Krugman: Welfare is the Nation's "Seed Corn"

Paul Krugman must feel at times as though he is Horatio at the Bridge. He openly campaigned for Democrats last fall only to see the House fall to Republicans and for the Democrats to see their once almost insurmountable Senate majority fall apart. And now, the Republicans are calling for budget cuts and Krugman once again dons his battle gear.

Now, I absolutely agree with him that the military budget should not be sacrosanct, and most likely I would want more cut out of the Budget to Preserve the Empire than would he. (After all, Keynesians believe that military spending also serves as an economic "stimulus," even if they don't like what it accomplishes.) Any Republican who believes that the current level of military spending and military interventions overseas is sustainable is not someone who is willing to listen to reason.

However, Krugman does not seem to be particularly exorcised about the lack of Republican desire to cut military spending. Instead, he decides that a poll by the Pew Research Center really should be the centerpoint of economic policy. He writes:

...Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.

The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.

Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions — and even there the public was evenly divided.

The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.

In other words, since no one really wants to stop spending, let's just pretend that we have lots and lots of money, or that we can increase the national debt or just get the Fed to give us QE3, QE4, and QE5, which is the Going-Out-Of-Business Sale. In the meantime, Krugman really wants us to think that unless we have a vast welfare state, somehow our economy and our society will disappear:

The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.

Yet, if anyone has called for the eating of the economy's seed corn, it has been Paul Krugman. Because, in his view, capital simply "happens," then we don't have to worry about capital development, given that if we spend lots of money, capital magically appears.

To Paul Krugman, there is no difference between real wealth and the printing of money. As he wrote in The Return of Depression Economics, all it takes is for the government to end the downturn is just to print money. There is, he claims, a "free lunch" out there. What he does not say is that these are the very policies that destroy our real seed corn, our capital base.

Maybe Paul Krugman is not such a great weather guy after all

As I pointed out in a recent post, Paul Krugman that anyone who might disagree with the Theology of Algore really does not know science and should not be permitted to be on a college faculty:

It’s particularly troubling to apply some test of equal representation when you’re looking at academics who do research on the very subjects that define the political divide. Biologists, physicists, and chemists are all predominantly liberal; does this reflect discrimination, or the tendency of people who actually know science to reject a political tendency that denies climate change and is broadly hostile to the theory of evolution. (Emphasis mine)

Well, it turns out that some people who actually know science have found out that one of the claims made by the people who meet Krugman's approval simply is not true. According to some U.S. scientists (who almost surely will be ostracized for their heresy), a study of weather patterns for more than a century have dispelled that the weather has become more extreme:

The Twentieth Century Reanalysis Project is the latest attempt to find out, using super-computers to generate a dataset of global atmospheric circulation from 1871 to the present.

As it happens, the project's initial findings, published last month, show no evidence of an intensifying weather trend. "In the climate models, the extremes get more extreme as we move into a doubled CO2 world in 100 years," atmospheric scientist Gilbert Compo, one of the researchers on the project, tells me from his office at the University of Colorado, Boulder. "So we were surprised that none of the three major indices of climate variability that we used show a trend of increased circulation going back to 1871."

In other words, researchers have yet to find evidence of more-extreme weather patterns over the period, contrary to what the models predict. "There's no data-driven answer yet to the question of how human activity has affected extreme weather," adds Roger Pielke Jr., another University of Colorado climate researcher.

A decade ago, British scientists were claiming that snow was to be a thing of the past in Great Britain, and the authorities planned accordingly. Thus, snowfalls that not long ago would have been mere bumps in the way have become major problems, as the government has not had the equipment or the de-icing material needed to get rid of the snow.

Mainstream economists -- including Krugman -- pretty much hold to Milton Friedman's contention (from the paper "The Methodology of Positive Economics") that the gold standard for good theory is its ability to predict events or actions. In fact, Austrian Economists are vilified (see the recent attacks on Tom DiLorenzo) for holding to deductive logic as a central methodology instead of the Friedmanite view.

If Krugman is to be consistent in his thinking, then climate modeling (or climate modeling that is acceptable to Krugman and the Environmental Protection Agency) holds that an increase in carbon dioxide will increase warming, since the gas is known to hold heat. Furthermore, this model should an effective predictor of future weather patters, given that the Algoreans hold that with the inevitable warming comes other weather-related patterns. However, the models have not predicted well, despite Algore's claim that both no snow and lots of snow both are predicated by global warming. Still, the government of this country as well as other governments are using these models to lay down all sorts of economic restrictions, not to mention outlays of vast subsidies to produce "green energy" that economically speaking is an attempt to turn back the clock (something that is supposed to be anathema to people like Krugman).

