Friday, February 18, 2011

Krugman's New Gig: He's a Comedian!

Once upon a time, I thought Paul Krugman was at least a semi-serious economist, as opposed to being just another political operative. (The difference is that I actually read Krugman's stuff, in part because of this blog and also in part because I do hope -- against hope, I'm afraid -- that he will give some of the economic wisdom that he used to give. No, I don't read anything on the Wall Street Journal editorial page by either Karl Rove or Peggy Noonan, as pure political operative material is not worth the time spent reading it.)

In his semi-weekly anti-Republican screed masquerading as a column, Krugman decides to delve into comedy. After attacking the Republican budget proposals which actually may cut a tiny sliver of spending (don't hold your breath, however), Krugman then gives us this gem:
What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.
Yes, talk to people in the healthcare business who actually have to deal with the new law and all of its new regulations. Talk to people who have to fork out huge amounts of money to comply with these new rules, the restrictions on care, and the like.

This is "cost-cutting" in its most bureaucratic and Orwellian sense. One does not and CANNOT cut "costs" by forcing people to bear new costs. (Don't forget that Krugman himself used "death panels" in a positive way on national television, and he sees governmental denial of care as a legitimate tool for "cost-cutting.")

The fundamental concept in economics is opportunity cost. The Keynesian notion that government can simply create money to bring about new spending and thus reclaim "idle resources" is one way that Keynesians like Krugman like to claim that they can create the "free lunch." (Don't forget that Krugman himself makes that very claim in his Depression Economics book.)

So now we have Krugman claiming that forcing up real costs and passing laws somehow can circumvent the very real and immutable laws of economics. It's official; he no longer is an economist; he is a political operative, and maybe a comedian. Maybe both.

30 comments:

Jonathan M.F. Catalan said...

I don't think he is ignoring economics. I just think he doesn't agree with our theory (i.e. a potential for unlimited demand). For me, this is just a problem of a lack of visitation of theoretical roots of most modern "mainstream" economists. Why waste time revisiting foundational theory, when you can just study your little niche?

It shows that criticism of modern "mature" "mainstream" theory isn't respected enough to make a serious impact on the direction of academic economics (which should be more introspective, in my opinion).

The mainstream doesn't recognize this problem. We need to show why this problem is an important one.

Mike Cheel said...

What I don't understand is why people seem to think that the government is somehow less corrupt than non-government. At least in private enterprise there is incentive to do good (a lot of the time). If they fail, they go out of business. If the government fails, they either skewer the facts or throw more money at it to 'fix it'.

Sam Gamgee said...

re Mike Cheel.

The underlying goal of private enterprise is not to "do good". Rather it is to maximize earnings for shareholders/owners.

They may make good products at a great price, but nothing says they have to. If they can make bad cheap products to maximize their earnings they will. If they can hide any downside of their goods/services, they will.

Capitalism in it's purest form is a pretty great thing, but as with most -isms, when you put them in the hands of people they don't always meet the ideal (i.e. see communism tendency toward tyranny).

Government ultimately is there to serve us. It is there to represent us. Generally speaking, it's there to protect and provide for us. Things like regulations for safe drinking water, a military, etc.

Does that mean that it doesn't have corruption or inefficiencies? No, of course not. Every large bureaucracy will have these things creep in. Especially, if there is money involved. Private enterprise has the same issues. The goal is to make govt do it's job better.

Just remember...assuming that private enterprise has to sell something, doesn't mean what they do is "good" for you. They serve themselves (and not even their employees).

Bob Roddis said...

The simple fact is that Krugman refuses to understand the pricing process (which is also why he won‘t wrap his little mind around ABCT). ObamaCare is going to employ command and control in lieu of market pricing. It will be a nightmare. From the December 2010 issue of LIBERTY:

ObamaCare creates over 100 new government commissions. Some estimates are as high as 159; no one seems to know for sure. But judging by the 4,231 occurrences of the word “shall,” the commissions will be very busy, whatever their number. And they will be everywhere, all the time. According to the PPACA, commissions shall establish procedures; promulgate regulations; provide for efficient and non-discriminatory administration; prescribe regulations, rules, and guidance. They will be identifying health quality measures, monitoring outcomes, allotting money to states, awarding grants to entities, participating in rigorous federal evaluation of activities, ensuring that hospitals are representative of the spectrum, establishing a national strategy to improve healthcare, aggregating consistent data on quality, consulting with other commissions. They will be conducting demonstration programs, computing benchmarks, establishing geographically adjusted premiums, negotiating reimbursement rates, determining contingency margins, conducting competitive bidding processes. All this is barely the tip of a colossal, dizzying, and nebulous iceberg of healthcare command and control — so who needs the Public Option? @Page 25

http://www.libertyunbound.com/node/290

It’s a law written by economics deniers that only an economics denier could love.

