Another thing we supposedly learn in that world is that one does not argue legitimately by setting up straw men and then demolishing them. One has to be careful in setting up generalities that simply have no meaning as the foundation of one's arguments.
Over the years, I have been fortunate to have met a number of well-known economists, including a number who have won the Nobel Prize in economics. Furthermore, I have known a lot of their friends and have had the opportunity to sit with some of them and have long conversations, as well as see them interact with others.
A number of them have had columns and articles in the popular media, including the late Milton Friedman and Gary Becker, and I read many of them. I cannot recall one time when either of them ever drew the distinction that they were holy and moral and anyone who disagreed with them was pure evil. In fact, many of these Nobel winners have demonstrated a real graciousness toward those in other camps.
And then there is Paul Krugman, who really draws the line in today's column, "A Tale of Two Moralities." In this column, we find there are two kinds of people in our society.
The first group he describes as such:
One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.These are the good people, as they want wonderful things for those who are less fortunate. Unfortunately, he continues, there also are the Bad People in our midst:
The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.How do these people differ? Krugman explains:
There’s no middle ground between these views. One side saw health reform, with its subsidized extension of coverage to the uninsured, as fulfilling a moral imperative: wealthy nations, it believed, have an obligation to provide all their citizens with essential care. The other side saw the same reform as a moral outrage, an assault on the right of Americans to spend their money as they choose.He goes on to explain that the Good People are Democrats, but the Bad People are Republicans. The Good People are kind, generous (at least with other people's money), and make good neighbors.
The Bad People, on the other hand, are violent, greedy, selfish, and are so out-of-control that there really is no reasoning with them, as they reject any attempt at reconciliation. These Bad People have no socially or morally redeeming values, and Krugman promises to show how they also spread a bad social theology:
But that was then. Today’s G.O.P. sees much of what the modern federal government does as illegitimate; today’s Democratic Party does not. When people talk about partisan differences, they often seem to be implying that these differences are petty, matters that could be resolved with a bit of good will. But what we’re talking about here is a fundamental disagreement about the proper role of government.I only can wonder how Krugman deals with students at Princeton who are not in his moral corner. After all, he is publicly declaring that their views are immoral and illegitimate and have no place in decent society. After having seen how much of the faculty at Duke University dealt with the false allegations in the infamous Duke Lacrosse Case of four years ago, Krugman does have a model to follow, and the faculty members who engaged in the worst conduct at Duke also are people in Krugman's political corner.
Regular readers know which side of that divide I’m on. In future columns I will no doubt spend a lot of time pointing out the hypocrisy and logical fallacies of the “I earned it and I have the right to keep it” crowd. And I’ll also have a lot to say about how far we really are from being a society of equal opportunity, in which success depends solely on one’s own efforts.
Of course, only the Bad People make false allegations. Only the Bad People engage in violence. (There were no Obama supporters outside a polling place making threats. That is just your imagination.)
The first is that the Tucson shooter was not a political person, and what happened is not necessarily something that falls into the category of political violence. There is no evidence that Jared Lougher knew the identity of the federal judge, and I don't think one murders nine-year-old girls for political reason.
Krugman, however, has ignored the facts because they don't fit his narrative. But there is even a bigger issue that Krugman ignores and that is the violence committed by government agents. I never have seen Krugman speak on one incident in which those wearing government costumes have engaged in unwarranted violent behavior against innocent people.
(Will Grigg has documented government violence against innocents -- including outright murder -- numerous times. I guess that the very act of pointing out that fact, according to Krugman, makes Grigg a violent person.)
The closest Krugman has come to dealing with that issue was about 10 years ago (I have not found the column but remember reading it) when he wrote that there was no abuse by the IRS of taxpayers. There was no government violence, and if there was, well those on the receiving end deserved it. In other words, according to Paul Krugman, even if the government engages in unwarranted violence, as long as Democrats are in charge, we are to take it no matter what.
Notice that what he is saying is that if one does not accept the ObamaCare bill in toto, then one wants other Americans to die for lack of medical care. To question a bill that runs 2,500 pages with much of the contents being open-ended (to be "interpreted" by the bureaucracies) is to be evil and violent, not to mention utterly selfish.
