New York Times Nobel winning economist Paul Krugman has a lengthily tweet thread slamming the corporate “slush fund” that Republicans are pushing in the two trillion dollar bail out bill. First, beware analogies with 2008. There are some parallels, but this time the epicenter of crisis is NOT in the financial sector — and the …
Tag: Paul Krugman
Mar 23 2020
Nov 17 2014
Some illusions are not good. Keeping up appearances can be dangerous. We should have the courage to admit that we or those we love or should love are in need. A political party that is too afraid to speak this message is nearly worthless.
I love the honest moment many critics hate in Akira Kurisawa’s One Wonderful Sunday (1947) when the director, through the female co-lead, confesses the act of creating for the public good by turning to us, the viewers, and begging for help for the poor lovers of post-WWII Japan: “There are so many poor lovers like us.”
Generations later, the Japanese left is by and large retaining its moral courage against a denialist onslaught that would have fit right in with Fascist days gone by. In a vicious campaign of moral inversion that would make Karl Rove proud, those who dare to stand by the historical veracity of the exploitation of “comfort women” are themselves scandalized. The current conservative Japanese effort to expunge from history the Japanese military’s mass brutalizing of women during WWII is, needless to say, itself deeply shameful. But this need for maintenance of societal illusion is by no means a new creation. Nor can the U.S. exempt itself from criticism with respect to its own deep and wide illusion at home and abroad, and in particular with respect to Japan.
In these sad days it is difficult to remember except with sadness that not too long ago a first term presidency was won on a simultaneously discomforting and audacious vision—
The title of The Audacity of Hope was derived from a sermon delivered by Obama’s former pastor, Jeremiah Wright. Wright had attended a lecture by Dr. Frederick G. Sampson in Richmond, Virginia, in the late 1980s, on the G. F. Watts painting Hope, which inspired him to give a sermon in 1990 based on the subject of the painting – “with her clothes in rags, her body scarred and bruised and bleeding, her harp all but destroyed and with only one string left, she had the audacity to make music and praise God … To take the one string you have left and to have the audacity to hope… that’s the real word God will have us hear from this passage and from Watt’s painting.”
While “her” audacity is commendable, where is “ours”? Can we look on at a person in such a condition and not ask why and then do all we can to change those conditions?
This vision, which was ultimately an appeal to honestly assess the requirements of justice in the service of love, has been diminished through a societal psychosis brought about only in part by an opposition party strategically incapable of telling the truth on anything serious. The Republican Party is built on lying, to be sure. But it has received decades of assistance from the pathetic unwillingness of the U.S.’s so-called liberal party to have the audacity to honestly call even for old time liberal religion and from the pathetic unwillingness of the so-called liberal media to have the audacity to expose lies on a prolonged basis except of the inconsequential variety–such as the covering up of the pathetic sex life of a president with a consenting intern. While I hope most of us would agree that Bill Clinton was a putz, our collective political lives should not turn based on what he does with his. Had he turned to the camera and said “There are so many poor [so to speak] lovers like us” we all should have clapped, laughed, or yawned, but certainly immediately moved on.
It is worth pondering who is really running this sickly thickly syrupy daytime theatre of life in the U.S.–so comfortable with societal psychosis once reserved for dreams of a heavenly one–while we put on our daily generally modest costumes. We have lost the will to pray, oh Lord, for a Mercedes Benz or even a new pickup, although we may still feel this unexplained ungratified compulsion to purchase new gizmos with whatever is left over after the tank of gas that will get us from our trailer to our part time jobs if we can get them.
It can sometimes be difficult, however, to tell the actors from the playwrights, for even the playwrights have to play dress up, or, more typically, dress down. When you are an imperial family, it is important to look the part, which will vary according to the needs of the occasion. If your power is mainly cultural, with pretentions of divinity, your plumage may need to be bold. While living large you may feel compelled to use your women and children more like props than actors on the stage of your pampered world.
If your power is economic, you may need to dress like regular small business folk on the way to the quaint grand opening of a new five and dime, complete with soda fountain. Your appearance should reflect the business needs of your milieu, even if that means you too must look like you eat tons of that processed corn-shit you sell to us at everyday low prices.
