Comments on: Bush, Krugman, and the Old Deal

By: R.P. McCosker

R.P. McCosker — Sat, 06 Mar 2010 06:00:10 +0000

In September of last year (2009), I received a personal email in regard to an exchange above in which I participated, in January of 2006. (Apparently what I’d written must’ve stuck in his craw, or else he keeps a record of all his online posting exchanges.) The gist of the email was, see how silly you look now — what with the failure of the economy proving how bad unregulated free markets are!

I wrote back that I’d only bother responding if I had this person’s permission to post his email to this original discussion, then respond publicly. He said, yes, I could. Sorry to let almost six months elapse, but I had to wait for a real slow day to bother with this nonsense. So here’s our little email exchange, and my followup comments:

“In January of 2006, on the Mises blog, you responded to my statements. I invite you to revisit my comments, which you can find by Googling my name, Tracy Wettig. Let me know if I was right in predicting the financial crisis, based on what Krugman et al were saying at the time. Also, let me know if Krugman won the Nobel in economics(well-deserved), and if my projections of the future debt proved to be accurate. I am not a leftist, although I must assume that to you, anyone to the left of Attilla the Hun is a leftist. Rather, I am a pragmatist, pragmatism being the philosophy that an idea must be judged according to how it works in practice. No more, no less. It is not my judgement, but the judgement of the world, that US laissez faire capitalism has failed, developing countries throughout the world are now rejecting the US model and embracing the Chinese model. Stiglitz has been proven correct, and Mises is fast becoming an irrelevent relic, according to the standards of pragmatism. There is a danger in embracing ideology as revealed truth, I think, and I find that the conservative ideology is akin to religious fervor. Comments?”

I replied:

“No offense intended, but I’m not going to take time to write out comments just for one person I don’t even know. However, if you email me back permission, I’d be happy to paste in the text of your email above as part of a continuation of that blog discussion, followed by my own response.”

The reply was:

“You have my permission to post my email to the Mises blog.”

Okay, so here goes:

Your question evinces spectacular unfamiliarity about what the Ludwig von Mises Institute is about. It’s a wonder you found yourself posting there in any discussion thread at all. I can’t help but speculate whether you care to inform yourself at all about the economic ideas presented and, usually, intelligently argued on the Institute’s website.

If you were even minimally familiar with the ideas of the Institute, you’d know that its voices were predicting the present-day financial crisis all along, based on the credit and monetary policies forcibly imposed by the government of the United States and most other industrialized countries (including the central banks that have great powers over the economy at the point of a bayonet). That Ludwig von Mises (1881–1973) himself first developed the comprehensive theory that the credit expansion and inflationism imposed by the coercive agency of government is what causes periodic systemic market failure.

So how does all that apply to the particulars of what are happening today? Rather than try to reinvent the wheel, here are a few beginner articles which summarize how governmental economic interventionism, and not laissez faire capitalism which you erroneously believe was in effect leading up to the present crisis, was the cause of that crisis:

http://www.lewrockwell.com/paul/paul494.html
http://mises.org/daily/3549
http://www.lewrockwell.com/higgs/higgs127.html
http://www.lewrockwell.com/woods/woods129.html

After you’ve had a chance to read them all:

Krugman was a great cheerleader for all the things that led up to the crisis. If he was predicting it, it was for the wrong reasons. Meanwhile, everybody at the Mises Institute was predicting it, and for the correct reasons.

Does Krugman deserve the Nobel Prize in Economics? That prize is awarded by the Swedish central bank, so it would be akin to the CIA giving an award to one of its in-house assassins.

You call yourself a pragmatist for promoting ideas that work? That’s just tooting your own horn.

“It is not my judgement, but the judgement of the world, that US laissez faire capitalism has failed” (how’s that for pomposity?): The US doesn’t have laissez faire capitalism. Where do you get such ridiculous ideas? Oh, maybe from reading Paul Krugman and taking him seriously.

“Mises is fast becoming an irrelevent relic, according to the standards of pragmatism. There is a danger in embracing ideology as revealed truth, I think, and I find that the conservative ideology is akin to religious fervor.”

