Someone brought this to our attention via e-mail. It seems that one of my least favorite syndicated columnists, Paul Krugman, had a few words to say about my least favorite current governor.
Mr. Krugman, you’ll recall, won the Nobel Prize for economics this year. My beef with him is that he doesn’t stick to economics, and his political commentary reads like something written by a member of the College Democrats, it’s so sophomorically partisan. But note that in THIS case, he is talking about what he knows — economics. (Now watch — Lee will ‘splain to us that he’s the economics expert, and the guy who just won the Nobel for it doesn’t know squat.)
This is from the MSNBC program "1600 Pennsylvania Avenue" on Tuesday:
GREGORY: To this point, Paul, this is Governor Mark Sanford in the course of the meeting today from South Carolina, taking on this idea of the efficacy of a stimulus package. Listen to him.
(BEGIN VIDEO CLIP)
GOV. MARK SANFORD (R), SOUTH CAROLINA: We’ve been told for a long number of months that this stimulus, that stimulus, this stimulus, that stimulus would opportunity the economy around, and it hasn’t. The ultimate stimulus package for the United States of America is the entrepreneur with a dream working on the project of tomorrow. The ultimate stimulus package is, again, that market-based economy, rather than a political economy wherein people come as simple plaintiffs to Washington, D.C., for yet more money.
(END VIDEO CLIP)
GREGORY: Paul, reaction to that?
KRUGMAN: You know, that’s catastrophic. If that become the way the decisions are made, that’s real know-nothing economics. That’s just saying, oh, you know, we’re going to-the reason that this market-based-total faith in the free market didn’t work is that we didn’t do it enough. We have a lot of experience here. We have the 1930s. We have Japan in the ’90s. And we do know that government spending helps when you’re in a big problem-when you’re in a deep slump of this kind. It’s, in fact, about the only thing we have to keep us from being in something that would look more like the Great Depression than we want to contemplate. This is a time that the private sector is pulling back. The private sector is pulling back because consumers are nervous, because the financial system is a mess. There’s a huge hole in the economy. Government has to fill it, or we’re going to look at double-digit unemployment.
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I don’t have a Nobel Prize in economics but I wonder if Mr. Krugman knows where the money that the government supplies to “fix” the problem comes from. As Wimpy wpuld say, “I’ll gladly pay you Tuesday for a bailout today”.
Maybe Mr. Krugman should try getting his books printed and distributed by the government. Let’s see how that works out.
I happen to be an economist who, unlike Paul Krugman, is paid by businesses to give correct answers on which they can base decisions.
Krugman’s retort to Mark Sanford demonstrates his inability to formulate an alternate view, probably because Krugman lacks business experience.
To use Krugman’s scare example of the Great Depression, FDR ran deficits which were more than half the budgets, with huge public works programs, and its effects were entirely negative. Unemployment worsened in the first two terms of Roosevelt.
Mark Sanford is a businessman with an MBA, with major experience in investment banking, venture capital, public stock valuation, and real estate development.
So far, Brad Warthen has not attempted to make a single argument to refute any of Mark Sanfords observations on the bailouts. Neither has Paul Krugman or any other expert in some non-business field that Warthen has trotted out to do his fighting for him.
The core argument of Mark Sanford is that robbing millions of successful entreprenuers to bail out failed big businesses and big unions, will stifle economic growth overall.
Likewise, tax hikes on successful workers to hand out “stimulus” checks to the porch sitters who will mostly blow the money on cigarettes, beer and lottery tickets, is recipe for failure sold by Obama during the election.
Don’t suggest it, Doug; it might happen. Democrats love the guy.
By the way, I tried to find the video on this and got lost on the MSNBC site. It surprised me that the transcript was easier to find. Seems like they’d be pushing the video. But it doesn’t read like there’d be much to see. You know what Sanford looks like, and for Paul Krugman just picture someone who looks disturbingly like a Mad Bomber, especially when he grins through the beard.
