by Rob Natelson I think too much realism can actually be a problem. Paul Krugman on the PBS Charlie Rose Show, Oct. 12, 2011 Enough is enough. One expects some exaggeration from a political columnist, but one expects at least a minimal level of accuracy if the columnist is a Nobel Laureateeven if he writes for the New York Times. The problem is that during his ideological rants Paul Krugman has been failing to reach the necessary minimum. Krugman, you may recall, was the guy who, without a scintilla of evidence, smeared the Tea Party by claiming that its members were probably responsible for the shooting of Congresswoman Gabrielle Giffords. Krugman is also one of the ideological diehards who are convinced that the reason massive federal deficits havent cured our economic woes is that we are not spending enough! (The deficit is already 42% of the budget; how large does it have to be?) Krugmans latest venture into the absurd is a column in which he concludes that it would be good for the congressional budgetary supercommittee to fail to reach an accord because doing so would result in spending cuts. He seems completely to have forgotten that the fact that under the law creating the supercommittee, it is failure to reach agreement that triggers automatic, sweeping, across-the-board spending cuts! Along the way toward that conclusion, Krugman makes a number of assertions about Republicans that suggest that, like our President, he has spent his life isolated from them. Consider his claim that while Democrats think social insurance programs. . . serv[e] a moral imperative, Republicans have a totally different view. . . they view the welfare state as immoral. You have to wonder how many Republicans Krugman really knows; with brief exceptions, he seems to have been spent his life almost exclusively among the New York/New England liberal intelligensia. Of course, the party that favors eliminating all social programs is the tiny Libertarian Party, not the GOP. Nearly all Republicans favor some sort of government social safety net, although many of them recognize that under our constitutional system the states, not the federal government, are the ones primarily charged with that responsibility. Krugman also claims that Republicans think the way to increase revenue is to cut taxes on corporations and the wealthy. Thats a caricature, of course. Its silly to generalize that way about all Republicans, many of whom have supported tax increases as a way to raise revenue. (George H.W. Bush comes to mind.) More importantly, Krugmans statement misunderstands those of us who presently oppose tax hikes. Our actual position is that hiking taxes raises revenue only up to a certain point, and that beyond that point higher tax rates discourage productivity so that revenues fall. Hence, in considering tax hikes we should ask whether rates already are so high that further increases would be counterproductive. There are other questions, too. Among them are * Even if raising a tax would produce more revenue, would the additional revenue be worth any resulting economic distortions? * Even if raising the tax would produce more revenue, what are the moral implications of taking more money from those who earned it and giving it to those who did not? (When government at all levels is already taking, directly or by regulation, half what people earn, that moral issue becomes particularly compelling.) And * Would showering more money on inefficient or harmful programs delay needed reform? Or, put another way, would it be better for society to terminate or downsize some programs rather than increase their funding? Finally, Krugman takes Republicans to task for believing that slashing government spending is a job creation strategy. But on this point the Republicans are clearly right and Krugman is clearly wrong. Government is like water: You need it to stay alive, but too much of it can drown you. Government is necessary because certain necessary functions can be performed no other way. But it is, on average, notoriously less efficient than the private sector. (Having spent many years in both government and the private sector, I can certainly testify to this.) Not surprisingly, therefore, a growing body of research shows that the more government grows beyond the necessary minimum, the more it throttles economic progress. (For an example, click here.) It is no accident that the U.S. economy slowed to nearly European stagnancy after the aggregate size of U.S. federal, state and local government rose to nearly European levels. Thats why slashing government spending from excessive current levels (over 40% of GDP) would indeed be an effective job creation strategy. After all, weve already tried it the other way. http://www.tenthamendmentcenter.com/2011/11/21/dr-krugmans-rants-enough-is-enough/
Paul Krugman is obviously a smart guy. But he is also obviously living in an 'ivory tower'. That first quote says it all, imo.
