I have no idea if Paul Krugman writes editorials for the New York Times, as well as his own columns. I do know that his excoriation of Europe’s governments in today’s missive is similar to an editorial that appeared last Friday attacking the European governments for not spending to Larry Summers’ liking.
Krugman, who I remember a year or so ago declared that the European economies were doing just fine, does provide praise for the heavy welfare burdens that governments on the Continent place upon taxpayers:
The only thing working in Europe’s favor is the very thing for which it takes the most criticism — the size and generosity of its welfare states, which are cushioning the impact of the economic slump.
This is no small matter. Guaranteed health insurance and generous unemployment benefits ensure that, at least so far, there isn’t as much sheer human suffering in Europe as there is in America. And these programs will also help sustain spending in the slump.
But such “automatic stabilizers” are no substitute for positive action.
We see the results of the vulgar Keynesianism that Krugman employs in his columns and blogs. Capital isn’t important, nor is the structure of production important in an economy. In fact, to Krugman, I think we can substitute “blob” for “structure.”
You see, at the Hallowed Halls of MIT and Princeton (and the other “elite” institutions of “higher” learning), an economy is nothing more than a “blob” of goods and spending, a perpetual motion machine that must continue to be greased by more spending. Capital is useful only in the money spent to create it, and (according to Frank Knight, when he dominated the University of Chicago’s economics department), capital simply appears on its own and automatically sustains itself.
For all of the supposed sophisticated math that dominates the “elite” or “A” journals of economics, it pretty much comes down to “blob” economics. Economists create extremely crude models of an economy, and then have the chutzpah to tell the rest of us that they have the ability to replace the workings of an economy and its billions of prices and transactions with their Own Infinite Wisdom.
Lest anyone disagree, I would urge them to read the Krugman column today. (Yes, I know it is difficult and painful, but it helps to know what Really Bad Economists Who Are Influential are saying.) Anyone who even hints at responsible action is smeared with the worst label that Krugman can imagine: calling someone a “Republican.”
I can only imagine the horror Krugman would have experienced had he been to the ASC last weekend. Yes, he would have heard things about “structure of production,” and “profligacy,” and he would have heard Peter Schiff telling us that borrowing a trillion or more dollars and blowing them on consumption goods is the sure road to a long and deep depression. I suspect Krugman would have been in depression, himself, had he been forced to listen to sound economic thinking.
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Maybe Krugman is confused, and believes that he is a graduate of Hogwarts.
>welfare states, which are cushioning the impact of the economic slump.
Would it have been proper to push Keynes off a cliff and the drive him to a hospital?
Would it be so far fetched to say that I think, in some sort of divine providence sort of way, that Krugman only exists so that we can all read Bill Anderson’s response to his articles?
I guess everyone should quit their jobs and become full-time shoppers, using their welfare checks.
>welfare states, which are cushioning the impact of the economic slump.
It’s lovely. Where I live in the Republic of Ireland the unemployment benefits are very generous. As a result folks are moving to take advantage of it:
Some folks are quitting their jobs in case they become more difficult and arduous.
Still, what does this matter, if capital is homogeneous then surely so is human capital?
My feeling is that there is only one reason for the Keynes lite response to this mess. (PK believes that the US is Keynes Medium and desires Keynes Super-Sized) is that these insane policies the US is using and that have already produced 2 decades of low economic growth in Japan would simply break the EU into apart. There is only so much wealth that Germany is willing to give away before it just can’t do so any longer. It is already paying out tons of its own wealth in subsidies and is beginning to feel the grip of inflation. Germany seems to be the only place where the inflation is resulting in higher prices and not in a price correction. But just wait, it is coming there too.
If the EU countries were smart then they would just destroy the EU and go back to their own currencies (I would like to see them backed by gold, but that ain’t gonna happen.) instead of this Krugman solution to go into giant debts and wreck the value of the Euro.
I feel dumber after reading the Krugman essay.
This editorial is proof that Krugman KNOWS that his prescriptions for spending are on the road to wrecking the US economy. So what does he propose? All other countries MUST wreck their economies also, lest in the future the USA will become the cripple that Japan is now, and he will be totally discredited as an economist, in spite of his arguments to be that ‘the stimulus was just not big as I liked it to.”.
If all developed countries in the world consume what’s left of their capital by coordinated bad fiscal policy, when the markets finally correct, while everyone’s situation will be worse than now, he’ll be able to say “We’ve pulled through. Imagine how worse we’d be if not for our magic recipes.”.
It’s sad that Knight, who was good on methodology, is so terrible on actual economics when it comes to capital. He must be read to be believed. His introduction to Menger’s Principles (more of an attempt at a scathing critique than an intro) is one place one can see his bizarre doctrine of capital qua homogeneous good in action.
Reading Krugman kills brain cells. No thanks. I’ll stick with beer for that purpose.
Inquisitor, Pat Gunning makes the interesting claim that Knight considered capital homogeneous only for certain purposes. The problem was that Knight’s purposes were not general or the same as that of later writers.
