What turned Paul Krugman from academic to firebrand?

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A somewhat long, but interesting look into the transformation of Paul Krugman. Like I've said before, he and I disagree on almost every policy prescription imaginable, but he is a first class intellect whose theories and insights are mind-blowing. However, his wife is the academic equivalent of Yoko Ono.

http://www.newyorker.com/reporting/2010/03/01/100301fa_fact_macfarquhar?currentPage=all

Great read, thanks.

If you were to recommend someone to provide a counterpoint to Krugman - someone with whom you generally agree rather than disagree, someone with economic cred but who writes for the unwashed masses, who would that be?

barfo
 
Great read, thanks.

If you were to recommend someone to provide a counterpoint to Krugman - someone with whom you generally agree rather than disagree, someone with economic cred but who writes for the unwashed masses, who would that be?

barfo

Good question. There's no one on my side (I would be defined in that article as a "freshwater" economist) who does the same thing Krugman does. He's one of the finest Keynesian minds there is, yet he's pitched his academic career aside and waded into the dirty waters of partisanship. Remember, he doesn't talk about economics as much as he talks about politics. He uses economics to butress his political opinion.

There are plenty of second-rate economists doing the same thing (Thomas Sowell, Walter Williams, etc.), but no one of Krugman's stature. Milton Friedman used to do it, Gary Becker writes an occasional column, but no one regularly.
 
Krugman's published today one of his finest, most pointed pieces in my memory:
http://www.nytimes.com/2010/02/22/opinion/22krugman.html?ref=opinion

O.K., the beast is starving. Now what? That’s the question confronting Republicans. But they’re refusing to answer, or even to engage in any serious discussion about what to do.
For readers who don’t know what I’m talking about: ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.”
But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?
The conservative answer, which evolved in the late 1970s, would be dubbed “starving the beast” during the Reagan years. The idea — propounded by many members of the conservative intelligentsia, from Alan Greenspan to Irving Kristol — was basically that sympathetic politicians should engage in a game of bait and switch. Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.
And the deficit came. True, more than half of this year’s budget deficit is the result of the Great Recession, which has both depressed revenues and required a temporary surge in spending to contain the damage. But even when the crisis is over, the budget will remain deeply in the red, largely as a result of Bush-era tax cuts (and Bush-era unfunded wars). And the combination of an aging population and rising medical costs will, unless something is done, lead to explosive debt growth after 2020.
So the beast is starving, as planned. It should be time, then, for conservatives to explain which parts of the beast they want to cut. And President Obama has, in effect, invited them to do just that, by calling for a bipartisan deficit commission.
Many progressives were deeply worried by this proposal, fearing that it would turn into a kind of Trojan horse — in particular, that the commission would end up reviving the long-standing Republican goal of gutting Social Security. But they needn’t have worried: Senate Republicans overwhelmingly voted against legislation that would have created a commission with some actual power, and it is unlikely that anything meaningful will come from the much weaker commission Mr. Obama established by executive order.
Why are Republicans reluctant to sit down and talk? Because they would then be forced to put up or shut up. Since they’re adamantly opposed to reducing the deficit with tax increases, they would have to explain what spending they want to cut. And guess what? After three decades of preparing the ground for this moment, they’re still not willing to do that.
In fact, conservatives have backed away from spending cuts they themselves proposed in the past. In the 1990s, for example, Republicans in Congress tried to force through sharp cuts in Medicare. But now they have made opposition to any effort to spend Medicare funds more wisely the core of their campaign against health care reform (death panels!). And presidential hopefuls say things like this, from Gov. Tim Pawlenty of Minnesota: “I don’t think anybody’s gonna go back now and say, Let’s abolish, or reduce, Medicare and Medicaid.”
What about Social Security? Five years ago the Bush administration proposed limiting future payments to upper- and middle-income workers, in effect means-testing retirement benefits. But in December, The Wall Street Journal’s editorial page denounced any such means-testing, because “middle- and upper-middle-class (i.e., G.O.P.) voters would get less than they were promised in return for a lifetime of payroll taxes.” (Hmm. Since when do conservatives openly admit that the G.O.P. is the party of the affluent?)
At this point, then, Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs. And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan — and there isn’t any plan, except to regain power.
But there is a kind of logic to the current Republican position: in effect, the party is doubling down on starve-the-beast. Depriving the government of revenue, it turns out, wasn’t enough to push politicians into dismantling the welfare state. So now the de facto strategy is to oppose any responsible action until we are in the midst of a fiscal catastrophe. You read it here first.
 