Cutting spending right now when the economy is in trouble will cause the government workers to lose their jobs. If they lose their jobs, that means the unemployment rate AND unemployment insurance both go up. It's not rocket science... The super committee is a joke. Putting right-wing politicians in it that refuse to raise taxes is a recipe for disaster from the beginning. It's funny when Alan Simpson, a Republican, criticizes his own party for being too extreme. And then there's also the fact that Reagan raised taxes (http://www.bloomberg.com/news/2011-08-16/why-reagan-raised-taxes-and-we-should-too-echoes.html stupid lefties at BLOOMBERG!) after he cut them...But let's not let reality get in the way of our magnificent story! This MIGHT be more of a legitimate criticism, but many Republicans in Congress today talk like they want to get rid of all social programs. They want to gut education funding, food stamps, etc. all in the name of "cutting spending" all the while leaving an ENORMOUS defense budget, so spending isn't actually what they are concerned with, so it's what the money is spent on, and when it's not endless wars, forget it! THIS IS NOT A CARICATURE. I don't know how many Republicans have made this claim on here, and in the media. Mr. Natelson might be the one who needs a dose of reality. Yes this is true. And the rate is approximately 60%. When we get there, then there can be a discussion. There are other questions, too. Among them are WHAT??????? Moral implications are that it is wrong to cut medical research, education, heat and oil funding for low income households, food stamps, social security, medicare, and medicaid. It amazes me how much of this "Christian" nations supports such immoral policies. AGAIN, cutting government spending means more people are unemployed. That's why spending has to be cut when times are good so the economy can absorb it. If the cutting is just insane, then that will drastically slow the economic recovery. Like Japan being the third largest, Germany the fourth, France the fifth, and the United Kingdom the sixth largest economies respectively... Sorry but the claim that higher taxes and redistributive measures will stifle economic growth is simply a farse. If it were true, those countries that distribute the wealth more than we do would rank near the BOTTOM of the worlds largest economies. But they don't!!! Amazing...
It's possible to be very intelligent and completely insane at the same time. Krugman has proven this.
Krugman is the only one who is sane at present. His predictions have been closer to the truth than anyone else's. Krugman states we are in a liquidity trap - a bizarro world where bad is good and good is bad. The reason interest rates are low is that everyone is too scared to borrow - hence lowering interest rates wont create economic activity and jobs. In any case the Fed has already cut rates to almost zero. What Krugman correctly points out is that negative interest rates are needed - ie; Deliberate inflation. That will get those piles of cash moving very quickly. Krugman also talks about the "business confidence" argument - he terms it "The Confidence Fairy" - if Obama would only remove regulations, balance the budget, whatever, The Confidence fairy will wave her magic wand and businesses will suddenly start hiring. This is nonsense; business hires people when it can make a buck and not before, and since demand is low there are no extra bucks out there to be hoovered up. Todays post by Krugman:
Since you state it is 'needed'...then I assume you have link(s) to unbiased evidence/proof that it is so? Again, where are your link(s) to unbiased proof/evidence that reducing red tape, balancing the budget will not get people hiring? You do realize, of course, that that is almost exactly what was done during the 1920/21 Depression (balanced the budget, drastically cut spending) and the unemployment rate dropped DRASTICALLY (from 11.7% to 2.4% in just two years)? http://en.wikipedia.org/wiki/Depression_of_1920–21 http://en.wikipedia.org/wiki/Warren_G._Harding#Domestic_policies_and_economy
This is SO pathetic. All these economists in their ivory towers playing checkers with the U.S. economy. Throwing trillions of taxpayers dollars around like Monopoly money and deciding the futures of hundreds of millions of people...many who have not even been born yet. I have a question for you megalomaniacs...? What if you are wrong? I know you think it's impossible...but what if you are?
I like Krugman's very neat summary of how much debt we can get in. Why, people ask, would I want to compare us to Belgium and Italy? Both countries are a mess! Um, guys, thats the point. Belgium is politically weak because of the linguistic divide; Italy is politically weak because its Italy. If these countries can run up debts of more than 100 percent of GDP without being destroyed by bond vigilantes, so can we. It sounds like the President is ready to meet the challenge!
This is far out of context. For the in-context quote, skip to 24:00 in the video, or read a third-party transcript here. Here's my own transcript: If I may summarize him: "You need political energy to get anything done, and that energy comes from rhetoric, not realism. This is Obama's mistake." Edit: Ironically, people like to attack Krugman because he focuses on realism, not rhetoric, and as such doesn't sound very convincing. He would make a terrible politician.
Krugman is the guy that thought a Martian attack would be good for the economy (or similar words). He is for spending trillions of dollars America does not have to fix a problem that has only gotten worse after spending trillions of dollars already to 'fix' it. He is NO realist. He is a dreamer. Other then consulting for Enron - he has (to my knowledge) never worked a day in his life in the real world and clearly does not have a clue how it works. And he would be a fab politician...he is fantastic at spending other people's money in HUGE quantities.
I don't know about that. Krugman was owned on his own blog and had to shut down the comments section. That takes a real idiot to pull off. _
I think Paul Krugman is VERY smart. But I don't think he is very wise. And I think he wears rose colored glasses when it comes to Keynesianism.