Anonymous said...

Re Sam Gamgee,

Everything the government is supposed to do can be found in Article 1 Section 8 of the US Constitution. I'm pretty sure it doesn't say anything about providing clean drinking water or a military.

Jonathan M.F. Catalán said...

Sam,

"They may make good products at a great price, but nothing says they have to."

So, would you say that you actively buy the worst quality products? Because, you know, the consumer is where profits actually come from, right?

Mike Cheel said...

"Government ultimately is there to serve us."

That sounds like the public school system talking. No offense.

Mike Cheel said...

Also, I didn't mean good like do good things. What I meant was do good as in be profitable.

Yes some companies do bad things to maximize profit but usually when people find out they stop patronizing that business. Also, when businesses do bad things to their customers often times other businesses in the same industry will try to capitalize on that to steal their customers which I would say usually ends up benefiting the customer withe better service \ prices and benefits the business with, well, more business.

I'm not talking about businesses that use the government to skewer the playing field to further their ends. That is a topic unto itself.

burkll13 said...

@Sam
"They may make good products at a great price, but nothing says they have to. If they can make bad cheap products to maximize their earnings they will."

but you arent forced (unless through some sort of legal coercive action, of course) to buy that product. the long term success of a business depends on satisfying their customers, plain and simple. thats not to say that people in business dont trade long term success for short term gain, but it tends to get handled in the marketplace.

Sauros said...

At the crux of this great debate is the fundamental nature of mankind.

On the more libertarian end of the spectrum we find the view that the consumer has more direct representation through acts of voluntary commerce and other interactions, a vote by dollars and sense if you like. On the progressive end the argument is that the masses are qualified and capable of choosing their own rulers, who are supposed to be like conquering heroes and white knights for the “public good,” whatever that might mean.

Both views have their finer points, but I find both ultimately miss the mark. A reading of history will not find many examples of either dialectic. Instead history teaches us that "mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed." While the concept of "evil" is too nebulous and metaphysical to address here, it's obvious that there are such things as "maximum sustainable absues." The cleverer of the species have taken note and forged a new destiny through will, reason, and science. We've concluded that the broad masses of mankind are cattle to be exploited, a crop to be harvested. As interesting as the great debate between progressives and libertarians is, it misses that fundamental point. The theoretical arguments are moot. Force majeure obliterates even the most elegant of syllogisms. Slavery happens to be the most common state of mankind; it’s no more wrong to exploit that fact if you are at all able to than it is for lions to hunt gazelles on the Serengeti.

"Society is divided into two classes; the shearers and the shorn. We should
always be with the former against the latter." - Talleyrand

The trick for statists like me is to find the limits of what hoi polloi are willing to put up with. We're finding that the sky is the limit if the maximum sustainable abuses are done scientifically.

- An honest statist.

Bala said...

"The trick for statists like me is to find the limits of what hoi polloi are willing to put up with. We're finding that the sky is the limit if the maximum sustainable abuses are done scientifically."

The guiding philosophy of The Matrix, of course.

Tel said...

Sauros the honest statist, have you ever noticed how few of your fellow statists take the trouble to be honest like you do?

I can just imagine Obama starting out his State of the Union speech with, "Slavery happens to be the most common state of mankind; it’s no more wrong to exploit that fact if you are at all able to than it is for lions to hunt gazelles on the Serengeti."

Yup, that would go down just sweet.

When you say "sustainable abuses are done scientifically", ultimately the science is primarily the science of deception and confusion.

Oh wait! You are really Krugman having another one of your jokes with me right? Oh man, you really go me. I was so taking you seriously for a moment.

Mike Cheel said...

"The guiding philosophy of The Matrix, of course."

Also from the matrix:

"You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it."

Bala said...

@Mike Cheel,

Very true and sadly so. Sometimes, it's too late to free some minds.

Sam Gamgee said...

Anonymous Anonymous said...

Re Sam Gamgee,
Everything the government is supposed to do can be found in Article 1 Section 8 of the US Constitution. I'm pretty sure it doesn't say anything about providing clean drinking water or a military.

Actually it does say "To provide and maintain a Navy" which does sound like a military. No, it doesn't specify clean drinking water, but I'm grateful it was done, as I'm not sure the market would have gotten around to responding to the negative impact. Course, it then just becomes a matter of what kind of cost are you willing to put up with before forcing the market to clean up a mess.



Anonymous Jonathan M.F. Catalán said...

