Paul Krugman is a jackass (1 Viewer)

[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.

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

All you are saying is that a select group of people think they are a good idea (without presenting decent evidence to support your point). That doesn't make it apolitical at all.

 

[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.

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

 

[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.

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

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

We established that an economist who wrote a text book includes them as such. Nothing more.

 

[SacramentoBob]

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."

Any economic theory that wasn't written in hieroglyphics is nonsense.

 

[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.

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

We established that an economist who wrote a text book includes them as such. Nothing more.

I've personally reviewed dozens of principles of microeconomics textbooks over the past 15 years. I can assure you that it's more than just one guy. Ordinarily, I don't like making arguments from authority, but undergraduate economics education is one of the very few things that I can reaasonably claim to be an expert about. And I know from exprience that you have no objection to appeals to authority since you do this sort of thing all the time. So we're done now, right?

 

[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."

Any economic theory that wasn't written in hieroglyphics is nonsense.

Well I wouldn't go that far. Most economic theories can work on paper under the assumptions that the theorists make. The problem is making all the correct assumptions for the situation. Marx didn't. Keynes didn't. Laffer didn't. In fact I doubt that any do. I doubt it is possible.

 

[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.

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

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

We established that an economist who wrote a text book includes them as such. Nothing more.

I've personally reviewed dozens of principles of microeconomics textbooks over the past 15 years. I can assure you that it's more than just one guy. Ordinarily, I don't like making arguments from authority, but undergraduate economics education is one of the very few things that I can reaasonably claim to be an expert about. And I know from exprience that you have no objection to appeals to authority since you do this sort of thing all the time. So we're done now, right?

Okay, substitute one for several. Presenting them in textbooks in an apolitical way does not make the application of said ideas apolitical.

 

[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.

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

We established that an economist who wrote a text book includes them as such. Nothing more.

I've personally reviewed dozens of principles of microeconomics textbooks over the past 15 years. I can assure you that it's more than just one guy. Ordinarily, I don't like making arguments from authority, but undergraduate economics education is one of the very few things that I can reaasonably claim to be an expert about. And I know from exprience that you have no objection to appeals to authority since you do this sort of thing all the time. So we're done now, right?

Okay, substitute one for several. Presenting them in textbooks in an apolitical way does not make the application of said ideas apolitical.

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

 

[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.

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

They are not.

I thought we already established that all Econ 101 textbooks include them as uncontroversial applications of basic microeconomic principles.

We established that an economist who wrote a text book includes them as such. Nothing more.

I've personally reviewed dozens of principles of microeconomics textbooks over the past 15 years. I can assure you that it's more than just one guy. Ordinarily, I don't like making arguments from authority, but undergraduate economics education is one of the very few things that I can reaasonably claim to be an expert about. And I know from exprience that you have no objection to appeals to authority since you do this sort of thing all the time. So we're done now, right?

Okay, substitute one for several. Presenting them in textbooks in an apolitical way does not make the application of said ideas apolitical.

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

But there isn't. There is some agreement among economists, not among society as a whole. That doesn't make it apolitical - in fact, if you read the article you posted, you can see that it is very political.What you are saying is like saying that if abortion proceedures are published in all medical textbooks, then abortion isn't political.

 

[IvanKaramazov]

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

But there isn't. There is some agreement among economists, not among society as a whole. That doesn't make it apolitical - in fact, if you read the article you posted, you can see that it is very political.What you are saying is like saying that if abortion proceedures are published in all medical textbooks, then abortion isn't political.

Okay. Please provide a few citations of economics textbooks that state that carbon taxation is an economically ineffective way of combating carbon emmissions. Since there isn't a general agreement on this point, you should have no problem providing 3-4 cites.

 

[bueno]

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

But there isn't. There is some agreement among economists, not among society as a whole. That doesn't make it apolitical - in fact, if you read the article you posted, you can see that it is very political.What you are saying is like saying that if abortion proceedures are published in all medical textbooks, then abortion isn't political.

Okay. Please provide a few citations of economics textbooks that state that carbon taxation is an economically ineffective way of combating carbon emmissions. Since there isn't a general agreement on this point, you should have no problem providing 3-4 cites.

You are missing the point. What a select group of experts say, even if they are in agreement does not make it apolitical. Besides, a properly written textbook would not promote it as effective or ineffective - it will present the theory of how it could be effective. If you want to see why it won't be effective, just look at the point list in the link you posted.

 

[IvanKaramazov]

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

But there isn't. There is some agreement among economists, not among society as a whole. That doesn't make it apolitical - in fact, if you read the article you posted, you can see that it is very political.What you are saying is like saying that if abortion proceedures are published in all medical textbooks, then abortion isn't political.

Okay. Please provide a few citations of economics textbooks that state that carbon taxation is an economically ineffective way of combating carbon emmissions. Since there isn't a general agreement on this point, you should have no problem providing 3-4 cites.

You are missing the point. What a select group of experts say, even if they are in agreement does not make it apolitical. Besides, a properly written textbook would not promote it as effective or ineffective - it will present the theory of how it could be effective. If you want to see why it won't be effective, just look at the point list in the link you posted.

And now you're back to being incoherent. A few posts ago, you said that what made it "political" was the absence of a general agreement on the topic. Now you're back to saying that agreement doesn't matter, and that it's still political in some other sense.I apologize for doing this, but you clearly have no idea what you're talking about and it got on my nerves. I'm going to just let this go because it's not entertaining any more and I think I've made my point.

 

[bueno]

But you yourself said that it isn't political if there's general agreement on the point. And we know that there is, at least among people who know what they're talking about.

But there isn't. There is some agreement among economists, not among society as a whole. That doesn't make it apolitical - in fact, if you read the article you posted, you can see that it is very political.What you are saying is like saying that if abortion proceedures are published in all medical textbooks, then abortion isn't political.

Okay. Please provide a few citations of economics textbooks that state that carbon taxation is an economically ineffective way of combating carbon emmissions. Since there isn't a general agreement on this point, you should have no problem providing 3-4 cites.

You are missing the point. What a select group of experts say, even if they are in agreement does not make it apolitical. Besides, a properly written textbook would not promote it as effective or ineffective - it will present the theory of how it could be effective. If you want to see why it won't be effective, just look at the point list in the link you posted.

