Paul Krugman

Paul Krugman, 2005, saying universal health care would make us more like GM...

Why should we be a country in which hard working people aren't guaranteed health care if they need it? ... But the problem is that ... our economy is starting to look more like Wal-Mart and less like General Motors in the good days. The share of workers who get benefits at all is declining and the quality of the benefits.

Wal-Mart is very profitable. GM filed for bankruptcy.

Paul Krugman is not concerned about how much universal health care will cost taxpayers.

I’m not that worried about the issue of costs. Yes, the Congressional Budget Office’s preliminary cost estimates for Senate plans were higher than expected, and caused considerable consternation last week. But the fundamental fact is that we can afford universal health insurance — even those high estimates were less than the $1.8 trillion cost of the Bush tax cuts.

Krugman waves away the matter of cost with "One way or another, the numbers will be brought into line".  However, in a 2005 interview with the Asian Times, Paul Krugman explained what he thinks we need to do...

"We should be getting 28% of GDP [gross domestic product] in revenue. We are only collecting 17%."

2008 tax revenue was 17.7% of GDP.  So, in Paul Krugman's ideal world, we would see a 60%+ increase in taxes.  But Krugman is "not that worried about the issue of costs."

This is what happens under a monopoly.  Consumer concerns about cost and value are called irresponsible, and the only "responsible" option - ever - is to gouge consumers for even more money.

If Democrats want to pass the health care legislation, then let's pass the tax hike necessary to pay for it simultaneously.  Let's bring those numbers into line and see how Americans feel about universal health care then.

Ezra Klein says the health care public plan is very popular in polling, so Senate opposition to it means "the Senate hates democracy" and "is resolutely, aggressively, anti-democratic."

Paul Krugman says poll results show that a majority of Americans prefer deficit reduction to higher government spending, but Krugman says "most people don’t know much about macroeconomics" so "the moral for Obama is, of course, to ignore this poll".

Discuss.

NOTE: Aside from the fact that people tend to accept or dismiss polls results based almost entirely on what they already wanted, I think there are two problems with the idea that popular support equals legitimacy, propriety or even democracy.

1. Stated preference (poll) and revealed preference (how people actually behave when making a choice) differ widely.
2. With no real price mechanism through which people can evaluate the costs and benefits of policy, we end up with simultaneous public support for massive spending and minimal taxation.  Well, who doesn't want something for nothing?

#1 is a political problem that can't really be changed - thus, we have a representative democracy, rather than direct democracy.

#2 is a policy problem that both Republicans and Democrats should be doing more to fix - e.g., indexing tax rates to spending, pigovian taxes, federalism, etc.

Paul Krugman wasted no time responding to the claims by Megan McArdle and others that he was the spiritual father of the housing bubble.

No, Paul. We don't think you were on the grassy knoll. Maybe Arlen Specter might. He was the investigator for the Warren Commission. We'll check if you want..

Problem is, Paul, the charge here isn't about pulling the trigger. It's about inciting the riot. And Clusterstock pulled up abundant evidence the McArdle quote was not out of context and entirely consistent with your agenda in 2001 and 2002.   

Paul, we understand. We've all called things wrong. Jeez, even people here think I'm wrong for writing at Dow 7000 the market had yet to reach bottom.  And it didn't until 6500. But people still say I got it wrong. Oh, well.  Maybe a little humility might be a good thing here, too.  Guess they forget my calling the 2008 mortgage hurricane. Oh well.

Now Paul, it you want to hang Alan Greenspan for botching the execution of the proposed strategy, I'm all ears.  How the "Maestro" didn't realize low short term bond rates=low ARM mortgage rates=excess housing appreciation---well, maybe that's what happens when you stop looking at the war in the trenches. 

If you do that, I'll back off thehack  charge for awhile.

The bigger problem , Paul, is once again you are out urging that the economy be pumped up when the track record in 1999-99 and 2005-07 is the Fed and the Congress are completely unable to turn off the spigot before things overheat.  Why will this time be any different unless you think liberal Democrats are immune to the avoidance of short-term political pain?   

I'm actually glad Krugman is an economist. Had he been an engineer, he would still be telling operators of nuclear plants to pull out the control rods to gain added power even after what happened at Chernobyl.