Sam,
"They may make good products at a great price, but nothing says they have to."
So, would you say that you actively buy the worst quality products? Because, you know, the consumer is where profits actually come from, right?


No I don't try to. I understand that the consumer holds the leverage over the companies fiscal health. I just wanted to emphasize that there isn't anything implicit in a company's charter to make the best product at the best price. Rather, it's just to maximize shareholder/owner value. Too often I have heard people imply that because a business is dependent upon the consumer, that everything they do is of value.

Yes, the market is supposed to punish those businesses that server poorly, but too often they have been able to hid their negative impact to the consumer or by the time they are "corrected" by the market, there has been a real negative impact to people (health, etc). Take a look at a lot of superfund cleanup sites. Toxic wastelands that the company was able to walk away from and I'm not sure if the cosumer at the long end of that product base has any idea of what they have done. How long before there is corrective action and are we willing to accept the cost of waiting.

Look, I think the free market provides an excellent framework for our society, but it isn't some magical panacea that will solve everything without a cost.


re Mike Cheel
see above


re burkll13 said...
see above

David said...

The honest statist, may be honest, but his history is incomplete.

The statist condition of which you speak is not the natural human condition. The natural human condition is stateless.

Humans, as homosapiens, have been around for 200,000 years. Behaviorally speaking, we can say for 50,000.

States have not only a much shorter time span, they have covered only specks of the globe until the last 500 years.

Prior to that, they came in went, largely in areas where human capital could be appropriated for use. These areas were virtually unimportant in the bigger picture. The great kingdoms of Egypt and China, for example, controlled a tiny area of land and had a tiny population compared to the world of free peoples.

The reason we spend so much time studying these insignificant people and not the 99.9% of the world that was stateless and free is due to the state-centric viewpoint offered in all educational systems since the rise of the nation-state in the last 500 years.

Our current predicament, as stateless people, is simply an experiment. An anecdote in human history. Not the norm and not the natural condition.

Our problem, simply put, is you. The attitude and people you represent. You cannot solve our problem, since you created it. Our solution, obviously, is to get of rid you, preferably by non-violent means. We would prefer to simple Opt Out of your horrendous solutions. Since you will not leave us in freedom, we probably will have no choice. Alas, such is the way of history.

But the State will lose. That is inevitable. It will lose because freedom is the natural human condition. State-sponsored coercion is not. Talleyrand is a relic of a barbarian, uncivilized order of slave masters whose time will come.

For a deeper understanding of why states are the exception and not the norm, I point you to a recent book, which builds on the works of many others.

http://www.amazon.com/Art-Not-Being-Governed-Anarchist/dp/0300169175/ref=sr_1_1?s=books&ie=UTF8&qid=1298146116&sr=1-1

David said...

@Sam,

The reason businesses can survive despite poor service and fraud has nothing to do with the customer. You have a maze of bankruptcy laws enacted by the State that protect them. The Corporate entity itself is a State creation to shield liability for the politically connected. When that fails, they simply bail them out with taxpayer money.

In light of this, why do expect the consumer to win?

Sauros said...

Tel,
Obviously Obama’s position is one in which honesty is not the best policy, nor do I want to give the impression that I’m completely honest outside of cyberspace. Nevertheless, you have overlooked the enabling mechanism behind the “science of deception and confusion:” the willingness of the public to be deceived and manipulated. Belief, faith, trust, and projection of personal traits onto the authorities by “the mutable, rank-scented many” make our modus operandi possible. Surely you can’t blame us for their terminally naïve stupidity. We have merely cultivated and enhanced those traits, just as the pioneers of the Neolithic revolution domesticated cattle by taking advantage of their fundamental nature. Those traits weren’t put in them by us.

P.S.: I’m most decidedly not Paul Krugman.

David,
Ah yes, those heady stateless days before the Neolithic revolution, where merry bands of brutes hunted and gathered in a peaceful and free state of nature. They enjoyed "poor, nasty, brutish, and short" lives. Those primitive days are long gone and won‘t be returning. Even if what you say is true, man is still an animal, therefore his nature can be changed just like that of any other beast. Domestication is simple. Today we can remote control cockroaches via implanted electrodes, genetically engineer crops, clone animals, and great strides are being made in synthetic biology and nanotechnology. It’s clear that dedicated meatbags are doomed. Biology is subject to the laws of entropy, a barbaric relic of random evolution. Transhumans shall inherit the universe and there’s no stopping us. Our destiny is self directed evolution and eventual scientific apotheosis. "The state will lose." The state will evolve like everything else, but you're welcome to keep telling yourself that if it helps you get through the day. All of us are entitled to our pet conceits.

David said...

