Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Writing for the New York Times, Paul Krugman has a new column promoting more government spending and additional government regulation. That’s a dog-bites-man revelation and hardly noteworthy, of course, but in this case he takes a swipe at the Cato Institute.
The financial crisis of 2008 and its painful aftermath…were a huge slap in the face for free-market fundamentalists. …analysts at right-wing think tanks like…the Cato Institute…insisted that deregulated financial markets were doing just fine, and dismissed warnings about a housing bubble as liberal whining. Then the nonexistent bubble burst, and the financial system proved dangerously fragile; only huge government bailouts prevented a total collapse.
Upon reading this, my first reaction was a perverse form of admiration. After all, Krugman explicitly advocated for a housing bubble back in 2002, so it takes a lot of chutzpah to attack other people for the consequences of that bubble.
But let’s set that aside and examine the accusation that folks at Cato had a Pollyanna view of monetary and regulatory policy. In other words, did Cato think that “deregulated markets were doing just fine”?
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
This means the politicians can increase spending, but simultaneously claim they are cutting spending because the budget could have expanded at an even faster pace.
Sort of like saying your diet is successful because you’re only gaining two pounds a week rather than five pounds.
Anyhow, some people get deluded by this chicanery. Paul Krugman, for instance, complained in 2011 that “the government of Prime Minister David Cameron chose instead to move to immediate, unforced austerity, in the belief that private spending would more than make up for the government’s pullback.”
It’s official: the New York Times’ resident Nobel Prize Laureate/Loony is delusional. He wrote on his blog Monday about “how right he was”:
We’re coming up on the second anniversary of my piece “Myths of Austerity“, in which I tried to knock down the simply insane conventional wisdom then gelling among Very Serious People. Intellectually it was, I think I can say without false modesty, a huge win; I (and those of like mind) have been right about everything.
But I had no success in deflecting the terrible wrong turn in policy. Moreover, as far as I can tell none of the people responsible for that wrong turn has paid any price, not even in reputation; they’re still regarded as Very Serious, treated with great deference. And the political tendency behind that terrible economic analysis has at least a 50% chance of triumphing in America.
“Oh well” is right.
His first problem is that he says he has “been right about everything.” When one looks at the stimulus programs that have been enacted since this recession began, and the high unemployment that has persisted, the evidence is blatantly clear: Krugman is an idiot.
His second problem is his statement that “I had no success in deflecting the terrible wrong turn in policy.” Um, lest I am living on a different worldline than Krugman, the man’s main policy prescription has been stimulus, and we’ve had a lot of it:
No, seriously, that is what this man has become. He recently blogged a chart on his blog (inappropriately—or maybe entirely appropriately—named “Conscience of a Liberal,”) showing first quarter growth for five countries:
He then goes, “Wait, what? Japan as star performer? What’s that about? Actually, no mystery.”
Japan’s economy expanded faster than estimated in the first quarter, boosted by reconstruction spending that’s poised to fade just as a worsening in Europe’s crisis threatens to curtail export demand.
So he then argues that the tsunami reconstruction has led to great economic growth, while so-called “austerity” (which isn’t actually austerity at all, if Krugman had bothered to pay attention) has doomed Italy.
It makes perfect sense! Absolutely! Let’s hit Japan with another tsunami that will kill over 15,000 people, injure 27,000 citizens, and make 3,155 go missing! If only the 2011 tsunami had destroyed even more than that paltry 130,000 buildings—if only it had actually caused Fukushima to go critical and explode—it would have created so much potential for rebuilding! It would have shot the Japanese GDP right over the moon!
The bruhaha over Rick Perry’s comments that Social Security is a Ponzi scheme have taken a backseat to the remembrance of 9/11 and the Redskins’ first win in about 90 years, but let’s fan the flames a bit. Thanks to the erudite Don Boudreaux over at Cafe Hayek, it has come to my attention that a highly visible economist at one of the nation’s largest papers agrees with Gov. Perry’s assertion:
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in).
And yes, you’ve probably guessed it: it’s Paul Krugman. And yes, you’ve probably guessed it, but the above emphasis is mine.
The essay was written in the December 1996/January 1997 edition of the Boston Review, as a response to Richard Freeman’s suggestions on fixing inequality. I profess to not having read Freeman’s work entirely, though mostly it was more of the same “we need to take the wealth from the top 20% and give it to the bottom 20%” nonsense.