Furthermore, if one questions the extremely "liberal" use of the Commerce Clause in the Constitution, one is a violence-loving purveyor of evil. In fact, given his views of American society and capitalism before the New Deal, it would seem that he believes that life was pure hell until FDR came along with all of his alphabet-soup programs.
Krugman's logic runs into another problem: it seems that, according to a study by Arthur Brooks, those who Krugman claims are greedy -- conservatives -- tend to give away a larger portion of their income than do liberals. Of course, Krugman believes that the ONLY acceptable kind of "giving" comes through taxation and transfer payments. There can be NO argument here.
There is another point I believe needs to be made: most Republicans believe in and support the Welfare State. In fact, like a lot of Democrats, they support the Welfare-Warfare State and never have attempted any serious repeal of welfare (or warfare) measures when they were in power. Thus, Krugman has set up the straw man Republican when, in reality, there are no Republicans in power (except for Ron Paul) that really fit that description.
And, I only can guess that Krugman, who has smeared Ron Paul before, would claim that Rep. Paul is someone who advocates mindless political violence and murder. After all, he does believe that much of the modern state is illegitimate, so A MUST follow B. Why? Because Krugman says so.
My guess is that Krugman sees nothing polarizing about his rhetoric. People who agree with him are the Good People, and everyone else is a Bad Person. And that is the "wisdom" that comes from the august Princeton faculty these days.
Hi Prof. Anderson - hope you had a good holiday! Just checking in to see if you have decided to be an economist again. Guess not. Good luck in your crusade to 'out hack' Krugman. I probably won't be posting much more in the future, since this blog has gotten seriously off topic. I know, you'll miss me! It was fun debating economics with you back when you wrote about economics. In all seriousness, I do hope you have learned something from me, and maybe one day you'll open up your mind (and classroom) to MMT. What's become pretty clear during this crisis is real economists like Wray, Mosler, and Mitchell were way ahead of their peers, and that includes Krugman and Murphy.
Good luck in the future. If I'm ever in the Frostburg area or happen to catch you at a speaking event sometime, I'll be sure to introduce myself. And in all seroiusness, please accept my apology if I had ever offended you anyway personally. I fully admit I was guilty at times at saying things just to grab your attention and others (similar to when you said Krugman endorses criminal activity in the Madoff post). To be honest, after reading a lot of your work, I don't think you're much of an economist, but you do seem like a real stand up guy.
I'm sure I'll be back every now and then to torment you...if you ever decide to write about economics again :)
Trust me when I say I am not offended. The give-and-take on the blog is what I like to see. I don't think that there is a position one can take on about any subject that does not have some internal contradictions -- or problems because, after all, people get in the way.
I don't take criticism personally unless someone aims beyond the matters here, like the commenter who recently attacked our decision to try to adopt from overseas. (I doubt that this person had ever tried to adopt within the US foster care system, as we did for more than a year, but that did not keep him from knowing everything that is to know.)
As for the comment regarding economics, you are right in that this is not an economics column. However, Krugman is using his perch as a Nobel winner to claim that people who disagree with you social view of the world are evil. I do have a problem with that.
And, by all means, stop by.
I actually think that Republicans are absolutely against the Welfare State. However, in a democracy such as ours, it is politically impossible for them to do away with the programs that so many people depend on.
This is a reason why Krugman has theorized that they are essentially trying to precipitate a financial crisis through their insistiance on more tax cuts in the face of massive budget deficits. Once there's an "emergency" they will have the political cover to make big cuts.
Libertarians and Republicans do not have faith in democracy and would love to let the markets kill programs which The People have enacted to protect themselves from the worst aspects of capitalism.
Although you point out the need to avoid constructing straw men, your argument does just that. Even though Krugman is making a political argument and obviously wants us to believe his side is more correct, he never says that Democrats are 'good' or that Republicans are 'bad', just that they have very different perspectives on the role of government. By reducing his position to good vs. bad you give yourself an easy target, but it doesn't represent Krugman in my view. For example- I don't think Krugman, or liberals in general, would be at all surprised that conservatives give more. The stereotype would be that conservatives more often belong to religious organizations, and give money to them. This is completely in keeping with Krugman's point that while the left sees helping the less fortunate as a job for government, the right thinks it should be a personal choice.
