Wednesday, March 6, 2013

Is Paul Krugman Really a Martyr?

Paul Krugman operates with numerous themes, although for the most part they revolve around his belief that (1) the U.S. economy is in a "liquidity trap," and (2) government must spend, borrow, raise taxes (ostensibly to seize "idle" money holdings), print money, and spend some more. Anyone who does not agree, according to Krugman, is not worthy of existence and certainly should not be allowed to make any public utterances.

(The Austrians, in Krugman's view, are nothing more than an evil cult who apparently are trying to foist things like the Law of Scarcity and Marginal Utility -- What? Marginal Utility? -- upon the world. Everyone but the Austrians knows that government can create prosperity by printing and borrowing.)

Lately, however, Krugman has fastened himself to another theme: Paul Krugman, martyr. Yes, Krugman is fashioning himself as the Lonely Voice In The Wilderness, the ignored prophet, the abused Holy Man, and now the Last Hippie (or at least until Ben Bernanke testified to Congress that showering the world with freshly-printed dollars was sound economic policy -- that made Bernanke an Honored Hippie).

To be honest, I find this amusing. Martyrs do not receive Nobel Prizes, nor do Sunday television news shows compete literally every week for the man's appearance. Nor do martyrs make millions of dollars a year, and martyrs certainly do not have positions on a faculty of one of the world's top-ranted universities.

What Krugman seems to mean is that if anyone -- Anyone -- publicly criticizes what he is saying, then whoever had the temerity to utter such blasphemies also has inflicted a grievous wound upon The Great One and has thrown him into the pit of martyrdom. Those who refuse to believe in the Inflation Fairy or who would deny that governments can create more wealth by forcing up real costs have no place in the discussion of economics.


ayassos said...

It's generally true that the flipside of a grandiose personality is paranoia. Krugman's deep sense of moral self-righteousness, which he displays just about on a daily basis, leads him to annoint himself as the Prophet crying in the wildnerness you describe. Frankly, I think the man is getting more than a little weird. A very recent blog posits the idea that the key figures in the EU financial world (Olli Rehn, for example) "spend all their time" deriding Krugman instead of doing their work. This is a two-fer: a chance to inflate his ego while nourishing his paranoia.

Anonymous said...

Now both you and Krugman have something in common. You both obsess over the man.

William L. Anderson said...

Oh, I don't obsess over Krugman, just over the fact that Keynesian economics is destroying the economy. But I did appreciate your comment, anyway, as it was clever, and this blog always can use some cleverness.

Tom E. Snyder said...

" of the world's top-ranted universities."

You accidentally got THAT right. :-)

KSB said...

(ostensibly to seize "idle" money holdings)

Yeah, the US savings rate finally managed to climb back into positive numbers. Time to stamp that brush fire out.

With savings accounts paying a whopping 1/10th of 1% interest you'd have to be saintly to resist locking all your hard earned money away.

"Paul Krugman, martyr. Yes, Krugman is fashioning himself as the Lonely Voice In The Wilderness, the ignored prophet, the abused Holy Man, and now the Last Hippie."

I can't decide if this is projection or simply typical statist over-reaction to the presence opposition.

Either way it's a good sign. If alternative viewpoints weren't gaining more attention, Krugman and his ilk wouldn't be so riled up.

"It would be sort of funny if it weren’t for the fact that this cult has large influence within the GOP."

Guess someone forgot to tell the GOP that. Krugman should give up on economics and try stand up comedy.

Zachriel said...

William L. Anderson: Is Paul Krugman Really a Martyr?

Krugman sees himself as Cassandra, not John the Baptist.

Tel said...

Somewhat off topic but I'm jumping ahead. This is from David Cameron (UK Prime Minister) regarding the UK economy:

But already there are signs that our plan is beginning to work.

The biggest deficit in peacetime history – is already down by a quarter. Interest rates - are at near record lows. Exports are starting to turn around too.

Over the last three years our exports of goods to the fastest growing parts of the world have been soaring ... Brazil – up by half; India by more than half ... China – almost doubled; and Russia up by 133 per cent.

These are not just statistics.

These increases in British exports means British businesses getting new orders; and that means new jobs back at home.

The number of people on out of work benefits has fallen and there are a million extra private sector jobs; and more people in work than ever before in our history.

And today we welcome the news from BT that they are creating 1,000 new jobs, including 400 apprenticeships; as part of their £2.5 billion investment in broadband.

Most importantly of all, our economy which was previously so badly unbalanced; now has private sector employment levels rising in every part of the country, and rising fastest right here in the north of England.

Within one year of this government we had a faster rate of new business creation than at any time in our history. Today we have more than a quarter of a million new private sector businesses – the biggest increase in private enterprises on record, with more than three quarters of these new businesses created outside London.

Of course, these signs of progress are just the beginning of a long hard road to a better Britain.

Note that I have emphasised one small point on interest rates, which might easily go unnoticed amongst the other many points that Cameron brings up. Here is Krugman's take on the same:

I was particularly struck by the way Cameron is still claiming that Britain’s low interest rates show that his policy is successful and necessary. This is a bit like the high priest sacrificing a virgin once a month to ensure that the sun keeps rising, then claiming that the fact that the sun has risen proves that the sacrifice was indeed necessary.

Gosh, from reading Krugman you would be led to think that Cameron had made low interest rates his crowning achievement. But wait... I remember someone else using low interest rates as evidence that "the market" was in support of government policy. Where was that again?

But we can’t afford it, say the advocates of austerity. Why? Because we must impose pain to appease the markets.

There are three problems with this claim.

First, it assumes that markets are irrational – that they will be spooked by stimulus spending and/or encouraged by austerity even though the long-run budget implications of such spending and/or austerity are trivial.

Second, we’re talking about punishing the real economy to satisfy demands that markets are not, in fact, making. It’s truly amazing to see so many people urging immediate infliction of pain when the US government remains able to borrow at remarkably low interest rates, simply because Very Serious People believe, in their wisdom, that the markets might change their mind any day now.

Oh there it is (emphasis mine), Krugman himself (2010-06-14) was pointing out that because US Treasuries are at a low interest rate (let's pretend QE never existed) the market is fully in support of a stimulus package (let's also ignore the fact that "the market" is a lot more than just the Treasury Bond market, and further ignore that Cameron at least made an effort to point out that mortgage rates and business loan rates are fundamentally more important than government borrowing).

William L. Anderson said...

Good comments, Tel!

Deniro said...

> Tel

The point is, Cameron's statement was that an increase in government borowing would increase interest rates - which is untrue where QE policy exists. Unless Cameron thinks that government spending would cause inflation, and cause the independant BoE to stop QE.
Krugmans article there was about National currencies and was right on that technical point.