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Sunday, June 07, 2015

The endless "temporary"

Paul Krugman asks why he is a Keynesian:
Noah Smith sort-of approvingly quotes Russ Roberts, who views all macroeconomic positions as stalking horses for political goals, and declares in particular that

Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government.

OK, I’m not going to clutch my pearls and ask for the smelling salts. Politics can shape our views, in ways we may not recognize. But I’m aware of that risk, and make a regular practice of asking myself whether I’m letting that kind of bias slip in. In fact, I lean against studies that seem too much in tune with my political preferences. For example, I’ve been aggressively skeptical of studies that seem to show a negative relationship between inequality and growth, precisely because that result is so convenient for my political tribe (which doesn’t mean that it’s wrong.)

So, am I a Keynesian because I want bigger government? If I were, shouldn’t I be advocating permanent expansion rather than temporary measures? Shouldn’t I be for stimulus all the time, not only when we’re at the zero lower bound? When I do call for bigger government — universal health care, higher Social Security benefits — shouldn’t I be pushing these things as job-creation measures? (I don’t think I ever have). I think if you look at the record, I’ve always argued for temporary fiscal expansion, and only when monetary policy is constrained. Meanwhile, my advocacy of an expanded welfare state has always been made on its own grounds, not in terms of alleged business cycle benefits.

In other words, I’ve been making policy arguments the way one would if one sincerely believed that fiscal policy helps fight unemployment under certain conditions, and not at all in the way one would if trying to use the slump as an excuse for permanently bigger government.
This all sounds very well and good, except for one thing. Do you EVER recall Paul Krugman once calling for a REDUCTION in government spending at any point of the business cycle? Do you ever remember him recommending spending cuts or tighter monetary policy at all?

In 2013, Krugman wrote: "I’ve often argued on this blog and in the column that now is a particularly bad time to cut spending." And this was four years into the Fed-reported economic recovery. Last year, he pointed out that "Prima facie, cutting spending depresses economies." Even looking back to the heights of the 2007 and 1999 booms, I can't find any evidence that Krugman called for fiscal contraction or anything but more spending and more taxes.

In any event, we already know why Krugman is a Keynesian. He read Foundation, he wants to be Hari Seldon, and Keynesianism permits him to wallow in the delusion of controlling future events.

Labels:

41 Comments:

Anonymous RedJack #22 June 07, 2015 8:07 AM  

Their worldview is such that cutting spending is never a good idea. Krugman can no more say " I am for cutting spending" than I can say "I am for child sacrifice to Moloch!"

It is the grow or die mantra of all bureaucracies. In government and private industry.

Anonymous NorthernHamlet June 07, 2015 8:16 AM  

If I were, shouldn’t I be...

Who me?

In all seriousness, I cut my teeth as a layman in economics on Krugman, and I quickly realized he wasn't adding up.

But his claim that he only wants big govt right now for this tinsey tiny little moment? WTF. His economics blog is called "The Conscious of a Liberal" for crying out loud.

What exactly are you a liberal of, Mr Krugman?

Blogger ScuzzaMan June 07, 2015 8:35 AM  

First and foremost, he's a liar.

He's not a liberal; he has an authoritarian, illiberal, dogmatic list of political positions which he thinks are liberal because his social studies teacher told him so in 1967.

Liberal is a label he wears for political convenience.

Like "economist".

He's a court jester, a hofjuden, a palace intellectual, a pet kept hired for his ability to invent plausible-sounding pretexts for the existence and exercise of limitless power.

That he might actually believe some of his own schtick is irrelevant.

Blogger Desiderius June 07, 2015 8:35 AM  

"This all sounds very well and good, except for one thing. Do you EVER recall Paul Krugman once calling for a REDUCTION in government spending at any point of the business cycle? Do you ever remember him recommending spending cuts or tighter monetary policy at all?"

Yeah, before his wife cut off his balls.

Blogger Henry Smith June 07, 2015 8:43 AM  

Query: Can one be for *less* government spending while still supporting a larger, more powerful, government? And the converse: Can one be for smaller, less powerful government while at the same time supporting added government spending?

Just a thought experiment. My initial reaction---given the realities of the world---is "no". But perhaps someone else can argue otherwise.