And now you're back to being incoherent. A few posts ago, you said that what made it "political" was the absence of a general agreement on the topic. Now you're back to saying that agreement doesn't matter, and that it's still political in some other sense.I apologize for doing this, but you clearly have no idea what you're talking about and it got on my nerves. I'm going to just let this go because it's not entertaining any more and I think I've made my point.

You are confusing general agreement among economists with general agreement in the political arena.Traffic engineers all agree speed limits are effective. So does the general populace.

Economists mostly agree carbon taxes are effective. The general populace does not.

Example one is apolitical.

Example 2 is political.

Did Cowen ever write a textbook?

 

[bueno]

IK, all 10 of Cowen's "reservations" are legitimate reasons why carbon taxes are not an effective means of combating "economic failure." Many of those reasons are not based in economic theory, but political. In fact, one can construct elegant, mathematically consistent economic theories that will not work because not all variables are considered. Carbon taxes fall into that category.

 

[pantagrapher]

Holding China to AccountBy PAUL KRUGMANPublished: October 2, 2011The dire state of the world economy reflects destructive actions on the part of many players. Still, the fact that so many have behaved badly shouldn’t stop us from holding individual bad actors to account.And that’s what Senate leaders will be doing this week, as they take up legislation that would threaten sanctions against China and other currency manipulators.Respectable opinion is aghast. But respectable opinion has been consistently wrong lately, and the currency issue is no exception.Ask yourself: Why is it so hard to restore full employment? It’s true that the housing bubble has popped, and consumers are saving more than they did a few years ago. But once upon a time America was able to achieve full employment without a housing bubble and with savings rates even higher than we have now. What changed?The answer is that we used to run much smaller trade deficits. A return to economic health would look much more achievable if we weren’t spending $500 billion more each year on imported goods and services than foreigners spent on our exports.To get our trade deficit down, however, we need to make American products more competitive, which in practice means that we need the dollar’s value to fall in terms of other currencies. Yes, some people will shriek about “debasing” the dollar. But sensible policy makers have long known that sometimes a weaker currency means a stronger economy, and have acted on that knowledge. Switzerland, for example, has intervened massively to keep the franc from getting too strong against the euro. Israel has intervened even more forcefully to weaken the shekel.The United States, given its special global role, can’t and shouldn’t be equally aggressive. But given our economy’s desperate need for more jobs, a weaker dollar is very much in our national interest — and we can and should take action against countries that are keeping their currencies undervalued, and thereby standing in the way of a much-needed decline in our trade deficit.That, above all, means China. And none of the arguments against holding China accountable can stand serious scrutiny.Some observers question whether we really know that China’s currency is undervalued. But they’re kidding, right? The flip side of the manipulation that keeps China’s currency undervalued is the accumulation of dollar reserves — and those reserves now amount to a cool $3.2 trillion.Others warn of bad consequences if the Chinese stop buying United States bonds. But our problem right now is precisely that too many people want to park their money in American debt instead of buying goods and services — which is why the interest rate on long-term U.S. bonds is only 2 percent.Yet another objection is the claim that Chinese products don’t really compete with U.S.-produced goods. The rebuttal is fairly technical; let me just say that those making this argument both overstate the case and fail to take the indirect effects of Chinese currency policy into account.In the last few days a new objection to action on the China issue has surfaced: right-wing pressure groups, notably the influential Club for Growth, oppose tariffs on Chinese goods because, you guessed it, they’re a form of taxation — and we must never, ever raise taxes under any circumstances. All I can say is that Democrats should welcome this demonstration that antitax fanaticism has reached the point where it trumps standing up for our national interests.To be fair, there are some arguments against action on China that would carry some weight if the times were different. One is the undoubted fact that inflation in China, which is raising labor costs in particular, is gradually eliminating that nation’s currency undervaluation. The operative word, however, is “gradually”: something that brings the United States trade deficit down over four or five years isn’t good enough when unemployment is at disastrous levels right now.And the reality of the unemployment disaster is also my answer to those who warn that getting tough with China might unleash a trade war or damage world commercial diplomacy. Those are real risks, although I think they’re exaggerated. But they need to be set against the fact — not the mere possibility — that high unemployment is inflicting tremendous cumulative damage as we speak.Ben Bernanke, the chairman of the Federal Reserve, said it clearly last week: unemployment is a “national crisis,” with so many workers now among the long-term unemployed that the economy is at risk of suffering long-run as well as short-run damage.And we can’t afford to neglect any important means of alleviating that national crisis. Holding China accountable won’t solve our economic problems on its own, but it can contribute to a solution — and it’s an action that’s long overdue.

 

[timschochet]

So Krugman and Mitt Romney seem to agree that China should be "punished". I think protectionism is very bad policy. I can't see how it will help us one bit; but it will hurt us bigtime long term, IMO.

 

[Andy Dufresne]

That one actually sounded reasonable.

 

[timschochet]

So Krugman and Mitt Romney seem to agree that China should be "punished". I think protectionism is very bad policy. I can't see how it will help us one bit; but it will hurt us bigtime long term, IMO.

Punished is too punitive of a word for it. But if you're so against protectionism, how would you characterize the Chinese policy that Krugman is talking about whereby the Chinese government keeps buying American debt so as to keep their currency stable against the dollar and not rising?

I don't like it. China plays against us with a crooked hand. Even so, I don't believe this is the correct way to combat that.

 

[Maurile Tremblay]

The only real policy recommendation that Krugman makes is to threaten sanction against countries such as China who manipulate their currency against the dollar.

What is your specific objection to that? And if that's wrong, then what would you do?

If China is keeping its currency artificially low, that means Americans can buy more Yuan, and therefore more Goji berries, for the same number of dollars. That's good for Americans!!!Krugman says that it increases American unemployment, but that's a terrible argument. The sun harms American candle-making businesses, but that doesn't mean that free sunlight is bad for Americans on the whole. Same with cheap Goji berries.

