If you support government action that violates the rights of others by initiating force against them, expect government to do the same to you, and accept it without complaint.
Government is not reason, it is not eloquence, it is force; like fire, a dangerous servant and a fearful master. Never for a moment should it be left to irresponsible action. — normally attributed to George Washington (but unproven)
I hope you're well -- [redacted]
snowmageddon, Christiegate, and the Republicans' faux-outrage over the CBO report (could they possibly not know the difference between supply and demand?).
Many Republicans probably don't know the difference between supply and demand, just as many Democrats probably don't -- why should they, when a professional economist like Paul Krugman can't explain the difference either?
In other words, Krugman missed the obvious point that demand is supply being spent, so the only legitimate way to raise demand is to raise output. All trade consists of producers exchanging what they've produced -- their supply -- for the supply of another producer, and so every exchange is an expression of the demands of the producers from what they've supplied.
Even claiming that demand will fall if the savings rate is high, since people aren't spending their output, does nothing to suggest that stimulating demand somehow solves a problem. A high savings rate means people are paying down an existing debt, or accumulating their output for a larger purchase -- increasing output is still the only way to stimulate demand, since an increased output is the only way for a producer to both save -- to achieve whatever goal motivated increasing their savings -- and increase their demand.
Also, note that as much as people claim that excess savings (even though it never happens) can be a drag on an economy, saving is just a different kind of spending, so it too is an expression of demand. Any savings in bank deposits increase the available capital for lending, and so it tends to lower interest rates, which lowers the cost of debt, which leaves a greater portion of the available supply to be spent on other things, increasing demand.
In any case, if someone doesn't know the difference between supply and demand, they certainly won't get that knowledge from Krugman or Gornick.
And that Gornick would single out Republicans for a mocking comment is a strong indication of an agenda on her part -- there's a lot to criticize in government, and party specific mockery, with pop-culture references like 'Christiegate', indicates Gornick is just another symptom of a cult of personality. This is a terrible quality in an academic supposedly doing objective research -- never mind one at a public university who is paid with tax dollars.
... you will not be expected to teach or supervise students. Instead you will be asked to contribute to our build-up of LIS [Luxembourg Income Study Center] and the inequality initiative and to play a modest role in our public events. During year-two (2016-2017) and thereafter, you will teach one seminar per year, the balance of your workload being made up of contributions as described above.
Here's the nine-month salary, for that vague job that has something to do with inequality: $225,000, plus an annual research/travel fund of $10,000.
Notice that 'The City University of New York' is a public university system, which means it is funded by taxpayers -- not only city and state, but also federal -- so every working American who pays taxes is partially funding this university system (along with many others). Here's a brief description of CUNY's funding, dated January, 2012 -- at that time, New York State covered 60% of the operating budget of CUNY senior colleges and their entire capital budget -- http://psc-cuny.org/cunys-funding-sources
Updated: January 12, 2012
New York City
Public funding from New York City covers more than a third of CUNY community colleges’ operating budget. Student tuition and state funding make up the balance.
... New York State
Public funding from New York State covers 60% of the operating budget for CUNY senior colleges and their entire capital budget. At present, student tuition provides 40%.
... United States
The federal government provides critical funding to public higher education including grants for academic research, Pell grants and subsidized loans to college students, and other direct aid to states.
For comparison, here's a chart from the '1997 Revenues and Expenditures Report' by the 'Mayor's Advisory Task Force on the City University of New York', which shows the bulk of CUNY's costs were also paid by taxpayers at that time. Notice that the tuition portion shown in this chart also includes tax dollars, since it includes financial aid -- in other words, the portion of the cost covered by tuition is exaggerated in this chart, since the financial aid contribution to tuition isn't excluded from the tuition percentage (as mentioned in the footnote on the chart). In short, taxpayers pay the bulk of the cost -- http://www.nyc.gov/html/records/rwg/cuny/pdf/report3/report3_4.pdf
...
But this is one case where I think Krugman is in the right and his critics are in the wrong. Not only should he have had no compunction about accepting CUNY’s offer—he would have been entirely justified in asking for more. And doing so should have no bearing on his credibility as a scourge of rising inequality.
...
Why would going for an even larger salary 'have no bearing on his credibility as a scourge of rising inequality'? How does paying someone so much more than so many others, for even less work, with taxpayer funds, not destroy their credibility as a critic of income inequality?
Of course, there's no way to coherently make the case that being paid far more than your co-workers (who are doing more work), doesn't make a mockery of being a supposed 'scourge of rising income inequality'. So, Salam does the only thing he could do when trying to defend the indefensible -- he uses a series of red-herring fallacies to attempt to distract the reader from the obvious point that no one committed to equality would accept being an example of inequality.
Here are some of the irrelevant details Salam gives in his article:
Krugman has sounded the alarm regarding income inequality
Krugman is well credentialed
Krugman has a stature that will raise the profile of The Graduate Center at CUNY
Krugman will attract donors that share his convictions regarding income inequality
The appropriate response here is: 'So what? What does any of this have to do with someone being paid in a dramatically unequal way to be involved in a supposed 'inequality initiative'?'
These points of information may justify a private college offering Krugman a large salary, but they do nothing to undercut the richly deserved charge of hypocrisy, for someone who pretends to be fighting the vary thing he exemplifies.
What is so hilarious about Reihan Salam's article, is that by attempting to defend Krugman's salary by listing the special qualifications that supposedly make Krugman more valuable, Salam unwittingly makes the case that income inequality is justified by individual ability -- and so no one should have a problem with it, because it's fair.
So, if, as Salam claims, Krugman really is worth more than $225,000 per nine-months, because of his unique abilities and achievements, then what on earth is the point of an 'inequality initiative' ?
