The Blind Leading The Blind

In my previous post, I wrote about the hypocrisy of a publicly funded university paying someone a dramatic amount of money ($225,000 per nine-months) to supposedly study income inequality.  That post was in response to the ridiculous job offer given to Paul Krugman by 'The Graduate University Center of the City University of New York (CUNY)', in February, 2014, and Krugman's acceptance.

Related to that, there's an ironic statement in an e-mail to Paul Krugman from the director of the Luxemborg Income Study Center at CUNY, Janet Gornick.  This e-mail is one in the series involving the job offer to Krugman from CUNY.  In that e-mail, Gornick makes a mocking comment about Republicans, and then she wonders to Krugman if they know the difference between supply and demand --

Paul,

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?

What is ironic about Janet Gornick's comment, is that Krugman wrote a blog post seven months later, on September 5, 2014, where he makes the claim that output is low because of inadequate demand, missing the obvious point that output is a prerequisite of demand.

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.

This isn't surprising, given Gornick's great respect for a person like Krugman, who seems to take pride in a lack of character.

Could Janet Gornick possibly not know the difference between an honest person and a dishonest one?

Here's Gornick's actual e-mail --

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https://www.documentcloud.org/documents/1112846-4-9-14-mr10634-res.html#document/p117

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