American unemployment isn't caused by having free sunlight or cheap Goji berries dropped in our laps. Causes of unemployment are varied. It can be caused by shifts in production (such as from candle-making to film-making), or by transaction costs (including payroll taxes), or a number of other things: but the satisfaction of everybody's wants (i.e., the drying up of aggregate demand) is not the problem. If the Chinese can cheaply satisfy some of our wants, it needn't leave us with idle hands. There will still be work to do as long as people still need stuff. And people will always need stuff. Personally, I could use a massage right now. (Who couldn't?) If I can't afford one, it's not because Goji berries are too cheap. If anything, the opposite is true. The availability of cheap imports makes Americans effectively richer: the money I save on Goji berries can be used to buy extra massages.

If China wants to subsidize American purchases of their products by manipulating their currency, we should not punish them. We should reward them. We should give them free drinks, like a casino would, to keep them in the game.

Then, if we're worried about unemployment, we should reduce payroll taxes.

 

[pantagrapher]

The Renminbi and US ManufacturingThe Senate will be taking up Chinese currency this coming week. So I though I should offer a brief note about one of the arguments people make against focusing on Chinese currency manipulation — namely, the claim that China doesn’t really compete head to head with US manufacturing, so that a rise in the renminbi wouldn’t help.I’d argue that this is wrong on three levels.First, the notion that there’s no head-to-head competition is false. There have lately been quite a few stories about manufacturing moving back from China: the labor costs will always be much higher in America, but other advantages, especially logistical, can make even labor-intensive production worth doing at home.Second, there are real effects on the US if production moves, say, from China to Mexico. To an important extent, global manufacturing is carried out by regional complexes — an Asian complex centered on Japan and China in effect competes with a North American complex in which labor-intensive stuff is done in Mexico or Central America. So there’s an indirect competitive effect.Most important, however, is that you really need to think of this as a global adding-up issue. If China and other currency manipulators run smaller trade surpluses, who will be the counterparties? Emerging economies that compete more directly with China than we do are by and large not in liquidity traps, and indeed are facing inflationary pressure. So any Chinese appreciation, while it directly tends to raise their net exports, will probably show up in matching appreciation in their currencies, setting in motion a series of domino effects that end up pushing the adjustment onto countries that are in liquidity traps, namely the US, Japan, and Europe.The bottom line is that Chinese currency policy does indeed matter for US manufacturing.

 

[adonis]

If China wants to subsidize American purchases of their products by manipulating their currency, we should not punish them. We should reward them. We should give them free drinks, like a casino would, to keep them in the game.

This seems a bit shortsighted though. Sure we get cheaper goods, but we lose jobs to China in the process, allowing them to make pretty big money off of our purchases, continue to fuel their economy, at our expense.Sure, we're getting cheap products, but China isn't doing this as a favor to us, and it's benefiting more from these policies than we are from the lower prices, especially at a time when our job "creation" is languishing. What good are discounted products if we don't have the labor force to buy them?Also, we're losing out on major industries of growth over time, we're subsidizing China's competitive advantage by developing the products, but sending that intellectual capital to them to build, create the huge scale, huge capacity factories to produce the goods we develop, then sell them back to us. All the while, they get more and more dominant in more and more areas of manufacturing, making it hard for any US company to compete with them, and they do this by offering us cheaper prices...which they can do because they manipulate their currency.So they entice us in with the low prices, but make no mistake, we're paying for this discount...in mid-to-long-term job growth, and we're currently in the mid-term.

 

[adonis]

The only real policy recommendation that Krugman makes is to threaten sanction against countries such as China who manipulate their currency against the dollar.

What is your specific objection to that? And if that's wrong, then what would you do?

If China is keeping its currency artificially low, that means Americans can buy more Yuan, and therefore more Goji berries, for the same number of dollars. That's good for Americans!!!Krugman says that it increases American unemployment, but that's a terrible argument. The sun harms American candle-making businesses, but that doesn't mean that free sunlight is bad for Americans on the whole. Same with cheap Goji berries.

American unemployment isn't caused by having free sunlight or cheap Goji berries dropped in our laps. Causes of unemployment are varied. It can be caused by shifts in production (such as from candle-making to film-making), or by transaction costs (including payroll taxes), or a number of other things: but the satisfaction of everybody's wants (i.e., the drying up of aggregate demand) is not the problem. If the Chinese can cheaply satisfy some of our wants, it needn't leave us with idle hands. There will still be work to do as long as people still need stuff. And people will always need stuff. Personally, I could use a massage right now. (Who couldn't?) If I can't afford one, it's not because Goji berries are too cheap. If anything, the opposite is true. The availability of cheap imports makes Americans effectively richer: the money I save on Goji berries can be used to buy extra massages.

If China wants to subsidize American purchases of their products by manipulating their currency, we should not punish them. We should reward them. We should give them free drinks, like a casino would, to keep them in the game.

Then, if we're worried about unemployment, we should reduce payroll taxes.

I'm not necessarily endorsing Krugman's line of thinking but I have been turning away from endorsing the type of efficiency argument this represents.One of the causes of American unemployment certainly is the cheap Goji berries insofar as the cheap Goji berry was produced overseas and a slightly more expensive Goji berry ceased to be produced in the United States. Macro theory goes that this is a net win as it frees the inefficient Goji berry producer to do something else but we're running out of good second-bests. We're developing a severe glut of underclass Wal-Mart workers and I'm not sure if the extra capital accruing at the top is worth it from a society point of view. There are other societal goals other than output maximization and distributive effects is one of them.

I'm not as good on this as I should be, but does the bolded hold true when the price advantage China has is not one determined by free trade in the market, but rather set by policy to always make it cheaper than the US person producing the same product?China essentially has its fingers on the scale of efficient production, that makes it appear that it's more efficient to produce there, but it's an artificial advantage (at least to the degree it currently exists). When their finger lifts off the scale and allows their currency to rise in value vs the dollar, I think we'll see a more true economic valuation of their goods and services vs our goods and services.

 

[adonis]

And all you economics gurus out there, does what China is doing qualify as "Predatory Pricing" on a national level, where they're artificially keeping their prices low to drive customers to their products and employers to their country, knowing eventually that they'll have to let their currency float and value of their money rise, thereby rising the cost of their products, without effective manufacturing existing in the US or elsewhere to compete with them?