Salam has already answered the question posed by income inequality -- it's caused by differences in individual ability -- so let's just send Krugman home, along with everyone else being paid with tax dollars at CUNY's Luxemborg Income Study. Then the tax dollars being wasted on the salaries of all the academics involved in this pointless exercise, can be used to help students acquire individual abilities of their own, so that they too might earn a decent living one day -- and hopefully at a job that isn't just another wasteful burden for taxpayers.
...
To that end, he sought an affiliation with the Luxembourg Income Study, a think tank that gathers and analyzes data on income, wealth, and employment from a number of countries to draw meaningful cross-national comparisons.
...
Understandably, Krugman chose not to disclose any financial details in his announcement. But one can read between the lines. The LIS does difficult, expensive, thankless work, and attracting a scholar of Krugman’s stature would do much to raise its profile. The Graduate Center is home to a number of well-regarded scholars, yet it is not generally seen as competitive with other major research universities with deeper pockets.
...
The mention of 'expensive, thankless work' and the need for 'deeper pockets' is especially priceless following the absurd claim that Krugman would have been justified in asking for more money. Salam gives no indication that he has any sense of the irony of his claim, that researchers ought to be treated like celebrities, and showered with money to study income inequality.
And here's how Krugman, 'that scourge of inequality', responded to CUNY's offer. If there's any indication that this best-selling author had any hesitation over accepting this 'remarkably generous' offer to be involved in an 'inequality initiative', it can't be found here -- https://www.documentcloud.org/documents/1112846-4-9-14-mr10634-res.html#document/p4
It’s kind of strange that people are focusing so intently on Krugman. Yes, he’s a well-known economist, a public figure. But it’s pretty clear that CUNY deserves the greater share of scrutiny here.
There's plenty of guilt to go around here, but clearly, as Trotter wrote (politely), CUNY deserves the bulk of the criticism, since they're the stewards of the tax dollars they receive, so they have a responsibility to spend them wisely, on things that have a reasonable chance of bringing benefit to the taxpayers who were forced to give them the money.
In that regard, notice another of the extreme absurdities in the previous quote above from Reihan Salam's article at slate.com. Salam described CUNY's Luxemborg Income Study as doing 'thankless work', as if the academics thereare toiling away tirelessly to serve the public. Well, of course it's thankless work. No one in their right mind would pay for an 'inequality initiative' from a group of corrupt, pretentious academics.
This makes me sick. I work in university administration (not at CUNY thank heavens) and make a small fraction of this every year for full time + extra time. I can barely budget my staff who are all very hard workers and serve the university and community well. Meanwhile I see crap like this obvious cronyism and think how many students could be on scholarship or how may professorships could be funded without this waste of a PR stunt? Grrrrrrr....
At least some people aren't fooled by the obvious hypocrisy.
It's no surprise that Paul Krugman would defend Social Security. After all, Krugman attempts to argue that WW II brought great benefits, so why wouldn't he do the same for a forced government retirement scheme, even if it performs more poorly for the majority of Americans than all other investment alternatives, including bank CDs?
Figures 5 through 7 provide the following conclusions: For those people retiring at age 62, none would benefit more from the current Social Security system relative to private investments in the S&P 500 (Figure 5). A person retiring at age 65 will only benefit more from Social Security relative to a private investment in the S&P 500 if he is a low earner and lives to be at least 96 years old (Figure 6). Finally, for those retiring at age 70, the only individuals that benefit more from Social Security are low earners who live to be at least 94 years old and average earners who live to be at least 108 years old, assuming an investment in the S&P 500 (Figure 7).
In short, the vast majority of people are harmed by Social Security, when compared with the return they could have received, had their Social Security contributions gone into a private account.
This is what Krugman describes as 'bringing dignity and decency to the lives of older Americans'. And if you have the temerity to criticize such a terrible alternative? In Krugman's view you have committed a 'a cruel attack'.
And it's perversely fascinating to see yet another article by Krugman, in which he denounces others for a quality that he himself displays in the same article. Krugman's article, 'Attacking Social Security', is a good exhibit of 'ideology and posturing', that at the same time attacks others for supposedly making claims that are about ideology and posturing.
Here's how Krugman sums up any criticism of Social Security:
So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in
three-card monte in which the surpluses Social Security has been running for a quarter-century don’t count — because hey, the program doesn’t
have any independent existence; it’s just part of the general federal budget — while future Social Security deficits are unacceptable —
because hey, the program has to stand on its own.
Then after giving no details about how Social Security actually works, or real details of an actual criticism, Krugman dismisses critics with these empty statements —
And having invented a crisis, what do Social Security’s attackers want to do? They don’t propose cutting benefits to current retirees;
invariably the plan is, instead, to cut benefits many years in the future. So think about it this way: In order to avoid the possibility of
future benefit cuts, we must cut future benefits. O.K.
What’s really going on here? Conservatives hate Social Security for ideological reasons: its success undermines their claim that government
is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut
Social Security has long served as a badge of fiscal seriousness, never mind the arithmetic.
Krugman's claim that conservatives hate Social Security, because 'its success undermines their claim that government is always the problem, never the solution', is especially fascinating given his empty defense of a program that supposedly demonstrates a government solution that deserves to be celebrated. Krugman's hypocrisy is stunning — he repeats the usual fallacies regarding Social Security, consistent with his own mantra that 'government is always the solution, never the problem', and then accuses others of having an ideological bias.
If Social Security is so helpful to people, as Krugman claims, why does he resort to contemptuously dismissing criticism of the so-called 'trust fund', while offering no details about how the 'fund' works? And why is there a Federal Reserve study that shows many people would have been better off had their contributions simply been put into bank CDs?
To be clear, Krugman's mocking description of criticism of Social Security as an 'exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century don't count', is obviously absurd. That description explains nothing, and doesn't address the basis of any criticism — legitimate, or not.
