Paul Krugman economics: Deny, deny, deny!

Discussion in 'Politics' started by Max E., Mar 4, 2013.

  1. Max E.

    Max E.

    Great article sums up krugmans douchebaggery.

    Paul Krugman is a frustrated man — a Cassandra whose wise warnings are regularly ignored by fellow economists, policy experts and political leaders alike. This past week has been especially difficult for the Nobel Prize winner, who like Sisyphus, must continue to push back against the ignorant fools who dismiss his debt-denying ways as reckless.

    Mr. Krugman came on “Morning Joe” and declared that Washington needn’t worry about its long-term debt problem until the moment that programs like Medicare begin melting down.
    “If we are worried about health care costs in the year 2025, why do we have to worry about it now?” asked The New York Times columnist. It is a question regarding our looming entitlement crisis that is every bit as ridiculous as a healthy 50-year-old man asking why he should bother buying life insurance.

    (Also on POLITICO: Krugman is wrong - but don't take my word for it)

    Paul Krugman justified this indefensible position by saying that since Washington politicians are too stupid to walk and chew gum at the same time, they are incapable of running short-term deficits while worrying about long-term debt.

    The Krugman solution? Simply ignore America’s long-term debt.
    That reckless conclusion shocked even the hardiest of Keynesians on the “Morning Joe” set last week. President Barack Obama’s car czar, Steve Rattner, described Krugman’s views as dangerous. Columbia University economist Jeffrey Sachs concurred, saying Krugman’s views were reckless, Democratic leader Ed Rendell politely explained to our guest that investment and debt control were not mutually exclusive, and Council on Foreign Relations President Richard Haass dismissed this form of debt-denial as deeply irresponsible.

    Mr. Krugman responded to the flurry of criticism he received by excoriating “in-crowd” types like “Joe Scarborough, Erskine Bowles and Pete Peterson,” (and anyone else who disagreed with him) as members of an incestuous clique populated by shallow simpletons who draw their economic conclusions based on hearsay instead of rigorous study and hard data.

    Unfortunately for the self-consumed professor, his latest lurch left has created an entirely new collection of critics that are a far cry from the right-wing straw men that he usually sets up to knock down. Instead, Krugman’s extreme view that Washington should ignore long-term debt until the bottom falls out of entitlements now places him at odds with liberal Keynesians as well as conservative Republicans.

    I would like to believe that Paul’s “Morning Joe” routine was simply an attempt to be provocative and bring to camera the ideological Vaudeville act that he performs daily on his hilariously entitled New York Times blog. This is where Krugman flails about at windmills while professing his omnipotence daily, in between stints as a serious economist.

    Krugman doubled down on that act this week, posting four blogs addressing his one “Morning Joe” segment. In those posts, he characterized me as an angry deficit scold who accused him of being outside the mainstream of economic thought.

    That charge is only half right.
    Krugman’s views on long-term debt are, in fact, wildly outside mainstream economic thought. But he is wrong in saying that his interview made me angry. Watch it here and see how I was polite, engaged and entertained by the preposterousness of his debt-denying logic. Far from being angered, I found the interview to be one of my favorites of the year. He is welcome back anytime.

    Unfortunately, Paul Krugman and his merry band of bloggers were not as excited by the “Morning Joe” appearance, as they rushed to their laptops to launch a ham-fisted defense of debt denial.

    Krugman’s apostles then proceeded to mischaracterize his critics and reframe the debate.

    Bloggers from The Washington Post, Business Insider and New York Magazine all wrote posts accusing Paul Krugman’s critics of being ignorant of basic economics. All three then proceeded to embarrass themselves by mixing up the most basic concepts of economics by repeatedly confusing the terms “deficits” and “debt.”