No reasoning there, just frenzied preaching. Uh, thanks for pointing out the “danger.” Really, are you serious, or just a very wry prankster?

By: John Jay

John Jay — Sun, 30 Sep 2007 15:46:55 +0000

In response to the very first comment:

Expanding government spending, but using the funds to pay private companies, is exactly what has happened and is consistent with Krugman’s statement.

Please note that a huge portion of our federal budget now goes merely to paying interest on debts run up by past Republican borrow-and-spend Presidents. There really is an unavoidable economic cost to unfunded tax cuts.

By: John Jay

John Jay — Sun, 30 Sep 2007 15:45:08 +0000

Look at your paycheck or 1040 next April. 20% of your tax dollars are going to pay interest expenses on money borrowed under Republican Presidents.

Pushing borrowed money into my wallet and saying “gee, aren’t Low Taxes Great!?” is a short-sighted and decidedly unconservative view.

Reagan, Bush1, Bush2 and their belief in unleashing the national Credit Card have led to our taxes being 20% higher than they should be to meet the level of services the gov’t delivers. 20% of our taxes are being wasted on interest payments that serve no public purpose.

By: R.P. McCosker

R.P. McCosker — Sun, 08 Jan 2006 20:49:01 +0000

tracy wettig:

“[C]onservative fools”? Most people reading and writing here aren’t conservatives, they’re libertarians. I take it you’re some kind of leftist. Most leftists conflate libertarian ideas with conservatism, so it’s unsurprising you defend FDR by attacking his allegedly conservative predecessors.

So far as “any mainstream, reputable historian” is concerned, one of the purposes of this website is to set the record straight. Unfortunately, what’s considered mainstream and reputable in the brotherhood of professional historians is pretty much grotesque economic misunderstanding and profoundly statist, egalitarian premises. BTW, did you really think that among members of a profession about 90% of whom are unabashed left-leaning Democrats that their discussions of FDR are going to be anything less than enthusiastic?

BTW again, if I had a dollar for every time I read or heard someone say — always without citing the particulars of any evidence — that FDR “saved capitalism” (or your variation: “saved the U.S. from socialism”), I’d, oh, take my family out for a multicourse dinner at Trader Vic’s, complete with a round of the schlocky-but-fun trademark cocktails there. And still have enough left over for a generous tip.

“Saved” capitalism? Sort of like how Johnson and Nixon “saved” Vietnam?