And does a Nobel Prize winning economist really not understand that all government securities are a liability to tax payers, including those that were purchased with the Social Security surpluses?
I wrote in detail in a previous post about this common way of dismissing criticism of Social Security — that is, pretending it's meaningful to say 'you owe yourself money', and that tax payers could treat money they owed as an asset.
Amounts collected via the 'OASDI' payroll deduction that are not paid to beneficiaries, are used to purchase government treasuries — in this case, special issue government bonds — which means any Social Security surplus is put into the government's general fund and spent. The treasury bonds held by the Social Security trust fund are a liability to future U.S. taxpayers, since U.S. taxpayers owe both the principle and interest on those bonds — just like U.S. taxpayers owe the principle and interest on every other government security. All government securities are a claim on future tax receipts, and therefore a liability to taxpayers, regardless of who is holding those securities.
This is what makes the often heard comment: 'the Social Security trust fund earns interest', so tragically amusing — many Americans are maintaining a delusion that the interest they must pay via tax collections is a return that they are earning. Yes, the Social Security trust fund earns interest, and if you are a U.S. taxpayer, you are one of the people who is paying that interest.
If anyone is playing three-card monte, it's Krugman, and anyone else who refuses to make these obvious points.
Social Security turned 75 last week. It should have been a joyous occasion, a time to celebrate a program that has brought dignity and decency to the lives of older Americans.
But the program is under attack, with some Democrats as well as nearly all Republicans joining the assault. Rumor has it that President Obama’s deficit commission may call for deep benefit cuts, in particular a sharp rise in the retirement age.
Social Security’s attackers claim that they’re concerned about the program’s financial future. But their math doesn’t add up, and their hostility isn’t really about dollars and cents. Instead, it’s about ideology and posturing. And underneath it all is ignorance of or indifference to the realities of life for many Americans.
About that math: Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.
But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come.
Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P. To give you some perspective, that’s a significantly smaller increase than the rise in defense spending since 2001, which Washington certainly didn’t consider a crisis, or even a reason to rethink some of the Bush tax cuts.
So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century don’t count — because hey, the program doesn’t have any independent existence; it’s just part of the general federal budget — while future Social Security deficits are unacceptable — because hey, the program has to stand on its own.
It would be easy to dismiss this bait-and-switch as obvious nonsense, except for one thing: many influential people — including Alan Simpson, co-chairman of the president’s deficit commission — are peddling this nonsense.
And having invented a crisis, what do Social Security’s attackers want to do? They don’t propose cutting benefits to current retirees; invariably the plan is, instead, to cut benefits many years in the future. So think about it this way: In order to avoid the possibility of future benefit cuts, we must cut future benefits. O.K.
What’s really going on here? Conservatives hate Social Security for ideological reasons: its success undermines their claim that government is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut Social Security has long served as a badge of fiscal seriousness, never mind the arithmetic.
And neither wing of the anti-Social-Security coalition seems to know or care about the hardship its favorite proposals would cause.
The currently fashionable idea of raising the retirement age even more than it will rise under existing law — it has already gone from 65 to 66, it’s scheduled to rise to 67, but now some are proposing that it go to 70 — is usually justified with assertions that life expectancy has risen, so people can easily work later into life. But that’s only true for affluent, white-collar workers — the people who need Social Security least.
I’m not just talking about the fact that it’s a lot easier to imagine working until you’re 70 if you have a comfortable office job than if you’re engaged in manual labor. America is becoming an increasingly unequal society — and the growing disparities extend to matters of life and death. Life expectancy at age 65 has risen a lot at the top of the income distribution, but much less for lower-income workers. And remember, the retirement age is already scheduled to rise under current law.
So let’s beat back this unnecessary, unfair and — let’s not mince words — cruel attack on working Americans. Big cuts in Social Security should not be on the table.
On September 14, 2001, just days after terrorists destroyed the World Trade Center in New York, Paul Krugman wrote an opinion piece entitled 'Reckonings; After The Horror', in which he claimed the destruction from the attacks would help people.
Krugman based this claim on the often repeated and absurd premise that the expense to replace what was lost would make people better off than they would have been, had the attacks not occurred.
Al Qaeda spent roughly half a million dollars to destroy the World Trade Center and cripple the Pentagon. What has been the cost to the United States? In a survey of estimates by The New York Times, the answer is $3.3 trillion, or about $7 million for every dollar Al Qaeda spent planning and executing the attacks.
...
In Krugman's 2001 piece, he made his own guess at a possible cost for the 9/11 attacks:
Nobody has a dollar figure for the damage yet, but I would be surprised if the loss is more than 0.1 percent of U.S. wealth -- comparable to the material effects of a major earthquake or hurricane.
From the 2003 Federal Reserve study, 'A Rolling Tide: Changes in the Distribution of Wealth in the U.S., 1989-2001', p.21
It is surprising that Krugman did not express hope for more damage, given how consistently he attempts to pretend there are blessings from destruction — regardless of the level of damage, the number of deaths, or the amount of wealth that's lost. As he often does, he wrote here too that WW II ended the Great Depression, so it follows directly from Krugman's insane logic that we should welcome terrorist attacks, since the suffering and destruction they cause, like WW II, make our lives better:
These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good.
The Statue of Liberty and lower Manhattan skyline as seen in the early morning on September 15, 2001.
(AP Photo/Dan Loh)
Firefighters at ground zero carry a dead victim out of the remains of the World Trade Center on September 13, 2001.
(AP Photo/Bill Farrington)
If you contemplate the photos above, it isn't hard to see why the 9/11 attacks could cost as much as $3.3 trillion dollars. It isn't just the obvious cost of all the people being paid to deal with the aftermath of the attacks — the medical care to all the surviving victims, the labor to clean up the rubble, the enormous and unnecessary cost of rebuilding the lost buildings, etc. It is the enormous loss of all the economic activity that would have been happening in the place of these efforts to deal with the damage — efforts that were not aimed at creating new wealth, but only at restoring conditions that existed prior to the attacks.
