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Krugman says "TMGM" - close enough
Sunday, February 10, 2008
A number of you have alerted me to another "Greenspan mess" sighting, this one from a conscientious liberal who comes oh-so-close to exactly duplicating the name of the blog that you are currently reading.
Thanks to all of you. Paul Krugman writes in the New York Times:You see, it’s gradually becoming clear that the second half of the 1990s was in many respects just a lucky period for the U.S. economy — and that our luck has now run out.
Yes, it's all becoming very clear now.
Import prices were falling in the 90s, partly because of a surplus of oil, partly because third-world exporters were flooding the world with cheap goods, partly because the dollar was strong.
...
I remember describing it at the time as “1979 upside down”: the bad things that happened in the late 70s, with soaring oil prices and lagging productivity, were running in reverse. Now it seems to be all over.
Bill Clinton got some credit for all this — but the big, undeserved beneficiary was Alan Greenspan, who looked like a genius when he was mostly just in the right place at the right time.
Now Ben Bernanke is having to try and clean up the mess Greenspan made — and do it in a much less favorable environment.
This week's cartoon from The Economist:
18 comments:
Given Krugman's "progressive", leftist, wild-eyed, virtually always-wrong politics, unfortunately this is damnation by faint praise.
That said, should fiscal responsibility be a conservative virtue, the Republicans, as has been very widely noted, are no conservatives.
Further, nothing the Republicans have produced in the way of a candidate a decades has been, and the next presidential hopeful with an R behind his name is arguably worse.
What's next? Your choice: A socialist Democratic member of Entitlement Nation or a socialist Republican member of Entitlement Nation.
I can't be out of money. I still have more checks.
One may agree or disagree with Krugman's politics (I do both depending on the issue), but he is more "reality-based" then most; e.g. like Tim, he has been writing about the housing bubble before it became popular.
Also, I feel the term "entitlement" is being used too generally. There is a huge difference between all children having access to healthcare (which I think is a moral imperative and good economics) and the current bailout of banks and speculators (which I think is immoral and bad economics).
Why would anyone pay money to be insulted? Companies do it because they cannot survive without credit-rating agencies. Agencies are downgrading the ratings of thousands of companies and their bonds but charging those same companies for the dubious privilege. It means the borrowers must not only pay more for their money, they have to pay the agencies that have doubted their creditworthiness.
http://dofonline.co.uk/blogs/business/credit-rating-agencies-would-say-that-wouldnt-they4565/
I find it humorous how a centrist democrat like Krugman becomes a "leftist" to our minarchist friends.
Centrist policies demonstrably work in the real world.
Leftist, or rightist, or minarchist, not so much.
I find it amusing how a far left shill becomes a centrist democrat to our sliding-left friends. Er, country.
Speaking of centrists, while I suppose you didn't mean it as such, policies that centralize control and power -- such as the "moral" argument to socialize health care, thereby subscribing it to the same failure a globe's worth of socialism had already proved -- tend not to work so much.
Where morality enters that is anybody's guess. Maybe "for the children" covers it.
Anyway, the next time you find all this American collectivism in the Constitution -- clearly enumerated next to the mandate for a DHHS with a seven trillion dollar budget (that in turn next to the clause establishing a nine trillion national paper debt to pay for it) -- will be the first.
If wishes were bread and circuses, surely everybody'd have some, so to mangle the metaphors...
Since Johnson's 'Great Society' programs, we have transferred over $10 trillion from those who produce to those who do not. Yet the percentage of those in poverty has hardly budged.
The 'war on poverty' is over...
Poverty won.
The morality of collective social interest:
"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience." – C. S. Lewis
First anon:
Krugman is simply a Democratic Party acolyte. If you actually believe the Democrats are "far left", you ought to ween yourself off of Rupert Murdoch publications. If I understand you correctly, the Republican Party is also to be considered far left, and we can assume the corporate donors that pump money into the two parties and the corporate media that fawn over them fall into the category as well. At that point, the term "far left" seems to have lost all meaning.
Let's just say that both parties represent big government, huge deficits, a keen desire to police the world according to its own rules, and fierce loyalty to their large donors. That's broad enough without claiming that at least 90% of the country (or whoever did not vote for Ron Paul in the primaries) is "far left".
Disclaimer: I support Ron Paul over any of the remaining candidates.
Actually, little larry, since you re-raise the point (as I'd pointed out, tongue partly in cheek) what's "centrist" today is indeed collectivist.
And what's collectivist is mostly aptly described, in this our race for semantic labels, as socialist.
I tend to describe socialism -- if not by formal definition then surely by typical central policy in this land of ours over the last 50 years at least -- as fairly far left.
It shouldn't be all in the language, it should be in the visible outcomes. These days, those outcomes are anything but minimal or conservative. Kinda like the difference between the founding type of liberalism 200+ years ago and what passes for liberalism today.
Not so incidentally, Krugman's reasonable, rational, balanced "centrism" isn't exactly promoted by a column entitled a Liberal's Conscience and led by this lovely bit of denial-laced paranoid derangement syndrome:
"You know, if it wasn’t for the bit about lying us into war, lying about just about everything else, fearmongering for political gain, making America synonymous with torture, busting the budget to cut taxes for the rich, and so on, I’d almost feel sorry for George W. Bush."
That said, a broken clock is right twice in 24 hours, and Paul's take on the nature of fiscal America is actually worth noting. Of course, one would predict that should a Democrat be elected, he'll immediately reverse his slant.
