Wednesday, August 10, 2011

Yes, Paul, it IS politics!

In what Jeffrey Tucker of the Mises Institute calls "The Most Evil Column Ever," Paul Krugman begins to come clean. If I read his recent statements correctly, Krugman is claiming that the economy easily can be "fixed" with a dose of inflation, heavy taxation, and borrowing, and that anyone who might see things differently does so because that person is pure evil.

Krugman has not gone as far as Michael Moore, who recently called for the arrest of the CEO of Standard & Poors for permitting his agency to downgrade U.S. Government debt, but he is moving in that direction. As Anthony Gregory has put it, we are seeing the totalitarian mindset of the Progressives in action, and Krugman is right in the middle of it with his unhinged rhetoric. (Gregory, one of the most insightful writers out there today, notes that we now are faced with totalitarian thinking on both right and left. His column definitely is worth a read.)

Before deconstructing Krugman's column and his latest blog posts, I would like to quote Tucker who makes a most salient observation regarding S&P's supposed sin:
Krugman seems to regard the down-rating as the sin that cries out to heaven for vengeance. And why? Because S&P had given Lehman Bros. an A rating before it went bankrupt and therefore the company has no credibility.

Huh? Doesn’t his point suggest the opposite of what he intends? By his own account, S&P has a bias to overrate bonds. S&P down rated U.S. debt from AAA to AA+. Seems like S&P could continue to downlist U.S. debt a long way before even approaching Lehman territory. Plus, if A is supposed to be a vote of confidence in Lehman, how can AA+ constitute a pessimism so horrible that it is a crime against humanity?
That is an excellent point. Furthermore, what Krugman does not point out is that the government was strongly encouraging the formulation of the toxic assets through its various programs, and the Federal Reserve System quietly stood in the background with its promised "Greenspan-Bernanke Put."

To say it another way, one easily can argue that S&P was doing what its political masters wanted it to do: give high ratings to government-inspired debt. Likewise, as we can see with the reaction of Krugman, Moore, Congress, and the White House to the latest S&P move, the consequences of telling the truth -- that the emperor wears no clothes -- are severe. With upcoming Senate hearings on S&P, we can be assured that the iron fist of the state is going to follow.

So, it is politics after all, but a different kind of politics. Krugman blames Goldstein, er, the Republicans, for all of the problems -- ALL of them. According to Krugman, even when the Democrats held the White House AND insurmountable majorities in the House and Senate, somehow Goldstein, er, the Republicans, managed to keep them from spending what Krugman says was enough money to "stimulate" the economy and give it "traction."

How did the Republicans do that dastardly deed? Why they disagreed with Paul Krugman. Yes, mere words, something that never bothered the Democrats before, suddenly stopped them dead in their tracks and made them initiate what Krugman has called "austerity." Yes, through Fox News (which Krugman and his allies never watch, anyway), the conservatives managed to destroy all the good Krugman demanded that Obama do. The fact that the Democrats had the major media all on their side from the NY Times to the news networks apparently meant nothing, as just the existence of dissent somehow overpowered the powerful.

To me, that is a huge howler. What Krugman is saying is that the very presence of people who might see the world differently than him is unacceptable. Given his recent endorsement of the view that the only way we can bring back prosperity is through state violence against businesses and banks, we can see where he and his political allies are headed. Look for Krugman to endorse measures in the future that smack of totalitarianism and outright violence.

Krugman no longer is even engaging in debate. The same person who spoke glowingly of "death panels" now is claiming that only the conservatives have used the term. For that matter, Krugman's ally Robert Reich also has endorsed "death panels," although he termed things differently.

For all of his talk of being the prophet in the wilderness, Krugman clearly is part of the political establishment. The recent Time screed against the Tea Party points out that the establishment view is that Ben Bernanke is a sober tiller of the economy, that John Maynard Keynes provides the way to prosperity, and that Ron Paul is a wacko nut job. In other words, the political establishment -- and Time is part of that group -- has no problem with Krugman.

What we are seeing is a roadmap to destruction. On one side, Krugman is claiming that tax-borrow-print-spend will bring us prosperity when, in fact, it will only make things worse. And as the hole continues to get deeper, Krugman and his friends are going to call for outright totalitarian measures against anyone who disagrees with them. You can bank on that one.