This estimate was based on how long businesses damaged in the attacks took to relocate (2 to 4 weeks, in many cases) and the decline in air travel through 2003, beyond what might have been expected given the 2001 recession.
And almost as if Krugman wasn't satisfied in only demonstrating his incompetence as an economist, he goes on to demonstrate his hypocrisy, by attacking others for supposedly exploiting the tragedy to push a political agenda.
After the attacks, I found myself wondering whether some politicians would try to exploit the horror to push their usual partisan agendas.
Then I chided myself for such an uncharitable thought. But it seems you can't be too cynical; sure enough, the push is already on to sell tax breaks for corporations and a cut in the capital gains tax as a response to terrorism.
— immediately after having written this paragraph, where he attempts to sell his own Keynesian agenda to increase government spending as a response to terrorism:
Second, the attack opens the door to some sensible recession-fighting measures. For the last few weeks there has been a heated debate among liberals over whether to advocate the classic Keynesian response to economic slowdown, a temporary burst of public spending. There were plausible economic arguments in favor of such a move, but it was questionable whether Congress could agree on how to spend the money in time to be of any use -- and there was also the certainty that conservatives would refuse to accept any such move unless it were tied to another round of irresponsible long-term tax cuts. Now it seems that we will indeed get a quick burst of public spending, however tragic the reasons.
You couldn't make this up. If it is 'exploiting the horror' to argue that it is helpful to let people keep more of their money after a tragedy, why is it acceptable to argue that people should not be able to keep more of their money after a tragedy?
At least Krugman is helpful in being so transparent in his absurdity.
It seems almost in bad taste to talk about dollars and cents after an act of mass murder. Nonetheless, we must ask about the economic aftershocks from Tuesday's horror.
These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good. But there are already ominous indications that some will see this tragedy not as an occasion for true national unity, but as an opportunity for political profiteering.
About the direct economic impact: The nation's productive base has not been seriously damaged. Our economy is so huge that the scenes of destruction, awesome as they are, are only a pinprick. The World Trade Center contained 12 million square feet of office space; that's out of 375 million square feet in Manhattan alone, and 3.5 billion in the United States as a whole. Nobody has a dollar figure for the damage yet, but I would be surprised if the loss is more than 0.1 percent of U.S. wealth -- comparable to the material effects of a major earthquake or hurricane.
The wild card here is confidence. But the confidence that matters in this case has little to do with general peace of mind. If people rush out to buy bottled water and canned goods, that will actually boost the economy. For a few weeks horrified Americans may be in no mood to buy anything but necessities. But once the shock has passed it's hard to believe that consumer spending will be much affected.
Will investors flee stocks and corporate bonds for safer assets? Such a reaction wouldn't make much sense -- after all, terrorists are not going to blow up the S.&P. 500. True, markets do sometimes react irrationally, and some foreign markets plunged after the attack. Since then, however, they have stabilized. On the whole it's just as well that our own markets have stayed closed for a few days, giving investors time to calm down; the administration was wrong to put pressure on stock markets to reopen right away. By the time the markets do reopen, the worst panic will probably be behind us.
So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.
First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.
Second, the attack opens the door to some sensible recession-fighting measures. For the last few weeks there has been a heated debate among liberals over whether to advocate the classic Keynesian response to economic slowdown, a temporary burst of public spending. There were plausible economic arguments in favor of such a move, but it was questionable whether Congress could agree on how to spend the money in time to be of any use -- and there was also the certainty that conservatives would refuse to accept any such move unless it were tied to another round of irresponsible long-term tax cuts. Now it seems that we will indeed get a quick burst of public spending, however tragic the reasons.
Now for the bad news. After the attacks, I found myself wondering whether some politicians would try to exploit the horror to push their usual partisan agendas. Then I chided myself for such an uncharitable thought. But it seems you can't be too cynical; sure enough, the push is already on to sell tax breaks for corporations and a cut in the capital gains tax as a response to terrorism.
One hopes that the White House will distance itself from this disgraceful opportunism, that it will deliver the bipartisanship it originally promised. But initial indications are not good: the administration developed its request for emergency funding in consultation with Congressional Republicans -- full stop. A Democratic contact says that his party received ''no consultation, no collaboration, virtually no information.''
I didn't want to mention this, but now is the time to draw the line. This tragedy will only be magnified if it is exploited for political gain. Politicians who wrap themselves in the flag while relentlessly pursuing their usual partisan agenda are not true patriots, and history will not forgive them.
September 14, 2014 2:23 pm
...
First, picturesque language, used right, serves an important purpose. “Words ought to be a little wild,” wrote John Maynard Keynes, “for they are the assaults of thoughts on the unthinking.” You could say, “I’m dubious about the case for expansionary austerity, which rests on questionable empirical evidence and zzzzzzzz…”; or you could accuse austerians of believing in the Confidence Fairy. Which do you think is more effective at challenging a really bad economic doctrine?
Beyond that, civility is a gesture of respect — and sure enough, the loudest demands for civility come from those who have done nothing to earn that respect. Noah felt (and was) justified in ridiculing the Austrians because they don’t argue in good faith; faced with a devastating failure of their prediction about inflation, they didn’t concede that they were wrong and try to explain why. Instead, they denied reality or tried to redefine the meaning of inflation.
And if you look at the uncivil remarks by people like, well, me, you’ll find that they are similarly aimed at people arguing in bad faith. I talk now and then about zombie and cockroach ideas. Zombies are ideas that should have been killed by evidence, but keep shambling along — e.g. the claim that all of Europe’s troubled debtors were fiscally irresponsible before the crisis; cockroaches are ideas that you thought we’d gotten rid of, but keep on coming back, like the claim that Keynes would never have called for fiscal stimulus in the face of current debt levels (Britain in the 1930s had much higher debt to GDP than it does now). Well, what I’m doing is going after bad-faith economics — economics that keeps trotting out claims that have already been discredited.