Before I come back to them, I want to mention the customers. You may wholly or partly not realize it, but, if you are reading this, you are likely sitting or standing (pray not driving) in the Wholly Walton Empire. You won’t actually get to “[m]eet the 6 Walton Heirs at the [t]op of the Walmart [e]mpire,” but it is important to their tight hold on power in the U.S. that you and hundreds of millions of species-beings like you remain alienated and not develop class consciousness of them and moral consciousness of the ends and means of their empire.
Now back to our story …
The Walton family are just regular folk, plus lots of money and power. They are at the pinochle of a homestyle capitalist family built on the illusion of choice. They are mere country vendors.
Other small town folk make the stuff that they vend, which we stuff into our bodies and souls to the limit of our credit and physiological and psychological capacity to intake stuff.
These ultra rich “regular folk” use slick mercenary politicians from both U.S. ruling parties to carry out their policies in exchange for chump change and neoliberal-circumscribed political power implemented through the kabuki theatre of “aw shucks, pass me them taters” known as U.S. “democracy.” A broad spectrum of “regular folk,” sometimes already wealthy but usually not “ultra rich,” compete within this mercenary class. Enter folks like Jeb (make no mistake, Jeb does not come to Arkansas because he cares about education)
and “our” very own HRC.
Now what in tarnation does this have to do with Japan?
May 12 2013
Ben Bernanke Is Creating A Disaster Once Again With Obama’s Blessing
The “Black Swan” is a theory popularized by Nicholas Taleb that says that unpredictable financial stress periodically hits the financial markets and wipes out Wall Street institutions that use models that claim that such events are so rare that they do not need to worry about them.
In the summer of 2008 Taleb wrote an article saying that Fannie Mae and Freddie Mac were on the verge of total collapse and so was the entire banking system.
It was at this moment in time that a reporter asked Ben Bernanke about Taleb and the “Black swan.” Bernanke’s reaction got caught on camera as you can see in the above video clip.
He laughs and says he doesn’t read Taleb.
Bernanke’s own policies created the financial bubbles that led to the 2008 crash. And he laughed.
It should be obvious to anyone who is sentient that this diatribe is filled with rightwing kookery such as these later gems:
Paul Krugman had claimed that Obama and Bernanke have been heroes of the economy and the crisis is over.
[People] are being told by people like Paul Krugman that government debt doesn’t matter
Equating Paul Krugman with Reagan and Laffer is almost as absurd as blaming Ben Bernanke for the planetary economic disaster created by the bankers.
The heroes of the article are the rightwing loons that don’t give a hang about disaster that has befallen the working class, the aged, the young and very young and the disabled while the very wealthy have profited enormously – even more than Obama and his minions, who would make those at the bottom pay for the sins of the robber barons.
Given all that, there is a very valuable point here IMO.
The distortions in the economy being wildly expanded by reliance on monetary policy to repair damage exacerbated by austerity is reminiscent of Carter’s economic foppery that gave us the Misery Index while the usual indicators of economic health looked dandy.
Mar 06 2013
Even though I’m an “only child,” I had a large extended family that we visited quite often, especially my maternal great grandmother and her two maiden sisters. They would gather in the dining room every afternoon for tea and exchange the “news of the day.” Since they were all profoundly hard of hearing, the disconnected conversations were quite amusing and memorable, as you can imagine, even for a five year old.
The conversation about sequester and the manufactured debt/deficit crisis reminded me of the three elderly ladies sitting around that table, talking to each other but not hearing a word the others are saying. The president, congressional leaders and the press are all talking but not hearing what they need to hear and ignoring what the American people want, jobs.
