Forum Post: Great read from Paul Krugman
Posted 13 years ago on Oct. 10, 2011, 10:40 a.m. EST by emeflag
(88)
from Flagstaff, AZ
This content is user submitted and not an official statement
Here is a great read from Paul Krugman, winner of the Nobel Prize in Economics (2008).
"And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called 'economic royalists,' not the people camping in Zuccotti Park."
http://www.nytimes.com/2011/10/10/opinion/panic-of-the-plutocrats.html?_r=1&src=ISMR_HP_LO_MST_FB
All you have to do is be the fiftieth customer at the local supermarket to get a Nobel peace prize. Krugman never ran a company. You can't learn anything about economics without that background. FDR kept us in a depression for over 15 years! You're going to ascribe to those failed theories?? Really??
Ah, good old Paul - stoking the fires of the old 'divide and conquer' game by pointing out that the most outspoken leaders against OWS thus far happen to be meanie 'republicans'.
He always reliably trots out the old socialist game and paints the repubs as the only members of the rich elite.
One could just as easily argue that Bush's TARP and Obama's Stimulus Package kept the United States from going into another Great Depression. The counter to Krugmen's is what England has done in their austerity stop-spending program. By adopting this approach, Britain is worse off then the United States and making even less progress.
No one couldn't. These cash infusion policy are the equivalent of curing heroin withdraw with more heroin - short term surface solution that worsens the underlying causes. Mal-invested capital needs to vanish from the system in order to reach equilibrium - something that cannot happen while the money supply is being artificially increased.
this red team versus blue team stuff is only serving the elite you guys are yelling about.
here is a dire warning from charlie mcgrath about the message that people of all political persuasions WILL try to use OWS for their personal gain. and we are in a global collapse - anyone who doesn't recognize this is not paying attention... http://www.youtube.com/watch?feature=player_embedded&v=qWJ6Ci9cdEQ
I trust Paul Krugman about as far as I can throw him. His economics are proven wrong daily around the world. With the exception of the more free market based theory he had that earned him his nobel prize, every other theory he has relies on human nature going straight out the window. If only people weren't people and didn't have a mind of their own, And did the complete opposite of what they naturally would do, then my ideas would work. And the only reasons my ideas haven't worked is because we didn't do enough of it. We didn't set enough cash on fire....
Since they havent been tried "around the world" I cannot imagine how we know they are "proven wrong".
I agree. MrKelly is bashing Krugman a Nobel Prize winning economist just because he doesn't like what Krugman advocates yet has nothing to back them up. I can easily point to the CBO (non-partisan) who claim the Obama stimulus alone created or saved 1.5 to 3.3 million jobs JUST in the first quarter of 2011.
Economics is not a science. It has as much credibility as astrology. That is why people are able to argue about it forever. Like religion.
Not true. At the microeconomic level is VERY science-y (oh God I know). We understand microeconomics very well but when we try it at the Macroeconomic level things get hazy there's too many unknowns and uncertainty that making forecasts and solving problems are difficult. Please respect my profession we work very hard and everyone has had a hand in trying to find the answers to those problems. As I said at the Macro level it's difficult to account every persons decision in aggregate. But, there's hope :)
I meant at the country level - economic cycles and so on. People influence economy so it is hard to model it.
Microeconomics= the interaction of individuals and firms. Macroeconomic= interaction between markets. (country level)
I got that. Macro = bigger = more people involved = harder to model. At that point they are just hypotheses.
true. but, there's some good theories out there with a lot of meat behind it. Keynesian theory has stood the test of time (since Keynes in the 30s) though it has many names now.
The basic theory of Keynesianism is that during a recession/depression the country has a lack of demand. It can visualized by calculating GDP which equals Consumption+Investment+Government Purchases+Net Exports. Keynesians point out that since in a recession people aren't buying goods Consumption is going down and since profits aren't being made Investment goes down as well. Most likely Net exports will be down as well but its behavior is a moot point since government can't do much about it anyways since they can't force other countries to import our products. So all that's left is government purchases and since that's all that government has control over the best policy is just to spend to get the GDP back up and create demand. There's Keynesian 101 and it is not infallible there's definitely holes but it's better than Neoclassicism.