I chime in with Megan McArdle (H/T)

Wow.  Just . . . wow.  .Paul Krugman, circa 2002

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. (emphasis added)

My word, was this ever nonsense on steroids.

I can assure you that the people actually involved in real estate finance out in the hinterland in the early '00's would have explained quite concisely the risks in "bubbling" real estate---since Mr. Krugman obviously ignored the popped bubble circa 1989-1990. But we aren't Ivy League eggheads and we weren't asked.

Let's deconstruct the impact of this remarkable paragraph

A) It was easy for Paul Krugman to identify the real estate bubble in 2006 since it was exactly what he lobbied for in 2002.

Worst still, you spent the second Bush term bashing him for presiding over policies you endorsed. 

B) Krugman often scoffed that the only tool Republicans ever want to use is cutting marginal tax rates. Look in the mirror, Paul.  Everytime the economy hits the least bit of trouble, you immediately demand the fire hose of stimulus --either monetary or fiscal or both--be turned on.  It' a Johnny-one-note approach.

C) The solution to the popped Nasdaq bubble was the real estate bubble. Now the solution to the popped real estate bubble is the federal budget bubble. When the Chinese stop lending to us. are we going to find another bubble to blow up?  What is this--Bazooka economics?

There's always a crisis in capitalism for Paul, and there's always a bubble to fix it.  Should the guys in Oslo do a recount about that award about now? 

Paul Krugman makes a very good point about the dominant conservative media being full of "conspiracy theories and apocalyptic rhetoric".   That's true (e.g.), and it's a genuine problem for the Right.  I'm not sure the Right has come to terms with just how destructive an echo chamber is - and has been - to perceptions of reality and propriety (and yes, the Left has dived into their own rhetorical sewer, but tu quoque is no excuse). 

However...

The ongoing efforts to conflate the Tiller and Holocaust Museum murderers with the Right, conservatives or Republicans - or to imply that criticism of government is responsible for these murders - is absurd and offensive.  Would the critics change their political views if it turned out that one of the killers was a left wing militant?   No.

What's more, it's not something any of the critics actually believe.  Recall their outrage when Andrew Sullivan suggested that a fringe on the Left would fight against the US.  Of the idea that this fringe on the Left would "ramp up its hatred in the days and months ahead", Duncan Black said, "Sullivan was one of the earliest adopters of the idea that the most appropriate response to September 11 was to figure how to to use it to pit American against American."

We've come full circle.  The Left is growing comfortable with the role of dominant bully.

And contra some on the Left, objections to the DHS Report (both the Left and Right wing reports) were legitimate.  The objection is not that they DHS studied the potential sources of violence, but that they made political generalizations ("the DHS description of these groups seems excessively broad with the potential for mischief").  It was political profiling.

Let's conclude with two central ironies:

• The Left strenuously objects to connecting President Obama to socialists and William Ayers; meanwhile, they want to lump all conservatives in with militant radicals.

 

• Meanwhile, as Doug Mataconis points out, "Conservatives who object to being tied to Von Brunn were eagerly associating Obama with Ayers and Wright."

 UPDATE: Jesse Walker makes excellent points, as well. (via Instapundit)

I know I shouldn't care what someone who has been so consistenly wrong about economics thinks (and before you peddlers of revisionist haterade chime in saying Krugman predicted the current crisis -- if you predict a recession every 2 months for a decade, you'll eventually be right.  Krugman's analysis of the current situation is so absurd its laughable).  That said, Paul Krugman doesn't think we should be worried worry about inflation.  Money quote:

Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves. And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.

But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.

Riiiiiiiiiiiight, so the second there's a hint of economic recovery we're not going to see a "butt"load of inflation?!?  I guess Krugman hasn't seen what's happened with Gas Prices the past month....

I'll file this in the laughable Krugman predictions file, right next to his 2003 recession call.

Priceless line from Krugman's column today:

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

...

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.

Riiiiiiight...the state with the highest income tax rate in the country has a massive budget problem because taxes aren't high enough.  It can't have anything to do with state spending.  Apparently, there's no problem government has that can't be solved with just a little bit more of our money.

I hope this helps.

That is all.

Cahnman out.

Plagiarism is the author's attempt to use the work of other people as your own, without disclosing their involvement.   Astroturfing is exactly the oppose: it is an organization's attempt to attribute their own work to other people without disclosing the involvement of the organization.