Sauros,

Argument by slander much?

Here let me try,
Ah yes, those civilized centers of culture called states, where most people were slaves and people risked their lives to free themselves whenever they could.

Ah yes, those wonderful states, that actually produce nothing yet magically provide for everyone!

You need to take back that thing you said.

You're not an honest statist. There is no such thing.

If you can't win the argument, I'm sure you'll just have me killed so you can appropriate my possessions.

So very civilized.

Sauros said...

David,
Have it your way. I'm a dishonest cur. Even so, I'm still the most honest statist you'll ever speak to.

If they risked their lives to free themselves whenever they could, why did that virtually always result in erecting a new state with concomitant plunge back into slavery all over again? These ‘people’ don't sound too bright, Dave. States produce things of great value to those that rule them. The purpose of a state is to consolidate power and wealth into as few hands as possible, thereby aggrandizing the deserving minority worthy of being called "double wise man."

Fear not, I doubt very much your possessions would be of any great interest to me. On that score you've more to fear from the impoverished horde and spoiled unionists. As for winning the argument, the proof is in the pudding. You can nakedly assert that “the state will lose,” but so far it is not. Au contraire, the state is winning. It easily domesticated your alleged stateless heroes of old. Even if I did take your stateless Paleolithic freedom fighters seriously, it once again begs the question: Why did they submit to the state to begin with? Whence such recklessly idiotic weakness? After living in liberty for all those millennia they gave in pretty readily and show few signs of reclaiming their ancient heritage.

David said...

Sauros,

Again, a reading of history is how one learns. If you choose not to read and understand the volumes that have been written that explain with every hanging, plundering, and enslavement exactly how these stupid rubes ended up giving themselves up to your noble statist heroes, then we have little to discuss.

Nobody chose to be ruled. Our ancestors were murdered and enslaved. As were yours. Wherever they are, I wonder how they feel about your steadfast commitment to propping up the creature that did them in.

David said...

On a second note, this issue need its own post.

"States produce things of great value to those that rule them. The purpose of a state is to consolidate power and wealth into as few hands as possible, thereby aggrandizing the deserving minority worthy of being called "double wise man."

They produced alot, I'm sure. One can't do without enough pyramids right? But they didn't produce anything that reflected anything that consumers value with their own money. If they did, consumers would have given voluntarily and our would-be kings would not be robbers, relying on confiscation and forced labor.

Face it. The people you worship are the worst elements of human history. They couldn't produce anything of value to the world, so instead they used deceit and violence to get they wanted.

If you want type of heroes, be my guest. Just know that you are the enemy of mankind.

Sauros said...

David,
This is getting tedious. I fear you are being deliberately obtuse in missing my point. History is clear on how the state evolved and secured its sovereignty over the affairs of mankind. But why did your naturally stateless and largely mythological freeborn giants degenerate into easily duped rubes? Why did they permit themselves to become cattle? Whence their devolutionary teleology?

Moreover, considering that they are cattle and tolerate being treated as such, isn't it obvious that the blighters bloody well deserve every bit of it?

Their cooperation legitimizes statism. Their malleability and obsequiousness gives us license to dominate them. We are fully justified by their simian servility.

Why should my heroes be mindless automata that do whatever they're told and accept artificial limitations imposed from on high? Why should I empathize with, let alone respect such biological waste? No. My heroes are real human beings, not detritus and dregs, flotsam and jetsam, chaff riding the whirlwind of history. It is the height of misanthropy to anthropomorphize chattel as you apparently do.

burkll13 said...

does anybody else think of Al Pacino in 'Thge Devil's Advocate' when reading Sauros?? or is it just me...

David said...

Well I'm sorry this is so tedious for you. I don't want to keep you from implementing such grand designs for the rest of us.

Your ignorance of history outs you, btw. Next time we engage in conversation, I will require that you will at least have one book read on how states were formed.

Thanks.

burkll13 said...

"I just wanted to emphasize that there isn't anything implicit in a company's charter to make the best product at the best price. Rather, it's just to maximize shareholder/owner value."

those things arent necessarily in opposition to each other. further, if a company does cheapen their product, and it is still widely accepted in the marketplace, isnt that ultimately for the better? think about it, those extra resources that were being employed are now freed up to be used elsewhere.

"Too often I have heard people imply that because a business is dependent upon the consumer, that everything they do is of value."
there is no such thing as a perfect system. people make mistakes. people commit fraud. the error is assuming that people in a government system are immune, or even better

"Yes, the market is supposed to punish those businesses that server poorly, but too often they have been able to hid their negative impact to the consumer or by the time they are "corrected" by the market, there has been a real negative impact to people (health, etc). Take a look at a lot of superfund cleanup sites. Toxic wastelands that the company was able to walk away from and I'm not sure if the cosumer at the long end of that product base has any idea of what they have done. How long before there is corrective action and are we willing to accept the cost of waiting."

even anarchists favor a system of private property protection. a free market does not mean an absence of legal recourse, or a legitimization of vandalism or aggression.