...
With regard to the first paragraph quoted above, Krugman's claim that the accusation of 'belief in the Confidence Fairy' is a better way to attack those who make the obvious point that government spending doesn't necessarily make people's lives better, is a confession of his inability to convincingly defend his own position.
Phrases like 'believing in the Confidence Fairy' hint at being a straw man, but they don't have enough substance to even qualify as a fallacy, because such phrases have no clear meaning, and certainly don't make an important point. They aren't even an attempt at making an important point — they are just childish mockery — a kind of nonsensical ad hominem, that only tell the reader that the writer is attacking, and that cast doubt on the validity of the attacker's position.
This is just an attempt by Krugman to defend the crude titillation of confused readers who are examples of confirmation bias — the core audience of any writer who writes in this way. No one who wants real evidence to support their view point, and is actively looking for falsifying evidence to check a particular belief, would be satisfied with such silly, content free writing.
Krugman's comments are a fascinating statement of psychological projection. Notice that Krugman massively exhibits the qualities he mentions above as undeserving of civility — 'arguing in bad faith' and 'trotting out claims that have already been discredited.'
No reasonable, honest person, motivated by understanding the truth, would view using phrases like 'Confidence Fairy' and 'cockroach idea' as arguing in good faith.
It's a funny irony when someone reveals a lack of character in trying to argue they have character.
Krugman's dishonesty is fairly well documented, since he really doesn't make an effort to conceal it.
The Ascent of E-Man R.I.P.: THE MAN IN THE GRAY FLANNEL SUIT
By Paul Krugman May 24, 1999
(FORTUNE Magazine) – I grew up in a planned economy. Bureaucrats didn't run everything: Small-business men were more or less free to buy and sell as they saw fit. But those who controlled the economy's "commanding heights," its key industries, were administrators rather than entrepreneurs, conformists who were valued less for their productivity than for their loyalty, whose career advancement depended on their political skill. For ordinary workers, the system had some benefits: It was hard to get ahead, but once you had a good job, your life was secure. Still, the economy was often appallingly inefficient and consistently unresponsive to consumer needs.
No, I am not an immigrant from Eastern Europe. I'm talking about the U.S. economy of the '50s and '60s, when General Motors was the very model of a modern major company.
In those days progressive thinkers like John Kenneth Galbraith used to ridicule economists who still believed what they had learned from Paul Samuelson's textbook, which was that free markets could be counted on to match supply and demand. After all, business itself was clearly moving away from markets and toward planning. More and more of the economy was dominated by large corporations, and those corporations didn't place much faith in the invisible hand. For example, AT&T owned it all--not just the long-distance lines, but the local phone systems, the factories that made telecommunications equipment, even the phones in your home. By contrast, in today's cutting-edge e-businesses (see Cover Stories), the company often owns--or rather, rents--little but brainpower.
That's a long way from the era of the man in the gray flannel suit, when the great business empires were not run according to the principles of supply and demand: They were command-and-control systems, and people did what they were told. As technology grew more complex, as big corporations grew ever bigger, as computers made it easier to impose centralized control, it was clear to smart people that the economy would bear ever less resemblance to the competitive system described in obsolete economics textbooks.
But over the past two decades the market has steadily gained ground--not only against socialism but against big-business capitalism. Large companies account for a steadily declining share of employment and value added. Moreover, even within corporations there is a growing tendency to rely on individual initiative, on independent profit centers free to take risks and do it their way. (True, sometimes individual initiative leads to something that looks like mass conformity--seen one Banana Republic, you've seen 'em all. But we're talking about management here, not tastes.)
The retreat of business bureaucracy in the face of the market was brought home to me recently when I joined the advisory board at Enron--a company formed in the '80s by the merger of two pipeline operators. In the old days energy companies tried to be as vertically integrated as possible: to own the hydrocarbons in the ground, the gas pump, and everything in between. And Enron does own gas fields, pipelines, and utilities. But it is not, and does not try to be, vertically integrated: It buys and sells gas both at the wellhead and the destination, leases pipeline (and electrical-transmission) capacity both to and from other companies, buys and sells electricity, and in general acts more like a broker and market maker than a traditional corporation. It's sort of like the difference between your father's bank, which took money from its regular depositors and lent it out to its regular customers, and Goldman Sachs. Sure enough, the company's pride and joy is a room filled with hundreds of casually dressed men and women staring at computer screens and barking into telephones, where cubic feet and megawatts are traded and packaged as if they were financial derivatives. (Instead of CNBC, though, the television screens on the floor show the Weather Channel.) The whole scene looks as if it had been constructed to illustrate the end of the corporation as we knew it.
What happened to the man in the gray flannel suit? No doubt he was partly a victim of sex (er, I mean gender) and drugs and rock & roll--that is, of social change. He was also a victim of information technology, which ended up deconstructing instead of reinforcing the corporation. But probably the biggest force has been a change in ideology, the shift to pro-market policies. It's not that government has vanished from the marketplace. It's still a good guess that in a completely unregulated phone market, long-distance companies would buy up local-access companies and deny their customers the right to connect to rivals, and that the evil empire--or at least monopoly capitalism--would rise again. However, what we have instead in a growing number of markets--phones, gas, electricity today, probably computer operating systems and high-speed Net access tomorrow--is a combination of deregulation that lets new competitors enter and "common carrier" regulation that prevents middlemen from playing favorites, making freewheeling markets possible.