The idea is temporary government spending creates an artificial demand that can bootstrap the economy. That should work. The solution to the present crisis could be increased spending in the short term and deficit reduction in the long term. Even a non economist like me can understand it. The politicians will not do it because they are only interested in doing populist measures that will get them reelected. We are doomed!
The root problem is far more complex...what is the reason for the lack of demand? Easy: high unemployment. Ok, so why is there high unemployment. It can't be the financial industry it has already recovered. A) High profits means higher investment in capital (mechanization means fewer workers) B) cheaper labor overseas because of low transportation costs and low import duties. C) the housing industry hasn't recovered and it may be a very long time till it does because we massive over built homes.
How do we solve these problems? Putting tariffs up means higher prices on top of low wages and high inflation. Slowing mechanization is slowing innovation and productivity. How? Keynesianism nor Neoclassical economics addresses it.
We need to come up with re industrialization plan. Then spend till that can pick up. Jobs will be lost to other countries. There is no way around it. We have to compete at global level. somehow we have to increase exports of goods or services made here. The workforce may also have to be retrained. Some of the old jobs may be gone forever. Or until china and india become more expensive than the US.
Ding ding ding. You hit them all and guess what that was all in the Jobs act the GOP voted against.
Some of it was. like infrastructure jobs. There was nothing to reenergize the industry. Tax credits for hiring wont work because people wont hire unless there is demand. It is a good attempt but will not fix the problem. Manufacturing jobs will not come back. We have to plan for it. A new industry that can compete globally.
if Krugman was right about anything Obama would already have unemployment down under 7% and the green economy would be creating millions of jobs in America and there would be no protest on wall st . where did he go wrong?
The 'H.R. 2990: National Emergency Employment Defense Act of 2011' Bill appears to be a major step in correcting the financial problems forced on the 99% by The Federal Reserve Bank and Wall Street. It is not the ultimate answer for the 99% (whose decision may be to abolish money completely, or ban Usury [the lending of money with interest] completely). However, it is now before Congress for ratification. If passed, it should be able to be implemented quickly, and buy time to formulate a more complete solution.
Lobby your Congressmen and let them know that YOU want this passed!
I believe that if implemented in the US, other countries would follow suit, and even agree to band together to share the same monetary system. In fact the whole world needs to have the same money, because all countries are now interconnected and all have the same 99%, with the same problems in common. Having the same money the World over would eliminate “exchange rates” and their associated costs.
To quote the Bill: “(b) Purposes- The purposes of this Act are as follows:
(1) To create a Monetary Authority which shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner. The Monetary Authority shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
(2) To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money, to modernize and provide stability for the monetary system of the United States, and for other public purposes.
(3) To abolish the creation of money, or purchasing power, by private persons through lending against deposits, by means of fractional reserve banking, or by any other means.
(4) To enable the Federal Government to invest or lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure.
(5) To incorporate the Federal Reserve System into the Executive Branch under the United States Treasury, and to make other provisions for reorganization of the Federal Reserve System.
(6) To provide for an orderly transition.
(7) To make other provisions necessary to accomplish the purposes of this Act.”
Please read and discuss this Bill with friends and workmates, The complete text can be found at:
www.govtrack.us/congress/billtext.xpd?bill=h112-2990
Boy you really hit a nerve here - you've driven the trolls crazy! Congratulations!
Does anyone else see the post time in spanish?
"The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is."
All too true. Excellent read. Thanks for posting.
I think they have another reason to be hysterical. Deep down they also know the system has run into a dead end, this kind of constant growth, infinite profit, exploitative economical model is unsustainable. I think at this stage they are more afraid of losing everything than they are afraid from the protests they do not take seriously. We are in a system failure, these "oligarchs" are just the dinosaurs of the expiring system.