We shall see if Krugman attacks these scientists as he has others, or if he simply will ignore their inconvenient studies. Most likely, it will be the latter. Out of sight, out of mind.

The Great Inflationist Kneecapper

In an interview many years ago, Victor Navasky, the former editor of The Nation, described the New York Post as an entity that would "kneecap" anyone it did not like, and he did a "rat-a-tat-tat" imitation with his hands. (Not that Navasky and The Nation ever would do such a thing themselves.)

Economists at one time did not publicly kneecap each other. They hardly were (or are) angels behind the scenes, and I have been witness to some real ugliness that has transpired in economics departments, and ideology really had little or nothing to do with the infighting.

Over the years, I have been privileged to have met economists who won Nobel prizes and read their material. Some were forceful in what they wrote, and others were not, but even in their popular press columns, they never launched outright personal attacks on other economists, and when they mentioned others, they dealt with their arguments as they understood them.

I guess that Paul Krugman represents a new era in how Nobel-winning economists present themselves in public, and his column on Rep. Ron Paul's hearing on the Federal Reserve System once again crosses that line of civility and decency. (Perhaps it is better to argue that Krugman long ago crossed the line and decided just to stay there, and maybe build a mansion.)

It is perhaps ironic that Rep. William Lacy Clay, a congressman from St. Louis, launched the personal attacks (of which Krugman clearly approves) on Dr. Thomas DiLorenzo by claiming that Austrian Economics is "unscientific" because it relies upon deductive logic. As anyone who has taken a logic class knows, the ad homimen, appeal to authority, and the like fall into the category of "informal fallacies," yet, Krugman obviously likes to employ them. Clay also relied heavily upon such fallacies in his "proof" that Dr. DiLorenzo was a fraud.

Now, I always have learned that if one wishes to attack the position of another person, one first should do some fact-checking. First, Krugman's comments:

One of the hearings was called by Representative Ron Paul, a harsh critic of the Federal Reserve, who now has an oversight role over the very institution he wants abolished in favor of a return to the gold standard. Mr. Paul’s subcommittee called three witnesses, one of whom was an odd choice: Thomas DiLorenzo, a professor at Loyola University and a senior fellow at the Ludwig von Mises Institute.

What was odd about that choice? Well, Mr. DiLorenzo hasn’t actually written much about monetary policy, although he has described Fed policy — not just recently, but since the 1960s — as “legalized counterfeiting operations.” His main claim to fame, instead, is as a critic of Lincoln — he’s the author of “Lincoln Unmasked: What You’re Not Supposed to Know About Dishonest Abe” — and as a modern-day secessionist.

No, really: calls for secession run through many of Mr. DiLorenzo’s writings — for example, in his declaration that “healthcare freedom” won’t be restored until “some states begin seceding from the new American fascialistic state.” Raise the rebel flag! (Emphasis mine)

Now, here is Dr. DiLorenzo's reply:

The junior high schoolish smart aleck Paul Krugman, who writes for that well-known leftist tabloid the New York Times, wisecracks about the Ron Paul Fed hearings in his recent column where he says that I was writing about the Fed as “a legalized counterfeiting operation” as far back as the 1960s. That’s unlikely since the very first thing that I ever wrote that was published was an article for the peer-reviewed Southern Economic Journal in 1980, shortly after I finished graduate school. He must have me confused with Ludwig von Mises or Murray Rothbard. I guess all Austrians look alike to some people.

Now, why does Krugman go rabid at any criticism of Abraham Lincoln? He explains:

He (Lincoln) was, after all, the first president to institute an income tax. And he was also the first president to issue a paper currency — the “greenback” — that wasn’t backed by gold or silver.

Yes, Lincoln was a "stimulus" sort of guy, someone who liked to print money. However, if one reads through the Krugman columns, one finds that anyone critical of such an action is to be labeled...well, whatever Krugman wants to call him. A racist? Yes. An ignoramus? Yes.

So, Paul Krugman is becoming unleashed. Disagree with him on monetary policy, global warming, the current inflation situation, taxes, and whatever else and you are not simply wrong. No, you oppose all these things because you are evil. You want people to lose their jobs and be unemployed and poor forever. There is no other explanation.

Paul Krugman Smears Tom DiLorenzo and Ron Paul

Leave it to Krugman to use smear tactics to discredit Ron Paul's hearing on the Federal Reserve System. I put his post in full:

Mike Konczal has a post about Ron Paul’s first hearing on monetary policy, in which he points out that the lead witness is a big Lincoln-hater and defender of the Southern secession.