As far as business commentary goes, Paul Krugman is something of a Mad Bomber.
To defend Gov. Mark Sanford against attacks by those that would run him down for reasons yet to be defined, I would like to express my opinion of our governor.
I have not read or heard anywhere from before his becoming governor and throughout his tenure in office that there has been any scandal involved concerning Gov. Sanford. He is running a state that is literally infested with money hungry politicians. They actually run for office for personal gain. They award people with payback for past favors or for future favors. I am not saying that all servants of government fall into this category but I am saying that in Gov. Sanford we have an honest man.
He has been held up for ridicule a couple of times but when the full truth came out concerning his actions on a given subject, it did not hold him accountable for having did anything for personal gain or did anything wrong for that matter.
As far as Mr. Krugman is concerned, I am somewhat surprised that Obama has not appointed him to some office so that he can carry out Obama’s plan to financially equalize all people. I am not quite sure if Obama wants us all to become porch sitters or if he wants us all to become bankers.
Bailouts for failing newspapers?
http://www.creators.com/opinion/michelle-malkin.html
So what do we do if not pump money into the economy through a federal goverment stimulus? Should we just sit back while consumer confidence continues to slump and people continue to get laid off? Come on folks the government has to cut taxes and spend money to get the economy rolling. That’s the Keynsian approach and it’s appropriate for the current situation. Where I differ with the government is all these entity specific bailouts. A general plan that focuses on government spending while at the same time cutting taxes for middle and lower income folks will do the trick without all these gimicks. But just to sit back and wait is nonsense.
Here is my list of syndicated columnists from most favorite to least favorite who appear frequently in the State:
Paul Krugman – Brilliant, somewhat partisan but fair. His criticism of Bush are spot on. He has a way of articulating what I believe.
Bob Herbert – Great liberal insight.
E. J. Dionne, Jr. – Pretty good liberal insight but a bit dull.
Kathleen Parker – Called Sarah Palin on her gross incompetence. Tends to be the most fair minded of the conservatives.
Robert J. Samuleson. – Ok for a conservative. His ideas on energy are way off target though.
George Will – The ultimate elitist. He obviously doesn’t care about working class people but instead is fine with giving all the money to the wealthy. His writing style is painful to decipher.
Tom Friedman – His energy proposals are good but his views on Iraq are painful to read. How many times can one pundit say the next 6 months will decide. Really Tom, take a position and stick with it.
Maureen Dowd – Probably the worst of the liberal writers. The woman has an attitude.
David Broder – What’s the point of his columns? Never offers much insight into anything. In his case being a non-partisan is no virtue.
Charles Krauthamer – War monger through and through. Good at spewing talk radio spin points. Simply an awful columnist.
Cut taxes drastically.
Abolish money-pits which are going bankrupt soon anyway, like Social Security, Medicare, and the state pension plans.
* Use bailout money to force the unions to cut wages in half, retirements by more, convert all their benefits to employee-funded.
* Remove all CAFE standards.
* Roll back the emissions standards to 1996 levels and leave them there.
* Drop all politicians dictating what models of cars to make.
Don’t bail out any of the blacks, illegal aliens and others who got junk mortgages. Let them lose their houses now, instead of next year, and let people with better sense and higher incomes buy the houses at deep discounts and rent or sell them to better buyers.
Lee wants to cut wages in order to enrich a few scoundrel CEOS, pollute the air, waste gasoline and give houses to folks who are already super wealthy. That’s a formula for a complete economic collapse along with a filthy environment and continued dependence on foreign energy supplies. A few super rich would benefit for a while but in the end the Lee plan would ruin America. Fortunately Lee’s candidate lost the election.
So what are you saying here? That you agree with Paul or not?
Can’t tell from all of your caveats saying that he’s politically sophmoric, while you seem to agree with his economics.
Janus would have a hard time following this dialectic.