Great read, thanks.

If you were to recommend someone to provide a counterpoint to Krugman - someone with whom you generally agree rather than disagree, someone with economic cred but who writes for the unwashed masses, who would that be?

barfo


First and foremost, you'd want to be a regular reader of Tyler Cowen. He's the main blogger at Marginal Revolution, and often writes Sunday Pieces for the NY Times.

Megan McArdle is the business editor of the Atlantic and maintains an excellent blog from which she's pretty handily dissected most of the arguments for health care.

They're both moderately libertarian in their outlook and probably most obviously run counter to Krugman in that they're both scrupulously nice to their ideological opponents.

They're also both first rate thinkers.

I could see Cowen winning a Nobel at some point, although his interests tend to lie in areas that don't traditionally get recognized.

The guys at EconLog are topical and interesting, and generally a little more firebrand in their individualist, libertarian brand of economics. Caplan is actually not argumentative at all, but he rarely engages on very "political" issues. Kling used to work in the mortgage business and is a heck of a teacher. I think he's generally right on his big picture "recalculation" story of the current recession and its causes, but he sometimes seems a little myopic on it for my taste.

Finally, there's Russ Roberts, who does podcasts, gives talks on NPR, and writes at Cafe Hayek. He is the brains behind the recent viral video hit featuring Keynes and Hayek

[video=youtube;d0nERTFo-Sk]"]

I guess for the sake of full disclosure, whatever that means in this context, I worked as a research assistant for Russ, took several classes with Bryan Caplan, and routinely got good advice from Tyler Cowen while I was in grad school at GMU.

Beyond those guys, Harvard professor Greg Mankiw writes a very accessible econ blog with a more mainstream conservative take. If you ever become a little bit more washed than the masses, you might find Scott Sumner or Jim Hamilton worth a read. They're very interesting but generally understate the important stuff they have to say by couching it in more technical terms.
 
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A somewhat long, but interesting look into the transformation of Paul Krugman. Like I've said before, he and I disagree on almost every policy prescription imaginable, but he is a first class intellect whose theories and insights are mind-blowing. However, his wife is the academic equivalent of Yoko Ono.

http://www.newyorker.com/reporting/2010/03/01/100301fa_fact_macfarquhar?currentPage=all

I'm a bit perplexed by this. I agree that Krugman has a first class intellect, but I've always come away from lots of what he writes as a tremendous misapplication of that intellect. In, I guess, the sense that you could call the smartest of Cardinals back in the 14th century mind-blowing for coming up with the most sophisticated argument of how many angels can fit on the head of a pin (which mostly seems what being an intellectual boils down to these days).

I mean, I'm not just saying you and I would disagree with his policy prescriptions. I think if you were to take his fundamental contributions to economic science, I think most mainstream economists would say they're interesting but probably misleading as far as implementing any practical policy.

New trade theory essentially leaves most casual folks coming away thinking "protectionism", and economists of pretty much every stripe are for free trade. Likewise, I think his stuff on liquidity traps and international finance is interesting, but I think even quite a bit more liberal folks than me think the prescriptions he's put forth (e.g. trade war with China, triple the stimulus) are wildly impractical and solutions in the same sense that sawing off your leg is a solution to a stubbed toe.
 
Great read, thanks.

If you were to recommend someone to provide a counterpoint to Krugman - someone with whom you generally agree rather than disagree, someone with economic cred but who writes for the unwashed masses, who would that be?

barfo

Although he is not an economist like Krugman, David Brooks is also a first-rate smartie. When I want to understand the Republican POV, he makes the most sense.
 
I mean, I'm not just saying you and I would disagree with his policy prescriptions. I think if you were to take his fundamental contributions to economic science, I think most mainstream economists would say they're interesting but probably misleading as far as implementing any practical policy.