49 comments:

JG said...

Anderson, I understand that this is your blog and that it's entire purpose for being is to provide a platform for you to broadcast your opinions, but as a supposed scholar don't you see the problem with using such unrestrained hyperbole when spouting those opinions?

When you desribe Krugman's positions on monetary policy as "state violence against business" and say that Krugman endorses "outright violence" you cross the line from mere exaggeration to Beck-esque, undiluted, unapologetic bullshit.

And I'm sure your brigade of flying monkeys (Roddis, I'm pointing at you) will flock to defend your silliness but you know I'm right.

Anonymous said...

Just so I'm clear, the Austrian response to this Krugman statement:

"The good news, such as it is, is that our underlying model has performed very well. Interest rates have stayed low despite large government borrowing; crowding out has been totally absent; huge increases in the monetary base have not been highly inflationary."

Is basically the Fed is keeping rates low, crowding out is happening regardless of what Krugman says, and inflation is happening because gold is going up. Does that about cover it?

Bob Roddis said...

When you desribe Krugman's positions on monetary policy as "state violence against business" and say that Krugman endorses "outright violence"

What the hell is government anyway, dumb ass? It's the threat of force backed up by SWAT teams, paddy wagons, prison, fines and the firing squad. There's the Rothbardian voluntary way with the attendant non-aggression principle and then there's the government "do it our way or the SWAT team comes for you" approach. The statist economic approach is based upon the initiation of force. If there’s no threat of force, it isn’t government. Dumb ass. That’s why the New Deal and Keynesianism are co-extensive with nuking Nagasaki and why it was New Dealers who, alone in the history of mankind, are the ones who perpetrated it.

Libertarians are meticulously hostile to the initiation of force. You statists (in addition to being blood-thirsty insecure neurotic bastards) are so dishonest that you lie even to yourselves about the nature of the state and your nefarious plans and schemes for your oblivious neighbors who will be your victims.

Lord Keynes said...

"Given his recent endorsement of the view that the only way we can bring back prosperity is through state violence against businesses and banks,"

What utter rubbish. Krugman does not advocate "state violence against businesses and banks" in the column you link to.

Daniel Kuehn has your number:

http://factsandotherstubbornthings.blogspot.com/2011/08/what-is-most-evil-column-ever.html

Anonymous said...

The left's desperation is showing. This is either the death throws of the progressive movement or the death throws of free markets. I do not see another possibility.

William L. Anderson said...

When Michael Moore -- who is a Progressive icon these days -- calls for the arrest on CRIMINAL charges of a CEO simply because the company changed a rating of U.S. bonds, and no Progressive calls him out for it, I think that we see the mood of the so-called Progressive community. Furthermore, when Joe Stiglitz calls for forcing (he did use the word "force") banks to lend, and, I suspect, also forcing companies to "invest" in projects the government wants, that is an implication of state violence.

When Congress calls for hearings to investigate S&P, that is an implication of state violence. Bob Roddis is correct; everything the state does, it does either with outright violence or the threat of it.

Gee, I have not seen LK or the others call out Michael Moore, who really does call for state violence, so I suspect they support it, too. People, it is going to get a lot worse out there. Krugman is playing the "Goldstein" card, claiming that speech itself is the cause of the depression.

During Obama's first two years, he had complete run of the government, yet Krugman still blames the Republicans and others because they SAID things against Obama's plan. According to Krugman, simply saying words he does not like is evil.

So, LK, don't tell me Krugman doesn't endorse state violence. That is the only card he has left.

William L. Anderson said...

To the 10:05,

I think that sums it up. Krugman is saying some contradictory things. First, he claims that it is the MARKET that is sending signals on government interest rates when, in fact, it is the Fed that is making the rates artificially low.

Second, Krugman is claiming with his "free money" blog that there is no opportunity cost to government borrowing. So, is he saying that the MARKET is signalling no opportunity cost (which would be an oxymoron), or does he admit that what we see is the work of the Fed?

