Paul Krugman is a jackass (1 Viewer)

[humpback]

First off, I don't know where you get your opening question. I've had ongoing productive arguments with several people in this thread. You made what I think is a cynical statement about economics. I disagreed and explained why.When you say "people should stop treating estimates as facts," (and "facts" is a problematic word; you initially said we can't assess the effect of stimulus or tax cuts, that it's all just estimates so why bother), you are implicitly demanding complete accuracy. Unless you get it, you don't think it's possible to draw any conclusions.Last, we can revisit different theories and estimates and determine who was on the right track and who wasn't. So far, the Krugmans of the world have been right.

I got my first question because it seems like you think there is only one correct answer here.There's nothing cynical about my statement, it's the truth- estimates are not facts. I never said we shouldn't use estimates, I think it makes sense to give estimates for just about everything, I was just pointing out that they are only estimates and we shouldn't put too much weight into them. There are some major fundamental differences between different economic theories, so it stands to reason that people subscribing to different theories are going to come up with different estimates and draw different conclusions. You may agree with Krugman, but there isn't one universally accepted correct answer to our problems.What I mean by stop treating them as facts is, in many discussions on here, people will link some report using an estimate and say something to the effect of "see, says right here this caused xyz". It's pointless because they don't even discuss the assumptions made in the estimate, they just find some link that supports their opinion and think the discussion is over.Again, I'm not implying anything besides taking estimates with a grain of salt. You can draw conclusions or form your opinions on them, but they aren't indisputable proof.No, we really can't revisit different theories and estimates and determine who was on the right track- how can we say what the effects of not bailing out the banks or not doing the stimulus would have been when we didn't do it? That's my point, we have no idea if we would have been better or worse off or by what magnitude. Krugman may have been right the the stimulus wouldn't work, but that doesn't mean he was right that it was because it wasn't big enough- there's no way to know that.

 

[pantagrapher]

Does Economics Still Progress?In a few hours Sylvia Nasar and I will have an on-stage dialogue at the 92nd Street Y, centered around her new book The Grand Pursuit, which offers a set of fascinating portraits of the makers of economics. (Irving Fisher invented the Rolodex?) But as I was reading her book I have to admit that I found myself wondering whether there’s much to celebrate.I’ve never liked the notion of talking about economic “science” — it’s much too raw and imperfect a discipline to be paired casually with things like chemistry or biology, and in general when someone talks about economics as a science I immediately suspect that I’m hearing someone who doesn’t know that models are only models. Still, when I was younger I firmly believed that economics was a field that progressed over time, that every generation knew more than the generation before.The question now is whether that’s still true. In 1971 it was clear that economists knew a lot that they hadn’t known in 1931. Is that clear when we compare 2011 with 1971? I think you can actually make the case that in important ways the profession knew more in 1971 than it does now.I’ve written a lot about the Dark Age of macroeconomics, of the way economists are recapitulating 80-year-old fallacies in the belief that they’re profound insights, because they’re ignorant of the hard-won insights of the past.What I’d add to that is that at this point it seems to me that many economists aren’t even trying to get at the truth. When I look at a lot of what prominent economists have been writing in response to the ongoing economic crisis, I see no sign of intellectual discomfort, no sense that a disaster their models made no allowance for is troubling them; I see only blithe invention of stories to rationalize the disaster in a way that supports their side of the partisan divide. And no, it’s not symmetric: liberal economists by and large do seem to be genuinely wrestling with what has happened, but conservative economists don’t.And all this makes me wonder what kind of an enterprise I’ve devoted my life to.

 

[Joe T]