Anonymous Clyde June 07, 2015 9:00 AM  

"When I do call for bigger government — universal health care, higher Social Security benefits — shouldn’t I be pushing these things as job-creation measures?"

No, you idiot. You just reversed cause and effect. The above would make sense if you genuinely believed increased government spending was good for the economy; not if you support Keynesian economics because you already support bigger government anyway.

Anonymous p-dawg June 07, 2015 9:00 AM  

@Henry Smith: If you paid more for each remaining area, you could spend more while reducing the size. I'm not saying it would be a good idea, but you could buy Cross pens and expensive desks, chairs, computers, office space, company cars, etc for the survivors. Basically, give the remaining agencies no more actual power or authority, but upgrade all of their equipment to ridiculous levels. I don't think you can do it without massive waste. That's stretching things, I admit, but it's a way it could happen. I don't think you can get larger and more powerful while spending less, though. Maybe someone else will come up with something.

Anonymous NorthernHamlet June 07, 2015 9:04 AM  

Henry Smith,

Query: Can one be for *less* government spending while still supporting a larger, more powerful, government? And the converse: Can one be for smaller, less powerful government while at the same time supporting added government spending?

Yes to both amounts. I'll assume your question is in the context of the US.

We close all public schools, shut down all welfare, etc. Less money spent. We take half that money and give it to the military, as a part of the govt, which in turn merges with militarized, local law enforcement for a technologically-advanced police state.

Bigger, more powerful govt, less spending.

Blogger Shimshon June 07, 2015 9:12 AM  

If you were a fiscal conservative and social liberal, my love.

Blogger Jourdan June 07, 2015 9:52 AM  

Slightly OT, but of interest:

A friend just emailed me a report from the G7, including this:

"Juncker just emphatically said that 'Greece leaving the Euro is simply not an option, not an option at all, it's not even on the table.'"

Blogger Chris Mallory June 07, 2015 9:55 AM  

"I am for child sacrifice to Moloch!"

They have gotten smarter, now they say "collateral damage" or "dying to defend your freedoms" when they talk about their sacrifices to Moloch.

Blogger YIH June 07, 2015 10:02 AM  

I'll just leave this here...
http://memegenerator.net/Scumbag-Paul-Krugman
BTW, Sparklepunter got a Encyclopedia Dramatica page.
Now I know where that nickname came from.

Blogger JaimeInTexas June 07, 2015 10:14 AM  

"Bigger, more powerful govt, less spending"

No such animal can exist. No process could bring it about and it will last until the spending begins to increase again ...

Blogger Quizzer W June 07, 2015 10:42 AM  

I thought he was Keynesian because he was concerned about unemployment. His own unemployment. Lets face it, it's easy work and he is highly paid to do it. Someone has to write out all those zeros...

Anonymous Maximo Macaroni June 07, 2015 10:45 AM  

Why should the great economic thinker ever say he's for bigger government when that is the only logical result of his policies and his greatest thrill is deceiving rationalists into thinking Keynes had all the answers?

Anonymous Will Best June 07, 2015 10:50 AM  

I am pretty sure he was complaining about the deficit when GWB was in office. That he was nominally a conservative I am sure had nothing to do with his analysis. I also don't recall him wanting to cut anything in particular.

Blogger Cail Corishev June 07, 2015 10:56 AM  

We close all public schools, shut down all welfare, etc. Less money spent. We take half that money and give it to the military, as a part of the govt, which in turn merges with militarized, local law enforcement for a technologically-advanced police state.

Bigger, more powerful govt, less spending.


Maybe temporarily, but I wonder if they could maintain it at the current size without the indoctrination provided by the schools. It couldn't have gotten this large without them. And could any amount of money fund a large enough police state to control the explosion that would come from cutting all welfare? Welfare (and the schools) are an essential part of the police state.

Anonymous joe doakes June 07, 2015 11:01 AM  

In bad times, we demand more government spending because we need it. In good times, we demand more government spending because can afford it. But we're not for more government spending, per se.

Blogger James Dixon June 07, 2015 11:02 AM  

> First and foremost, he's a liar.

What was that line again? Oh yes, SJW's always lie. It can be broadened to liberals in general fairly easily.