1. I'm still waiting for AP to explain where all the stuff is going to come from to pay all of this unpayable debt.
2. In an associated blog post, Krugman suggests that evidence does not matter to those who see funny money dilution as immoral. Of course, that's how Hayek won the Nobel Prize. Right.
@AP- This Blog is called Krugman-in-Wonderland. The point is pretty clear; to point out fallacies, errors, and complete fabrications in what Krugman writes. Therefore, Prof. Andersons writings on here are a reaction to what Krugman writes. If Krugman writes something that is rooted in politics instead of economics, it is only reasonable to expect Prof. Anderson, on THIS blog, to to respond with a political discussion. i, too, would like more economic discussion, but that would first require Krugman to engage in it. THAT is the problem. To expect a discussion completely unrelated to what Krugman says, on a blog called Krugman-in-Wonderland is silly.
I’ll answer your question to AP. In their world “stuff happens” thus no need to worry about where it will come from.
In addition to burkll 13 I would add the following. The only place there is a complete separation of politics and economics is in an abstract sterile academic laboratory. It doesn’t work that way in the real world.
Krugman is always the fraud. Implicit in today's writings is his phony and false insinuation that the Austrians have no evidence of the total failure of Keynesian policy and that we base our positions on the welfare state and money dilution solely upon moral grounds. Hey Krugman, ever hear of "Human Action"?
Krugman has again posted one of my comments where I insult him, but in a nice way:
Bob and Mike,
About the "stuff", Mosler says its a dumb question:
“When our children
build 15 million cars per year 20 years from now, will they
have to send them back in time to 2008 to pay off their debt?
Are we still sending real goods and services back in time to
1945 to pay off the lingering debt from World War II?”
“… Are we still sending real goods and services back in time to
1945 to pay off the lingering debt from World War II?”
That type of statement is an overly simplistic attempt to dodge the issue. We don’t send the goods and services back in time; the debt is brought forward to our time. You can roll debt foreword until you can’t anymore. Think of it in terms of thermodynamics. Water stays in liquid form all the while it is heated until reaching 212 degrees at which point it goes into phase transition. Everything seems fine until that point. The jump from liquid to gas then happens quickly. Phase transition in terms of debt is when it can no longer be rolled forward and the bill is presented for the “stuff.”
At what temperature are we now?
Oh, I'm with you Mike. I was just showing one reason why Chartalists never answer this question.
"Discusses how Paul Krugman sees the world as black and white, good versus evil, and his superiority complex."
I really like this post. I hate it when political views obscure the fact that everyone (pretty much) is doing what they think is right. We're not evil. Some are right and some are wrong, but that does not make the people on the other side evil. If Krugman was just a neo-Keynesian that would be okay, but his harsh tone and disdain for everyone else is what really makes him outrageous.
Bob, Daniel, Mike M, chartalists answer the question all the time. You may not like the answer or not agree with it, but it is answered.
In nominal terms, the question is ridiculous. You just print the money. If you want, just pay off the interest bearing debt once and for all, and stop issuing it any more. (Many have a mystical belief that bonds are different from money, rather than being another kind of it, that printing bonds is different from printing money.)
Austrians assume that money creation causes price inflation and deprives people of their purchasing power. It can, but does not necessarily or even usually do so. Austrians always assume all economies are always at full employment, and have a completely wrong and ahistorical idea about what money is.
In real terms - well, the US economy has been operating below full employment for decades, the government not doing enough - not running big enough deficits - to counteract strong deflationary forces. So there is enormous room for money printing to do its work, for more production and employment. This production is what will help pay the debts, the unfunded liabilities.
OF COURSE, if Austrians are put in charge of the US economy, and we have 90% unemployment for 10 years, the debts will be hard to pay in undepreciated value - but the problem would be unemployment, real wealth destruction by Austrian policies - not nominal debts.
None of the US government's debts are unpayable, or even serious - and they need not be seriously inflated away by reducing purchasing power. The question is a joke.