By STEPHEN MOOREChristina Romer, the University of California at Berkeley economics professor and President Obama's first chief economist, once relayed the old joke that "there are two kinds of students: those who hate economics and those who really hate economics." She doesn't believe that, but it's true. I'm surprised how many students tell me economics is their least favorite subject. Why? Because too often economic theories defy common sense. Alas, the policies of this administration haven't boosted the profession's reputation.Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper."Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.Economic bimboism is rampant in Washington. The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire.A few months ago Mr. Obama blamed high unemployment on businesses becoming "more efficient with a lot fewer workers," and he mentioned ATMs and airport kiosks. The Luddites are back raging against the machine. If Mr. Obama really wants to get to full employment, why not ban farm equipment?Or consider the biggest whopper: Mr. Obama's thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical "multiplier"—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there's a fairy passing out free dollars.How did modern economics fly off the rails? The answer is that the "invisible hand" of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new "macroeconomics," a witchcraft that began to flourish in the 1930s during the rise of Keynes. Macroeconomics simply took basic laws of economics we know to be true for the firm or family—i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid—and turned them on their head as national policy.As Donald Boudreaux, professor of economics at George Mason University and author of the invaluable blog Cafe Hayek, puts it: "Macroeconomics was nothing more than a dismissal of the rules of economics." Over the years, this has led to some horrific blunders, such as the New Deal decision to pay farmers to burn crops and slaughter livestock to keep food prices high: To encourage food production, destroy it.The grand pursuit of economics is to overcome scarcity and increase the production of goods and services. Keynesians believe that the economic problem is abundance: too much production and goods on the shelf and too few consumers. Consumers lined up for blocks to buy things in empty stores in communist Russia, but that never sparked production. In macroeconomics today, there is a fatal disregard for the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy. "All economic problems are about removing impediments to supply, not demand," Arthur Laffer reminds us.So here we are, three years of mostly impotent stimulus experiments and the economy still hobbled. Keynesians would be expected to be second-guessing the wisdom of their theories. Instead, Prof. Romer recently complained that the political system will not allow Mr. Obama to "go back and ask for more" stimulus.And that is why Americans hate economics.

 

[tommyGunZ]

By STEPHEN MOOREChristina Romer, the University of California at Berkeley economics professor and President Obama's first chief economist, once relayed the old joke that "there are two kinds of students: those who hate economics and those who really hate economics." She doesn't believe that, but it's true. I'm surprised how many students tell me economics is their least favorite subject. Why? Because too often economic theories defy common sense. Alas, the policies of this administration haven't boosted the profession's reputation.Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper."Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.Economic bimboism is rampant in Washington. The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire.A few months ago Mr. Obama blamed high unemployment on businesses becoming "more efficient with a lot fewer workers," and he mentioned ATMs and airport kiosks. The Luddites are back raging against the machine. If Mr. Obama really wants to get to full employment, why not ban farm equipment?Or consider the biggest whopper: Mr. Obama's thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical "multiplier"—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there's a fairy passing out free dollars.How did modern economics fly off the rails? The answer is that the "invisible hand" of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new "macroeconomics," a witchcraft that began to flourish in the 1930s during the rise of Keynes. Macroeconomics simply took basic laws of economics we know to be true for the firm or family—i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid—and turned them on their head as national policy.As Donald Boudreaux, professor of economics at George Mason University and author of the invaluable blog Cafe Hayek, puts it: "Macroeconomics was nothing more than a dismissal of the rules of economics." Over the years, this has led to some horrific blunders, such as the New Deal decision to pay farmers to burn crops and slaughter livestock to keep food prices high: To encourage food production, destroy it.The grand pursuit of economics is to overcome scarcity and increase the production of goods and services. Keynesians believe that the economic problem is abundance: too much production and goods on the shelf and too few consumers. Consumers lined up for blocks to buy things in empty stores in communist Russia, but that never sparked production. In macroeconomics today, there is a fatal disregard for the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy. "All economic problems are about removing impediments to supply, not demand," Arthur Laffer reminds us.So here we are, three years of mostly impotent stimulus experiments and the economy still hobbled. Keynesians would be expected to be second-guessing the wisdom of their theories. Instead, Prof. Romer recently complained that the political system will not allow Mr. Obama to "go back and ask for more" stimulus.And that is why Americans hate economics.

Stephen Moore? The lobbyist and author of "Bullish On Bush: How George Bush's Ownership Society Will Make America Stronger"?Is Moore really attempting to compare the American economy to his two sons and their summers?

 

[pantagrapher]