    The Washington Post’s Greg Sargent at least circled back to write a follow-up post that bothered to accurately reflect the views I have been repeating every morning for five years now. But the same could not be said of a fabulously misleading Business Insider post that claimed to list 11 economists who shared Krugman’s debt-denying views. Never mind the fact that most of the links provided actually undercut Krugman’s reckless position and supported my view that the most pressing fiscal crisis is not next year’s deficit but next decade’s debt.

    The Business Insider link to an Alan Blinder piece was particularly supportive of the “Morning Joe” panel’s view. Blinder, a former Fed vice chairman and Princeton economics professor, warned of “truly horrific problems” caused by long-term debt, health care costs and interest on the debt. Paul Krugman’s Princeton colleague even shared my conclusion that the coming Medicare crisis will be so great that Democrats won’t be able to tax their way out of it.

    Far from supporting Mr. Krugman’s extreme position, the link to Professor Blinder’s New Yorker article undercuts his Princeton colleague’s exaggerated “In-the-end-we’ll-all-be-dead” approach to U.S. long-term debt.

    After watching his debt-denying performance on “Morning Joe,” one wonders whether Paul Krugman will be as haughty and dismissive of his fellow Princeton economics professor as he is of all who disagree with his marginalized position. One hopes he instead does something that Mr. Krugman hates to do: just admit that he was wrong.

    I won’t hold my breath.

    Read more:
  2. jem


    krugman has been and dancing econ clown for years.

    now that Obama has been re elected even leftists are free to learn the truth.

    Debasing the dollar to support govt spending this useless is nuts.
    tacking on debt when it takes 2 dollars of debt to make a dollar of gpd is nuts.
  3. Ricter


    That was the case during the worst slice of the recession, when non-discretionary spending was peaking and revenues were tanking. It's not a general principle.
  4. jem


    I just changed my quote... to "this" useless.

    I agree that in the passed when govt spending was getting a return it was not as much of a problem or a problem ( at times)

    we have a mature economy... and president who is not spending the money in the right places.
  5. Krugman's whole premise is that the debt is ok because nothing bad has happened yet.

    That was the approach the Fed took when the housing bubble was being inflated. As we learned, things can go south in a hurry.

    The dollar is strong and rates are low largely because of the even greater problems other countries have, not from anything we are doing. We are just not going down the drain quite as fast as they are, for now.
  6. Tsing Tao

    Tsing Tao

    Krugman is a charlatan. And like all charlatans, they flounder about and make loud noise to attempt to distract the crowd while selling snake oil.
  7. Exactly. He is a hack, plain and simple. Whenever the govt gets the urge to spend more money or blow another asset bubble, they drag out Krugman to endorse it as a "wise idea".

    He's really something of a media whore to be perfectly frank.
  8. Wasn't that the unofficial motto of the Hindenburg and Titanic?
  9. No.

    Both crashed as a result of acts of god, really.
  10. What Krugman is saying is not totally crazy. The Fed is buying up most of the government debt, so we really are just printing money to live on. It works until it doesn't work any more. He's saying it's working so push it a little harder.

    He ignores some inconvenient facts however. One, the main impediment to growth is not lack of stimulus but burdensome government regulatory policies. It's like, you want to get stronger? Well, you can work out or take steroids. Both will work, but one has severe side effects eventually.

    He also ignores the fact we are already running a highly stimulative fiscal policy. So if five cans of Red Bull aren't doing it for you, up it to eight or nine. What could go wrong?

    What he is really saying is we need to get serious about engaging in a currency war with the euro bloc and Japan. Of course, the end result is that anyone with savings is made poorer but he is OK with that, just as obama is. Those people are the enemy after all.

    I would actually be OK with this if we weren't just pissing the money away on welfare, lavish government spending and the military. We can borrow for next to nothing. Actually we can borrow for nothing because the Fed just creates money to buy the debt. People are pointing out now that the Fed will take a big hit when rates finally rise as their enormous bond portfolio tanks. But the Fed isn't FNM or FRE. It doesn't have to mark its assets to market. They can hold them to maturity.
    #10     Mar 4, 2013