I don't know, but I specifically remember him forecasting the bursting of the housing bubble in 2007 or so and thinking "What does he know, my home value will go up forever."

Ha!
 
I'm confused here Crenny Dane, are you saying he's misleading us because it's only 1/3?

He said, "But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?"

Maybe military spending and interest on the debt are equally dominant? (They are). And there's still another 1/3 of the budget that can be tackled.
 
He said, "But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?"

Maybe military spending and interest on the debt are equally dominant? (They are). And there's still another 1/3 of the budget that can be tackled.

Math not very accurate. Here's a graph from the link you provided.

WhereOurTaxDollarsGo_MostOfBudget.jpg


So, which parts of that do you feel are not very popular and voters would be happy to cut? Or is your complaint just that Krugman gave an incomplete list of popular programs?

barfo
 
Seems to me people are getting caught up too much about how much of the current deficit was caused by stimulus spending vs entitlements. The key point he is making is that for 30 years the Republican plan was to "starve the beast" by cutting taxes and running up a ridiculous national debt, so eventually we'd have no choice but to cut spending or raise taxes. Americans would naturally be averse to taxes, so we'd be forced to cut spending. The beast would starve.

Well, the time to starve it has come. We finally got to the point where they wanted us all along. Where's the leadership of the Republican party on cutting government programs? I just don't see it.

And that's the real problem with the "starve the beast" election strategy. It's great to run on when you aren't actually starving it.
 
Math not very accurate. Here's a graph from the link you provided.

WhereOurTaxDollarsGo_MostOfBudget.jpg


So, which parts of that do you feel are not very popular and voters would be happy to cut? Or is your complaint just that Krugman gave an incomplete list of popular programs?

barfo

It was Krugman who stated that "the programs that actually dominate federal spending — Medicare, Medicaid and Social Security," which simply isn't true.

My math is quite fine.

Those figures are from FY 2008 when the budget was $2.5T. Give them a nice 10% yearly growth due to inflation and population aging and those things Krugman talks about are $1.6T out of a $3.6T budget THIS YEAR. You could easily make the point that Defense, Safety Net Programs, and Interest on the Debt dominate federal spending (and none are entitlements).

How about we just go back and spend the $2.5T like in 2008, just 2 years ago (with 2 wars ongoing, at that). Or a 10% hike at $2.75T. That would be something like a healthy 5% year over year increase since Clinton's last budget.

Or is it in your interest somehow to see the 8% that is interest on the debt turn into the biggest of any one item in that chart? It's going to be there before Obama's term is over.
 
Seems to me people are getting caught up too much about how much of the current deficit was caused by stimulus spending vs entitlements. The key point he is making is that for 30 years the Republican plan was to "starve the beast" by cutting taxes and running up a ridiculous national debt, so eventually we'd have no choice but to cut spending or raise taxes. Americans would naturally be averse to taxes, so we'd be forced to cut spending. The beast would starve.

Well, the time to starve it has come. We finally got to the point where they wanted us all along. Where's the leadership of the Republican party on cutting government programs? I just don't see it.

And that's the real problem with the "starve the beast" election strategy. It's great to run on when you aren't actually starving it.

Ronald Reagan told Tip O'Neal, "I'm going to take away your allowance."
 
It was Krugman who stated that "the programs that actually dominate federal spending — Medicare, Medicaid and Social Security," which simply isn't true.

My math is quite fine.

Those figures are from FY 2008 when the budget was $2.5T. Give them a nice 10% yearly growth due to inflation and population aging and those things Krugman talks about are $1.6T out of a $3.6T budget THIS YEAR. You could easily make the point that Defense, Safety Net Programs, and Interest on the Debt dominate federal spending (and none are entitlements).

Ok, you could make that point. Where would it get you? Krugman's point is that people don't actually want to cut government spending. You are arguing that he named the wrong programs. Who cares? Show me some programs that people want cut. If you can't do that, he's not wrong.

I think mook was right. You want to make this all about the stimulus. That wasn't the subject of the article. The stimulus is temporary. The question of starving the beast goes back many years, and will still be an issue after the recession is over.

barfo
 
Ronald Reagan told Tip O'Neal, "I'm going to take away your allowance."

lol. And that was what, 25 years ago? (I'm not familiar with the quote. Just guessing.) Both guys have been dead for more than a decade.