Unrecoveries and the New NormalLarry Mishel has a very good piece systematically debunking the zombie claim that fears of regulation are holding back job creation. There is, literally, not a shred of evidence for this claim — not in the numbers, not in what businesses say. Yet it has been eagerly adopted not just by Republican politicians but by Chicago economists, Federal Reserve presidents, and more. I think the willingness of so many people to completely abandon any intellectual principles here, so that they can play for Team Republican — or maybe we should call that Team Oligarch — is part of what has me down these days.But there’s another point Larry raises here that is worth emphasizing. A lot of the argumentation for the regulatory thing comes from the belief that the failure to recover strongly from the 2007-2009 recession is unprecedented. You often hear assertions to the effect that in the past the economy has always rebounded strongly after a recession, so there must be something special at work here — and that something special must be the socialist in the White House.Yet the reality is that weak recoveries have actually been the norm for the last two decades: both the 1990-1991 recession and the 2001 recession were followed by prolonged “jobless recoveries”.This isn’t a new observation. I personally was warning that this recession would be followed by a recovery that didn’t feel like a recovery as early as January 2008, and was speculating about the reasons for the change in the business cycle back then too. And of course by late 2008 we also had the Reinhart-Rogoff comparisons of severe financial crises to draw on as backup.This does make me wonder, by the way, how the jobless recovery post-2009 can have come as such an apparent surprise to the White House. It was by far the most likely outcome, even given what we knew then.In the current context, however, what this means is that there is nothing special to explain. This is what the postmodern business cycle looks like, especially in the aftermath of a financial crisis. You don’t have to invoke fear of the Kenyan Islamic atheist socialist or whatever.

 

[Andy Dufresne]

Unrecoveries and the New Normal

Larry Mishel has a very good piece systematically debunking the zombie claim that fears of regulation are holding back job creation. There is, literally, not a shred of evidence for this claim not in the numbers, not in what businesses say.

Utter nonsense.This is just a new twist on the old Pauline Kael lament that Nixon couldn't possibly have been elected because she didn't know anyone who voted for him.

 

[Andy Dufresne]

Suck it, Paul.

 

[pantagrapher]

Suck it, Paul.

Basically says small business owners find dealing with regulations is a drag, but they're the same regulations they've always been dealing with. Sky is blue. That doesn't mean those same regulations are suddenly killing job growth.

 

[pantagrapher]

By the way, here's a link to the piece Krugman cited this morning.

 

[Andy Dufresne]

Suck it, Paul.

Basically says small business owners find dealing with regulations is a drag, but they're the same regulations they've always been dealing with. Sky is blue. That doesn't mean those same regulations are suddenly killing job growth.

That's not true either.And he said there's "literally, not a shred of evidence for this claim". Well, that's just patently false isn't it?

 

[Andy Dufresne]

By the way, here's a link to the piece Krugman cited this morning.

I think the disconnect is that people like Mishel and Krugman are talking about big business while most people are talking about small business - where most of the job creation in America comes from.So they're probably right from the perspective regulation isn't preventing big business from hiring. But that misses the point entirely.

 

[pantagrapher]

Phony Fear FactorBy PAUL KRUGMANPublished: September 29, 2011The good news: After spending a year and a half talking about deficits, deficits, deficits when we should have been talking about jobs, job, jobs we’re finally back to discussing the right issue.The bad news: Republicans, aided and abetted by many conservative policy intellectuals, are fixated on a view about what’s blocking job creation that fits their prejudices and serves the interests of their wealthy backers, but bears no relationship to reality.Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest efforts to aid the economy.The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false.The starting point for many claims that antibusiness policies are hurting the economy is the assertion that the sluggishness of the economy’s recovery from recession is unprecedented. But, as a new paper by Lawrence Mishel of the Economic Policy Institute documents at length, this is just not true. Extended periods of “jobless recovery” after recessions have been the rule for the past two decades. Indeed, private-sector job growth since the 2007-2009 recession has been better than it was after the 2001 recession.We might add that major financial crises are almost always followed by a period of slow growth, and U.S. experience is more or less what you should have expected given the severity of the 2008 shock.Still, isn’t there something odd about the fact that businesses are making large profits and sitting on a lot of cash but aren’t spending that cash to expand capacity and employment? No.After all, why should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more. Business investment always responds strongly to the state of the economy, and given how weak our economy remains you shouldn’t be surprised if investment remains low. If anything, business spending has been stronger than one might have predicted given slow growth and high unemployment.But aren’t business people complaining about the burden of taxes and regulations? Yes, but no more than usual. Mr. Mishel points out that the National Federation of Independent Business has been surveying small businesses for almost 40 years, asking them to name their most important problem. Taxes and regulations always rank high on the list, but what stands out now is a surge in the number of businesses citing poor sales — which strongly suggests that lack of demand, not fear of government, is holding business back.So Republican assertions about what ails the economy are pure fantasy, at odds with all the evidence. Should we be surprised?At one level, of course not. Politicians who always cater to wealthy business interests say that economic recovery requires catering to wealthy business interests. Who could have imagined it?Yet it seems to me that there is something different about the current state of economic discussion. Political parties have often coalesced around dubious economic ideas — remember the Laffer curve? — but I can’t think of a time when a party’s economic doctrine has been so completely divorced from reality. And I’m also struck by the extent to which Republican-leaning economists — who have to know better — have been willing to lend their credibility to the party’s official delusions.Partly, no doubt, this reflects the party’s broader slide into its own insular intellectual universe. Large segments of the G.O.P. reject climate science and even the theory of evolution, so why expect evidence to matter for the party’s economic views?And it also, of course, reflects the political need of the right to make everything bad in America President Obama’s fault. Never mind the fact that the housing bubble, the debt explosion and the financial crisis took place on the watch of a conservative, free-market-praising president; it’s that Democrat in the White House now who gets the blame.But good politics can be very bad policy. The truth is that we’re in this mess because we had too little regulation, not too much. And now one of our two major parties is determined to double down on the mistakes that caused the disaster.