If I said Paul Krugman was a plagiarist because he quoted other people in his columns (with attribution), that would be ridiculous. I would owe him a correction.  And possibly monetary damages. Words mean things.

Yet, in today's New York Times column (in which he makes some reasonable points about the sad state of the Republican Party), Paul Krugman grossly misuses a term to libel a variety of people.

Last but not least: it turns out that the tea parties don’t represent a spontaneous outpouring of public sentiment. They’re AstroTurf (fake grass roots) events, manufactured by the usual suspects. In particular, a key role is being played by FreedomWorks, an organization run by Richard Armey, the former House majority leader, and supported by the usual group of right-wing billionaires. And the parties are, of course, being promoted heavily by Fox News.

What Freedomworks and various other organizations are doing is not "astroturf" any more than the anti-war protests of some years back were astroturf because ANSWER and Moveon.org helped organize people around those events.  Astroturfing is paid activism by an organization; it is not genuine grassroots activism that funded groups are simply helping to organize.

The Center for American Progress & Think Progress, of all groups, should know better than to use the word "astroturf" against funded, ideological 501c(4) organizations that are trying to organize activists.  Especially considering how many funded, ideological 501c(4) organizations they have trying to organize activists.

The accusations Paul Krugman makes in the New York Times are very similar to the talking points that have spontaneously arisen in the Leftosphere recently, and their attempts to delegitimize these policy protests are not likely to stop unless the Right fights back.  For starters, unless Krugman and the New York Times issue a correction, the people they have libeled should consider responding to this libel through appropriate legal channels. 

Beyond that, it is crucial that the groups attempting to organize activists around these Tea Party protests see their role as service-oriented infrastructure.  Provide the information and tools, and let the grassroots continue to organize themselves.

UPDATE: Contra Matt Yglesias, I did not "attack CAP/AF as astroturf".  Indeed, my point was that the CAPAF (Think Progress) "grassroots advertising and organizing" is not astroturf, so they shouldn't throw the astroturf accusation at other groups that do grassroots organizing.

For the record, astroturf really requires two things: (1) A claim to be organic/grassroots, and (2) non-disclosure of the non-grassroots group that is really behind the activity.  Organizational involvement in activism is not, itself, astroturf.  Nor is it astroturf when an organization conducts its own activism project with full disclosure of their involvement.

Bob Herbert peddles one of the Left's favorite myths....

"Working people were not just abandoned by big business and their ideological henchmen in government, they were exploited and humiliated. They were denied the productivity gains that should have rightfully accrued to them. [...] As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher, Mr. Johnston pointed out, than in 2005."

I addressed many of these "stagnant wages" arguments at TCS Daily in 2006 and at QandO.  I won't repeat those arguments here.  Instead, I'll outsource this dispute to somebody Bob Herbert may know: Paul Krugman.  While acknowledging income inequality, Krugman nevertheless realizes that the "morality play" about stagnant wages and oppressed workers was mostly "a statistical illusion" attributable to poor measurements of inflation that underestimate income gains.

[O]ne thing is now clear: the truth about what is happening in America is more subtle than the simplistic morality play about greedy capitalists and oppressed workers that so many would-be sophisticates accepted only a few months ago. There was little excuse for buying into that simplistic view then; there is no excuse now.

I find it remarkable that Republicans have not done more to pursue better measurements of inflation - CPI may be the best proxy we have for inflation, but it is a very flawed proxy.  What's more, Republicans need to demand a re-consideration of the CPI numbers we currently use to evaluate the past 30+ years. The systematic errors in CPI create the statistical illusion that things are getting worse when that clearly is not true.  Indeed, this is a view that has been supported by economists from Paul Krugman to Alan Greenspan, from Brad DeLong to Ben Bernanke.

A more accurate index of inflation would have two crucial effects.

1. It would reduce our long-term deficit, as it would reduce the growth of entitlement spending.
2. It would destroy the Democrats fundamental economic premise.  Inequality may be growing, but the poor are not, in fact, getting poorer.

This is a case where the science - the experts - are on the side that Republicans ought to take.  Republicans should take advantage of that.  We should not let the "would-be sophisticates" of the world - e.g., Bob Herbert - peddle the morality play about "greedy capitalists and oppressed workers".  There is no excuse, either for that simplistic argument or for Republican inaction at this opportunity to accurately recapture the economic narrative.