Any day now, though, Republicans are going to start axing all those horrible government programs Americans hate.

Note: I'm not saying Democrats haven't had their own share in this mess that is our national finances. But at least they never pretended that some day a magic diet was going to come to make all the spending stop. They wanted their binge, but they also wanted to pay for it.

Republicans have been like binge eaters who also figured they'd save money by cutting their gym membership. After all, if they just kept eating eventually there wouldn't be any food left and we'd have to starve.
 
Ok, you could make that point. Where would it get you? Krugman's point is that people don't actually want to cut government spending. You are arguing that he named the wrong programs. Who cares? Show me some programs that people want cut. If you can't do that, he's not wrong.

I think mook was right. You want to make this all about the stimulus. That wasn't the subject of the article. The stimulus is temporary. The question of starving the beast goes back many years, and will still be an issue after the recession is over.

barfo

People DO want to cut government spending.

I just proposed a $900B cut. People hate the bank bailouts ($400B/year over 2 years) and the so-called stimulus bill (also $400B/year over 2 years).

Even if those were one-time spending things, the budget wouldn't be negative $trillion+ per year if there wasn't some massive increase in spending.

Then there's about 30% of the population who make up the tea party movement that your kind misunderestimates. They're all about fiscal responsibility.
 
lol. And that was what, 25 years ago? (I'm not familiar with the quote. Just guessing.) Both guys have been dead for more than a decade.

Any day now, though, Republicans are going to start axing all those horrible government programs Americans hate.

Note: I'm not saying Democrats haven't had their own share in this mess that is our national finances. But at least they never pretended that some day a magic diet was going to come to make all the spending stop. They wanted their binge, but they also wanted to pay for it.

Republicans have been like binge eaters who also figured they'd save money by cutting their gym membership. After all, if they just kept eating eventually there wouldn't be any food left and we'd have to starve.

Reagan was president at the time, O'Neil speaker of the house.

I'd say democrats have historically been tax and spend, while republicans have been borrow and spend. Right now though, democrats are borrow and spend at a level never seen before, and they still haven't met a tax hike they didn't like.

I saw some economist write that once the Bush tax cuts expire and new taxes are enacted, we'll be the 4th highest taxed people in the world, behind Camaroon, Denmark, and the Netherlands.

And people think the country is headed in the wrong direction now, just wait.
 
People DO want to cut government spending.

I just proposed a $900B cut. People hate the bank bailouts ($400B/year over 2 years) and the so-called stimulus bill (also $400B/year over 2 years).

Even if those were one-time spending things, the budget wouldn't be negative $trillion+ per year if there wasn't some massive increase in spending.

Then there's about 30% of the population who make up the tea party movement that your kind misunderestimates. They're all about fiscal responsibility.

Ok, well, the stimulus is going away automatically, so you'll get your wish on that.

Now, after that. Are you happy with the 2008 level of spending, or are there things in the 2008 budget that you think the people want to see cut, and if so WHAT ARE THEY?

Don't give me "people want to cut spending". Of course they do, in the abstract. Tell me what specifically they want to cut.

barfo
 
Government spending is a lobster trap. There's no going back.

Spending happens, people get used to spending, and then the spending doesn't go away... even when the revenues do.

Given that democracy gets it from both sides (corporations taking as much as they can, citizens on the dole not wanting to give anything up once they've gotten used to it) it seems inevitable that something will have to give.

It's sort of depressing.

Ed O.
 
Ok, well, the stimulus is going away automatically, so you'll get your wish on that.

Now, after that. Are you happy with the 2008 level of spending, or are there things in the 2008 budget that you think the people want to see cut, and if so WHAT ARE THEY?

Don't give me "people want to cut spending". Of course they do, in the abstract. Tell me what specifically they want to cut.

barfo

I think people realize that when their paycheck runs out and there's no room on their credit card that they have to stop spending. We're headed toward running out of room on the govt. credit card as quickly as our elected officials can spend.