Who would have thunk it? The millennial economy turns out to look more like Adam Smith's vision--or better yet, that of the Victorian economist Alfred Marshall--than the corporatist future predicted by generations of corporate pundits. Get those old textbooks out of the attic: they're more relevant than ever.
PAUL KRUGMAN is professor of economics at MIT and author of The Return of Depression Economics.
And here's a piece Krugman wrote in December of 2001, entitled 'Death by Guru', where he claims Enron failed due to being managed by advisory gurus — of course, he doesn't mention here that he had been on Enron's advisory board, making him one of those gurus -- http://www.nytimes.com/2001/12/18/opinion/18KRUG.html
Death by Guru
By PAUL KRUGMAN Published: December 18, 2001
ies.[sic] Arrogance. Betrayal." So reads Fortune's current cover, under the headline "The Enron Disaster." Sounds good to me. But Fortune may have overlooked one force for evil: trendy management theories. In part, this was a case of death by guru.
Enron sold lots of things, but above all it sold itself: it crafted a self-portrait that business gurus loved. Like a schematic diagram from The McKinsey Quarterly or The Harvard Business Review, Enron's business plan made a perfect PowerPoint presentation. Other companies hired business gurus as consultants; Enron, in effect, put the gurus in charge. (Jeff Skilling, who made Enron what it is today, is a former McKinsey consultant.) What they created was a company so trendy that investors were dazzled. And that let executives get away with financial murder.
Are trendy management theories really that important? A look at the business best-seller lists might suggest not; it might even suggest that the management-guru business is not what it was five or six years ago. In a bull market, readers wanted advice on investment, not on how to re-engineer the search for excellence in the total quality chaos. It has been a while since that giddy moment when both "Jesus CEO" and "Make It So: Management Lessons From Star Trek the Next Generation" were riding high in the charts.
But the real impact of the guru business — and the real money — has always come via consulting rather than book sales. While consultants may not have sold as many books in the late 1990's as they did in earlier years, the influence of trendy business doctrines probably increased as the millennium approached. Why? Because in a bubble economy, investors weren't interested in hard facts; they flocked to the companies that told the best stories. And this created tremendous pressure on managers to conform with the latest trend. Corporations became intellectual fashion victims.
Which brings us back to Enron. From 1997 to 2000, the years when Enron stock rose from $20 to $90, business gurus disdained old-fashioned companies whose valuation had something to do with hard assets. "The usefulness of asset-based strategies is waning," declared one article in The McKinsey Quarterly. The future belonged to companies with no visible means of support. I'm not just talking about dot-coms; gurus also celebrated such new-age business heroes as "petropreneurs," who owned neither oil wells nor refineries, and "fabless" chip companies that owned no factories. Flexibility and vision were what counted, not bricks, mortar and tubular steel.
And Enron was absolutely fabless — it prided itself on being an "asset light" company. O.K., it owned some pipelines, but what it really offered was the vision thing: it would create markets in everything, and make money by trading in those markets. And if you couldn't understand why Enron's trading operation was as profitable as it seemed to be, that was because you just didn't get it.
This sort of circular logic — if you don't believe, that's because there's something wrong with you — is typical of extreme religious and political sects. Well, what's a guru without a cult?
Admittedly, there is a chicken-or- Enron question: Was Enron so admired because it embodied faddish management ideas so perfectly, or did those ideas become so faddish because of Enron's apparent success? Probably both. The point is that the stock market rewarded Enron for following such a fashionable business strategy, and few analysts were willing to fly in the face of fashion by questioning Enron's numbers. Enron executives had every incentive to turn the company into a caricature of itself — a "giant hedge fund sitting on top of a pipeline," as one critic said. And the power that came with fashionability shielded the company from awkward questions about its accounts.
In the end, of course, reality bit. Enron is in bankruptcy; its stock closed yesterday at 57 cents. You can say this for the business world: Because there is a bottom line, ultimately the truth will out. No matter how plausible a business leader sounds, if his numbers don't add up, if he promises more than he can possibly deliver, the facts will eventually catch up with him.
It's just too bad that the false business prophets who ran Enron will probably get off lightly, while the people who trusted them — especially the ordinary employees — will pay a heavy price.
Here's Krugman's attempt at damage control on January 25, 2002, entitled 'Spreading It Around', in response to being portrayed in the press as a guilty party in the Enron scandal. As usual here, there's no indication that Krugman is in possession of the character traits that he requires of others to deem them worthy of respect.
When Krugman was on Enron's advisory board he wrote glowingly about the company, but he wrote here of criticizing the company when it was too late to matter — after he had resigned from its board in order to write for The New York Times. Again, Krugman demonstrates his own accusation, by writing to avoid his own blame and deflect attention away from how wildly wrong he was -- http://www.nytimes.com/2002/01/25/opinion/spreading-it-around.html?pagewanted=all
Spreading It Around
By PAUL KRUGMAN Published: January 25, 2002
Correction Appended
A bizarre thing happened to me over the past week: Conservative newspapers and columnists made a concerted effort to portray me as a guilty party in the Enron scandal. Why? Because in 1999, before coming to The New York Times, I was briefly paid to serve on an Enron advisory board.
Never mind that, scrupulously following the Times conflict of interest rules, I resigned from that board as soon as I agreed to write for this newspaper -- making me much more fastidious than, say, William Kristol, who served on that same board while editing The Weekly Standard. Never mind that I disclosed that past connection a year ago, the first time I wrote about Enron in this column -- and also disclosed it the one time I mentioned Enron before, in a Fortune column. Never mind that the compensation I received per day was actually somewhat less than other companies were paying me at the time for speeches on world economic issues.