 

[Slapdash]

The subtitle on this thread cracks me up everytime.

 

[pantagrapher]

DefeatismMartin Wolf is getting frantic, as well he should. The austerians have brought us to the brink of a vast disaster. A recession in Europe looks more likely than not; and the question for the United States is not whether a lost decade is possible, but whether there is any plausible way to avoid one.Wolf directs us to a recent speech by Adam Posen (pdf), which opens with a passage that very much mirrors my own thoughts:"Both the UK and the global economy are facing a familiar foe at present: policy defeatism. Throughout modern economic history, whether in Western Europe in the 1920s, in the US and elsewhere in the 1930s, or in Japan in the 1990s, every major financial crisis-driven downturn has been followed by premature abandonment—if not reversal—of the macroeconomic stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further policy stimulus. Every time those voices were wrong on each and every count. Those voices are being heard again today, much too loudly. It is the duty of economic policymakers including central bankers to rebut these false claims head on. It is even more important that we do the right thing for the economy rather than be slowed, confused, or intimidated by such false claims."Indeed. Posen’s “unduly influential voices” are my Very Serious People. And it has been an awesome spectacle watching the VSPs search, obsessively, for reasons not to fight mass unemployment. Fiscal policy must tighten to appease the invisible bond vigilantes and please the confidence fairy. Interest rates must rise because, well, um, inflation, well, no, low rates cause moral hazard — yes, that must be it.And we’re not (just) talking about ignorant politicians. This stuff has been coming from the European Central Bank, the Organization for Economic Cooperation and Development, the Bank for International Settlements.I don’t fully understand it. But a large part of it, it seems obvious, is the intense desire to see economics as a morality play of sin and punishment, where the sinners are, of course, workers and governments, not the bankers. Pain is not an unfortunate consequence of policies, it’s what is supposed to happen.How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:"Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.Gosh, it’s regrettable that the markets aren’t confirming my warnings! And today Ronald McKinnon laments, yes, laments the failure of the invisible bond vigilantes to show themselves — they’re supposed to be “disciplining the government”, so why aren’t they here?"Just to reiterate a point I’ve made before, none of this reflects actual economic theory. Throughout this crisis, people like Adam Posen and yours truly have been basing our arguments on standard textbook macroeconomics, whereas the Very Serious People have been making up stories on the fly to justify their calls for pain. As Wolf, who really seems to have eaten his Wheetabix, puts it, "The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally."And this cruelty rules our world.

 

[pantagrapher]

Markets Can Be Very, Very WrongMuller, Mendelsohn, and Nordhaus have a new paper in the American Economic Review that should be a major factor in how we discuss economic ideology. It won’t, of course, but let me lay out the case anyway.What MMN do is estimate the cost imposed on society by air pollution, and allocate it across industries. The costs being calculated, by the way, don’t include the long-run threat of climate change; they’re focused on measurable impacts of pollution on health and productivity, with the most important effects involving how pollutants — especially small particulates — affect human health, and use standard valuations on mortality and morbidity to turn these into dollars.Even with this restricted vision of costs, they find that the costs of air pollution are big, and heavily concentrated in a few industries. In fact, there are a number of industries that inflict more damage in the form of air pollution than the value-added by these industries at market prices.It’s important to be clear about what this means. It does not necessarily say that we should end the use of coal-generated electricity. What it says, instead, is that consumers are paying much too low a price for coal-generated electricity, because the price they pay does not take account of the very large external costs associated with generation. If consumers did have to pay the full cost, they would use much less electricity from coal — maybe none, but that would depend on the alternatives.At one level, this is all textbook economics. Externalities like pollution are one of the classic forms of market failure, and Econ 101 says that this failure should be remedied through pollution taxes or tradable emissions permits that get the price right. What Muller et al are doing is putting numbers to this basic proposition — and the numbers turn out to be big. So if you really believed in the logic of free markets, you’d be all in favor of pollution taxes, right?Hahahahaha. Today’s American right doesn’t believe in externalities, or correcting market failures; it believes that there are no market failures, that capitalism unregulated is always right. Faced with evidence that market prices are in fact wrong, they simply attack the science.What this tells us is that we are not actually having a debate about economics. Our free-market advocates aren’t actually operating from a model of how the economy works; they’re operating from some combination of knee-jerk defense of the haves against the rest and mystical faith that self-interest always leads to the common good.And they’re wrong, with every breath we take.