And it’s true! I went to his articles at Mises, and clicked more or less idly on the piece about American health care fascialism — I guess that’s supposed to be a milder term than fascism, although he seems to equate the two. And sure enough, he ends:

This is not likely to happen in the United States, which at the moment seems hell-bent on descending into the abyss of socialism. Once some states begin seceding from the new American fascialistic state, however, there will be opportunities to restore healthcare freedom within them.

I presume that Amity Shlaes is already working on her Lincoln assessment, The Even More Forgotten Man.

First, Tom DiLorenzo, who wrote the article that so offended Krugman, DOES make clear his use of "fascialism," writing:

Some time ago I invented the phrase "fascialism" to describe the American system of political economy. Fascialism means an economy is part fascist, part socialist. Economic fascism has nothing to do with dictatorship, militarism, or bizarre racial theories. Fascism is a brand of socialism that was the economic system of Germany and Italy in the early 20th century. It was characterized by private enterprise, but private enterprise that was comprehensively regulated and regimented by the state, ostensibly "in the public interest" (as arbitrarily defined by the state).

Socialism started out meaning government ownership of the means of production, but it came to mean egalitarianism promoted by "progressive" taxation and the institutions of the welfare state, as F.A. Hayek stated in the preface to the 1976 edition of The Road to Serfdom. The problems of the American healthcare system are caused entirely by the fact that the government subjects the system to massive interventions, some of which are fascist in nature, while others are socialist.

Second, what is Krugman really trying to say? He is trying to go in the backdoor to smear Rep. Paul with the following syllogism:

• Ron Paul has Tom DiLorenzo testifying at his hearing;
• Tom DiLorenzo has defended southern secession and has criticized Abraham Lincoln;
• Therefore, Ron Paul is a racist and anything he says about the Fed's behavior should be ignored.

Don't kid yourselves about what Krugman is doing. The guy has smeared Ron Paul in the past and now that Rep. Paul is taking aim at the Fed -- something that is in his right to do -- Krugman is going to unleash all barrels on him. And, I am sure that his employer, the NY Slimes, will follow suit.

On Academe and Discrimination

In a post yesterday commenting on a recent survey on ideological attitudes in academe, Paul Krugman writes:

Every once in a while you get stories like this one, about the underrepresentation of conservatives in academics, that treat ideological divides as being somehow equivalent to racial differences. This is a really, really bad analogy.

He goes on to describe how there is self-selection and the like in the different areas of work, and how that differs from racial discrimination. To a point, that is true. There is self-selection, and being a faculty member at a university where the political and social attitudes of the faculty as a whole pretty much fit the caricature one might have of higher education, I can attest to what Krugman is saying.

However, there is much, much more that Krugman is not saying, or pretending does not exist. First, the area of bias does apply in self-selection, but sometimes in a different way than what Krugman claims. Take the field of labor economics, for example.

It used to be that a lot of people took a field in labor while in graduate school, but today, that division is dominated by women and minorities. Why? Because the issue often under discussion is discrimination on behalf of race, sexual orientation, and sex, and people who go into the field are motivated such discussions.

Over time, as more and more women and minorities go into labor economics, that field becomes dominated by them. When economics departments have job openings, they always are under pressure to hire women and minorities, so labor becomes an easy way to meet the affirmative action goals. Thus, we see how the pattern grows, until one can expect almost any department to have its labor "experts" being women or minorities, or both.

This is not due to any nefarious plot, but rather is a rational approach taken by all parties. Likewise, over time we see the same thing happening in the area of English. Once upon a time, English departments had both liberals and conservatives, but through the years, people who are politically liberal have come to dominate, push out the older conservatives, and then make it clear that they will hire only people who agree with them.

We share space with the university's political science department, and everyone in the department is on the left and, of course, always votes Democratic. I happen to like most of them and get along with them, and at times do things socially with them, so while there might be political disagreements, they tend not to bleed into the area of friendship.

Furthermore, while people at Frostburg know I am politically libertarian and a Christian, nonetheless they had no objection to my heading the university's Promotions/Tenure Subcommittee, and in our discussions of applicants, political views simply are regarded as irrelevant, since we look at the performance and achievement records, not what someone thinks. (However, I did not publicize my appearance on Judge Andrew Napolitano's show in order to avoid any possibility of retaliation by disgruntled faculty members or administrators who foam at the mouth when they hear the word "Fox.")

This kind of tolerance is not always the norm, however. My involvement in the Duke University lacrosse case showed me that at Duke, at least, ideology matters in many ways. Students told me that many classes they took were little more than sessions of political harangues by hard-left profs, and the way that the hard left was able to dominate the campus discussion during that case tells me a lot about the place.

People like Krugman don't seem to mind what happened at Duke. The New York Times played an active role in trying to keep Mike Nifong's case alive, even when the evidence pointed the other way. The newspaper that trumpets how DNA has freed wrongly-convicted minorities suddenly decided that in the Duke case, DNA really did not matter.