 

[bueno]

Holding China to AccountBy PAUL KRUGMANPublished: October 2, 2011The dire state of the world economy reflects destructive actions on the part of many players. Still, the fact that so many have behaved badly shouldn't stop us from holding individual bad actors to account.And that's what Senate leaders will be doing this week, as they take up legislation that would threaten sanctions against China and other currency manipulators.Respectable opinion is aghast. But respectable opinion has been consistently wrong lately, and the currency issue is no exception.Ask yourself: Why is it so hard to restore full employment? It's true that the housing bubble has popped, and consumers are saving more than they did a few years ago. But once upon a time America was able to achieve full employment without a housing bubble and with savings rates even higher than we have now. What changed?The answer is that we used to run much smaller trade deficits. A return to economic health would look much more achievable if we weren't spending $500 billion more each year on imported goods and services than foreigners spent on our exports.To get our trade deficit down, however, we need to make American products more competitive, which in practice means that we need the dollar's value to fall in terms of other currencies. Yes, some people will shriek about "debasing" the dollar. But sensible policy makers have long known that sometimes a weaker currency means a stronger economy, and have acted on that knowledge. Switzerland, for example, has intervened massively to keep the franc from getting too strong against the euro. Israel has intervened even more forcefully to weaken the shekel.The United States, given its special global role, can't and shouldn't be equally aggressive. But given our economy's desperate need for more jobs, a weaker dollar is very much in our national interest — and we can and should take action against countries that are keeping their currencies undervalued, and thereby standing in the way of a much-needed decline in our trade deficit.That, above all, means China. And none of the arguments against holding China accountable can stand serious scrutiny.Some observers question whether we really know that China's currency is undervalued. But they're kidding, right? The flip side of the manipulation that keeps China's currency undervalued is the accumulation of dollar reserves — and those reserves now amount to a cool $3.2 trillion.Others warn of bad consequences if the Chinese stop buying United States bonds. But our problem right now is precisely that too many people want to park their money in American debt instead of buying goods and services — which is why the interest rate on long-term U.S. bonds is only 2 percent.Yet another objection is the claim that Chinese products don't really compete with U.S.-produced goods. The rebuttal is fairly technical; let me just say that those making this argument both overstate the case and fail to take the indirect effects of Chinese currency policy into account.In the last few days a new objection to action on the China issue has surfaced: right-wing pressure groups, notably the influential Club for Growth, oppose tariffs on Chinese goods because, you guessed it, they're a form of taxation — and we must never, ever raise taxes under any circumstances. All I can say is that Democrats should welcome this demonstration that antitax fanaticism has reached the point where it trumps standing up for our national interests.To be fair, there are some arguments against action on China that would carry some weight if the times were different. One is the undoubted fact that inflation in China, which is raising labor costs in particular, is gradually eliminating that nation's currency undervaluation. The operative word, however, is "gradually": something that brings the United States trade deficit down over four or five years isn't good enough when unemployment is at disastrous levels right now.And the reality of the unemployment disaster is also my answer to those who warn that getting tough with China might unleash a trade war or damage world commercial diplomacy. Those are real risks, although I think they're exaggerated. But they need to be set against the fact — not the mere possibility — that high unemployment is inflicting tremendous cumulative damage as we speak.Ben Bernanke, the chairman of the Federal Reserve, said it clearly last week: unemployment is a "national crisis," with so many workers now among the long-term unemployed that the economy is at risk of suffering long-run as well as short-run damage.And we can't afford to neglect any important means of alleviating that national crisis. Holding China accountable won't solve our economic problems on its own, but it can contribute to a solution — and it's an action that's long overdue.

Dollar falls and oil goes up. So does all other commodities - making the products produced from said commodities more expensive in US dollars. Which increases inflation. The other question is what products produced in the US have to directly compete with Chinese goods? My first guess would be that textiles is the largest industrial group facing Chinese competition. As far as it being a tax as CFG asserts, yes it is. The Chinese pay tariffs, the consumer picks up that cost in higher prices.So Krugman wants to weaken the value of the dollar, possibly losing oour status as world currency in the process and increase inflation. Brilliant!

 

[pantagrapher]

Notes On The Eurobubble

Alan Greenspan has written another deeply misleading, destructive op-ed. Also, the sun rose in the east. Greenspan is quickly establishing himself as the worst ex-Fed chairman of all time. But since he has introduced a brand-new fallacy into the debate, it’s worth taking on.

One of the big problems in coming to any rational response to the euro crisis has been the insistence of key players, especially but not only in Germany, of seeing it as a morality play: spendthrift, irresponsible politicians brought it on through budget deficits. It has been very hard to get across the point that this is a Greek story only, that Spain and Ireland actually had budget surpluses and low debt on the eve of the crisis.

What Greenspan does is to introduce a whole new fallacy: he takes the rise in Southern European costs and prices during the runup to the crisis as a sign of moral turpentine turpitude:

From 1990 through to the end of 1998, euro-south unit labour costs and prices rose faster than in the north. In the years following the onset of a single currency, that pace barely slowed. In fact, the underlying trend was stopped only by the financial crisis of 2008. Since then there have been signs of price level stabilisation in the north and the south.

Gosh, why should wages and prices have risen faster in, say, Spain than in Germany? Well, maybe this had something to do with it: link to graphHello? There was a huge boom in Spain, driven by housing and financed by large private — not public — capital inflows. Of course wages and prices rose. And it’s really hard to see what, short of either imposing capital controls or leaving the euro, Spanish officials could have done to stop it.

I understand that some people really, really want to blame the victims here. But that doesn’t make it right.

 

[pantagrapher]

Financial RomanticismOne line I’ve been seeing in various places, including comments here, is the claim that the real way to deal with Wall Street is laissez-faire economics: no more bailouts! On this view, policy makers should raise their right hand in the air, place their left hand on a copy of Atlas Shrugged, and swear in the name of A is A that they will never again step in to rescue failing banks. And all will be well with the world.Sorry, but that’s a fantasy.First of all, bank regulation is important even in the absence of bailouts. Don’t trust me, trust Adam Smith. Scotland invented modern banking; it also invented modern banking crises; and Smith, having witnessed such a crisis, favored bank regulations, declaring that

Such regulations may, no doubt, be considered as in some respect a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as or the most despotical. The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.