And never mind that when I started writing in this column about issues of concern to Enron -- in particular, criticizing the role that market manipulation by energy companies played in the California power crisis -- my position was not at all what the company wanted to hear. (Compare this with the board member Lawrence Kudlow, a commentator for National Review and CNBC. He wrote vehemently in favor of the Cheney energy plan -- and has called this the ''Clinton-Levitt recession,'' blaming Arthur Levitt, the former Securities and Exchange Commission chairman, who tried to fight the accounting laxity that made Enron possible.)
Yet reading those attacks, you would think that I was a major-league white-collar criminal.
It's tempting to take this vendetta as a personal compliment: Some people are so worried about the effect of my writing that they will try anything to get me off this page. But actually it was part of a broader effort by conservatives to sling Enron muck toward their left, hoping that some of it would stick.
A few days ago Tim Noah published a very funny piece in Slate about this effort, titled ''Blaming liberalism for Enron.'' (Full disclosure: I used to write a column for Slate -- and Slate is owned by Microsoft. So I guess that makes me a Bill Gates crony. I even shook his hand once.) It describes the strategies conservative pundits have used to shift the blame for the Enron scandal onto the other side of the political spectrum.
Among the ploys: Enron was in favor of the Kyoto treaty, because it thought it could make money trading emission permits; see, environmentalism is the villain. Or how about this: Enron made money by exploiting the quirks of electricity markets that had been only partly deregulated; see, regulation is the villain.
And, of course -- you knew this was coming -- it's all a reflection of Clinton-era moral decline. Traditionally, as we all know, Texas businessmen and politicians were models of probity; they never cooked their books or engaged in mutual back-scratching.
One doubts that the people putting out this stuff really expect to convince anyone. But they do hope to muddy the waters. If they can get a little bit of Enron dirt on everyone -- the Clinton administration, environmentalists, liberal columnists -- the stain on people and ideas they support will be less noticeable.
Why is Enron a problem for conservatives? Even if the Bush administration turns out to be squeaky clean, which we'll never know unless it starts to be more forthcoming, the scandal threatens perceptions that the right has spent decades creating. After all that effort to discredit concerns about the gap between haves and have-nots as obsolete ''class warfare,'' along comes a real-life story that reads like a leftist morality play: wealthy executives make off with millions while ordinary workers lose their jobs and their life savings. After all that effort to convince people that the private sector can police itself, the most admired company in America turns out to have been a giant Ponzi scheme -- and the most respected accounting firm turns out to have been an accomplice.
You might think that the shock of the Enron scandal -- and it is shocking, even to us hardened cynics -- would make some conservatives reconsider their beliefs. But the die-hards prefer to sling muck at liberals, hoping it will stick.
Sorry, guys; I'm clean. The muck stops here.
In a previous post
I wrote about the long held view that there is economic benefit to destruction. People love this fallacy.
It gets repeated over and over again ad nauseam, even by professional economists, despite being absurd on its face.
The famous economist Paul Krugman, for example, repeats this fallacy often. Indeed, he has built a career pretending something magical happens economically when government consumes what the participants of an economy are producing — so much so, that he repeatedly states that even enormous death and destruction brings benefits. Like this —
American corpses sprawled on the beach of Betio Island, Tarawa Atoll, 1943. Over 100,000 Americans died in the Pacific War.
German soldiers killing Jews at Ivanhorod, Ukraine, 1942. A woman shields a child with her body as soldiers take aim.
Consider the images above — of dead U.S. Marines on a beach in the Tarawa Atoll, where 990 Marines died after 76 hours of intense fighting to secure the island, or of German soldiers executing Jews — as you read this sickening blog post by the famous Nobel Laureate, Paul Krugman, regarding the 'lovely war' — http://krugman.blogs.nytimes.com/2011/08/15/oh-what-a-lovely-war/ http://archive.is/wOgMl
Oh! What A Lovely War!
World War II is the great natural experiment in the effects of large increases in government spending, and as such has always served as an
important positive example for those of us who favor an activist approach to a depressed economy. Christy Romer is very much on the same wavelength.
It’s especially relevant because in the 1930s, as today, many wise heads insisted that unemployment was structural, that many of the unemployed could not be gainfully employed no matter how much demand increased. Then demand actually did increase, and as Christy says,
But World War II has something to tell us here, too. Because nearly 10 million men
of prime working age were drafted into the military, there was a huge
skills gap between the jobs that needed to be done on the home front and
the remaining work force. Yet businesses and workers found a way to get
the job done. Factories simplified production methods and housewives
learned to rivet.
Here the lesson is that demand is crucial — and that jobs don’t go unfilled for long. If
jobs were widely available today, unemployed workers would quickly find a
way to acquire needed skills or move to where the jobs were located.
Oddly, however, people on the right have taken to claiming that World War II actually weakens
the case for stimulus. One line, due to Robert Barro, is that it shows fiscal expansion failing
because private spending actually fell. Duh. As Christy says, there was consumer rationing —
spending was forced to fall. Also, something she doesn’t note, there were severe restrictions
on private construction, which meant that investment not related to the
war effort was also forced to fall.
...
Nothing shakes the faith of a true believer.
Why is it so appealing to believe that there is some upside to building things at great expense, that can only be used to kill and destroy, and then have armies of millions of people go and kill and be killed with those things?
Notice how stupidly some professional economists attempt to justify this absolutely insane thinking.
How many people actually believe that a reduction in unemployment that is caused by conscripting millions of men into the military, and then killing many of them, builds the case for government 'stimulus' during peacetime?
Of course, if you eliminate a large portion of the workforce, and then the government takes on a massive debt to pay anyone who is willing to work to build war equipment, unemployment will go down and the gross domestic product (GDP) will go up, while the quantity of consumer goods and the quality of life go down.
And how many people actually believe that the consumer rationing that was necessary, because of the shortages caused by the massive consumption of resources for the war effort, is not obvious proof that the consumption of resources for the war (the government 'stimulus'), in and of itself, made the economy worse, even for those not involved in the fighting?
