Well, after lavishing praise on Obama a week ago, our latest Nobel Laureate Paul Krugman once again is in a snit: Obama is not spending enough to launch the economy back to prosperity:
…many economists, myself included, actually argued that the plan was too small and too cautious. The latest data confirm those worries — and suggest that the Obama administration’s economic policies are already falling behind the curve.
You just can’t make up this stuff. Krugman — the MIT-trained economist who has spent his career at the world’s most elite institutions of higher education — now appeals to public opinion:
Republicans are now firmly committed to the view that we should do nothing to respond to the economic crisis, except cut taxes — which they always want to do regardless of circumstances. If Mr. Obama comes back for a second round of stimulus, they’ll respond not by being helpful, but by claiming that his policies have failed.
The broader public, by contrast, favors strong action. According to a recent Newsweek poll, a majority of voters supports the stimulus, and, more surprisingly, a plurality believes that additional spending will be necessary. But will that support still be there, say, six months from now?
Also, an overwhelming majority believes that the government is spending too much to help large financial institutions. This suggests that the administration’s money-for-nothing financial policy will eventually deplete its political capital.
Yeah, yeah. Those “unhelpful” Republicans. If they question anything, then they are not “helping.” And, yes, all those armchair economists in the “broader public” want action, action, action.
Now, I happen to agree with the “broader public” that bailing out the banks is ludicrous, although Krugman’s demand that Obama nationalize them also is ridiculous and harmful.
Krugman worries that by the time unemployment has passed 9 percent, Obama will not have the political capital to push through yet another huge spending bill. Of course, when that time comes, I am sure that Obama, Krugman, and others will blame Goldstein, er, the few Republicans left in Congress for not being “helpful.”
For the first time in more than a decade, Republicans actually are doing something to reverse the harm they caused when they were in the majority. However, anything that smacks of fiscal sanity is not going to earn praise when the Nobel Laureate speaks.
Just think. The upshot of an economics doctorate at that prestigious university, MIT, is this: print, print, print, borrow, borrow, borrow, spend, spend, spend. Yeah, I knew all that math was good for something.
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Has this clown ever actually addressed free-market arguments against Keynesianism?
Has this clown ever actually addressed free-market arguments against Keynesianism?
No. He deliberately misinterprets the ABCT to mean that in a bust, people “deserve” to be punished for the unearned boom, which interjects a false karmic pseudo-morality into economic theory. It’s a deliberate attempt to shut down the conversation. He won’t address the concept of inflation-induced malinvestment in a straightforward way. He knows he can’t.
There are non-Austrian economists I can say are dead wrong, but for whose intellects I still have a tiny amount of tolerance and respect. Not this fool Krugman. I have never seen someone so shallow, predictable and just plain stupid rise to the top of the trash heap.
I have a sinking suspicion that he’s a plant. A paid propagandist. He has to be. I think he’s been selected by some anonymous person(s) in a position of power, and sent out into the world as a kind of shill to spew this garbage. That someone (or group, or organization) has arranged for him to be promoted up through the hierarchy of academia to give him the appearance of clout.
I suspect Obama has a similar life story.
When a political hack like Al Gore can win the Nobel Prize, the astute observer quickly realizes that we do not live in a meritocracy. Rather, we live in a system of “state capitalism” – where those who propagate views favourable to the power elites rise to the top, and those who resist depredations upon individual liberty sink to the bottom. Thus, it is no surprise that the Paul Krugman’s of the world rise to prominent positions.
Nor is it surprising that Keynesianism continues to live on. It’s as if the raging debates against Keynesianism during the stagflation of the 1970s never happened. It’s as if Milton Friedman and Friedrich Hayek didn’t spend their time picking apart Keynes’ arguments. Why do so many economists now act as Friedman and Hayek never existed? Because they (subconsciously, at least) know that the government likes to promote economists who tell them what it wants to hear.
I dont know if I would go so far as to say Krugman is “stupid.” Sometimes people get so focused on their point of view and it results in tunnel vision. That happens to me as well. The problem with this is I do not have any input at all – Krugman does.
Republicans are now firmly committed to the view that we should do nothing to respond to the economic crisis, except cut taxes — which they always want to do regardless of circumstances.
And the Krugmans of the world always want to increase government spending, regardless of circumstances.
Krugman may actually believe his own rhetoric and theories. His problem is that he was elevated by his noble prize (misspelling intentional) and now his theories, which were supposed to be untestable, are being put to the test in the real world. He can no longer sip a whiskey with his fellows in academia and make dollar bets with his fellows on where the next bubble will form. Now he has presidents, congressmen, and media moguls resting on his every word, and for the first time ever, he HAS to be right.
How terrible this must feel. All of the doubts and counter arguments that he so deftly brushed aside in the bar, are now reality. A real, live, actual test in the greatest of laboratories, the real world economy.
He’s been marked as the greatest scientist in his field yet he’s never run a test, and experiment, of any of his theories, until now. Talk about pressure!
The man is praying, daily, to any god that will listen, that his thinking is correct. He has no way of knowing, except for those nagging doubts that keep resurfacing. Those nagging little nuggets of fact that keep him awake at night. Can’t brush them aside any more.
Krugman’s Prayer:
Dear god, great banker in the sky,
Quash the lack of confidence in our economy,
Lay to rest the uneasy animal spirits of consumerisim,
Change our paper into money,
And prod the Government into spending more of it,
So that we might live in prosperous times again,
And bless the bankers with new found buyers for their paper. so long as they are not aliens from another planet with bigger guns than ours.