Second, there are in fact very good reasons to intervene to support banks during a financial crisis. Bagehot knew it; Diamond and Dybvig showed it theoretically; and it remains true. Letting a financial crisis spread is very dangerous.Finally, even if you persuade yourself that the moral hazard created by financial firefighting outweighs the benefits of avoiding a 1931-style cascading crisis, the fact is that policy makers will intervene. Hank Paulson set out to make Lehman an example; two days later he was staring into the abyss.So the only feasible strategy is guarantees and a financial safety net plus regulation to limit the abuse of those guarantees. It’s imperfect; it faces the constant threat of regulatory capture; but it has worked in the past, and it’s the only game in town.

 

[dickey moe]

Krugman has an army now!

 

[RCon]

Financial RomanticismOne line I’ve been seeing in various places, including comments here, is the claim that the real way to deal with Wall Street is laissez-faire economics: no more bailouts! On this view, policy makers should raise their right hand in the air, place their left hand on a copy of Atlas Shrugged, and swear in the name of A is A that they will never again step in to rescue failing banks. And all will be well with the world.Sorry, but that’s a fantasy.First of all, bank regulation is important even in the absence of bailouts. Don’t trust me, trust Adam Smith. Scotland invented modern banking; it also invented modern banking crises; and Smith, having witnessed such a crisis, favored bank regulations, declaring that

Such regulations may, no doubt, be considered as in some respect a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as or the most despotical. The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.

Second, there are in fact very good reasons to intervene to support banks during a financial crisis. Bagehot knew it; Diamond and Dybvig showed it theoretically; and it remains true. Letting a financial crisis spread is very dangerous.Finally, even if you persuade yourself that the moral hazard created by financial firefighting outweighs the benefits of avoiding a 1931-style cascading crisis, the fact is that policy makers will intervene. Hank Paulson set out to make Lehman an example; two days later he was staring into the abyss.So the only feasible strategy is guarantees and a financial safety net plus regulation to limit the abuse of those guarantees. It’s imperfect; it faces the constant threat of regulatory capture; but it has worked in the past, and it’s the only game in town.

Seems to me that bailouts are still a terrible idea, and fraught with moral hazard as well as economic inefficiencies. If we're going to have the concept of "too big to fail", such that taxpayers are on the hook for any risk taken by the "too big to fail" institutions, then the regulations should proactively prevent these institutions from becoming too big to fail in the first place.

 

[Maurile Tremblay]

Krugman has an army now!

Like Dumbledore?

 

[tommyGunZ]

Seems to me that bailouts are still a terrible idea, and fraught with moral hazard as well as economic inefficiencies. If we're going to have the concept of "too big to fail", such that taxpayers are on the hook for any risk taken by the "too big to fail" institutions, then the regulations should proactively prevent these institutions from becoming too big to fail in the first place.

I think Krugman would agree with the bold. His argument is that allowing failure is even more inefficient. And I think he'd agree that regulations curtailing the big financial institutions' ability to leverage the entire system is exactly what we need.

 

[guderian]

Yet another nail in the coffin of Krugmanomics..

The Austerity Myth: Federal Spending Up 5% This Year

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

Posted 10/17/2011 08:05 AM ET

When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade.

Some analysts have blamed these spending cuts for this year's economic slowdown.

But data released by the Treasury Department on Friday show that, so far, there haven't been any spending cuts at all.

Higher Spending, Deficits

In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.

These spending hikes haven't stopped many analysts from claiming that the country is in an age of budget austerity, one that's hurting economic growth.

A July article in USA Today, for example, claimed that "Already in 2011, softer government spending has sapped growth."

Jared Bernstein, former chief economic adviser to Vice President Biden, wrote over the summer that "government spending cutbacks have been a large drag on growth in recent quarters and have led to sharp losses in state and local employment."

Economist and New York Times columnist Paul Krugman argued in September that "the turn toward austerity (is) a major factor in our growth slowdown."

If government spending is related to growth, as these and others claim, then the economy presumably should be growing faster, not slower, given the current higher rates of federal outlays.

State Spending Higher Too

Nor does the claim that state governments sharply cut spending stand up well to closer scrutiny.

Overall state spending continued to climb right through the recession, when all money from state general funds and other funds, federal grants and state bonds is combined.

Total state outlays in 2010 were almost 10% higher than in 2008, according to the National Association of State Budget Officers' annual State Expenditure Report.

And general fund spending — which makes up about 40% of total state spending — is expected to climb 5.2% in 2011 and 2.6% next year, according to the association's latest survey.

NASBO says that states were able to sustain spending growth through 2010 only because the federal government was pumping more money in via the $830 billion stimulus, and that these funds are now all but exhausted.

 

[pantagrapher]

Surprise Anti-AusteriansIt is indeed a mixed-up, muddled-up, shook-up world. Right now, the two most prominent institutions calling for an end to the disastrous turn to short-run austerity are … Goldman Sachs and the International Monetary Fund.Brad has written about the Goldman memo, which calls for a nominal GDP target — that is, a future dollar value of GDP — that would in effect both promise a significantly higher inflation rate over the medium term and require very large quantitative easing. We need to be careful about this: it’s a proposal from the excellent Jan Hatzius, not official GS policy. But still.Meanwhile, the IMF special report for the G20 (pdf) is essentially a declaration that the focus on universal austerity was wrong, wrong, wrong. It’s a lot milder than it should be — the Fund is still, for example, endorsing the Cameron austerity plan. But it pretty much flatly says that Congress should pass the Obama jobs bill.What’s going on, I believe, is that serious economists — Hatzius at Goldman, and Olivier Blanchard — are rightly frightened by the economic outlook. And those organizations that listen to the right people are trying to get the message out.Unfortunately, it may take a long time before policy actually turns around.

 

[guderian]

Shame that 5% government spending growth in an era of sub-2% inflation is considered "austerity".

 

[pantagrapher]

Coalmines And Military Keynesians

Ah, so now we have a new principle of economics: government spending can’t create jobs, but cuts in government spending can destroy jobs — as long as the jobs are in the defense sector

It took months of fighting — the threat of a government shutdown, the graver threat of a default on the national debt, and now a new threat of major, automatic cuts to Medicare and defense programs — but Congress’ deficit obsession has finally exposed the rarest of all species: Republican Keynesians.

With just a under a month until the deficit Super Committee must recommend policies that cut the 10 year deficit by $1.2 trillion, members of the Republican party — the same party that’s been on the war path for deep spending cuts, and that decries President Obama’s “failed stimulus” — are making uncharacteristic arguments against slashing spending. Trim too much, too quickly, they warn, and people will lose their jobs!