Left-wing discontent with Obama is probably not as high as moderate, right-wing, or libertarian discontent with the man, but it’s getting there. In fact, some, including Matt Stoller of the Roosevelt Institute, are speculating about possibly taking Obama off the top of the Democratic ticket in 2012.
Not that it will ever happen, but hey, I only read Salon for entertainment anyways:
Democrats may soon have to confront an uncomfortable truth, and ask whether Obama is a suitable choice at the top of the ticket in 2012. They may then have to ask themselves if there’s any way they can push him off the top of the ticket.
That these questions have not yet been asked in any serious way shows how weak the Democratic Party is as a political organization. Yet this political weakness is not inevitable, it can be changed through courage and collective action by a few party insiders smart and principled enough to understand the value of a public debate, and by activists who are courageous enough to face the real legacy of the Obama years.
Obama has ruined the Democratic Party. The 2010 wipeout was an electoral catastrophe so bad you’d have to go back to 1894 to find comparable losses. From 2008 to 2010, according to Gallup, the fastest growing demographic party label was former Democrat. Obama took over the party in 2008 with 36 percent of Americans considering themselves Democrats. Within just two years, that number had dropped to 31 percent, which tied a 22-year low.
Paul Krugman is known for saying some very odd things. The neo-Keynesian economist has firmly planted himself as a hack for President Barack Obama and the Democratic Party, even if it means going back on policies he once supported.
For example, Krugman once spoke strongly against the idea of monetizing debt. But when the Federal Reserve decided roll out “quantitative easing” — a nice name for debt monetization, shifted gears and defended the program. Krugman, who often cherry-picks data to come to predetermined conclusions, has written fondly of death and destruction because he believes it will drive economic output. He’s also a big fan of death panels to deal with the unfunded liabilities of entitlement programs.
Krugman was also one of the loudest voices calling for economic stimulus in 2009. After President Obama’s stimulus failed to boost the economy, Krugman, who had advocated for a stimulus bill that exceeded the $833 billion price tag that the Obama Administration requested, complained that it wasn’t large enough.
Krugman chastized those who were pushing for spending cuts and later claimed victory. “Intellectually it was, I think I can say without false modesty, a huge win,” he wrote last year. “I (and those of like mind) have been right about everything.”
“So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment.” - Paul Krugman (1998)
During the State of the Union address, President Barack Obama called on Congress to pass an increase in the minimum wage to $9 an hour. This policy is one that is frequently pushed by the political left.
Because Democrats, who had complete control of Congress, were hesistant to continue funding military operations in Afghanistan and Iraq, President George W. Bush agreed to an increase in the minimum wage to attract their votes. For Democrats, the minimum wage is a path to their ultimate goal of a so-called “living wage.” Labor unions, however, push the issue because many of their contracts are indexed to the minimum wage.
President Obama’s latest gimmick may sound good, but ultimately raising the minimum wage has the opposite of the intended effect. Looking at the most recent data from the Bureau of Labor Statistics (BLS), 5.2% of workers make at or below the minimum wage. That number is up some from recent years, which is due to lingering economic stagnation. Of that 5.2% of workers, 49.5% are between the ages of 16 and 24 — nearly one in four are between 16 and 19.
The “We the People” petitions that can be created on the White House website have become incredibly popular in recent months. Through this site, a user can submit a petition and elicit a response from the White House once it has crossed the 25,000 signature threshold.
The site picked up recognition because of petitions created asking the White House to let states peacefully secede after President Obama won re-election in November. Other petitions that have been created include calls for the White House to legalize marijuana, allow Americans to opt-out of ObamaCare, and to support the NRA’s “National School Shield” prgogram.
There have also been some humorous and rather asburd petitions created. But perhaps the best one was the petition urging the White House to build the Death Star.
This weekend, MoveOn.org pushed a petition written by economic policy expert actor Danny Glover asking President Barack Obama to appoint Paul Krugman to serve as the next Treasury Secretary. The petition, which has garnered nearly 200,000 signatures, states, “Press speculation has centered on candidates likely to support the Wall Street agenda of cuts to Social Security and Medicare benefits and other domestic spending rather than government policies to create jobs.”
“We want President Obama to nominate Nobel prize-winning economist Paul Krugman, who opposes austerity and wants the government to focus on creating jobs.”
While one may not put it past Obama to make such an appointment, there is next to no chance that Krugman would win confirmation from the Senate. If you though Timothy Geither has been worthless in his role as Treasury Secretary, Krugman would be a disaster, based on things he’s said since President Obama has been in office.
Here’s a sample of The Crazy™ from Krugman: