and for foreign governments to acquire technology for their planned directives. As a result of this policy both workers in the US and overseas are poorer because the outsourcing of US capital reduces a workers real wage and the undervalued foreign currency serves as a tax on the earnings of foreign workers.The case is frequently made that products are cheaper when imported from countries with undervalued currencies where factories were outsourced to which saves Americans money. If this practice was so beneficial to Americans, then why do Americans have to use credit to buy all these products? The reason being is that real wages have fallen faster than the price of the products made in countries that manipulate their currencies because of the outsourcing of capital.Just because the US produces more services, it doesn’t mean that the US should manufacture less products. Just like farming never disappears, manufacturing will never disappear. The only thing that changes is that as technology advances, it helps to increase productivity where less workers will be needed. So if automation were really advancing at such a great pace, then why aren’t there more products that say made in the USA?If productivity were increasing as much as statistics claim, then the US would be accumulating greater capital. Economic growth is capital accumulation. Currently the US is outsourcing capital which is what increases productivity. The productivity statistics are just a monetary illusion derived from inflated GDP numbers divided by less workers due to outsourcing of jobs and the high unemployment.
What is beneficial for the trade of unique raw materials and manufactured goods is not necessarily beneficial to the trade of all non-unique goods like spare parts which may be screws, washers, etc. These parts for example are necessary to maintain the structure of many capital goods. If they can’t be readily made in the home country then many issues can arise if they have to depend on importing them. If Japan followed the theory of free trade according to Ricardo, then they would have specialized in tuna farming and not be making cars, tv’s and other consumer goods. A high ranking Japanese industrialist once said that.
During the time Ricardo wrote about comparative advantage; it was when money was backed by gold and silver. With money backed by gold and silver, the purchasing power of money would be more stable. Ricardo talked about the elimination of barriers to trade. The unlimited creation of fiat money out of thin air is a barrier to trade.
Also to remember that what is called free trade today is actually managed trade agreements that benefit some sectors at the expense of others. Some people seem to believe that these managed protectionist trade agreements that are called free trade have all barriers eliminated. These agreements are mostly just outsourcing agreements. These agreements do not eliminate all tariffs, requirements to share technology, requirements to produce abroad to sell abroad, currency manipulation, central bank subsidies to exporters so that they can dump products overseas below cost and put off business their foreign competitors, free land given to companies and etc.Outsourcing today is a monetary phenomenon. It depends on continued world inflation. The secret to offshoring is the transfer of technology to countries that create new money out of thin air faster then the US so that based on paper exchange rates foreign labor is cheaper to employ with US technology. Yes an undervalued currency is a tax on foreign workers because they should be consuming more of what they make. However, the goal of this policy is really for CEOs to make bonuses off outsourcing capital to other countries with artificially cheap labor based on manipulated exchange rates and for foreign governments to acquire technology for their planned directives. As a result of this policy both workers in the US and overseas are poorer because the outsourcing of US capital reduces a workers real wage and the undervalued foreign currency serves as a tax on the earnings of foreign workers.
The case is frequently made that products are cheaper when imported from countries with undervalued currencies where factories were outsourced to which has the effect of saving Americans money. If this practice was so beneficial to Americans, then why do Americans have to use credit to buy all these products? The reason being is that real wages have fallen faster than the price of the products made in countries that manipulate their currencies because of the outsourcing of capital.
Just because the US produces more services, it doesn’t mean that the US should manufacture less products. Just like farming will never disappear, manufacturing will also never disappear. The only thing that changes is that as technology advances, it helps to increase productivity where less workers will be needed. So if automation were really advancing at such a great pace, then why aren’t there more products that say made in the USA?
If productivity were increasing as much as statistics claim, then the US would be accumulating greater capital. Economic growth is capital accumulation. Currently the US is outsourcing capital which is what is needed to increase productivity. The productivity statistics are just a monetary illusion derived from inflated GDP numbers divided by less workers due to outsourcing of jobs and the high unemployment.
If I want to sell my wood carvings to someone in Australia then what business is that of yours? Similarly, why should I have to get someone else’s permission to buy a computer from Japan?
The “need” for free trade is very simply the need to allow people to make their own decisions regarding their own property. That is all.
Why does Miller write that the book finds Krugman “advocating for currency devaluation” rather than “advocating currency devaluation”? Has the verb “advocate” been stripped of its transitiveness?
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