Blogger Thucydides June 07, 2015 11:03 AM  

I became a Classical Liberal during the Reagan Administration. I was studying economics at the time, which was firmly in the grips of Keynesianism and busily looking at the tradoffs between inflation and unemployment (Phillips curve and IS:LM for archeologists out there).

This was a bit difficult to understand, since according to the economic models we were studying, the Stagflation of the late 1970's simply could not exist; it was, in fact, impossible under any sort of Keynesian model. My instructors were also adamant that the Reagan revolution was equally impossible, despite the evidence outside the classroom windows.

The fact that Paul Krugman can simply ignore the evidence and make prognostications that have no basis in reality isn’t anything special, he is simply the most prominent and highly paid person doing so.

Blogger James Dixon June 07, 2015 11:04 AM  

> I am pretty sure he was complaining about the deficit when GWB was in office.

Complaining about the deficit does not equate to calling for a reduction in government spending. Krugman simply doesn't like tax cuts.

Blogger James Dixon June 07, 2015 11:06 AM  

> This was a bit difficult to understand, since according to the economic models we were studying, the Stagflation of the late 1970's simply could not exist; it was, in fact, impossible under any sort of Keynesian model. My instructors were also adamant that the Reagan revolution was equally impossible, despite the evidence outside the classroom windows.

They've changed their tune on that. They now claim that it was a classic case of increased government spending improving the economy, per classic Keynesian theory.

How those increased government revenues came about is still lost on them, of course.

Anonymous Jack Amok June 07, 2015 11:25 AM  

Keynesianism is popular as an economic theory for one and only one reason. It gives politicians permission to do what they already wanted to do: spend more money. Aside from that, it has nothing else going for it, as it has a terrible track record of predicting or explaining developments. Anyone who didn't favor bigger government would have abandoned Keynesianism a long time ago. If they haven't, then it means they are in favor of more government spending.

Anonymous FriarBob June 07, 2015 11:45 AM  

Wasn't there a book about 12 (or was it 20?) Dead Men who "rule the world from their graves"? I heard about it in passing but never read it. But I distinctly remember that Marx, Keynes, and of course Darwin were chief among those mentioned. And every one of them has essentially become a false religion, easily disproven by those who are willing to follow the illogic to the logical conclusion and recognize the fallacy for what it is.

The sad thing is that (seemingly) so few can see it.

OpenID mattse001 June 07, 2015 11:53 AM  

"Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government."

Then the author is a goal-seeker too. I am an anti-Keynesian because it is riddled with nonsense.
I know what production and value-added generally look like, and I know that government does very little of it. Adding the government G into the GDP formula is nonsense, and not even the useful kind of nonsense. Keynesianism fails on its foundations.

Anonymous billybob June 07, 2015 12:37 PM  

He called for tighter fiscal policy in the early 00s and the 90s, if I recall correctly.

Blogger James Dixon June 07, 2015 1:06 PM  

> He called for tighter fiscal policy in the early 00s and the 90s

Again, tighter fiscal policy does not equate to decreased government spending. In Krugman's case, he simply wants higher taxes.

Anonymous MendoScot June 07, 2015 1:34 PM  

Tying Krugman down is like stabbing mercury with a noodle. Under the guise of "this is complex, but I'll try and make it simple for you", he makes unsupportable statements that he will never have to defend. Remember his "back of the envelope" calculations for QE? $600M. The Greeks are close to that.

Blogger Anthony June 07, 2015 3:03 PM  

Krugman thinks deficits only matter when a Republican is in the White House.

Anonymous Eric Wilson (#0242) June 07, 2015 3:31 PM  

Wasn't it Krugman who pined for an alien attack so that the economy would improve?

Blogger dc.sunsets June 07, 2015 5:35 PM  

Today's collectivism is universally statist, and we're treated to Kabuki Theater battles between left statists and right statists as though they're anything but two wings on a bird of prey...or a buzzard.

Krugman wants to concentrate more power in the hands of statism's cadre of "experts" like himself. The cult of Fredrick Taylor ("One Best Way") combined with Prussian organization and mandarinates to yield today's obsession with "experts" telling our rulers how the the slaves should sweat in the quarries cutting the stones for tomorrow's pyramids.