... but it isn't some magical panacea that will solve everything without a cost."

neither is government intervention.

Another Anonymous said...

Guys, don't have the energy to finish my reply in the last thread just now, but has anyone considered that Mr. Sauros is writing (excellent, enlightening) satire? :-)

But they didn't produce anything that reflected anything that consumers value with their own money.
In Egypt the state probably arose because of hydraulic engineering. Took about 1000 years, but the pharaoh was just the Jimmy Hoffa of the engineers union.

And of course, consumers couldn't value whatever the state did with their own money because money economies only arose with the rising of states.

David said...

And of course, consumers couldn't value whatever the state did with their own money because money economies only arose with the rising of states.

Incorrect. Gold coin monies stamped with the picture of the ruler arose with the states. Monies are found in every economy that moves past barter, states or not. For a recent example look no further than Iraq, where communities used anything from sheep to bottled water as money without after the state collapsed.

I want to add that the progression of monies in stateless economies like war ravaged Iraq follows exactly as Murray Rothbard laid out in MES.

If we want evidence-based theory, there is nothing more fully rock solid than how and why people come to use money. We have examples from ancient history all the way up to the present.

Tel said...

The purpose of a state is to consolidate power and wealth into as few hands as possible, thereby aggrandizing the deserving minority worthy of being called "double wise man."

So I guess you must really look up to those spoiled unionists, seeing how they have figured out how to make good money by systematically refraining from working.

Your vision of a state consisting of masters and slaves is an evolutionary dead end. Both master and slave lose the will to strive: the masters become infatuated with giant edifices to honour themselves, increasingly indulgent lifestyles; the slaves become dumbly obedient and forget they ever had a will of their own. Waste of time for all concerned.

Which state do you look up to right now BTW? The USA? The US is a sum of its Constitution and its institutions. The Constitution has been long forgotten, it only has one remaining clause -- regulation of interstate commerce now covers everything. The US institutions are rotten with corruption, everyone knows it. I can barely see a state, I see only a collection of individuals stuffing pockets, glancing around for a quick exit when the roof comes tumbling down.

Take a look at the bogus "War on Drugs" being faught from Mexico to Afghanistan and the drugs are still winning that war. The real masters are the people selling the poppies, your all powerful state can't even find ways to discourage a bunch of addicts from taking the easy way through life.

The Paleolithic savage is alive an well today. Plant a crop and wait for it to grow? Hell no, just buy 51% share of an existing company, strip it down, amalgamating what remains. Use dodgy finance to pump the enterprise and dodgy accounting to hide the mess afterwards.

When one territory has been eaten bare then make like a nomad and find new territory. Housing loan fraud doesn't work to good any more, next step is foreclosure fraud.

All this scientific implementation of deception, it works just as well for the criminals ripping state institutions apart as it does for the wannabe masters holding those institutions together. For any systematic organism to exist beyond squabbling individuals requires a mechanism for individuals to work as a genuine team. We know what that mechanism is: a code of morality and ethics. Maybe we could tinker with some details, but states that have ignored this have fallen time and again.

Sauros said...

Tel,
The unionists are useful tools. Lenin called that sort useful idiots. We use them to hammer society into shape. They're our modern day house slaves, or petit Mandarins if you like. We give them a better deal in order to create a buffer wedge between us and slaves at the bottom of the pecking order. Teachers unions are particularly useful when it comes to harmonizing education policies.

Hadn't it ever occurred to you that we can always find or forge new states? Why do you think there are around 15,000 private jets in the United States? It isn't merely because globe trotters are citizens of the world and do business everywhere. When one territory is strip-mined or becomes hostile we move on to the next one. That's called globalization. Your concern over what we intend to do once all territories are exhausted is touching, but by that time we'll have attained scientific apotheosis and will be vacationing on, say, a terraformed Pluto.

"For any systematic organism to exist beyond squabbling individuals requires a mechanism for individuals to work as a genuine team." We‘re in complete agreement on that score. Transhumanism serves that purpose for us quite nicely.

States have fallen time and again, but they're always replaced by new states.

My favorite states at this time are China, Singapore, and the UK. They have the smartest and most efficient control grids in place today and serve as a model for the world. The United States was great at imperial mobilization and imposing normative institutions around the world, but has outlived its usefulness.