The way political movements are categorized today is interesting. I've heard real leftists argue passionately (and not entirely unreasonably) that the Democratic Party has moved way to the right in recent years. After all, only the most passive observer could actually claim that they care about the poor or the tenets of Marxism. They use handouts as political weapons in the same way Republicans pay lip service to evangelicals to keep them on board. Above all, it's hard to argue that society has become truly socialist when the gap between rich and poor (throughout most of the world) has widened like never before.
Putting all this aside, the real problem in the world today is the fanatical emphasis on short term profits. Companies used to look ahead as far as possible, even decades in some cases. Eventually, the fiscal year became the furthest anyone would look ahead. Now, we're lucky if people look ahead to the end of the quarter. This mindset on immediate return manifests itself in all sorts of nasty ways. Why worry about enormous budget or trade deficits if now is all that matters? Why make an attempt to keep fiat currency sound? It's much easier to print money, doctor statistics, and try to use policy to bludgeon gold bugs into submission. Why should CEOs worry about employees and shareholders when they can gut companies (or even cook the books) and set up the best golden parachute possible? Why worry about Saudi Arabia's refining capacity or worldwide demand for oil when we can make ethanol requirements that don't serve any purpose other than keeping people happy while profits continue? Why should mainstream economists try to figure out what's going on in the world when they can make more money parroting theories based on faulty assumptions?
As far as I can tell, this extreme emphasis on short term profit is by far the biggest challenge the world faces today. We'll be rueing our obsession with it long before we care about any of the wedge issues the media throws at us on a daily basis. I wish I could offer a solution to this problem, but somehow I doubt telling people to forego immediate profit for the good of the future will have much impact.
As for Krugman's quote:
"You know, if it wasn’t for the bit about lying us into war, lying about just about everything else, fearmongering for political gain, making America synonymous with torture, busting the budget to cut taxes for the rich, and so on, I’d almost feel sorry for George W. Bush."
I don't find much fault with that statement, other than Krugman's implication that the budget was just dandy before Bush became President. Of course, I should add that the Dems are crooked too, and that Krugman's criticism of a Democrat President guilty of these things would be far more muted in comparison.
Anon, I would assume from your previous posts that given the way neoconservatives favor huge government and have transformed the Republican Party, you would be particularly displeased with them and their poster boy, GW Bush.
"Above all, it's hard to argue that society has become truly socialist when the gap between rich and poor (throughout most of the world) has widened like never before".
Untrue; it's entirely unavoidable to argue such.
The mythical rich v poor gap is another political construct, one devoid of statistics because it's simply repeated so often it becomes fact instead. The median American continues to advance in standard of living, and not by no small measure, regardless of the underlying fiscal fraud that enables it.
A great irony will be the hew and cry that goes up (to your point) should the Fed and DC develop a sudden sense of responsibility, plunging the nation into the unspeakable nightmare of actually paying for stuff. There'll be millions begging on the Capitol steps, our new masters and providers.
As to defining the US as socialized (as opposed to capital "S" Socialist) we have a social budget that in one department alone runs every median family in the nation approximately 25% of it's annual budget...except for the part we print And that's within the context of heavily federally-influenced education, health, retirement plans, family "assistance", family law, food, drugs, imports, exports, corporate behavior, personal behavior, speech (in some places), and nearly every area of life to some degree.
I'd call that worse than pure Socialism. I'd call that Orwellian bankruptcy. Given that it's funded by fiat only makes it all the more discouraging.
I certainly would, larry. Although I don't intentionally rank politicians by how they compare to other politicians...
The irony is that the Democrats are as unprogressive and morally impacted (read: corrupt) as collectivists are always found to be, and that the Republicans are content to merely compete with them by way of the slightly alternate social authoritarianism.
Either method runs up deficits and both working together in holy bipartisanship run up vast deficits. And debts.
The dialog that refuses to occur (illustrating how far gone we are) is that that would as a matter of course question why government -- aside from a unified defense -- is involved in anything whatsoever. Instead, we literally establish "centrism" as the midpoint between enormous collectivism and complete collectivism.
Anon,
If you accept my short term profit emphasis statements, I'm happy to drop the rich v poor argument. I think the worldwide gap is definitely widening based on the statements of Warren Buffett and many others, as well as the logical consequences of short term thinking I described. As for Americans, I would argue strongly that any advances in average standard of living in recent years are debt driven, both in terms of sheer borrowing ability and the growth in industries driven by increased borrowing. But I'm not sure how to drive these points home conclusively and I'm not fixin' for message board combat.
It is interesting that one of the stongest arguments against sane economic policy is that things are so out of whack that actually paying for goods would destroy us. That's a sad commentary on our situation.
Standards of living are indeed debt-driven, larry, but we've had national debt and the fiat money problem behind it for decades, so no news there.
An interesting mental experiment poses the question, what would things be like today had we never abolished a fiscal standard and had we never run this irreversible debt.
I suspect the most interesting reason the argument for sane economic policy fails is because we can't print the interest on the debt. With all money being lent into circulation, it's impossible, no?
"Standards of living are indeed debt-driven, larry, but we've had national debt and the fiat money problem behind it for decades, so no news there."
Money cannot created by fiat alone. Who would take it? A fiat currency always has its origins in another of intrinsic value. The power accorded by fiat money has always led to its collapse. The news here is we may have arrived.
Yes, indeed. The fiat animal must be borne of the misplaced trust and is essentially a colossal confidence trick . The endgame is what some have predicted since the Federal Reserve Act was passed in 1913. This would be Ron Paul's broken clock perspective on fiscal America which happens to be correct twice a day. Of course, the endgame is also the period of maximum price volatility and is the primary factor encouraging a focus on the near term.
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