…

“What’s more, cutting our military—either by eliminating programs or laying off soldiers—brings grave economic costs,” wrote Chairman Buck McKeon (R-CA) in a Wall Street Journal op-ed last week. “f the super committee fails to reach an agreement, its automatic cuts would kill upwards of 800,000 active-duty, civilian and industrial American jobs. This would inflate our unemployment rate by a full percentage point, close shipyards and assembly lines, and damage the industrial base that our warfighters need to stay fully supplied and equipped.”

One thought here is that a Keynesian is an Austrian whose campaign contributors are about to lose a lucrative contract. But it also harks back to Keynes’s point, when he suggested burying bottles full of cash in disused coalmines, so that private enterprise could dig them back up and create jobs in the process:
It is curious how common sense, wriggling for an escape from absurd conclusions, has been apt to reach a preference for wholly ‘wasteful’ forms of loan expenditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles. For example, unemployment relief financed by loans is more readily accepted than the financing of improvements at a charge below the current rate of interest; whilst the form of digging holes in the ground known as gold-mining, which not only adds nothing whatever to the real wealth of the world but involves the disutility of labour, is the most acceptable of all solutions.

That’s it exactly. Propose some kind of public investment, say in green energy, and the right screams “Solyndra! Waste! Fraud!” But propose spending the same amount on weapons that we don’t need, and it’s all good.If only we could convince Republicans that solar power or mass transit were complete wastes, but that they would upset some foreign power — the French, that’s it! — a big stimulus program might sail through.

 

[Andy Dufresne]

One thought here is that a Keynesian is an Austrian whose campaign contributors are about to lose a lucrative contract.

That line is

Thats it exactly. Propose some kind of public investment, say in green energy, and the right screams Solyndra! Waste! Fraud! But propose spending the same amount on weapons that we dont need, and its all good.

This one, not so much.

If only we could convince Republicans that solar power or mass transit were complete wastes, but that they would upset some foreign power the French, thats it! a big stimulus program might sail through.

Again, I liked that article. Showed that he's not a humorless troll, but on the contrary is a funny...troll.

 

[pantagrapher]

Bombs, Bridges and JobsBy PAUL KRUGMANPublished: October 30, 2011 A few years back Representative Barney Frank coined an apt phrase for many of his colleagues: weaponized Keynesians, defined as those who believe “that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation.”Right now the weaponized Keynesians are out in full force — which makes this a good time to see what’s really going on in debates over economic policy.What’s bringing out the military big spenders is the approaching deadline for the so-called supercommittee to agree on a plan for deficit reduction. If no agreement is reached, this failure is supposed to trigger cuts in the defense budget.Faced with this prospect, Republicans — who normally insist that the government can’t create jobs, and who have argued that lower, not higher, federal spending is the key to recovery — have rushed to oppose any cuts in military spending. Why? Because, they say, such cuts would destroy jobs.Thus Representative Buck McKeon, Republican of California, once attacked the Obama stimulus plan because “more spending is not what California or this country needs.” But two weeks ago, writing in The Wall Street Journal, Mr. McKeon — now the chairman of the House Armed Services Committee — warned that the defense cuts that are scheduled to take place if the supercommittee fails to agree would eliminate jobs and raise the unemployment rate.Oh, the hypocrisy! But what makes this particular form of hypocrisy so enduring?First things first: Military spending does create jobs when the economy is depressed. Indeed, much of the evidence that Keynesian economics works comes from tracking the effects of past military buildups. Some liberals dislike this conclusion, but economics isn’t a morality play: spending on things you don’t like is still spending, and more spending would create more jobs.But why would anyone prefer spending on destruction to spending on construction, prefer building weapons to building bridges?John Maynard Keynes himself offered a partial answer 75 years ago, when he noted a curious “preference for wholly ‘wasteful’ forms of loan expenditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles.” Indeed. Spend money on some useful goal, like the promotion of new energy sources, and people start screaming, “Solyndra! Waste!” Spend money on a weapons system we don’t need, and those voices are silent, because nobody expects F-22s to be a good business proposition.To deal with this preference, Keynes whimsically suggested burying bottles full of cash in disused mines and letting the private sector dig them back up. In the same vein, I recently suggested that a fake threat of alien invasion, requiring vast anti-alien spending, might be just the thing to get the economy moving again.But there are also darker motives behind weaponized Keynesianism.For one thing, to admit that public spending on useful projects can create jobs is to admit that such spending can in fact do good, that sometimes government is the solution, not the problem. Fear that voters might reach the same conclusion is, I’d argue, the main reason the right has always seen Keynesian economics as a leftist doctrine, when it’s actually nothing of the sort. However, spending on useless or, even better, destructive projects doesn’t present conservatives with the same problem.Beyond that, there’s a point made long ago by the Polish economist Michael Kalecki: to admit that the government can create jobs is to reduce the perceived importance of business confidence.Appeals to confidence have always been a key debating point for opponents of taxes and regulation; Wall Street’s whining about President Obama is part of a long tradition in which wealthy businessmen and their flacks argue that any hint of populism on the part of politicians will upset people like them, and that this is bad for the economy. Once you concede that the government can act directly to create jobs, however, that whining loses much of its persuasive power — so Keynesian economics must be rejected, except in those cases where it’s being used to defend lucrative contracts.So I welcome the sudden upsurge in weaponized Keynesianism, which is revealing the reality behind our political debates. At a fundamental level, the opponents of any serious job-creation program know perfectly well that such a program would probably work, for the same reason that defense cuts would raise unemployment. But they don’t want voters to know what they know, because that would hurt their larger agenda — keeping regulation and taxes on the wealthy at bay.

 

[tommyGunZ]

I know this is the Krugman thread, but thought this piece from Frum was interesting:

How tea party could drive GOP to disaster

By David Frum, CNN Contributor

updated 10:26 AM EST, Mon October 31, 2011

Editor's note: David Frum, a CNN contributor, was a special assistant to President George W. Bush from 2001 to 2002. He is the author of six books, including "Comeback: Conservatism That Can Win Again," and is the editor of FrumForum.

Washington (CNN) -- A new CNN poll finds that about half of Republicans sympathize with the tea party movement. The other half either remain aloof or (5%) even express hostility.

