Sunday, March 3, 2013

The five most amazing things that Paul Krugman has said lately ...

Counting down (and they are all from ONE op-ed):

Number FIVE:
Nations with responsible governments - that is, governments that are willing to impose modestly higher taxes when the situation warrants it - have historically been able to live with much higher levels of debt than today's conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of GDP for 81 of the past 170 years. 
Yes, Paul, looking at the last 170 years of the British Empire as it fought multiple disastrous wars, became the British welfare state, and is now berating citizens for not spending their savings fast enough is exactly how we want to model America.

Number FOUR:
If your image is of a nation that's deep in hock to the Chinese, you've been misinformed.
Apparently we were so misinformed by ... Barack Obama:
“It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. Over the past five years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is  ‘‘trillion’’ with a ‘‘T.’’ That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers.” 
Number THREE:
Taxes must be levied to pay the interest, and you don't have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance. But these costs are a lot less dramatic than the analogy with an over-indebted family might suggest. 
Nah, the fact that PBS reports that interest on the Federal debt is now
... more than the combined budgets of Commerce, Education, Homeland Security, Interior, Justice, and the federal courts combined ... 
... is not a concern at all.

Number TWO:
This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of GDP, than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn't make postwar America poorer. In particular, the debt didn't prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation's history. 
As I have pointed out before, the fact that Paul Krugman keeps trotting out this canard is pretty good evidence that he not only isn't a historian, but also that he doesn't know jack about the global economic differences between then and now.

AND ... FINALLY ... the NUMBER ONE most amazing admission by Paul Krugman (this week):
 Families have to pay back their debt. Governments don't.
 Ironically this one's true--as any citizen of Greece can tell you these days.

Which doesn't mean it's a good thing--as Paul Krugman plainly believes it is.

What is amazing about Krugman is not so much that he has prostituted himself to become a liberal Keynesian guru, but that anybody still listens to the man who calls other Nobel Laureate economists racists for not agreeing with him.


Dana Garrett said...

#5: How is Krugman suggesting that the USA carry a debt that is anything even close to 100% of the GDP as your reply intimates? That seems to be a red herring. How does what is happening now in Britain in any way refute his historical claim? Some have argued that Britain's current problems reflect the extent to which Britain abandoned it's social democratic moorings under Thatcher and Blair, leaving citizens without the capacity to make purchases at previous levels. I see no prime facie reason to believe that historical analysis is wrong and yours is evidently correct.

Dana Garrett said...

#4: Oh, because Obama said it, Krugman has effectively contradicted himself because Krugman always agrees with Obama. Except that he hasn't, often in significant ways.

Steven H. Newton said...


Anyone who would use the British Empire since 1853 as a model of debt management is simply ignorant of British history. In the 1880s-1890s Britain involved itself in an economically ruinous dreadnought arms race and over the next forty years consistently subordinated intelligent financial management to a foredoomed attempt to hold onto an empire that oppressed people around the globe. Sound familiar? You can do your Thatcher ranting all you want, but Krugman defined his own terms here--and by the way, where IS his analysis. He doesn't present any.

As for Number 4 my point is pretty simple--it is Krugman, not Obama, not people concerned with a model of unsustainable debt, who is the outlier.

I notice you didn't bother to examine (yet) my earlier explanations of why Krugman simply does not know what he is talking about with regard to the economic forces driving the US economy after World War Two, either.

delacrat said...

"AND ... FINALLY ... the NUMBER ONE most amazing admission by Paul Krugman (this week):
Families have to pay back their debt. Governments don't. Ironically this one's true--as any citizen of Greece can tell you these days."

Greece is a very different situation than the U.S. in that Greece does not control it's own currency and it's government debts are denominated in Euros, not it's own Drachmas. Because U.S. Federal debt government is denominated in an internally created currency, the level of U.S. Federal debt can be managed by "printing", euphemistically called, Quantitative Easing. An option not available to the Greeks. QE has it's own problems, nevertheless, the US and Greece situations are really not comparable.

Steven H. Newton said...

Goodbye Jim.

delacrat said...

Um .... I have, in the past, been called "asshole", and indeed much worse. But never before has anyone ever called me "Jim".

Steven H. Newton said...


Sorry, I have been dealing with a persistent troll here this evening, who is sometimes "Dan Smith" and sometimes Anon and is really named Jim.

It makes no sense to you because I deleted his intervening comments.

Delaware Watch said...

Steve, I didn't examine your earlier points and examples because my phone froze up. I was going in reverse order. Then I got busy with other things. My son is home early from school today, so if I get a chance later tonight, I'll take up where I left off.

Steven H. Newton said...


Don't bother. It's a week old and everybody in my house but me has the flu, so you probably won't get an intelligent response out of me anyway. :)

Dana Garrett said...

Sorry to hear about your family's illnesses. Hope you avoid it. I would like to make a comment on your post about Obama not striking Americans with drones within the US, but I don't see a make a comment option on that post, at least not through my phone.

Steven H. Newton said...

There isn't a comment option in that post--I had trouble with a really obnoxious troll and had to--reluctantly--shut it down. I would reopen it except that one item within it is so egregious that I needed to keep it around (where I could still access it) in case there eventually needed to be legal action taken.

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