I am sick of this notion that state-licensed or media/celebrity experts should tell me how to live. These clowns couldn't run a lemonade stand, are almost always abject failures as spouses or parents and in general are privately reprehensible human scum, yet they're held up as subject-matter gurus who are omniscient in their fields?

Makes me want to puke.

Blogger dc.sunsets June 07, 2015 5:40 PM  

OT: The Blue Angels are performing at an Airshow nearby, reminding me that if productive citizens of the USA like myself were not being robbed blind, deaf and dumb by taxes, crushing regulatory burdens and cronyism in medicine, insurance, finance, and police-the-world militarism, the ability to fly a high performance jet plane might be within reach of someone with my aptitudes and abilities.

How rich might we be, if we weren't reaping the negative compound interest of organizing society via a coercive monopoly, the state?

Blogger dc.sunsets June 07, 2015 5:42 PM  

Years ago I had an email conversation with an economist who agreed that Keynesian and Monetarist schools are kissing cousins, and that neither has any coherent theory regarding capital formation. They both simply "assume" capital forms (do the fairies do it?)

No wonder Keynes dreamed up the Paradox of Thrift.

Anonymous A Reader June 07, 2015 6:39 PM  

This Keynesian meme should die: that government spending can enhance economic growth, while cutting spending hurts growth.
The falsification of that meme is that the US National Debt as a percent of GDP went down in the 1950s and early 1960s, yet it was a period of strong economic growth.
This website has a chart of the US National Debt as percent of GDPhttp://www.usgovernmentspending.com/us_national_debt_chart.html

Anonymous HardReturn¶ June 07, 2015 7:17 PM  

The ratchet only ever turns one way: double down, moar stimulus, freebies, goodies, gimmedats... debasing to zero, sometimes slower, sometimes faster, but the ratchet only turns one way.
They will not kill Moloch by feeding Leviathan. As if they ever wanted to do either.

Anonymous HardReturn¶ June 07, 2015 7:23 PM  

They don't understand or care that in feeding Leviathan, Moloch will feed upon Leviathan.

OpenID simplytimothy June 07, 2015 8:01 PM  

God is a creator God, a creative being. Man is created in His image. Man creates.
A stable unit of account (an honest measure) allows a creative being to create via an honest, Godly economy. Call it a 'creative economy'.
The U.S. once had a creative economy, but then the U.S. honored God.
Keynesian has created a consumerist economy and killed the creative economy.
Keynesianism destroys and enslaves.
Keynesianism is of the devil.
Just a thought experiment I am entertaining, thought I would throw it out there.


Anonymous ThinkAboutIt June 08, 2015 12:15 AM  

Roberts Assertion:
Conceding the reality of self-deception isn't cynical. It's realistic. Leads to humility and caution.

is not a universal truth. In some cases, mea culpa (regarding self-deception) is simply a mild cathartic along the lines of, "I can quit any time I want to!!".

Blogger Augustus Octavian June 08, 2015 3:40 AM  

Krugman is the pinnacle of the intellectual court jester. Talk about A while writing your opinion columns (with all the implied appeal to authority, Kruggles has a "Nobel" Prize in Econ after all) while writing Not-A when engaging with your fellow economists. And should the laypeople notice something, your fellow economists will surely jump to your defense. Because after all economics is a highly complex matter that rubes who haven't been properly inducted into this new priesthood can't possibly understand.

Anonymous Stilicho June 08, 2015 5:17 AM  

Krugman has admitted that he supports taxation primarily as a means of punishing income earners. He also claims that the govt could successfully print/borrow all of its spending needs as long as we "owe it to ourselves", of course. Like when he was advising Enron, all of those off balance sheet transactions among wholly owned subsidiaries didn't matter because Enron owed the money to itself...

Blogger B.J. June 08, 2015 12:17 PM  

What's with the sudden wishy-washiness? Krugman has advocated nothing but Keynesian economics since, well, forever. I even like the guy, but holy crap, own your shit man.

Maybe this is related to the current progressive agitprop of "there's no such thing as an SJW." He wants people to think his opinions are natural epiphanies, not based on an overall ideology.

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