Put credit cards back on an even keel, so that our debt can grow beyond our means.
Please, oh lord, make me right, so that I may worship you all the better.
Amen.
Krugman is pulling a fast one. He KNOWS his voodoonomics will fail. He’s not stupid, he’s just trying to get turn his intellectual dishonesty into “foresight” for future use.
The problem with his kind of “foresight” is that he is always more right when he’s right than wrong when he’s wrong. He’ll blame the free-market when he’s wrong. He’ll blame the administration for not doing enough. It will always be somebody else who screwed-the-pooch when he’s wrong. If the government and the central bank can’t fix the economy, then it’s not because the government and the central bank can’t do it. It’s because the evil free-market is corrupt and needs to be purged of it’s corruption. The evil hand is at work, making all of the righteous efforts of the great and mighty fail. The selfish populace, the greedy horders, the unbelievers who have no faith in the Fed or the stimulus, etc. etc. etc. ad nauseum.
Keynesian economics can be summed up in the analogy of the lion tamer and the lion. The lion tamer of course, is the central planners. The lion is the free-market. The lion cooperates for a while, because he is afraid of the whip and the chair, and because he knows where his food comes from. But if the lion looses his fear of the whip and the chair, he will not do what the lion tamer wants. He may not eat that night, but he will not be more willing the next day. If he attacks the trainer, he dies of gunshot, if he runs away, he dies of starvation, at least that is his fear. In the end, the lion will be blamed for his own demise. The problem for the lion tamer is that without the lion’s cooperation, he has no show. And he still risks being mauled by the lion. The other problem for the lion tamer is that there is only one lion. He either gets the lion to do what he wants or there is no show. If the lion sleeps, it’s the lion’s fault. If the lion cooperates, it’s the trainers glory. If the lion rebels, it’s the trainer’s gun that puts him down. If the lion gets fat because the trainer can only get his cooperation with more food, then the lion dies or gets lethargic, and the show ends for awhile until the lion gets back into shape.
We are the lion. Our collective belly is full of kibbles and we are pulling away from the dish. The trainer can put the juiciest morsels in it and we will not eat. We can’t, we’re full, fat and lethargic.
The trainer is afraid we will not come back to the dish at all. That we will starve instead, and get mean, possibly eating the trainer instead of the kibbles. You can see this desperation in the words of the trainer on the nightly news. Sometimes the trainer looks like Krugman, sometimes like Obama, sometimes like Gordon Brown, and so on. The lion is to blame. God save the trainer!
I agree with Deefburger. Krugman knows (believes) that the stimulus as such will not work (I agree). He’ll tell the world that “they didn’t do it right”, or the “stimulus wasn’t big enough” yadda yadda. He’s already got his exit strategy all planned out. However, I do I believe he believes his own nonsense.
If you don’t mind the hijack, I’ll ask this question to the Austrians:
If you omit businesses that would have failed anyway from the equation AND all effects of governmental meddling that purpetuates the agony (The Fed Reserve or Federal government), can we attribute ALL declining business activity as the market’s way of cleaning house? Is there any room in the ABCT for the notion of “collateral damage” in a downturn i.e. some legitimate business activity is caught in the wake the bubble popping. My understanding of ABCT is that the answer is — No, since all economic activity is interconnected, all declining activity reflects the markets working out the problem. Therefore, there is some proportionality to the size of the bubble to the resulting downturn. Is this true? Is it possible that 1 Trillion of Fed money can create (let’s assume this is after the money multiplier effect), for example, 2 Trillion or more in destruction?
@Andy: Think of the market as a body. Think of it as an intellegent collection of independently intellegent cells. You and me and everybody else is a cell in this great organism. The interference in the natural workings of the body are sourced at the central bank and the government. Like a cancer or an infection, when they fail, the body becomes sick. A period of rest and recovery follows. Yes, there is some “colateral damage”. If there were never any interference in the functioning of the body, then only natural causes, and failed business models would create any damage. Normal market functioning would bring about recovery and the market would continue.
The problem we are having right now, is that the body has become addicted to the stimulants injected by the body politic. The injections have lost their effectiveness, and we are suffering from withdrawal. All of us feel the effects, to varying degrees, and so to answer your question, yes, the worse the addiction (bubble), the greater the withdrawal (economic collapse).
Have you ever noticed that even when he endorses an intervention, he always hedges his bets? He says such and such is a good idea, but it isn’t big enough or whatever. This is a telltale sign that he has his doubts that it will work, but wants to be able to tell people that he had pointed out the deficiencies at the time, so he is blameless. Krugman is a 1st class scoundrel.
Thanks Deefburger.
@D. Saul Weiner — Exactly. I will point out that those same traits of his probably led him to develop his theories that won him the Noble. As his colleague at Princeton Dixit put it, Krugman’s MO of success is to ID a problem or issue years ahead of the rest of the gang, make simple and specific straightforward assumptions about the world. I do think he’s done some good work in IT. Also, Krugman is a big advocate of making sure that the models tell a narrative. Though not praxeology by any means, his academic writings are understandable and tell a good plausible story. These are things an Austrian can appreciate. I just wish he wasn’t such a nut about Keynesian macro economics.
Krugman is not silly. He’s just dangerous. He realizes that things do not work out in spite of trillions spent. As he can not step back to and regret that he was wrong, he has to explain to his followers: I was right, but they just spent to little…
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