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

 

[adonis]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

 

[adonis]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

 

[tommyGunZ]

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

Are you new to bueno in economic threads?

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

 

[pantagrapher]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

So if you live downstream and I dump my waste into the river upstream, well then that's just the price we all pay for civilization?

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

So if you live downstream and I dump my waste into the river upstream, well then that's just the price we all pay for civilization?

The price you pay is that I come visit you with a baseball bat, not that the government allows you to trade emissions or taxes you for dumping your #### in my water.Taxation and trading emissions do nothing to solve the problem

 

[adonis]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

Road building isn't a direct byproduct of car production. However, pollution directly related to car production should be taken into consideration in the cost of an automobile.

 

[pantagrapher]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

Road building isn't a direct byproduct of car production. However, pollution directly related to car production should be taken into consideration in the cost of an automobile.

Aha! But if you breathe in pollution, you can just go hit cars with a baseball bat. Free market remedy.

 

[adonis]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

So if you live downstream and I dump my waste into the river upstream, well then that's just the price we all pay for civilization?

The price you pay is that I come visit you with a baseball bat, not that the government allows you to trade emissions or taxes you for dumping your #### in my water.Taxation and trading emissions do nothing to solve the problem

So your solution to solving pollution problems is physical violence and not (largely) using the market to work this out? Applying properly placed incentives/disincentives to pollution/carbon output allows the market to sort this out pretty efficiently.

 

[Maurile Tremblay]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I'd like to see a link supporting his contention that "Today’s American right . . . believes that there are no market failures."Saying obviously false things can sometimes be an effective way to preach to the choir, but it probably does little good beyond that.

 

[pantagrapher]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I'd like to see a link supporting his contention that "Today’s American right . . . believes that there are no market failures."Saying obviously false things can sometimes be an effective way to preach to the choir, but it probably does little good beyond that.

What failures do they believe the market is capable of?

 

[IvanKaramazov]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

 

[IvanKaramazov]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I'd like to see a link supporting his contention that "Today’s American right . . . believes that there are no market failures."Saying obviously false things can sometimes be an effective way to preach to the choir, but it probably does little good beyond that.

He's clearly over-generalizing, but I chose to interpret that remark as applying mainly to Republican politicians. Seeing as how almost none of them support cap and trade or other forms of carbon taxation, he's not really that far off.

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

Road building isn't a direct byproduct of car production. However, pollution directly related to car production should be taken into consideration in the cost of an automobile.

No, it shouldn't, unless the benefits directly related to car production are as well.

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I disagree. The cost of pollution is part of the price we all pay for civilization. In a sense, we are all paying that tax already.He would be more correct in pointing out what the total cost is. Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.That is all political, not economic.The real cost/benefit analysis should deal with the cost of air-scrubbers and the like versus the health benefits derived from removing pollutants versus the increased cost of energy. Krugman is full of #### as usual.

Seriously? Externalities not part of basic economics? It's as if you didn't read his comments at all. Part of the price we pay for civilization? You've got to be kidding.

No, I'm not. Should the cost of building roads be factored into the cost of an automobile?

So if you live downstream and I dump my waste into the river upstream, well then that's just the price we all pay for civilization?

The price you pay is that I come visit you with a baseball bat, not that the government allows you to trade emissions or taxes you for dumping your #### in my water.Taxation and trading emissions do nothing to solve the problem

So your solution to solving pollution problems is physical violence and not (largely) using the market to work this out? Applying properly placed incentives/disincentives to pollution/carbon output allows the market to sort this out pretty efficiently.