Contra Krugman, government cannot do away with the Law of Opportunity Cost.

Mike Cheel said...

In Krugmans Dismal Thoughts post linked above he says:

"The good news, such as it is, is that our underlying model has performed very well. Interest rates have stayed low despite large government borrowing; crowding out has been totally absent; huge increases in the monetary base have not been highly inflationary."

So who made the policies he is praising? Perhaps policy makers?

Then he goes on to say in the very next paragraph:

"The bad news is that policy makers almost everywhere have failed dismally, and seem determined not to take on board the lessons of experience, either historical or what we’ve learned the past few years."

So which is it? Policy makers = good OR policy makers = bad?

And honestly when I read the 'good news' part, right away I thought of someone with an insidious drug addiction: "The good news is that as long as we keep giving him drug x everything appears fine. When his condition worsens we just give more drug x and so the symptoms have been suppressed.

wobbles said...

@JG: Yes, it is state violence and no it isn't hyperbole.

Lord Keynes said...

"When Michael Moore -- who is a Progressive icon these days -- calls for the arrest on CRIMINAL charges ..

Very nice and sly fallacy of shifting ground, by switching to Moore.

"So, LK, don't tell me Krugman doesn't endorse state violence. That is the only card he has left. "

LOL.. Having been told that Krugman no where endorces state violence against banks or businesses in the column you link to, your response is?... To just reassert your same falsehold.

If nothing else works, then a total pig-headed unwillingness to look facts in the face will see you through, right?

Bob Roddis said...

Speaking of a total pig-headed unwillingness to look facts in the face.....

All that the statists can do is change the subject away from discussing the undeniable fundamental facts of human existence. They ignore the nature of the state with its SWAT teams and they ignore the inherently ignorant nature of man and the problems of knowledge in society.

The statists are so dumb, at times I start to think they cannot even spot those issues. But since they avoid those fundamental issues like the plague, they must sense both that they exist and are important. However, due to their inherent insecurity and dishonesty, they purposefully avoid addressing them.

Bob Roddis said...

BTW, I'm turning purple holding my breath awaiting proof of the existence of the alternate universe of "macro".

http://tinyurl.com/3ozld6o

I'm starting to think there will be no proof forthcoming.

Bob Roddis said...

Your disciplining is “planned“. If you’re fired from your job, it’s apt to be by a firing squad. What used to be an error is now a crime against the state. Thus ends the road to serfdom! See page 18:

http://mises.org/books/TRTS/

Dan said...

If I recall, a month or so ago, Anderson stated on this blog that he would be turning away from Krugman bashing and providing his own insightful commentary on current events. I guess he finally realized where his meal ticket lies.

This is not surprising of course, because Anderson has no coherent narrative for what is currently happening in the economy:

Bernanke is showering money on the world...but *gasp* inflation has not risen (this is because everyone is using the wrong inflation measures of course...Anderson's idea of a good measure is asking people if they've seen the prices of eggs at the grocer lately).

The Fed is practicing central planning...instead it should let a panicked market determine the interest rate so liquidity dries up and the entire economy implodes. But hey, at least then all malinvestments would be liquidated and we could start the economy from scratch all over.

Bob Roddis said...

Dan becomes our 89th troll with no clue about even basic Austrian concepts.

How about proving the existence of "macro", smart guy?

Mike M said...

Are there not various forms of force and violence? The assault on savers in the country are but one form.

Dan said...

Bob, sorry, but I have a life and I don't think I will spend too much time studying Austrian economics. I only found this blog because it comes up in the Google search for the blog of a real economist.

Why should I study Austrian economics anyways? What has it done for you Bob? I don't want to spend all my time raging at the world on obscure blogs. Do you have a job Bob?

Mike M said...

Dan Bob can speak for himself but for me, my study ( not robustly I might add) has enhanced my investment returns over the last 10 years. I find it consistent with the real world of street level business and how people really behaive. Not in some academic test tube.

My results speak for themselves. I will continue the journey.

JackTheRipper said...

@Dan,

You are a filthy statist and you are evil. Basic Austrian economics states that the Federal Reserve is a spawn of the devil. People like you, Paul Krugman, Lord Keynes, and Tiger Woods are going to destroy Western civilization and we will be overrun by the Muslim and Mexican hordes.