I would have trouble ranking the columnists myself. To give four examples, Krauthammer, Dowd, Broder and Will are so DIFFERENT in what they do and how well they do it that I’d have trouble putting them on a continuum together. How can, for instance, Will be “better” than Broder when what they’re trying to do is so different?
Something I find a little easier to do, and do it fairly quickly each day, is deciding which single column is the best of the lot available to me that day. (Good thing that’s easy for me, too, since it’s kind of critical for my job.) Back during the campaign, I was choosing more conservatives than liberals. The liberals were just so boring — they all loved their presidential candidate, and were thrilled that they were going to win the election, and just kept saying the same things. The conservatives were more interesting because they were TROUBLED, on a number of levels. They kept arguing with each other. They had decisions to make — Kathleen wanted so much to like Sarah Palin, but just couldn’t. Krauthammer got mad at her and others who let such things get in the way of their supporting McCain. It was interesting.
Now that the election’s over, the liberals are more interesting — since they’re no longer united in their simple (and to me, offensively partisan) desire to see THEIR guy win. Now, they have things to disagree about, things to question.
So it is that this week, I have chosen:
Now today, for tomorrow’s paper, I’m breaking the liberal pattern. I’ve picked Krauthammer. But that’s because the cards are sort of stacked on Thursdays. On Thursdays, the WashPost Writers Group moves two columns in advance for Friday editions — and as I’ve mentioned in the past, the fact that a column hasn’t run somewhere else gives it a leg up with me (the NYT columnists, unfortunately, never move in advance). The two that they move that day are Krauthammer and Parker.
Week before last, I got the chance to break that pattern and still give you something fresh, because Krauthammer had taken the week off, and the syndicate offered me E.J. Dionne as a sub. We used to subscribe to E.J. years ago, but I dropped him. I think it was so I could pick up Parker, but I don’t remember for sure — it might have been a budget cut.
marconi and I crossed paths there.
Cutting through the incoherence of the transcript and jumping to what I think Sanford and Krugman were TRYING to say, I guess I’ll have to side with the Mad Bomber with the Nobel on the subject. Never mind that Krugman’s likely to want to ALWAYS spend (and Sanford NEVER), in this case a certain amount of government spending is warranted, and he hints at why.
Our governor says he wants to leave it to the individual entrepreneur. And indeed, private enterprise is the strength of our system. Sanford’s problem, though, is that he thinks entrepreneurs are CREATED by tax cuts. (I base that on his policies here in S.C. He talks about creating the right “soil conditions” for entrepreneurship. To him, that doesn’t mean improving schools or infrastructure the way it might to most people. To him, it just means cutting the income tax.) In his universe, a guy’s not going to try to make a million dollars inventing and marketing a new widget unless the governor gives him a hundred bucks off on his taxes. Me, I have more faith in entrepreneurship than that.
The question, though, once you buy into the Keynesian notion of the government spending to stimulate the economy (since the private sector isn’t doing it), is what sort of spending? That isn’t addressed here.
Personally, I think the spending should go to infrastructure. Krugman would probably like more social programs than I would… although I will say that one of the best things we could do to unleash creativity in the private sector is pass a real National Health plan. If you freed millions of people from the dead-end jobs they cling to for the bennies and encouraged them to take a risk, you’d see some good things happening.
I don’t mean the Obama plan. I mean a REAL National Health plan.
“The ultimate stimulus package for the United States of America is the entrepreneur with a dream working on the project of tomorrow.” -Mark Sanford
Good Lord, I want that on a T-shirt.
If consumers aren’t consuming, and investors aren’t investing, and credit is frozen, and jobs are vanishing (AT&T just cut 12,000), then all the entrepreneur has IS a dream. The project of tomorrow becomes “How do I feed my kids?” It would be catastrophic if our democratically elected government did not backstop its own society during a particularly nasty economic bottleneck. That’s not being socialist. It’s being humane.