Don’t know if it’s true, but it’s interesting.
I’ve not read Knight in depth but what I have read of him seemed critical of the notion of heterogeneity of capital. His redeeming features are his work on entrepreneurship and methodology.
“Would it have been proper to push Keynes off a cliff and then drive him to a hospital?”
Yes! The wages received by the ambulance drivers and the attending nurses, along with the proceeds deriving to the bandage makers, would then be re-spent in the economy. The ambulance drivers and nurses would spend some money on pints down at the pub, the bandage company would buy more adhesive materials, and so on. This “multiplier” effect on economic activity would drive us out of recession, although to receive the full benefits would best be carried out by a state department of planning, who would avoid pesky leakages (such as savings).
Sorry, I forgot to include the sarcasm disclaimer.
well said….the keynesian fallacy of “only spending matters” needs to be exposed. By the way, can anyone tell me what the nobel prize in economics is worth now?
“By the way, can anyone tell me what the nobel prize in economics is worth now?”
about as much as the NYT…
Yesterday, Krugman gave a speech is Spain supporting the Prime Minister. Krugman’s recipe for Spain was a) keep building huge cushions b) Lower salaries. Even for socialist government is Spain there is no more room for cushions, and lowering salaries is impossible in an awfully rigid labor market.
Jc zumbado says: “By the way, can anyone tell me what the nobel prize in economics is worth now?â€
Well, for us nothing, but for the socialists a lot. It is a fetish. Krugman’s words are taken by the media as the universally accepted scientific opinion.
It seems while Europeans are taxed to death that they at least get something in return. If you take fed, state, local, and a tax on every damn product and service here (USA) we get very little in return. A socialistic society without the social aspect. Is this observation accurate? If so where the hell does our tax dollars go?
It seems while Europeans are taxed to death that they at least get something in return. If you take fed, state, local, and a tax on every damn product and service here (USA) we get very little in return. A socialistic society without the social aspect. Is this observation accurate? If so where the hell does our tax dollars go?
Rufus-
A huge portion of our tax money goes towards maintaining our empire and policing the world. Europeans don’t do this, for the most part. They just put a few token dollars into the UN, which stands for UNproductive.
Rufus, everything is relative. Yes, public health is better in Europe than in USA, but still awfully slow. Public education is mainly free, but for what? At least where I live education is a massive brainwashing tool. Justice is slow and unfair. And so on.
So far, government size in America is still smaller. In theory that could help, but Obama’s plan will put you in a European-like situation.
I barely made it to the middle of the article (the “Why is Europe falling short? Poor leadership is part of the story.” part). To regain some composure I had to re-read what Lord Acton had to say about this 150 years ago:
“”"
The avoidance of a Poor Law by means of public works, not actually necessary, is characteristic of a centralized absolutism. It nurses artificially, a proletariat, a classless community, which, instead of being absorbed in its own places, is permanently relying on the state to provide for it, not by barely keeping it alive, and leaving to vice and improvidence all its natural effects, but by raising it up to the level of those who are able to provide for themselves, as far as present profits go, only depriving it of the possibility of becoming independent and normally self-supporting. Thus a constant danger menaces society, and the need of a strong hand perpetually saving society, and converting dictatorship into a regular form of government, is kept always before it, as private individuals cannot constantly go on with this kind of benevolence without ruin, the labourer turns from the proprietor to the state as the protector and refuge, and the antagonism of property and labour is made more irreconcilable, the the great advantage of the civil power.
“”"
(Lord Acton, August 20, 1862 – Essays in Religion, Politics and Morality, page 575, Liberty Fund edition, 1988)
Maybe this is what Krugman wants, to impose upon us the “centralized absolutism” and “dictatorship of government” Lord Acton warned us about.
Hmmph. I think we might be a bit jealous over this Nobel thingy.Accordingly, let’s take minute to reflect
on the great mans blockbusters!
Rebel Without a Krugman
All Krugman on the Western Front
A Man for all Krugmans
A Midsummernight’s Krugman
Gone with the Krugman
The da Krugman Code (Krugman is descendent of Jesus)
The Lion the Witch and the Krugman
How Green was my Krugman
Harry Krugman and the Sorcerers Stone (yaoi sites not a hit with Japan schoolgirls)
Sex, Krugman and Videotape (not legal in all states)
The Last Temptation of Krugman (did Krugman father child with Ann Coulter?)
How to win friends and Influence Krugman
How to succeed in Business without being Krugman
Chicken soup for the Krugman
I’m OK- You’re Krugman
Everything You Wanted to Know about Krugman but were Afraid to Ask
The Joy of Krugman
How Much is that Krugman in the Window? (last place,Eurovision song contest, 1959)
It’s my Krugman and I’ll Cry if I Want to
Kiss a Krugman Good Morning (Charlie Pride drunk?)
(The Hills are Alive with) The Sound of Krugman
(Meadow twirl in Dirndl dress thrills millions)
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