Dan said...

At the risk of stereotyping you Mike, I'm guessing you invested in gold. That's nice, but it's about the only thing Austrians have correctly called since the 08 collapse began.

Anyone who bet on hyperinflation and runaway interest rates probably got screwed over though.

Anonymous said...

As this is all Krugman all the time, maybe one of you (Professor?) clarify something for me? I alleged (I read this somewhere but can no longer find the source) to a progressive friend that Krugman said Reagan tax cuts in 1981 and 1986 would cause inflation to ramp up again. He said Krugman never said that. He agrees that Krugman believes tax cuts are inflationary (not if they are accompanied by productivity gains) but says he never said that during Reagan's term. Did he, if so, I'd appreciate the source. Thanks a million, guys.

alaskaman said...

" They ignore the nature of the state with its SWAT teams and they ignore the inherently ignorant nature of man and the problems of knowledge in society."

Austrian naivete at its best! This radical view of the state dilutes the terms fascism, violence, and totalitarianism to actually devoid them of any meaning. You are an insult to anyone who ever lived under true violence and totalitarianism - from Stalin to Saddam Hussein.

Why can't Austrians get simple concepts of rational thought right?

1)States are the facts and they did not invent coercion.
2) State coercion is inevitable - the question is what type of regime would you like to have enact that coercion and what balance of freedom and order you want.
3) Regime-type matters and democratic states rest not only on the state's monopoly of coercive means but on a little thing called consensus (I believe Tocqueville called it "willful bondage").
4) The absence of the state and the Austrian utopia will not result in the abolition of power, violence, and exploitation.
5) Ignorant man acting does not preclude government intervention, if your standard is not complete efficiency but rather to address the inadequacy of the pricing process in the face of myopic decision-makers, information gaps, and large transaction costs.

You and Anderson were pretty clear up here with your radicalism - a rejection of the notion of the modern state and democracy itself in favor of a wealth-based free-for-all anarchy (i.e. the barbarism).

ekeyra said...

Wow this one brought a whole parade of jackasses. Good work professor.

ekeyra said...

Alaska,

"State coercion is inevitable - the question is what type of regime would you like to have enact that coercion and what balance of freedom and order you want."

So me and the guy with his boot on my throat are gonna sit down and hash out what kind of boots he's going to wear and how much pressure he's going to apply to my trachia? Thats mighty thoughtful of him.

"Regime-type matters and democratic states rest not only on the state's monopoly of coercive means but on a little thing called consensus"

Which it does not have...
The opinions on this blog are ample evidence of that.

"The absence of the state and the Austrian utopia will not result in the abolition of power, violence, and exploitation."

Funny, i dont recall anyone ever claiming it would?

"Ignorant man acting does not preclude government intervention, if your standard is not complete efficiency but rather to address the inadequacy of the pricing process in the face of myopic decision-makers, information gaps, and large transaction costs."

I hate to even ask, but how exactly does government intervention address any of those issues given that government actors are, given the benefit of the doubt, human and entirely subject to any and all problems of ignorant acting man?

Bala said...

Tell the truth and you get a shitstorm of them Statist sentinels. Good work, machines!!!

Bob Roddis said...

Does all of this unfocused hostility mean that we aren't going to get the proof of the alternative universe of "macro"?

Dan said...

I often wonder what most of the computer chair revolutionaries on this blog do professionally. We know that Anderson has a cushy tenor track job at a state school and Bob Roddis posts so much on these that he is either unemployed or government.

As for stirring up a shitstorm...I like doing it because it fits this blog well. Since it's not a real economics blog, there's really nothing else for us to do but sit here and rage at one another. Just like good old cable news!

Dan said...

Nevermind...I just saw in Bob's profile that he is an attorney rofl. So he's an even bigger leech on society than I originally guessed.

zackA89 said...

It really seems like the statists get a little testy when we Austrians critique their little golden boy. Who, apparently to one statist commentator, is a “real economist?” Wow, who knew?