And I agree that we should aim a major stimulus chunk at physical infrastructure, particularly NEW infrastructure such as high-speed rail. It’s a travesty that our highways and skyways are crammed and crumbling, and the best we can still do for medium- and long-distance rail transit on this massive continent is that broken piece of crap, Amtrak.
It is funny that Krugman won his Nobel prize for some models of how trade works between highly-developed countries. His follow-on work studied economies of scale and interaction of factory location and transportation. He used automobiles often as his examples.
Krugman’s entire work is about how consumers in America and Europe trade because they like diverse choices, and companies like the automobile manufacturers need to produce diverse produce lines.
Now, he is advocating bailouts for AIG, FNMA, FMAC, and the automakers, and arguing that they need to reduce product diversity, models, even entire brands.
Krugman is a partisan Democrat first, and an economist second. As someone who has consulted for almost every automaker in the USA and many in Europe and Japan, a rereading of his theories on plant location reveals just how little that 23-year-old knew, and how much was just conjecture. Krugman could get away with blowing smoke at other academics only because most of them are just as inexperienced as he was, and still is, in business.
He does have a lot of critics among academic economists who have wandered out into the real world. I’ll post some of those on specific threads where Brad uses Krugman in lieu of an argument.
didn’t help the auto makers much, huh, Lee?
A few points:
1. Krugman is an economist and won a Nobel for his work. But other economists who have won Nobels for their work would have disagreed vehemently with Krugman’s Keynesian/socialist schemes. These would be people like Friedman and Hayek. Just because Krugman is an economist with a Nobel doesn’t make him correct on these issues.
2. The key error in Keynesian thinking is the belief that wealth can be created by destroying it. For instance, hurricanes are a “stimulus” to the home repair industry. This would be correct except that this destruction diverts wealth from other activities such as buying new cars or saving for college. It comes at some cost. Similarly, taxpayers must pay for the increased expenditures of current “stimuli” with higher taxes and/or reduced services in the future. I would be very interested in Brad’s defense of Keynesian economics. Where does the money come from, Brad?
3. I can answer the question. Money given to idiots must come from the innovative and the industrious. To bailout Paul, we must tax Peter. But Paul is an idiot while Peter is a clever fellow. Or, to put it another way, should we have taxed Ford to pay for a bailout of the carriage industry? Should we have taxed Edison to subsidize candlemakers?
It isn’t fair or just to punish the productive and prudent elements of our economy to aid the unproductive and the imprudent. This punishes success and subsidizes failure, and we all suffer as a result. The Keynesians are wrong, and their influence has been shown empirically to be detrimental to economies.
If Osama bin Laden criticized Mark Sanford, Brad would find something in his rant to support.
Charlie has the right idea here, and Lee, but Brad wants no part of debating the issue’s merits. His pith for Sanford too much colors his thoughts.
bud and martin are tied for the most incoherent posts, but they get to try again.
bud needs to pick just one thing that he doesn’t understand and let us explain it to him.
martin needs to focus until he can come up with one thing.
What’s Basically Wrong with Krugman
—————————————–
“Paul Krugman is an unabashed liberal, and there is no crime in an economist having such persuasions. For that matter, many economists have a bit of that streak, too. Furthermore, many of us are in agreement that some of the economic policies of the Bush administration have been bad, if not downright disastrous.
However, the agreements end where Krugman begins to view U.S. economic history from a distorted lens, one in which all administrations run by Democrats are Good and Virtuous, and all Republican administrations are governed by Beelzebub himself. For example, Krugman has laid literally all of the recent financial meltdowns on free markets and deregulation, which he claims were the products of right-wing ideology and compliant Republican administrations.
This is a curious view of history. Until reading Krugman, I had no idea that Jimmy Carter and his economic guru, Alfred Kahn, were conservative Republicans. Carter and Kahn allegedly thought of themselves as liberal Democrats, and I even remember seeing Carter running for president on the Democratic ticket.