Krugman and his Keynesian ilk are the ones that helped cause this problem.
Ah another Keynesian basher....here's a simple question: which came first the recession or the keynesian policies? "cause this problem"
Did the stimulus make the economy back to its former prosperity? No. Did it stop the bleeding? Yes. And a resounding yes as we are sitting at roughly the same unemployment level for a while now. It stopped the bleeding that cannot be denied but did it fix the root causes of the recession ? No. Keynesian nor Neoclassical policy does not determine how to fix those root cause only how to stop the bleeding.
Keynesian policies are part of the root causes. It has given our politicians the intelectual cover they need to borrow and spend ever more money. Which is why all the bailouts and stimulus fixed nothing but have in fact made things worse by digging us deeper into the whole.
Keynesians only believe in deficits and spending during down business cycles. It's not intended for up business cycles. You need to learn more about keynesianism before you bash it. There's a reason a majority of economists believe in it. It makes sense.
You did not read what I wrote or you did not understand it. Try again.
Interesting. And how did he cause this problem and what is "this" problem you are talking about.
I assume he means what has happened since we went into depression. Every 5-8 years we have natural cycles in the economy. About every other one results in an actual recession. But we naturally bounce back on schedule pretty much every time. It's a normal cycle that if you don't do too much damage in policy whil you are on a down turn, the bounce back will come quickly and on schedule. What I think he means is the keynesian policies that Bush started at the end of his term while we were in a very normal down turn, and president Obama unfortunatly doubled down on were driven by economists like Krugman. The problem I assume he is saying is the massive debt we are putting into this normal down turn as a way to avoid a normal fluctuation in economics. Thus causing it to be far worse and far longer than it otherwise would have been, with much much much worse long term effects that assure a dark day for America for a long time. And his type caused it by the increase in kaynsian policies. Policies that spend a boat load of money assuming that money being spent has an economic bennefit. And it does to the people who get this money and where they spend it. But they completely ignoring that you had to first take that money out of the economy in order to spend it. This type of spending by design has a zero sum game as a whole. Even if you can point to particular companies that got a lot of this money and spent it and all the additional people it helped on it's trickle down. They forget that the places that money was taken from now doesn't have that. It's no more than redistribution with no macro economic return. (Remember, government doesn't invest, it consumes and redistributes.) In addition, the money redistributed is a static number. Most if not all wealth creation, assistance, growth that occures is only either out of that same static dollar, or only exists from private funding as long as the public money flows in perpituity. Otherwise it subtracts from that static dollar until it's gone. Unfortunatly for the most part, that money consumed from the private sector to fund keynesian spending came from people that invest for a return. They know and are proven to (Hence why they have the money) be able to take that static dollar and turn it into static + 'X'. They know how to grown it. Which grows the macro economics of the country. Taking money from people who know how to turn the economy around with that money and giving it too the people that know how to burn through that money with as little economic bennefit as possible.
So the alternative to the 2008 Great Recession was to do nothing and let the markets fix the problem. Well there is already a historical precedent for this approach, it is called the Great Depression. The 1928 stock market crash came in the middle of Herbert Hoover's term. He chose the do nothing approach which led to 25% unemployment a 50% drop in industrial production. Sorry do nothing is not a very good option.
Riiiiiiiiiiiiight. http://www.youtube.com/watch?v=czcUmnsprQI
Sorry to bust your bubble but Hoover tried all kinds of things that only made things worse.
Yes that's what I ment
Krugman and the Keynesians are the ones that gave the big government tax,borrow and spend politicians the intellectual cover they needed to dig us into this hole.
Great link. Boycott Faux News and the other corporate media trash.
yep read, it and am wondering how it made it to print.
BTW, the more you right wingers come out against this, the more I know it is the right thing to do. Basically, you are pissing alot of people off into supporting this movement with few reservations. So keep it up Cantor, keep it up Cain. Resistance breeds resistance and you will get what you are asking for.