Krugman contemptuously dismisses the painfully obvious point that World War II weakens the case for stimulus, by claiming that private spending was forced to fall by rationing, while completely missing the obvious cause of the shortages that made rationing necessary — the destructive government 'stimulus' required by the war.
Of course, rationing reduced consumer spending, but if government spending during the war 'stimulated' the economy in a helpful way, as so many professional economists pretend, rationing in the face of shortages would not have been necessary.
The shortages were necessarily caused by the 'stimulus' that consumed resources for the war. The war 'stimulus' began in late 1940, and rationing wasn't necessary until 1942 — well after the 'stimulus' for the war had begun. Certainly, rationing was not needed at any time during the depression prior to the war 'stimulus'. https://archive.is/eA7Qg https://archive.is/6ltUn
Krugman is just reversing cause and effect here by trying to pretend that rationing would have been necessary had there been no reduction in productivity. Again, this is absurd on its face — without a fall in the production of necessary goods, there is no reason to ration.
...
Military spending didn’t begin to rise substantially until late 1940. Once it did, fiscal policy had an expansionary impact. Some economists argue that the effect wasn’t very large, as real government purchases (in 2005 dollars) rose by $1.4 billion from 1940 to 1944, while real G.D.P. rose only $0.9 billion.
But this calculation misses two crucial facts: Taxes increased sharply, and the government took many actions to decrease private consumption, like instituting rationing and admonishing people to save. That output soared despite these factors suggests that increases in government spending had a powerful stimulative effect. Consistent with that, private nonfarm employment — which excludes active military personnel — rose by almost eight million from 1940 to 1944.
...
The contradiction should be obvious to anyone, so why is it not obvious to a couple of professional economists, and one who is a Nobel Laureate?
If, in Romer's words, 'output soared' as a result of government spending for WW II, why was rationing necessary? This directly contradicts Romer's following statement that 'government spending had a powerful stimulative effect.' The effect was obviously powerful, but it certainly wasn't 'stimulative' — unless the goal of 'stimulus' is to reduce the quality of life.
The government 'stimulus' to support the war effort did exactly what any reasonable, honest person without an agenda driven bias would expect — it made life worse overall, by directing massive investment and productivity to a destructive end.
That employment and gross domestic product (GDP) went up during the war only shows that more people were being paid to do something. Arguing that this proves government spending is helpful economically is just a crude begging the question fallacy — that is, the critical question is: 'what was accomplished by the spending that increased GDP and employment, and did living standards go up — or were the vast majority made worse off?'
To make this painfully obvious point even more obvious, notice that it costs money to run a concentration camp and execute prisoners, and the cost to taxpayers to purchase this 'service' will be counted in the measure of GDP, since regardless of how destructive an expense is, and how many are hurt, it is still a purchase of goods and services by government.
To those that would respond: 'well of course, the war buildup had to reduce the production of consumer goods and cause shortages — that doesn't mean a government stimulus isn't effective.'
That response is nonsense — it directly contradicts the Keynesian argument for such spending.
Keynesian economists are consistently unambiguous in their claims that any government spending is beneficial, however pointless, so long as it creates demand. That rationing was necessary during one of the largest government spending programs the world has ever seen — the war buildup that began in 1940 — is devastating to the Keynesian case. It proves that government spending has no special power to improve the quality of people's lives — when that spending is directed toward waste and destruction, the quality of life goes down, even while GDP is growing.
If the Treasury were to fill old bottles with bank-notes, bury them at
suitable depths in disused coalmines which are then filled up to the
surface with town rubbish, and leave it to private enterprise on
well-tried principles of laissez-faire to dig the notes up again (the
right to do so being obtained, of course, by tendering for leases of the
note-bearing territory), there need be no more unemployment and, with
the help of the repercussions, the real income of the community, and its
capital wealth also, would probably become a good deal greater than it
actually is. It would, indeed, be more sensible to build houses and the
like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better [off].
Krugman acknowledges that private productivity went down during WW II, but he has to try to reverse cause and effect by pretending
that the rationing and spending restrictions in place during the war were not caused by the shortages that resulted from the war 'stimulus' — he has to do this, in order to use the war as the basis for an argument that a government 'stimulus' is always a net economic gain, and that people should be eager to give responsibility for their lives to government.
This is what sells to the public, and this is what gives corrupt economists power — as long as people believe in these nonsensical fallacies, they will keep looking to charlatans like Krugman for answers.
Such is the conscience of the self-proclaimed and so-called liberal, Paul Krugman.
But Krugman is mistaken if he thinks he is leading the public on these issues — he is pandering to vice, not enlightening the ignorant, so it is public vice that is in control of this message, not Krugman.
In her novel 'The Fountainhead', Ayn Rand gives a beautiful description of someone coming to the realization that they have spent their life deluding themselves that they could control the popular sentiments of a largely ignorant public —
“Stand here, he thought, and count the lighted windows of a city. You cannot do it. But behind each yellow rectangle that climbs, one over another, to the sky - under each bulb - down to there, see that spark over the river which is not a star? -
there are people whom you will never see and who are your masters. At the supper tables, in the drawing rooms, in their beds and in their cellars, in their studies and in their bathrooms. Speeding in the subways under your feet.
Crawling up in elevators through vertical cracks around you. Jolting past you in every bus. Your masters, Gail Wynand. There is a net - longer than the cables that coil through the walls of this city, larger than the mesh of pipes that carry water, gas and refuse -
there is another hidden net around you; it is strapped to you, and the wires lead to every hand in the city. They jerked the wires and you moved. You were a ruler of men. You held a leash. A leash is only a rope with a noose at both ends.”
Could anything shake the faith of a true believer like Paul Krugman?
.jpg "Killing of Jews at Ivanhorod, Ukraine, 1942, by German army mobile killing units.")