Yes, many of the major deregulation efforts came through the Carter administration, although Krugman apparently denies all of that. Carter’s administration deregulated airlines and pushed through huge banking reforms as the highly regulated New Deal financial cartel imploded amidst inflation and the inability of that system to be able to finance many of the upcoming high-tech industries.”
– William L. Anderson, associate professor in the Department of Economics at Frostburg State University in Frostburg, Md.
The Keynesians are wrong, and their influence has been shown empirically to be detrimental to economies.
-Charlie
Prove it. The conservatives have been in charge of our economy since the early 80s and where has that gotten us? Frankly the whole Reagan trickle down approach has been such an unmitigated failure it’s hard to imagine any coherent defense of it. Wages have stagnated for 2 decades. Recessions wreck havoc whenever the Republicans are in charge of the White House. The debt soars because of the borrow and spend mania of the GOP (spending is mostly on worthless military crap).
Really, to suggest the Keynsians are wrong shows just how blinded by ideology the conservatives have become. Reaganomics has now been tried twice and it has failed twice. It’s time to move on from the failures of conservative thinking and try pragmatic liberal policies. Otherwise we may end up with a permanent depression to deal with.
“Know nothing economics”? Krugman should get a load of the rest of our Know-nothing Governor’s “ideas”.
Headline from a USA Today Story:
Employers cut 533,000 jobs in Nov., most since 1974
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — Employers slashed jobs at the swiftest pace in 34 years in November, leading the unemployment rate to rise to 6.7%, up from 6.5% in October and the highest in 15 years, the government said Friday.
Heckuva job there Bushie. Trickle down economics just does not work. Job creation during the 8 years of W is likely to be the worst since the Hoover administration. And the conservatives want more of this! Thank goodness they aren’t in charge any longer.
FDR and Keynes prolonged the Depression and ended the first 8 years with worse unemployment and other economic indicators than when Roosevelt took office. Over half the budgets some years were deficit spending, and it produced nothing. Their socialist meddling was a complete failure.
Jimmy Carter and Paul Volker drove inflation from 7% to 21% in 3 years, while jobs and economic growth went into reverse.
Reagan cleaned up Jimmynomics with large tax cuts and simplification.
Team Clinton rode the Reagan Boom into the ground with tax increases, regulation, corruption which killed investor confidence. Clinton ran up $1.4 TRILLION in new debt, on top of the largest tax increases in history.
Bush’s small tax cuts for everyone brought us out of the Clinton recession of 2000, but Congress spent the excess revenue from the recovery and more on social welfare programs.
Democrats proposed deficits of $600 BILLION a year; Bush and the GOP agreed to half of that, to show their “compassion”.
For the last two years, Democrats have controlled both the House and Senate, and have run up $1.2 TRILLION in deficits in 15 months. The mortgage scam of Clinton has come home to roost, and the Democrats scramble to paper it over and stop investigations of their skimming millions off the banks, HUD, FNMA and FMAC.
Democrats and their needless CAFE standards, new emissions standards and pointless safety standards have damaged the entire US vehicle manufacturing industry. Their unions live in a fantasy world, and Democrats enable their delusion.
Now Obama has appointed most of the Carter and Clinton teams. He is silent on the economic crisis created by their previous advice, unable to perceive reality, much less deal with it.
Normally it is best to ignore Lee’s nonsense but in this case it’s instructive to point out how factually incorrect he is to illustrate how flawed conservative economic thinking is. The Lees of the world had it all there way during the Hoover Administration and tragically for the nation we paid dearly as we sank deeper into depression for 4 long years until the Roosevelt agenda finally began to show some impact.
First of all let’s take this gem:
FDR and Keynes prolonged the Depression and ended the first 8 years with worse unemployment and other economic indicators than when Roosevelt took office.