It's nothing to do with the abstract. If they decided to cut spending, they would, and everyone's favorite ox would be gored. I'd be happy if we started by eliminating corporate welfare and cutting the military budget by 25%.
 
I'd say democrats have historically been tax and spend, while republicans have been borrow and spend. Right now though, democrats are borrow and spend at a level never seen before, and they still haven't met a tax hike they didn't like.

You know quite well Denny that that is just Republican talking point pablum.

Reagan enacted the biggest tax increase in history. Bush 41 famously raised taxes. Clinton cut the size of government. If Obama has to raise taxes it is because Bush 43 cut taxes while waging 2 wars - the only president in history to do that. We have to pay that bill sometime.

I get so tired of hearing that BS. Republicans are incredibly fiscally irresponsible.
 
I think people realize that when their paycheck runs out and there's no room on their credit card that they have to stop spending. We're headed toward running out of room on the govt. credit card as quickly as our elected officials can spend.

Mmm hmm.

It's nothing to do with the abstract. If they decided to cut spending, they would, and everyone's favorite ox would be gored. I'd be happy if we started by eliminating corporate welfare and cutting the military budget by 25%.

Corporate welfare is a bit ill-defined so I'd have to see what you meant exactly, and how much we'd save. Cutting the military budget 25% would be just fine with me.

But, the topic was what "the people" want. I could be wrong but I don't think "the people" want a 25% cut in the military budget. Would be great if they did, we'd save ourselves some serious dough.

barfo
 
You know quite well Denny that that is just Republican talking point pablum.

Reagan enacted the biggest tax increase in history. Bush 41 famously raised taxes. Clinton cut the size of government. If Obama has to raise taxes it is because Bush 43 cut taxes while waging 2 wars - the only president in history to do that. We have to pay that bill sometime.

I get so tired of hearing that BS. Republicans are incredibly fiscally irresponsible.

I'm not a republican, nor do I favor republicans. I favor those who would cut spending and hold it to what govt. takes in on lower taxes. Ron Paul, and his kind.
 
Mmm hmm.



Corporate welfare is a bit ill-defined so I'd have to see what you meant exactly, and how much we'd save. Cutting the military budget 25% would be just fine with me.

But, the topic was what "the people" want. I could be wrong but I don't think "the people" want a 25% cut in the military budget. Would be great if they did, we'd save ourselves some serious dough.

barfo

Like I said, everyone's ox has to be gored. Along with cutting the military, other programs would have to be cut.

Corporate welfare? Tax breaks for all sorts of things as well as outright handouts. Funding for ethanol, farm subsidies, and that sort of thing.

Take a good look at California. Our budget problems here are a preview of what happens when you wildly spend during the good times and face budget realities when the times aren't so good. We're having to fire teachers and firemen and policemen along with all sorts of govt. employees.

Take a look at Stevenson's post and there's a clue. Shrink govt. expenses simply by having less govt. employees. For most organizations, salary is a dominant expense! That's how clinton kept costs down, and the private sector thrived and we had surpluses.

Perhaps I sound like a broken record, but our fiscal health at any tax rate is tied to jobs and a good economy. The govt. can only get revenues where the money is and that's the middle class, like it or not. If you consider Bill Gates is the world's richest (or one of the) people, his entire net worth is $50B while the govt. spends $3.6T - taking all his money would barely make a dent and the negative effects of taxing net worth would kill this country anyhow.

The thing is, you can tax 1 guy $100 or two guys $50 and get that same $100 in revenues. It's better to have the 2 guys employed than the one. Or 100 guys...

It is surprising that a harvard law degree doesn't make that sort of thing obvious.
 
I could be wrong but I don't think "the people" want a 25% cut in the military budget. Would be great if they did, we'd save ourselves some serious dough.

barfo

I think "the people" need to stare at "this chart" for perhaps "a while":

country-distribution-2008.png


So how much of this money we spend being borrowed from other people on the same chart?
 
I think "the people" need to stare at "this chart" for perhaps "a while":

country-distribution-2008.png


So how much of this money we spend being borrowed from other people on the same chart?

$0

We literally borrow to keep the SS trust fund intact, though.
 

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