One class of people who are never allowed into mainstream debates about intergenerational demographic issues are uh, demographers, because they think as Mosler does, that the issue is a joke.
Repeating from memory an argument of one of the world's leading demographers, Joel Cohen, iirc from his How Many People Can the Earth Support? - If a nation can support a generation as children, it can support them as senior citizens. Baby booms and birth dearths pay for themselves. The resources that are not devoted to the children during the birth dearth are used by the numerous baby boomers to create the real wealth which will eventually be used to support them in their old age.
Not long ago, Paul Krugman was telling people, "Economics is not a morality play."
Strangely, today it is a morality play... I could say something deeply cynical about some people calling other people hypocrites, glass houses, stones and all that stuff. However, being an intensely positive person I'll conclude that Paul Krugman is learning from his mistakes and accepting that the morality is one of the foundation stones of economics.
I'm going to turn against Prof. Anderson on this occasion and say he is both unproductive and unfair to call "Krugman's Fairy Tales", just because Krugman paints a strongly partisan position. I see this as one of Krugman's more lucid articles in as much as he is actually willing to face the idea that there is a moral debate going on at all.
Better still, he actually makes some small effort to explain that there are two sides to the debate!
Of course Krugman is going to paint himself as the shining white knight. What would you expect in all seriousness? Krugman makes no bones about where he stands. That's all tinsel and line dancers for the plebs and the paymasters. Don't bother grumping over that stuff, put it out of your mind and focus on the core of the moral debate and the important points to cover.
Onwards with the real debate then.
"I see this as one of Krugman's more lucid articles in as much as he is actually willing to face the idea that there is a moral debate going on at all."
Nah, Krugman's still a stark raving madman. The following is what really clinched it for me:
"Commentators who pine for the days of civility and bipartisanship are, whether they realize it or not, pining for the days when the Republican Party accepted the legitimacy of the welfare state, and was even willing to contemplate expanding it."
Krugman is saying that everyone was happier when we all just accepted lovable big brother government into our hearts. Like it's inevitable. Like it's delusional to believe otherwise. Prof. Anderson hit it spot on.
Your answer is you don’t need stuff to pay off the debt, you just print the money. So essentially you advocate a form of default and shackling a future generation with a reduced standard of living because of the priors’ largess. Explain how that is economically healthy let alone moral. Your assumption they can just “stop issuing it anymore” is another example of academic laboratory naïve thinking. If they could stop themselves they would. They can’t and the present monetary system fails to act as a governor and actually encourages bad behavior.
Your argument about unemployment and money printing is classic demand-pull analyses and ignores cost-push.
Debts would not be hard to pay because they would NOT have been incurred at these levels in the first place. The question of present debt being payable is only a joke to those who choose to ignore the issue. The financial markets will explain this to those who think debt is a joke in a punishing way. Study the numbers; debt, unfunded liabilities, and the revenue opportunities and one can see the math doesn’t work. Demographics notwithstanding.
Re: Where's the stuff gonna come from? It ain't.
Investors in European bonds should prepare for losses, says Pimco co-CEO Mohammed El-Erian. Nonetheless, it’s an exciting time to be an investor, especially for those who keep a sharp eye for well-placed bond offerings.
"The main issue right now is the integrity of the eurozone is getting weaker and weaker as we delay the problem,” El-Erian tells CNBC. “They are simply kicking the can down the road."
"Ultimately there will be a haircut to bonds issued by certain governments in the eurozone, and the longer we delay that recognition the bigger the problem and the more disorderly the process will be."
Haircuts. Don't ya just love that hip financial jargon?
If one man pays 10% of his income to charity, of his own free will and under no compulsion to do so, while another man pays 20% of his similar-sized income to charity under constant threat of violence should he ever attempt to do otherwise... which of the two men is more generous?
Putting this question into it's older formulation: if a child is brought up to be a believer in God and every day taught to believe in God and never knows any other option, never understands there is a choice in the matter, are they really a believer at all?
This is the Anabaptist Heresy and has been annoying the Catholic Church for over 1000 years. It can be expressed yet another way.