In fact umemployment peaked in 1933 at about 24.9%. Then once the Keynsian approach began to take hold it dropped to about 10% by 1937. But unfortunatelly Roosevelt began to become uncomfortable with deficit spending and changed course. Predictably this return to Hoover like policies resulted in a recession within the depression. Unemployment rose again but by 1941, and the start of the WW II military buildup, 8 years after Roosevelt took office the unemployment rate was again below 10%. That reprsents a rate 60% below where it was when he took office. Keynsian economics worked. Lee Muller’s facts are, as usual, wrong.
Bud,
Simple question: when a government spends more than it has, where does the money come from?
How can you not get this? It’s like going to Best Buy and buying PC for $2000 when you have $100 in your bank account. Of course it makes you think you have a $2000 PC — but what you really have is a $2000 bill that will end up costing you $4000 down the road.
We need a government that only spends what it takes in. And we need a government that only takes in what it truly needs to perform the duties of the government.
A perfect example of how your view of Keynesian economics DOESN’T WORK is the stimulus checks that were sent out (including checks to people who didn’t deserve them) just six months ago. It did nothing to help the economy.
Unemployment was never below 14.0% during the 1930s. It was 17.2% when FDR was inaugurated in 1939. I posted all the years in another thread and will find it. Unemployment under FDR averaged 17.2% for his first two terms. Only preparations for war in 1939 lowered unemployment.
FDR ran on a platform of lowering taxes, and reducing government spending, which Hoover had increased by 50% in a useless attempt to stimulate the economy. He ridiculed the interventionist proposals of Herbert Hoover. After being elected, Roosevelt implemented all of Hoover’s proposals, and kept Hoover’s other programs in place.
Instead of reducing spending, Roosevelt ran huge deficits, spending more in his first term than all the previous Presidents from Washington through Woodrow Wilson, which included 7 wars.
Democrats killed investment by raising income taxes, with the top federal income tax rate going from 25 percent in 1931 to 79 percent in 1936.
Failure Confessed:
“We are spending more money than we have ever spent before and it does not work. … I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot.” – Treasury Secretary Henry Morgenthau. Testifying before the House Ways & Means Committee in May of 1939
UCLA economists model New Deal and say it prolonged the Depression by 7 years.
Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Harold L. Cole and Lee E. Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.
In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.
Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.
Doug, Keynsian economics specifically calls for higher government spending and lower taxes as medicine for slow economic growth and especially for recessions/depressions. It worked in the 30s to reduce unemployment dramatically between 1933 and 1937. Unfortunately FDR reversed his policies, thinking the worst was over, and did indeed raise the top marginal rate to 79%. That was the misguided thinking that Hoover used as the economy slid deeper and deeper into a whole between 1929 and 1933. It was felt at the time that budget deficits were bad. In the fullness of time we now know that deficits are appropriate at times such as recession and war.
Hoover’s presidency remains the standard by which all presidents are judged on their flawed economic thinking. Bush, Jr. will not replace Hoover as the worst president for job creation in American history but he may be the first to lose jobs during his tenure. My guess is he will about break even. A sad commentary for the first president of the 21st century. His legacy will include a citation that he failed to create any jobs during 8 years as president.
The other side of Keynes thinking is that government should reduce spending and raise taxes during times of prosperity in order to head off inflation and to have money for the recessions. In the long run the budget should be balanced.
FDR didn’t reduce taxes, he TRIPLED them.
New Deal spending and huge deficits did NOT stimulate the economy, nor reduce employment, which averaged 17.2% for the first 8 years of FDR, and stood at 17.2% in January 1939.
Manufacturing did not recover at all in the first 8 years.
Agriculture was in terrible shape. Hordes of regulators destroyed crops while people starved in the cities, in a misguided Marxist attempt to raise farm prices. It was illegal for farmers to donate food to charities, or to even pick up fruit which fell from its tree to the ground.
No same person thought “the worst was over” in 1936, with unemployment at 15%. Taxes were raised to “soak the rich”. FDR and his team of communists and socialists were pandering to the people they were keeping out of work.
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