By: tracy wettig

tracy wettig — Sun, 08 Jan 2006 05:56:43 +0000

Oh, conservative fools! FDR saved the U.S. from socialism, as any mainstream, reputable historian knows. After twelve years of conservative Republican rule (1921-1933), including tax cuts for the rich and deregulation, as well as orthodox conservative Republican philosophy (“What is good for GM is good for America), the U.S. experienced the Great Depression and twenty years of economic stagnation(1921-1941, the economy was the same size). Coincidence? No way! It is interesting that Greenspan is predicting stagnation, or worse, unless the Bush deficits are tamed. Paul Volcker, former chairman of the Fed and like Greenspan a Reagan appointee, is predicting a 75% probability of a serious economic crisis in the U.S. in the next five years, just what the conservatives want, according to Krugman. Has anyone posting to this site experienced an economic crisis in their lifetimes? I’m talking about something like in Brazil, Argentina, or Thailand, not the U.S. in the early eighties; Volcker says it is now the worst he has ever seen, although it is not yet apparent to the average person. I sure hope Volcker, Greenspan, Krugman, Walker, and Stieglitz are all wrong, and the Bush tax cuts will usher in an era of conservative Nirvana, but prudence tells me otherwise. Interestingly, Canada to our north does not have the same fiscal problems, in their budget they note that they have been in surplus since 1997, and their productivity has risen the fastest of G8 countries over the same period. Silly Canadians! They promise to reduce overall federal debt to 25% of GDP by 2014, because they promise to ensure that money is available for health care, nursing home care, and retirement funds for their aging population. Baby boomers, are you following me on this? Better buy your horse now, because with $11 trillion in federal debt predicted by 2010, surely you do not expect the younger generation to pay for your old-age upkeep. You will simply have to climb on your horse and head into the hills to die, just like the Indians used to do. And rightly so, don’t burden the next generation with debts wrung up by the tax cuts you voted for, and at the same time to support you in your old age! Those silly Canadians, who in polls said that 81% would have voted for Kerry, are worried that the huge U.S. budget deficits of Reagan and Bush(remember, Clinton paid them down to surplus)will have a bad effect on their economy over the long term, as they note in their budget summary. Interestingly, the Chinese economy has grown by 9.4% per year since 1978 (5-6% per year from 1952-1982, ie under Mao), and the CIA projects that this trend will continue, barring an end to globalization. Silly Chinese communist leaders, where they reinvest 40% of GDP every year, whereas the U.S. has a negative savings rate. How long will it be before China’s economy is larger than the U.S. economy? Goldman Sachs says 2041, but if Greenspan and Volcker are half right, I think it will be a lot sooner. According to Paul Kennedy, Yale historian, from 1500 to 2000 nine Great Powers came and went, an average of one every 55 years. The U.S. is simply the latest, I think, but maybe I should be an arrogant neoconservative and simply disregard the lessons of history, and support a Pax Americana like the neoconservatives in Project For a New American Century. But then, I invite everyone on this site to Google the following: India Daily BRICS. Guess what, Brazil, Russia, India, China, and South Africa are teaming up to challenge U.S. primacy, militarily and economically, covertly. Don’t they realize that the U.S. is predestined for everlasting greatness, just like the neoconservatives claim? Silly rest of the world! It does not matter that China is building a nation of thrift, producing ten times as many scientists and engineers as the U.S., just go and ask the neocons, tax cuts are what matter, not investing in science and technology education. Silly commies, even if the CIA says that China and India are destined to be scientific and engineering superpowers, hence economic and military superpowers. Silly CIA analysts, don’t they know America will always be number one on this planet. We don’t have to worry about global warming, either, do we, because we are the masters of the universe, right?Oh, I almost forgot, but as Paul Kennedy, Yale historian, says: in Great Power Wars, the nation with the largest and most productive economy has always won, and that is a historic fact. So, if Goldman Sachs and the CIA are right, we have about 35 years, and our kids and grandkids, too. So party it up in the good ol neoconservative USA, our time is coming, too. Really, fools, get a clue: Krugman is a future Nobel economist, as the oddsmakers will tell you. He is simply being honest when he says that this administration has looted the treasury, and is wildly irresponsible. As Krugman says, it would be much simpler for him if he simply championed the Bush administration economic debacle, but you gotta kill the snakes every day.

By: Anthony Gregory

Anthony Gregory — Tue, 20 Sep 2005 14:45:44 +0000

Ohhh Henry, I would definitely recommend The Roosevelt Myth. It’s not so much a biography as a chronicling of the New Dealer’s actions in office. The book’s priceless and irreplacable, as far as I’m concerned. John Flynn was a liberal journalist who favored FDR at first, but came to see the New Deal for what is was: economic fascism and warlike nationalism of the economy. The book is an Old Right classic.

See this info, too:

http://mises.org/misesreview_detail.aspx?control=49&sortorder=issue

http://www.lewrockwell.com/orig/woods2.html

http://mises.org/fullstory.aspx?control=100&id=75

By: Anthony Gregory

Anthony Gregory — Tue, 20 Sep 2005 14:45:37 +0000

See this info, too:

http://mises.org/misesreview_detail.aspx?control=49&sortorder=issue

http://www.lewrockwell.com/orig/woods2.html

http://mises.org/fullstory.aspx?control=100&id=75

By: Ohhh Henry

Ohhh Henry — Tue, 20 Sep 2005 14:26:06 +0000

I just found a biography from 1948 that is online, which promises to be anything but hagiography. I have only started reading it, but the foreword promises that it is based on an extensive sifting of the relevant political memoirs and news stories of the day: The Roosevelt Myth. Are any of you familiar with this book, and if so, would you recommend it?