That second group of Republicans has received remarkably little media attention this cycle. Yet their man -- Mitt Romney -- has held steady in first or second place for the past three years. Meanwhile tea party Republicans have bounced from Sarah Palin to Donald Trump to Michele Bachmann to Rick Perry to (now) Herman Cain, transfixing the media every time they lose faith in one messiah and search for another.

Yet sooner or later, the tea party Republicans must converge on a single choice. When they do, they will present the non-tea party Republicans with a troubling menu of possibilities.

Possibility 1: Romney is nominated, Romney is elected.

From the point of view of non-tea party Republicans, this is the ideal outcome of the 2012 election. Yet it is also an outcome that looks worryingly out of reach. As we enter the final 12 months of the election countdown, Romney still cannot rise above 30% support in his own party. Worse, while it's easy to imagine (say) Herman Cain's voters shifting to Rick Perry or vice versa, it is very hard to imagine where Mitt Romney will find the additional Republican votes he needs.

Possibility 2: Romney is nominated, Romney loses.

For non-tea party Republicans, this second outcome opens all kinds of ugly, ominous possibilities. If candidate Romney loses, tea party Republicans will claim that the GOP lost because it failed to nominate a "true conservative." That claim may fly in the face of political math (how would a more extreme candidate win more votes?), but it will pack a lot of emotional punch. Intense partisans are always ready to believe that the way to win is to be more intense and more partisan. Back-to-back losses under John McCain in 2008 and Mitt Romney in 2012 will open the way to an ultra-conservative nominee in 2016 -- and a true party debacle.

Possibility 3: A tea party Republican is nominated and loses.

From the point of view of a non-tea party Republican, the third possibility is the most tragic waste. A winnable election will be thrown away on an ideological adventure. Yet within the disaster might lurk a silver lining. At least the GOP will get the ideological adventure out of its system. For three years, Republican activists have lived in a fantasy world in which fringe characters like Sarah Palin and Herman Cain somehow "speak for the common sense of the common people." It seems incredible that anybody could believe such a thing. It seems crazy that anyone would actually need a presidential election to disabuse them of such notions. But as Benjamin Franklin said: "Experience is a hard teacher, but fools will have no other."

Possibility 4: A tea party Republican is nominated and wins.

This possibility has to be reckoned the most unlikely. But it cannot be excluded as utterly impossible, on two conditions:

If the U.S. economy continues as weak and sick as it is today, and;

If tea party Republicans revert from the utterly unelectable Herman Cain to Rick Perry, who as governor of Texas possesses at least the paper qualifications for the presidency.

Then - who knows? - anything might happen.

Perry would be a much weaker candidate than Romney, but if the voters are determined to fire the incumbent, then even a weak challenger can prevail. (See Barack Hussein Obama, 2008 candidacy of.)

In which case, not only tea party Republicans but all Republicans and all Americans will confront the problem: what next?

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

If put into practice, the tea party platform is a formula for political and economic crisis.

Fortunately, it remains a long-shot outcome. If you're betting the odds, you want to put your money on possibility three. As for possibility one -- that's just good government. And nobody seems to get much excited about that these days.

 

[Maurile Tremblay]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

 

[Slapdash]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

 

[RCon]

I know this is the Krugman thread, but thought this piece from Frum was interesting:

How tea party could drive GOP to disaster

By David Frum, CNN Contributor

updated 10:26 AM EST, Mon October 31, 2011

Editor's note: David Frum, a CNN contributor, was a special assistant to President George W. Bush from 2001 to 2002. He is the author of six books, including "Comeback: Conservatism That Can Win Again," and is the editor of FrumForum.

Washington (CNN) -- A new CNN poll finds that about half of Republicans sympathize with the tea party movement. The other half either remain aloof or (5%) even express hostility.

That second group of Republicans has received remarkably little media attention this cycle. Yet their man -- Mitt Romney -- has held steady in first or second place for the past three years. Meanwhile tea party Republicans have bounced from Sarah Palin to Donald Trump to Michele Bachmann to Rick Perry to (now) Herman Cain, transfixing the media every time they lose faith in one messiah and search for another.

Yet sooner or later, the tea party Republicans must converge on a single choice. When they do, they will present the non-tea party Republicans with a troubling menu of possibilities.

Possibility 1: Romney is nominated, Romney is elected.

From the point of view of non-tea party Republicans, this is the ideal outcome of the 2012 election. Yet it is also an outcome that looks worryingly out of reach. As we enter the final 12 months of the election countdown, Romney still cannot rise above 30% support in his own party. Worse, while it's easy to imagine (say) Herman Cain's voters shifting to Rick Perry or vice versa, it is very hard to imagine where Mitt Romney will find the additional Republican votes he needs.

Possibility 2: Romney is nominated, Romney loses.

For non-tea party Republicans, this second outcome opens all kinds of ugly, ominous possibilities. If candidate Romney loses, tea party Republicans will claim that the GOP lost because it failed to nominate a "true conservative." That claim may fly in the face of political math (how would a more extreme candidate win more votes?), but it will pack a lot of emotional punch. Intense partisans are always ready to believe that the way to win is to be more intense and more partisan. Back-to-back losses under John McCain in 2008 and Mitt Romney in 2012 will open the way to an ultra-conservative nominee in 2016 -- and a true party debacle.

Possibility 1 and Possibility 2 appear to contradict each other. In Possibility 1, he argues that this is "worryingly out of reach" because Romney wouldn't be able to garner enough Tea Party (read: "extreme") votes. In Possibility 2, he argues that a more extreme candidate wouldn't be able to win more votes. Unless he's arguing that Romney and a Tea Party candidate would pull in the same number of votes, he's arguing against himself.And yeah, this doesn't seem to have much to do with Krugman. I think it would be more suited to a "Tea Party is dangerous" thread or an election thread.

 

[Maurile Tremblay]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

An awful lot of poor immigrants try to come to the U.S. Isn't it because they think it offers a darn good opportunity to rise?

 

[lakerstan]

I know this is the Krugman thread, but thought this piece from Frum was interesting:

How tea party could drive GOP to disaster

By David Frum, CNN Contributor

updated 10:26 AM EST, Mon October 31, 2011

Editor's note: David Frum, a CNN contributor, was a special assistant to President George W. Bush from 2001 to 2002. He is the author of six books, including "Comeback: Conservatism That Can Win Again," and is the editor of FrumForum.