If a strong central authority uses force to turn ordinary people into "better" people, is this a moral act?
Note that Anabaptists typically renounce the use of violence (just like Krugman has) so if they have a fundamental and unresolvable moral disagreement with another person they simply "opt out" and avoid all possible dealings with that person.
As commenter's on Krugman's blog have pointed out, there is a perfectly good middle ground available on this issue which is to leave the matter to the states and allow people to move between states to find their own moral equilibrium on matters such as how to support charity, how much charity should be offered, etc.
So essentially you advocate a form of default and shackling a future generation with a reduced standard of living because of the priors’ largess.
No, I don't advocate default. In fact, Austrian Austerianism is pro-default, making debts harder to pay.
Like I said, Austrians understand that the question of what money is is important. But their answer, accepted by the mainstream quackonomists, is 100% wrong, entirely ignorant of history, confuses the nominal and the real, and coupled with magical belief in automatic full employment, is the source of all the false conclusions.
I advocate printing the money, which would not default on debt, not inflate it away, but cause higher production and economic growth. Print the money, and the stuff would be created, naturally, catallactically, by the free market economy which the evil government starves of money. The government returning to New Deal, full employment policies with a new WPA / guaranteed job would create instant, probably double digit, economic growth, and would make future generations have a higher standard of living. Of course I ignore cost-push - economics is not magic - the serious cost-push comes from oil prices, which are not controlled by the advanced countries. Any other sort of inflation is very, very far away, even if we printed the trillion or two (peanuts!) the economy wants right now.
The main inhibitor of economic growth is nutty tight money policies, especially for economically productive things, like full employment for ordinary people.
On the other hand, the US government showers money on the murderers and war-criminals of the military-industrial complex, big business welfare, who kill for no reason but to keep their cancerous complex alive. Getting rid of it would allow for far more non-inflationary expenditure, and would decrease the price of oil too, as the M-I complex goes out of its way to alienate oil producing nations.
Again since you missed it the first time. The debt would not have been incurred in the first place.
You seem to think inflation is what the BLS says it is. You believe wealth can be created by dropping currency units in the right accounts and adjusting the dials. You fail to understand the economy is not a machine or a science experiment.
Yeah, ok. Like Bush didn't try to privatize Social Security. Or like Reagan didn't put an end to initiatives set up by the Office of Economic Opportunity. Get real. Krugman may be over-the-top on a lot of issues, but to accuse him ignoring facts in an effort to perpetuate his narrative is just plain dishonest. The reality is that, if you've read any of his books, he's the first one to logically present all of the data on both sides of every issue he examines. He often points out where republicans have legitimate points supported by empirical facts. And yes, he also points out where republicans ignore facts altogether. But you need to be honest with yourself when you claim that republicans are more supportive of the well fare state than democrats. In terms of the philanthropy data, you know damn well there are many tax loopholes that make it advantageous to billionaires to make charitable donations to well fare groups and non-profits. Such contributors skew the data. If you compare giving statistics amongst middle-class members, you might have more credence, though I highly doubt that set of data will show republicans care more about the well fare state than democrats. Point is, your nonsense is just as unruly as you claim Krugman's commentary to be.
You call prof andersons blog nonsense, yet your own reasoning seems to state that charitable donations by the wealthy dont count because they get tax breaks? Who is the one peddling nonsense around here?
Not to mention, the study showed that liberals averaged higher incomes than conservatives in the study. The conservative families were POORER, yet still giving quite a bit more of the percentage of their income.
But hey, who needs to actually read and understand a study when dismissing it out of hand can do wonders for keeping your personal bigotry unchallenged.
cont:'The average family in San Francisco and South Dakota both give $1300 away each year, even though families in San Francisco make 78% more!
The percent of people that give to charity is higher among poor people who don't believe in income redistribution than rich people who favor income redistribution (welfare, closing the income gap, etc.) !!! [It is easy to want to give other people's money away and pat yourself on the back for advocating it, all the time calling people uncompassionate for not agreeing with you.]
People whose parents were charitable are more likely to be charitable
If liberals and moderates gave blood at the same rate as conservatives, the blood supply in the U.S. would increase 45%
Of the twenty-five states in 2004 that donated a portion of household income above the national average, twenty-four gave a majority of their popular votes to George W. Bush for president.'