By: Anthony Gregory

Anthony Gregory — Tue, 20 Sep 2005 10:33:54 +0000

Clarence Darrow was charged with evaluating the soundness of the National Recovery Administration, and ended up criticizing the fascist agency as “harmful, monopolistic, oppressive, grotesque, invasive, fictitious, ghastly, anomalous, preposterous, irresponsible, savage, [and] wolfish.”

Is Bush really the anti-FDR? Sounds like a wannabe-FDR to me.

By: Andy D.

Andy D. — Mon, 19 Sep 2005 20:03:08 +0000

We’re always too serious here, we need a light forums

By: Paul Edwards

Paul Edwards — Mon, 19 Sep 2005 13:18:15 +0000

Don’t feel too bad Andy. Only 25% of the jokes told on this site are funny enough to be recognized as such and thus avoid some kind of rebuttal. (That’s my attempt at humour for the week)

By: Andy D.

Andy D. — Mon, 19 Sep 2005 09:17:32 +0000

…..it was a joke…

By: Jonathan

Jonathan — Sun, 18 Sep 2005 22:42:03 +0000

Andy D, you mean like yours?

By: Andy D.

Andy D. — Sun, 18 Sep 2005 19:25:58 +0000

Henry, 75% of statistics are made up on the spot.

By: Ohhh Henry

Ohhh Henry — Sun, 18 Sep 2005 14:29:23 +0000

You have enough federal public corruption convictions to make statistical comparisons?

Wow. I can’t remember the last time a federal politician or bureaucrat was convicted of corruption in Canada. I think maybe there was a plea bargain with no jail time in Quebec in the past year, but despite a lot of scandals in the news, no other recent convictions come to mind. Certainly not enough to allow any statistical comparisons.

Either the Canadian government is incredibly honest, or the government is extremely small – or else it is so thoroughly corrupt that even the federal police and judges are ‘bent’.

By: MLS

MLS — Sun, 18 Sep 2005 08:25:32 +0000

"Last year the newsletter Corporate Crime Reporter ranked the states according to the number of federal public-corruption convictions per capita. Mississippi came in first, and Louisiana came in third."

I just love it how this guy spews out statistics without realizing their cause.

One would find federal corruption precisely in those areas with the most channeling of federal funds.

Republicans and Democrats today are just different sides to the same socialist coin.

By: Kristian Joensen

Kristian Joensen — Sun, 18 Sep 2005 01:05:42 +0000

No, Paul Krugman was opposed to the protectionistic trade policies proposed by the Clinton administration.

By: R.P. McCosker

R.P. McCosker — Sat, 17 Sep 2005 07:21:58 +0000

Kristian Joensen,

I stand corrected. And I’m sure everyone reading here’ll be interested to learn in which areas Krugman wasn’t an apologist for Clinton.

Let me take a wild guess: That Clinton mournfully declared that “the era of big government is over”? Conceivably Krugman was distressed that that gave the public the wrong idea, that such an era *deserved* to be over?

How *irresponsible* to be planting ideas like that, it might be imagined. Anyway, I look forward to your exposition.

By: Dennis Sperduto

Dennis Sperduto — Sat, 17 Sep 2005 05:24:13 +0000

“Gee, if only all that power was in the hands of someone incorruptible — say, a liberal Democrat like Krugman — we needn’t worry about cronyism and all that.”

R.P., I agree with your sarcasm. I would also add that academics/professors are typically even worse than politicians regarding cronyism and appointing and supporting only those who follow the official line. This may be one of the unfortunate consequences of tenure. And since Krugman is a fully tenured, powerful professor, his comment is certainly a blatant example of the pot calling the kettle black.

By: Kristian Joensen

Kristian Joensen — Sat, 17 Sep 2005 05:07:47 +0000

“not Bill Clinton, whom Krugman defended at every turn during *that* presidency.” This is not true at all.