Washington (CNN) -- A new CNN poll finds that about half of Republicans sympathize with the tea party movement. The other half either remain aloof or (5%) even express hostility.

That second group of Republicans has received remarkably little media attention this cycle. Yet their man -- Mitt Romney -- has held steady in first or second place for the past three years. Meanwhile tea party Republicans have bounced from Sarah Palin to Donald Trump to Michele Bachmann to Rick Perry to (now) Herman Cain, transfixing the media every time they lose faith in one messiah and search for another.

Yet sooner or later, the tea party Republicans must converge on a single choice. When they do, they will present the non-tea party Republicans with a troubling menu of possibilities.

Possibility 1: Romney is nominated, Romney is elected.

From the point of view of non-tea party Republicans, this is the ideal outcome of the 2012 election. Yet it is also an outcome that looks worryingly out of reach. As we enter the final 12 months of the election countdown, Romney still cannot rise above 30% support in his own party. Worse, while it's easy to imagine (say) Herman Cain's voters shifting to Rick Perry or vice versa, it is very hard to imagine where Mitt Romney will find the additional Republican votes he needs.

Possibility 2: Romney is nominated, Romney loses.

For non-tea party Republicans, this second outcome opens all kinds of ugly, ominous possibilities. If candidate Romney loses, tea party Republicans will claim that the GOP lost because it failed to nominate a "true conservative." That claim may fly in the face of political math (how would a more extreme candidate win more votes?), but it will pack a lot of emotional punch. Intense partisans are always ready to believe that the way to win is to be more intense and more partisan. Back-to-back losses under John McCain in 2008 and Mitt Romney in 2012 will open the way to an ultra-conservative nominee in 2016 -- and a true party debacle.

Possibility 1 and Possibility 2 appear to contradict each other. In Possibility 1, he argues that this is "worryingly out of reach" because Romney wouldn't be able to garner enough Tea Party (read: "extreme") votes. In Possibility 2, he argues that a more extreme candidate wouldn't be able to win more votes. Unless he's arguing that Romney and a Tea Party candidate would pull in the same number of votes, he's arguing against himself.And yeah, this doesn't seem to have much to do with Krugman. I think it would be more suited to a "Tea Party is dangerous" thread or an election thread.

I think he underestimates the hatred of Obama by the Tea Party, and that they will rally to Romney once he becomes the nominee as their perceived lesser of two evils. I also don't count out a racial component, as sad as that may sound.

 

[Daywalker]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

An awful lot of poor immigrants try to come to the U.S. Isn't it because they think it offers a darn good opportunity to rise?

Don't have a link. But info lately I've heard across the "airwaves" is that it is now easier to rise above the middle class in many other developed nations. From poor to middle class? Cannot say.Would think their are many benefits besides economics to immigrate to U.S. as oppossed to Europe or Asian countries. Access, diversity and liberties a few of them.

 

[IvanKaramazov]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

I don't like getting into arguments about which country is "the best" at something, but by any standard I think the US would have to be in the top bucket when it comes to upward mobility. I'm specifically thinking of how immigrants in the US fare relative to Europe, for example. Maybe you're thinking of something else.

 

[Slapdash]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

I don't like getting into arguments about which country is "the best" at something, but by any standard I think the US would have to be in the top bucket when it comes to upward mobility. I'm specifically thinking of how immigrants in the US fare relative to Europe, for example. Maybe you're thinking of something else.

Yes, I'm thinking the degree of income mobility between generations is a good metric of which country offers "the world's best opportunity for the poor to rise". When I've seen studies on this subject, we typically rank at the bottom of the developed nations. Given that, it is hard for me to think the US would be the best at mobility. Top bucket globally? Sure. But I think it is more useful to compare the US to its rich democratic peers.

 

[fatguyinalittlecoat]

I don't like getting into arguments about which country is "the best" at something, but by any standard I think the US would have to be in the top bucket when it comes to upward mobility. I'm specifically thinking of how immigrants in the US fare relative to Europe, for example. Maybe you're thinking of something else.

I feel like they aren't necessarily a good group to look at because their economic success is very closely tied to immigration laws which vary a lot by country. It seems at least possible that poor natural born citizens of a country might have better mobility when immigrants have diminished mobility.

 

[Slapdash]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

An awful lot of poor immigrants try to come to the U.S. Isn't it because they think it offers a darn good opportunity to rise?

Darn good <> The World's bestAlso, there are many other developed nations that have similar or even larger relative populations of immigrants. We are not unique in that respect.

 

[Topes]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

An awful lot of poor immigrants try to come to the U.S. Isn't it because they think it offers a darn good opportunity to rise?

In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.I don't have any data at hand. But it seems that you don't either. It just seems that "voting with their feet" doesn't seem to be a fair indicator of a country having the capacity of affording social mobility to the poor.

It's not as though there's a free market for international mobility, especially considering that much of the migrant labor is undocumented.

A great number of folks come to the U.S. because it's next door, and NAFTA destroyed their livelihoods.

Your average migrant laborer isn't going to break out the CIA fact book to weigh the differing opportunities in Luxembourg and the USA. He's going to go where he thinks he can go.

It's not an election. It's not a survey. It's not an efficient market.

 

[IvanKaramazov]

Darn good <> The World's best

So this was all just quibbling. Thanks.

 

[IvanKaramazov]

The tea party stands for a series of propositions that don't meet the reality test: that deficits matter more than jobs, that cutting deficits and tightening credit will accelerate economic growth, that high taxes and over-regulation are the most important reasons that growth has not revived, and that America still offers the world's best opportunity for the poor to rise. Tea party plans call for a radical shift in the burden of taxation from the rich to the poor -- and promise big reductions in government spending without touching any of the benefits of current retirees.

The green is at least arguable, and the blue seems pretty close to the mark. Poor people the world over often vote with their feet — or try to — on the latter.

Not at all among developed nations.

An awful lot of poor immigrants try to come to the U.S. Isn't it because they think it offers a darn good opportunity to rise?

In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.

What does this even have to do with Maurile's point? I think we'd all agree that there's a correlation between being stupid and being poor. No surprise there.