Ignoring the fact that your hyperbole of dumping waste into a river is as ridiculous as my hyperbole of visiting you with a baseball bat, I don't see how you can make a allegation that something not tried here will be either effective or efficient. Or that the advocated solutions are either.

 

[bueno]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I'd like to see a link supporting his contention that "Today's American right . . . believes that there are no market failures."Saying obviously false things can sometimes be an effective way to preach to the choir, but it probably does little good beyond that.

What failures do they believe the market is capable of?

Buggy whip manufacturing? IBM punch cards? Steam locomotives?The Pony Express? The telegraph? Sailing ships? Black and white TV?

 

[bueno]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

 

[IvanKaramazov]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

Government intervention has been part of the standard Econ 101 treatment of market failure for decades.

 

[IvanKaramazov]

So your solution to solving pollution problems is physical violence and not (largely) using the market to work this out? Applying properly placed incentives/disincentives to pollution/carbon output allows the market to sort this out pretty efficiently.

Ignoring the fact that your hyperbole of dumping waste into a river is as ridiculous as my hyperbole of visiting you with a baseball bat, I don't see how you can make a allegation that something not tried here will be either effective or efficient. Or that the advocated solutions are either.

What are you talking about? The US has been doing cap and trade in the SO2 market since 1994. And it's not like taxing things to increase their price and discourage their use is some weird, alien idea that nobody's ever had any experience with.

 

[Maurile Tremblay]

Hey Mikey, those of us who have realized that Krugman is a jackass don't need more evidence.

Sure, he makes frequent partisan jabs, but that last article before your post was pretty compelling.

I'd like to see a link supporting his contention that "Today’s American right . . . believes that there are no market failures."Saying obviously false things can sometimes be an effective way to preach to the choir, but it probably does little good beyond that.

He's clearly over-generalizing, but I chose to interpret that remark as applying mainly to Republican politicians. Seeing as how almost none of them support cap and trade or other forms of carbon taxation, he's not really that far off.

Even Republican politicians mostly believe that markets, left to themselves, will produce more air pollution and fewer big-budget movies than is optimal.

 

[bueno]

So your solution to solving pollution problems is physical violence and not (largely) using the market to work this out? Applying properly placed incentives/disincentives to pollution/carbon output allows the market to sort this out pretty efficiently.

Ignoring the fact that your hyperbole of dumping waste into a river is as ridiculous as my hyperbole of visiting you with a baseball bat, I don't see how you can make a allegation that something not tried here will be either effective or efficient. Or that the advocated solutions are either.

What are you talking about? The US has been doing cap and trade in the SO2 market since 1994. And it's not like taxing things to increase their price and discourage their use is some weird, alien idea that nobody's ever had any experience with.

SO2 is not CO2. There are ways of mitigating SO2 - we're stuck with CO2.

 

[bueno]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

Government intervention has been part of the standard Econ 101 treatment of market failure for decades.

I took Economics 101 in 1970 - that must explain it then.

 

[SacramentoBob]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

Were externalities covered?

 

[SacramentoBob]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

Government intervention has been part of the standard Econ 101 treatment of market failure for decades.

I took Economics 101 in 1970 - that must explain it then.

Thank god you're not a surgeon or you'd be practicing from your 1st edition Gray's Anatomy textbook.

 

[SacramentoBob]

Sorry Timmy, antibiotics weren't covered when I went to med school.

 

[bueno]

Econ 101 said nothing about remedying failure through pollution taxes or tradable emissions permits that get the price right.

"Market failure" has been a 100% standard topic in Principles of Microeconomics textbooks for at least the last 20 years. I hate Paul Krugman as much as the next guy, but I can personally assure you that nothing he said in the post above is even remotely controversial among economists, regardless of their personal politics. Read a little of Greg Mankiw's blog if you don't believe me.

Market failure wasn't the subject I was addressing. Government intervention was. At least when I took economic 101, that is.

Government intervention has been part of the standard Econ 101 treatment of market failure for decades.

I took Economics 101 in 1970 - that must explain it then.

Thank god you're not a surgeon or you'd be practicing from your 1st edition Gray's Anatomy textbook.

Thank god I actually learned economics, not whatever political nonsense passes for it today. But don't worry - I've kept track.

 

[Maurile Tremblay]

Thank god I actually learned economics, not whatever political nonsense passes for it today. But don't worry - I've kept track.