Also notice how these folks never demonstrate any familiarity with basic Austrian concepts. They really have absolutely no clue. The other thing I find funny is how they just assume every Austrian “thought there would be hyperinflation and high interest rates by now” and use this somehow universal Austrian “prediction” to smear us without even realizing not every Austrian has said things like this, and just because some of these things haven’t happened yet, doesn’t mean they won’t. Being early isant being wrong. You can’t just lump every Austrian into one category in order to dismiss them.

At least we didn’t say spending 850 billion dollars on political pet projects and other government boondoggles like signs that say “paid for by the American Recovery and Reinvestment Act” would keep unemployment from rising above 8 percent. Despite unprecedented levels of both fiscal and monetary stimulus under Bush and Obama, huge bailouts, and huge deficits and debt, all the statists can say is

“You didn’t do it BIG enough” you didn’t do it “targeted” enough.

Then they proceed to call a reduction in the rate of increase of ten years from 8 trillion in new debt to 7 trillion in new debt, and by cutting 1 half of 1/10 of a percent from next years budget “Austerity?” how ridiculous. In fact its so dumbt, really, there’s no coming back from that.

7 trillion in new debt over the next ten years. Cutting ½ of one percent of the budget. Unprecedent debt levels and debt, and this amounts to austerity? I still can’t get over that.

William L. Anderson said...

To the 6:11,

I don't know if Krugman made that statement or not. I do know that in answer to my question at a session of the 2004 Southern Economic Association meetings about the 70 percent tax rates that existed before 1981. (It was a Q&A and Joe Salerno was sitting next to me, and the other economists can vouch for what Krugman said.)

I asked Krugman, "Are you advocating going back to the 70 percent rates?" Krugman replied, "No! Those rates were insane!" Today, apparently Krugman and his friends believe we need to go back to those rates, a la Hoover in 1932.

As for Dan's point, I must admit that it is hard to kick the Krugman habit.

Bob Roddis said...

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.

AND

Paul Krugman: As Paul McCulley of PIMCO remarked when the tech boom crashed, Greenspan needed to create a housing bubble to replace the technology bubble. So within limits he may have done the right thing. But by late 2004 he should have seen the danger signs and warned against what was happening; such a warning could have taken the place of rising interest rates. He didn’t, and he left a terrible mess for Ben Bernanke.

How can one resist someone who says this kind of idiocy and then have da man himself and his minions deny he meant what he said or said what he said? Fascinating stuff.

alaskaman said...

OMG Anderson, there is no limit to the lows you will go to! When Dan points out that you can attribute none of those statements to Krugman (and somehow Michael Moore is a spokesman of something? What planet are you from?), you shift to another quote and then make up another statement that you cannot attribute to Krugman! Where has Paul Krugman ever stated that tax rates should return to a marginal rate of 70%? Where?

You have no shame.

Anonymous said...

When will Krugman defenders who say we should listen to his advice explain how he was so wrong about QE2 not increasing commodity prices unless demand was stimulated?

How can he be so clueless, and why should we listen to someone who was so wrong?

Mike M said...

Dan @ 6:05. Not only gold but a related theme. Austrian economics will not provide investment advice. Only a prism and framework to help put things in context.

Hyperinflation is a collapse of confidence in a currency. Not yet happened to the USD. May not happen. That type of event takes longer with a reserve currency. However one should not be so arrogant as to think the USD is immune from such an event.

Bob Roddis said...

More great New Dealer history...

After nuking innocent civilians for no reason twice, the New Dealers suppressed the extensive Japanese and American (color) film evidence of their ghastly crimes:

http://www.thenation.com/blog/162543/great-hiroshima-cover

Even more evidence of the basic goodness and benevolence of the New Dealers. We can hand over absolute power to them without fear. Right?

Mike Cheel said...

@alaskaman

"Where has Paul Krugman ever stated that tax rates should return to a marginal rate of 70%? Where?"

He clearly said where Krugman said that. He named people who were there who heard it as well. Let me repost it here to help you avoid the trouble of scrolling up a few posts:

"I do know that in answer to my question at a session of the 2004 Southern Economic Association meetings about the 70 percent tax rates that existed before 1981. (It was a Q&A and Joe Salerno was sitting next to me, and the other economists can vouch for what Krugman said."

Anonymous said...

Actually I read Andersons' comment as saying Krugman said the rates were insane at that conference, but then he gives no specifics on where Krugman reversed himself. I'm sure Anderson can clarify if he feels it's relevant.

To my knowledge Krugman has often pointed out that economic growth in the era of said high top marginal tax rates (and also strong unions) was as good or better than times with lower top rates. But I believe this has more often been rhetorical counterpoint to the "taxes kill the economy" types rather than advocating a return to those rates. No question he'd like to see higher rates (on the wealthy in particular) but even Krugman has his limits believe it or not.

Mike Cheel said...

@alaskaman Or it could be that I (gasp) misread your question you prick.

Mike Cheel said...

Also, from the interview at:

http://www.newyorker.com/online/blogs/ask/2010/02/questions-for-macfarquhar.html

"QUESTION FROM SEAN DOYLE: What would be the highest federal marginal income tax rate that you would deem acceptable?
PAUL KRUGMAN: Good question. I don’t advocate a marginal tax rate of 70 percent, but it’s worth noting that we had rates in that range all through the 60s and much of the 70s, without much evidence that effort at top levels was being crippled. So that’s feasible. That said, the truth is that the financing of social insurance is much more important than the progressivity of the tax system—Sweden pays for a lot of its programs with a regressive VAT, but that doesn’t change the fact that it takes much better care of the poor and unlucky than we do."

So he says he doesn't advocate it but then says he doesn't see anything wrong with it either. Then he says 'So that's feasible.'.

So there you have it.

JG said...

This will be my final posting on this site because it's become clear that this is not so much a forum for exchanging ideas as it is a soapbox for the dishonest and the uninformed. But before I go...

Roddis: You are genuinely retarded. That you would actually advocate some kind of utopian, libertarian, co-op model of ordering society and justify that view by condemning the instruments of law and order like law enforcement or a military proves how unrealistic and limited your thinking is. You're a grown man with the ideology of a naive college freshman, have fun embarassing yourself at dinner parties the rest of your life.

Anderson: Responding to charges of hyperbole and dishonesty by saying "but Michael Moore does it too" is pathetic. It's one more reason why you teach at podunk state and host a blog while Krugman taught at Princeton and writes for the Times.

Don't bother responding because I won't be back here to check.

ekeyra said...

Seeing as how you added nothing but ad homimens and horseshit, good riddance. If you ever come back tell us all how krugmans puckered asshole tastes.

I mean how could we have ever come this far if we hadn't nuked two cities for absolutely no reason.

Anonymous said...

JG,

I asked a question for you Krugman supporters. How do you explain him being so wrong on something as fundamentally basic as the whole QE2 and commodity pricing debacle? I won't even get into how he was calling for the fed to lower interest rates while the austrians were saying it was going to cause a housing bubble, then later proclaiming that he saw the whole thing coming!

I guess teaching at princeton and writing for the same paper that intentionally covered up the Soviet massacre and starvation of millions doesn't mean he has to know much about basic economics. But it sure does sound impressive to people who don't actually look at what he has said.

Bob Roddis said...

1. Does someone have a tissue?

2. Where's that proof of the existence of macro we've been waiting for?

3. Any bets on the decade or century when the first non-Austrian troll shows up with some understanding of basic Austrian concepts?

4. Without JG's deep explanations, I would have never known that there was general hostility to the non-aggression and antiwar position. Who knew?

Major_Freedom said...

LK:

LOL.. Having been told that Krugman no where endorces state violence against banks or businesses in the column you link to, your response is?... To just reassert your same falsehold.

You're a worthless liar. Krugman advocated for outright bank nationalization along the Swedish model, which is state violence against banks in the form of blatant theft of property. Bank nationalization is just another way of saying that the state is going to confiscate private bank assets and take control over them.

Anonymous said...

What is the difference between a London rioter stealing one's property vs the state doing the same?

Bob Roddis said...

When a democratic government commits a crime, it's not a crime because it has the support of the people. That's called "His Lordship Lord Keynes' theory of mob rights".

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