So, while Krugman is partially correct, it never occurs to him that self-selection may also apply in the workplace to both race and sex, along with other factors. To do so would upset his view of the world.

Of course, Krugman cannot write a post without smearing someone who might agree with him and his own ideology. He writes:

It’s particularly troubling to apply some test of equal representation when you’re looking at academics who do research on the very subjects that define the political divide. Biologists, physicists, and chemists are all predominantly liberal; does this reflect discrimination, or the tendency of people who actually know science to reject a political tendency that denies climate change and is broadly hostile to the theory of evolution?

Interestingly, it is Krugman who denies historical climate change, for he still insists upon the discredited "hockey stick" that was created in order to conveniently do away with the well-documented Medieval Warm Period and the Little Ice Age. You see, Krugman decides that it is OK to deny science when the truth is inconvenient. (By the way, the last warming notion on the graph came from the very people who tried at first to deny that there even was a Medieval Warm Period or Little Ice Age.)

What About Other Commodity Prices?

In my earlier post today, I take issue with Krugman's "Global Warming Explains It" logic. However, I have another question: If Global Warming is the cause of food prices going up, then why are commodity prices rising, too?

Krugman's standard answer is that economic activity elsewhere is driving up the prices of oil and various metals. In other words, because Krugman supports the Fed's policy of throwing dollars everywhere, he is never going to admit that maybe, just maybe, throwing more and more dollars around the world might have an impact on commodity prices.

Of course, if you say that, then you are just another evil right-winger.

All Global Warming All The Time

I notice that Paul Krugman KNOWS why food prices are rising. Why, it's Global Warming! Keep in mind that the Fed has been throwing new money all around the globe, and commodity prices tend to be much more sensitive to things like inflation, but Krugman knows better.

What’s behind the surge in food prices? The usual suspects have made the usual claims — it’s all about the Fed, or it’s all about speculators. But I’ve been looking at the USDA World supply and demand estimates, and what stands out from the data is mainly that we’ve had a huge global harvest failure.

Notice that Krugman does not even mention the fact that 40 percent of the nation's corn crop goes to produce ethanol, the inferior fuel that government forces us to put into our cars. But why the crop failures? Krugman has the answer:

Why is production down? Most of the decline in world wheat production, and about half of the total decline in grain production, has taken place in the former Soviet Union — mainly Russia, Ukraine, and Kazakhstan. And we know what that’s about: an incredible, unprecedented heat wave.

Obligatory disclaimer: no one event can be definitively assigned to climate change, just as you can’t necessarily claim that any one of the fender-benders taking place right now in central New Jersey was caused by the sheet of black ice currently coating our roads. But it sure looks like climate change is a major culprit. And it’s not just the FSU: extreme weather elsewhere, which again is the sort of thing you should expect from climate change, has played a role in bad harvest around the world.

Back to the economics: if you want to know why we’re having a spike in food prices, the data suggest that the key cause is terrible weather leading to bad harvests, especially in the former Soviet Union.

One of the big ironies here is that during the era of communism, the U.S.S.R. blamed bad weather every year for crop failures. It looks as though Krugman is trying to pick up where Khrushchev, Brezhnev, and Gorby left off.

Krugman picks up the same theme in his Monday column, continuing his theme that the Evil Right Wingers are the Source of All Evil. First, he excoriates anyone who might thing that printing lots of dollars might have an effect upon commodity prices:

So what’s behind the price spike? American right-wingers (and the Chinese) blame easy-money policies at the Federal Reserve, with at least one commentator declaring that there is “blood on Bernanke’s hands.” Meanwhile, President Nicolas Sarkozy of France blames speculators, accusing them of “extortion and pillaging.”

Like Krugman's predecessors who blamed bad weather for permanent bad harvests in the U.S.S.R. (because, after all, socialism BY DEFINITION cannot result in anything but freedom and plenty), Krugman tries to use the current events as a way to encourage the imposition of draconian government policies, this time to prevent Global Warming.

I hate to tell Krugman this, but he is not an expert on the weather. A Nobel does not give one Ultimate Wisdom, no matter what he and his friends at Princeton might think. In fact, Krugman might want to put on his economists' hat (you know, the one the emphasizes opportunity cost, something he ignores, as it doesn't fit his program of Inflation First) and ask what would happen not only of "cap and trade" were imposed as severely as the Princeton faculty is demanding, but also the effects of "food for fuel" around the world.

No, Krugman ignores the obvious and then demands that the bad harvests be used as a hook to impose government policies that will result in even worst harvests and real-live starvation. In other words, real economic analysis is not acceptable, not when one can worship the statue of Algore.