There's an excellent microeconomics textbook freely available online.You should read the chapter on market failures. Try to find anything that qualifies as "political nonsense."

 

[bueno]

Thank god I actually learned economics, not whatever political nonsense passes for it today. But don't worry - I've kept track.

There's an excellent microeconomics textbook freely available online.You should read the chapter on market failures. Try to find anything that qualifies as "political nonsense."

I understand economics well enough, thank you. And yes, the public solution to pollution is a political solution. The fact that it is couched in economic terms does not change the politics of it.Nor will you ever convince me that the EPA does economic analysis when it makes a regulation.

 

[IvanKaramazov]

I understand economics well enough, thank you. And yes, the public solution to pollution is a political solution. The fact that it is couched in economic terms does not change the politics of it.

I literally don't know what this is even supposed to mean. I guess you can sort of argue that "the public solution" (??) is political in the sense that it involves government, but by that standard then every act of government, including speed limits and laws against bank robbery are also "political," so that can't be what you meant to say. It's certainly not ideological, since we've already seen that people like David Friedman, Tyler Cowen, and Greg Mankiw support some sort of carbon tax, and none of those guys can be accused of being shills for big government. But then I'm out of guesses as to what you're trying to say.

 

[IvanKaramazov]

Here's a nice post by Tyler Cowen that pretty much sums up where we are on carbon taxes. Notice where the debate lies. It's not "Are carbon taxes a good idea?" Pretty much all economists of every ideological stripe agrees that they are. The debate is "Is it even possible in theory for someone to oppose carbon taxes in good faith?" When THAT'S where the debate lies, you can't just dismiss the core issue -- the one that enjoys virtually unanimous support -- as just "political nonsense."

 

[bueno]

I understand economics well enough, thank you. And yes, the public solution to pollution is a political solution. The fact that it is couched in economic terms does not change the politics of it.

I literally don't know what this is even supposed to mean. I guess you can sort of argue that "the public solution" (??) is political in the sense that it involves government, but by that standard then every act of government, including speed limits and laws against bank robbery are also "political," so that can't be what you meant to say. It's certainly not ideological, since we've already seen that people like David Friedman, Tyler Cowen, and Greg Mankiw support some sort of carbon tax, and none of those guys can be accused of being shills for big government. But then I'm out of guesses as to what you're trying to say.

Not all the government does is based in the political philosophy of one group over another's. Speed limits, laws against bank robberies are hardly "political" laws as there is general agreement. The public solution Friedman mentions in his book, though not couched in political terms, is a political solution. It is ideological in nature, even though Friedman in this particular instance is not being a shill. A public solution in this regard is every bit as political as a Keynesian or Marxist solution.

 

[IvanKaramazov]

I understand economics well enough, thank you. And yes, the public solution to pollution is a political solution. The fact that it is couched in economic terms does not change the politics of it.

I literally don't know what this is even supposed to mean. I guess you can sort of argue that "the public solution" (??) is political in the sense that it involves government, but by that standard then every act of government, including speed limits and laws against bank robbery are also "political," so that can't be what you meant to say. It's certainly not ideological, since we've already seen that people like David Friedman, Tyler Cowen, and Greg Mankiw support some sort of carbon tax, and none of those guys can be accused of being shills for big government. But then I'm out of guesses as to what you're trying to say.

Not all the government does is based in the political philosophy of one group over another's. Speed limits, laws against bank robberies are hardly "political" laws as there is general agreement. The public solution Friedman mentions in his book, though not couched in political terms, is a political solution. It is ideological in nature, even though Friedman in this particular instance is not being a shill. A public solution in this regard is every bit as political as a Keynesian or Marxist solution.

Among economists, carbon taxes are about as controversial as laws against robbing banks. So by your own definition, they're not political either.

 

[bueno]

Here's a nice post by Tyler Cowen that pretty much sums up where we are on carbon taxes. Notice where the debate lies. It's not "Are carbon taxes a good idea?" Pretty much all economists of every ideological stripe agrees that they are. The debate is "Is it even possible in theory for someone to oppose carbon taxes in good faith?" When THAT'S where the debate lies, you can't just dismiss the core issue -- the one that enjoys virtually unanimous support -- as just "political nonsense."

And you are trying to promote this statement with a blog that starts: "Do all serious economists favor a carbon tax? Richard Thaler, Justin Wolfers, and Alex all consider that question on Twitter. I say no."