In the middle of the implementation of austere sequestration cuts, we’ve had the inane distraction of the Washington Post‘s columnist Bob Woodward’s “poutrage” which is just another example, as the Washington Post‘s Greg Sargent in the Plum Line puts it, of being stuck in the wrong conversation:
The Woodward flap is superficially an argument about the meaning of Gene Sperling’s email, but as Jonathan Cohn details this morning, this is just a distraction from the broader, far more consequential argument over who is to blame for the creation of sequestration. The answer, of course, is that both sides are to blame for creating it – though one side is far more to blame for the failure to avert it – thanks to the deficit mania that gripped Washington in 2011, at precisely the time we should have been focused on unemployment and economic growth.
Meanwhile, the fact that sequestration is set to hit is a concrete reminder that we’re still stuck with the consequences of that misguided 2011 mindset. Indeed, the continuing argument over how to avert sequestration – whether to replace it with a mix of spending cuts and new revenues, or with just spending cuts – is itself a sign of the continuing power of elite consensus deficit-obsession. After all, the battle is still being fought on deficit/austerity turf, at a time of near-zero growth and mass unemployment, rather than over what government should be doing to boost the economy and alleviate widespread economic suffering. As Atrios has put it, we’re not debating whether to implement more austerity; we’re debating over how much austerity to implement.
Nobel Prize winning economist and New York Times columnist Paul Krugman told Ed Shultz, host of MSNBC’s “Ed Show, “that sequestration was “designed to be stupid” and “this is exactly what the doctor did not order”.
While the spending cuts were conceived as a fix for the federal deficit, Krugman said, this was not the time to implement that kind of measure. Instead, he said, the government should be taking advantage of low interest rates and a high number of unemployed construction workers to invest in infrastructure and education.
“What kind of spending would it take to keep us on the track that we’re on right now?” Schultz asked, noting a continued pattern of private sector job growth despite Republican resistance to a new jobs bill since the stimulus package of 2009.
“If we would just stop cutting, the growth would probably keep going,” Krugman answered. “If spending had grown as fast in this recovery as it has in past recoveries, we’d be spending something like $200 billion a year – state, local and federal – more, maybe $300 billion a year more. Maybe $300 billion a year more. We’d have about a million and a half more public sector workers than we do right now, because we’ve been laying them off at [an] unprecedented pace. So, I think $300 billion a year of additional spending would be appropriate and would mean, if we did it, that we would be pretty close to full employment at this point.”
Talking Points Memo‘s Brian Beutler says that the president has done “excellent job” of “of flipping the politics of taxation to make the GOP’s once bulletproof position a vulnerability,” but the president is still not saying what the public needs to hear about jobs and the social safety net.
Feb 19 2013
Writing for his New York Times blog, Conscience of a Liberal, Nobel Prize winning economics professor Paul Krugman makes two salient observation about President Barack Obama’s proposal to raise the minimum wage from the current $7.25 per hour to $9.00 per hour indexed to inflation. His first observation is the political “trap” for Republicans leaders who are opposed, even though a vast majority of voters support a wage increase (pdf) and that includes a string majority of Republican women but not men. Prof Krugman notes that while Republicans want you to believe that they are concerned workers might lose their jobs, he gives two examples of why this faux sincerity “won’t wash”:
1. The truth is that top Republicans have so little regard for ordinary workers that they can’t even manage to pretend otherwise. Case in point: on the last Labor Day, Eric Cantor declared,
“Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success”.
Yep: even on Labor Day, Cantor had nothing positive to say about workers, just praise for their bosses.
2. Consider a working couple with two children, earning the current minimum wage. How much federal income tax do they pay? If I’m doing the math right, the answer is, none – they get a refund. (They pay plenty of payroll taxes, sales taxes, etc., but that isn’t supposed to count). In the minds of Republicans, this makes them lucky duckies, members of the 47 percent, part of what’s wrong with America. The GOP just can’t credibly claim to suddenly be deeply concerned about their job prospects.
Prof. Krugman’s second observation is about the economics of raising the minimum wage:
First, as John Schmitt (pdf) documents at length, there just isn’t any evidence that raising the minimum wage near current levels would reduce employment. And this is a really solid result, because there have been a lot of studies. We can argue about exactly why the simple Econ 101 story doesn’t seem to work, but it clearly doesn’t – which means that the supposed cost in terms of employment from seeking to raise low-wage workers’ earnings is a myth.
Second – and this is news to me – the usual notion that minimum wages and the Earned Income Tax Credit are competing ways to help low-wage workers is wrong. On the contrary, raising the minimum wage is a way to make the EITC work better, ensuring that its benefits go to workers rather than getting shared with employers. This actually is Econ 101, but done right: given a second-best world in which you use imperfect tools to help deserving workers, two tools together can produce a better outcome than either one on its own.
As usual, if you want comprehensive, in depth discussion without the political talking points and invective, at the same time presenting both sides, Chris Hayes and his guests on Up with Chris Hayes this past Saturday provided just that. Joining Chris to discuss the president’s proposal to raise the minimum wage were by Arindrajit Dube, assistant professor of economics at University of Massachusetts-Amherst; Lew Prince, owner of Vintage Vinyl, Inc. a small business in St. Louis, Missouri; Jennifer Sevilla Korn, executive director of the Hispanic Leadership Network; and Tsedeye Geeresslasse, staff attorney of the National Employment Law Project.
Republicans and business groups have lined up in opposition to a minimum wage increase, and in doing so, they’ve repeated a talking point that has been common in Washington for decades: that an increase in the minimum wage would lead to reductions in employment. As it turns out, there’s a growing body of empirical evidence that indicates that minimum wage increases, within a certain range, have no negative impact on employment, and may actually boost worker productivity and consumer demand, providing a much-needed stimulus to the economy.
Feb 12 2013
After his exclusive interview with MSNBC’s Chris Hayes, host of Up with Chris Hayes, Nobel Prize winning economist and New York Times columnist/blogger, Dr. Paul Krugman (@NYTimeskrugman) joins Chris and his panel guests Dean Baker (@DeanBaker13), co-director Center for Economic & Policy Research and author; Alexis Goldstein (@alexisgoldstein), a former vice president of information technology at Merrill Lynch and Deutsche Bank, now an Occupy Wall Street activist; and Heather McGhee (@hmcghee), vice-president of Demos. Enjoy the lively and informed discussion about the self imposed sequester crisis, global austerity and the role of inequality in the recovery.
Feb 12 2013
The US economy is stagnating and all that our elected officials are fixated on is reducing the deficit and debt with more spending cuts at a time when the government should be investing in this country to help produce jobs. Nobel Prize winning economist and New York Times columnist/blogger, Dr. Paul Krugman has explained that austerity measures in this sluggish economy will only further the pain with more job losses and increase the likely hood of a second recession.
MSNBC’s Chris Hayes, host of Up with Chris Hayes, sat down with Dr. Krugman for a fascinating one on one conversation about the president’s latest bid to delay the looming sequester cuts and why there is a difference between “Macro-economics 101” and what policy makers in DC are talking about. They also discuss the banking crisis and the continued divergence between profits and wages.
Feb 01 2013
In his speech to Republican Party official in Charlotte, NC, Gov. Bobby Jindal said that
“the GOP must stop being the party of stupid.” The problem there is that actions, including Gov. Jindal’s, just reinforce how stupid the GOP is, especially when it comes to the economy.
Bad news for Jindal: Florida, Texas rely heavily on property and biz taxes
by Tyler Bridges, The Lens
As he seeks to eliminate the state’s income tax, Gov. Bobby Jindal has cast a covetous eye both west and east. The tax systems in Florida and Texas should serve as a model for Louisiana’s, the governor believes.
Neither state has an income tax, he notes, and both have reputations as hospitable to business investment.
But to make Louisiana look more like Florida and Texas, Jindal’s plan would have to include two significant elements that he dislikes: taxes on business and higher property taxes. [..]
“Most states have a three-legged stool for raising revenue,” said Jim Richardson, a Louisiana State University economist who co-chaired PAR’s tax study. “Texas and Florida have two legs – sales and property – since they don’t have an income tax.” Under the Jindal plan, “Louisiana would have a one-and-a-half-legged stool – sales taxes and some local property taxes.” [..]
In an interview with MSNBC’s Rachel Maddow, Nobel Prize winning economist, Paul Krugman said it would raise the taxes on every tax dollar the poor make going against “the Republican argument that high marginal tax rates discourage work“.
“In our system, the highest marginal tax rates — the biggest disincentives to work in our system — are not for the rich. They are for lower-income workers who are in that range where if you earn a little bit more you start to lose benefits, you start to lose Medicaid, you lose housing subsidies,” the Nobel Prize-winning economist said. “This is going to raise taxes precisely on the people who actually have the biggest disincentives to work. So it’s actually, even from that old supply-side incentive thing, this is going in the wrong direction.”
In his Monday New York Times column, Prof. Krugman called the Republicans “Makers, Takers, Fakers”
Like the new acknowledgment that the perception of being the party of the rich is a problem, this represents a departure for the G.O.P. – but in the opposite direction. In the past, Republicans would justify tax cuts for the rich either by claiming that they would pay for themselves or by claiming that they could make up for lost revenue by cutting wasteful spending. But what we’re seeing now is open, explicit reverse Robin Hoodism: taking from ordinary families and giving to the rich. That is, even as Republicans look for a way to sound more sympathetic and less extreme, their actual policies are taking another sharp right turn.
Despite the lessons of the 2012 election, the Republicans, in states that are not checked by Democrats, are pushing tax policies that punish the poor and the middle class and benefit the wealthy.
Jan 18 2013
Did someone leave the barn door open on the Chinese room experiment? One of the Keynesian mavericks has escaped:
It’s good to have someone questioning the tech euphoria, but I’ve been looking into technology issues a lot lately, and I’m pretty sure he’s wrong: the information technology revolution has only begun to have its impact. Consider for a moment a sort of fantasy technology scenario in which we can produce intelligent robots able to do everything a person can do. Clearly, such a technology would remove all limits on per-capita gross domestic product, as long as you don’t count robots among the capitas. All you need to do is keep raising the ratio of robots to humans, and you get whatever G.D.P. you want.
Sure, I’ll see your bet and raise you one thousand! robots: let’s make all those robots perpetual motion machines, while we’re at it.
Jan 15 2013
Transcript can be read here
Nobel Prize-winning economist and New York Times columnist Paul Krugman argues that saving money is not the path to economic recovery. Instead, he tells Bill, we should put aside our excessive focus on the deficit, try to overcome political recalcitrance, and spend money to put America back to work. Krugman offers specific solutions to not only end what he calls a “vast, unnecessary catastrophe,” but to do it more quickly than some imagine possible. His latest book, End This Depression Now!, is both a warning of the fiscal perils ahead and a prescription to safely avoid them.
On Pres. Obama’s choice of Jack Lew for Treasury Secretary
(W)hat the president needs right now is he needs a hardnosed negotiator. And rumor has it that’s what he’s got, so.
The president can’t pass major new legislation. He can’t formulate major new programs right now. What he has to do now is bargain down or ride over these crazy people in the Republican Party. And we what we need now is not deep thinking from the treasury secretary. If the president wants deep thinkers, he can call Joe Stiglitz, he can call other people. What he needs from the Treasury secretary is somebody who’s going to be very effective at dealing with these wild men and making sure that nothing terrible happens.
Damning praise, indeed.
Jan 11 2013
The Center on Budget and Policy Priorities has a graph:
Click on image to enlarge
The vertical axis measures the projected ratio of federal debt to GDP. The blue line at the top represents the projected path of that ratio as of early 2011 – that is, before recent agreements on spending cuts and tax increases. This projection showed a rising path for debt as far as the eye could see.
And just about all budget discussion in Washington and the news media is laid out as if that were still the case. But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon.
Prof. Krugman noted that the CBPP advocates for another $1.4 trillion in revenue or spending cuts over the next decade. While there are still problems the debt/deficit is not as bad as is being presented by politicians and the traditional media. So while we everyone was loosing sleep about falling off cliffs, the cliff was a bad dream. Now the government and the media need to wake up and start talking about jobs.