Considering this rather illuminating demonstration of your ability to research data, I find the likelihood that your other arguments have any basis to be severely lacking. Too bad we can't judge them on their merits, as you provided no evidence for them, but I guess that's about what we should expect from someone of your intellectual caliber.
About the full employment thing...
I'm somewhat of an ameteur austrian economist, but...
Don't austrians assume full employment ONLY in an actual free market??
In case you haven't noticed, we don't live in a free market.
Minimum wage laws (and a host of others) prevent full employment from ever being reached.
I think this sums up how much they just don't get it...
I advocate printing the money [...] cause[ing] higher production and economic growth. Print the money, and the stuff would be created, naturally, catallactically...
How, exactly? Who will deliver this new money to the factories building the things people want.
Suppose you just give the new money away. People will spend the money how they want and entrepreneurs will produce to meet the increase in 'demand'. When the money runs out will you print more, or let the boom crash?
Assuming people's preferences don't change, you will see price inflation, unless you can increase the money supply and simultaneously increase the efficiency of every producer.
Nope, Jason. With unemployment as high as it is, it would take a lot of money creation to create price inflation. People who cry inflation at the government's puny trillion dollar deficit spending / money printing don't notice at all the decline of the bank credit money supply - which is a much bigger sum of money.
I think this sums up how much they just don't get it Are you sure it is I, the Keynesians, the modern monetary theorists etc who "don't get it." Why does historically, Keynesian full employment economics lead to longterm prosperity and stability, in comparison to neoclassical/neoliberal policies? Capitalist economies are not naturally stable and self-correcting on reasonable time scales. Employment is not naturally full - the government should guarantee everyone a job, and money is never neutral. Austrian economics implemented in reality would be a catastrophe. Like I said, Austrians have no idea what money is.
The people who get the money - the unemployed for instance - would be the ones to spend it - of course the best thing would be to give the unemployed a WPA style job - which would be disinflationary.
When the "money runs out" - well, tax revenues would go up, so it would not likely run out too fast. If there still isn't full capacity utilization and employment, then just print some more. The government has an infinite supply of money.
The "true prosperity" the Austrians mythologize about never existed anywhere. Keynesian full employment government-malinvestment "false prosperity" is the best one can hope for - and give me it any day. And the government does plenty of things better than the private sector - like health care and funding basic research.
You don't need to increase the efficiency of every producer the way I think you mean. Utilizing existing capacity, employing people who want to be employed makes the economy that much more efficient. Any unemployment is a gigantic loss to the economy's prosperity and efficiency. And zero unemployment won't happen with laissez-faire.
@ AA (just above me)
Did I miss where zero unemployment happened under the keynesians for the past 30 years?
Also, employment is bad. Our goal should be to become so efficient that employment is no longer needed.
For instance, it would be much better if our economy was efficient enough (as it used to be before all this BS) that one parent could stay home and raise the kids if they wanted to. As it is, this is impossible for most families.
"Zero unemployment" is only a good thing if you are wanna be dictator/tyrant who's only concern is with keeping the rabble busy. Oh wait, that's what the bankers are...
"Also, employment is bad. Our goal should be to become so efficient that employment is no longer needed.
For instance, it would be much better if our economy was efficient enough (as it used to be before all this BS) that one parent could stay home and raise the kids if they wanted to. As it is, this is impossible for most families."
Do you prefer to work or to not work?
People prefer leisure to work. This is obvious. Leisure being whatever they enjoy...
Employment for the sake of employment is nonsensical.
If employment is the goal, then it is easily achieved. Dig a hole, fill it in. Repeat. We are all employed!!! Oh wait, we have nothing to show for it...
(Also, notice I said one parent could stay home IF THEY WANT. I was just using this as what I thought to be an obvious example of something people would rather do than work, eg spend time with their children)
When your goal is employment you aren't necessarily making anyone better off and in many cases you are making people worse off.
Oh yea, and it gets even worse when you steal resources from actual producers to fund all these make work jobs to "fight unemployment."
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