Dec 10 2012
Whether you voted for Barack Obama or not, the reality is he is on the same path he was on for the last four years and that is to sell out the majority of Americans to reach a “bargain” with Republicans, who lost the election, on the mythical “fiscal cliff” and the unconstitutional “debt ceiling.” Part of that sell out is raising the eligibility age for Medicare recipients to 67. This little nugget has started a “great debate” and a bit of an internet dispute about whether or not this is a good, or even workable, idea.
In his article at AMERICAblog our friend Gaius Publius, who is just reporting it, quotes Paul Krugman’s reaction on his NY Times blog to Ezra Klein’s commentary in The Washington Post on Jonathan Chait’s article in The New Yorker, who thinks that raising the eligibility age by two years is an OK idea. What the Herr Doktor said:
Ezra Klein says that the shape of a fiscal cliff deal is clear: only a 37 percent rate on top incomes, and a rise in the Medicare eligibility age. [..]
First, raising the Medicare age is terrible policy. It would be terrible policy even if the Affordable Care Act were going to be there in full force for 65 and 66 year olds, because it would cost the public $2 for every dollar in federal funds saved. And in case you haven’t noticed, Republican governors are still fighting the ACA tooth and nail; if they block the Medicaid expansion, as some will, lower-income seniors will just be pitched into the abyss.
Second, why on earth would Obama be selling Medicare away to raise top tax rates when he gets a big rate rise on January 1 just by doing nothing? And no, vague promises about closing loopholes won’t do it: a rate rise is the real deal, no questions, and should not be traded away for who knows what. [..]
All that effort to reelect Obama, and the first thing he does is give away two years of Medicare? How’s that going to play in future attempts to get out the vote?
If anyone in the White House is seriously thinking along these lines, please stop it right now.
Which resulted in Dayens’ response to Chait, the ill informed Ezra Klein comment agreeing with Chait that the Affordable Care Act would “blunt the pain,” and a hat tip to Kilgore’s pique about “tone.”
Meanwhile, Karoli at Crooks & Liars gets it in her response to Klein’s interview with Peter Orzag, former director of the Obama Administration’s Office of Management and Budget, currently Vice Chairman of Global Banking at Citigroup:
Raising the Medicare eligibility age is terrible, awful, horrible policy that plays right into the Republicans’ goal of killing Medicare altogether. Obamacare does not change that fact in substantive ways. Here’s why, in bullets:
- Adverse selection – Obamacare or no Obamacare, raising the eligibility age means people enter the Medicare system with a higher likelihood of health problems. Even if they have health insurance before they’re eligible for Medicare, facts are facts: The older one gets, the more likely health problems become.
- Administrative costs – Medicare’s administrative costs consistently come out to about 7 percent. Obamacare allows for administrative costs of 15 percent. Extending coverage via Obamacare means higher, not lower, costs to the government and the middle class. Subsidies will cost more for that older group as well as for the younger group, since insurers will set a higher baseline on young people in order to pad reserves for older people because of the 3:1 ratio requirement on rates between youngest and oldest.
- Workforce phase-outs of older employees – This is the dirty little elephant in the middle of the room that no one talks about. Because of the high demand for jobs right now, older employees are being shoved phased out earlier. Beginning at around age 50 to 55, jobs become scarce for older workers, leaving them with a 10-15 year gap before they become eligible for Social Security and Medicare. That means they’re living on their savings, home equity, or odd jobs just to scratch their way to the social safety net. Moving that football means leaving them on the hook for 2 extra years, not only for living expenses, but also covering their health insurance, whether or not subsidized.
[..]I’ve been told by some pragmatic liberals who I usually agree with that I’m being unreasonable on this point. I beg to differ. It is not reasonable for Peter Orszag to say we’ve gotten a concession from Republicans because privatizing Social Security is off the table entirely. That’s a little like saying we’re really lucky that they’re holding the gun to our hearts instead of our heads. The impact of conceding any ground on Medicare eligibility is immeasurably negative for Democrats.
HELLO, Barack, raising the eligibility age for Medicare is a really bad idea.