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Posts Tagged ‘paul krugman’

I love reading Paul Krugman’s NY Times columns and especially the comments that follow because they offer a fascinating glimpse of certain moral principles that are completely alien to my personal philosophy. It is like going into a country where they seem to speak the same language; yet their words mean completely different things than what you are used to.

For instance, in today’s article, PK rages against the practice of high speed trading and certain kinds of financial speculation on the ground that they are socially worthless. But at least he merely suggests higher income taxes to deal with such practices. His commenters go several levels further. They are so — oh so — outraged that some rich people are merely following Capitalism 101 rather than contributing to some “social good” that they want the guys arrested; some go further and demand a popular revolution to fundamentally steer the nation towards social democracy.

Not so long ago, Soviet Russia and countries under its influence measured not just economic activity but everything from art to films according to their social utility in furthering the principles of communism; those that did not pass the test were banned or worse. So the NY Times readers are continuing a worthy tradition.

What can I say? In my universe, freedom — freedom to invest or speculate, to be foolish or smart, to give back to society or be a rich miser — is of far, far greater importance than judging whether the exercise of freedom actually contributes to some social good. So the morality of the NY times commenters with their particular sense of justice and fairness is alien to me. Once upon a time, when faced with such morality, I would rage and scream silently inside at the grotesque sense of entitlement displayed. These days, I am merely amused; it is a bit like going to an alternate universe full of strange creatures.

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From his latest column:

[W]rite off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

I cannot make any sense of this purported analogy. Even ignoring the ridiculous comparison that glosses over distinctions between regulating commons and regulating private property, it seems that Krugman believes that if the government did not provide something, then it simply would not exist.

Here’s Nick Gillespie’s post on Krugman’s stimulus arguments.

Krugman is right about one thing though; there are both good and bad faith arguments going on about the economic crisis. I will let the reader decide which category Krugman’s column falls in.

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Tyler Cowen writes:

Yes, 40 percent of the Obama stimulus package will be a tax cut.  It’s already a talking point that “the Democrats have lost their nerve” but the reality is not so devious.  Obama wishes to deliver on his pledge to cut taxes (always electorally popular) and upon close inspection the economic team probably hasn’t found a lot of first-year stimulus spending it likes.  That leads to this obvious policy conclusion and of course it is very good news.  No, I do not think these tax cuts will drive recovery but a) less money will be wasted, and b) it shows that the Obama team is willing to flinch and be realistic, not just as a final compromise but indeed as an opening gambit.

I agree.

So far, all of Obama’s actions — from his excellent economic appointees to the current package — show that he is more a pragmatist than a far-left idealogue. Of course this does not mean his policies, economic or otherwise, will be great; merely that they will be less bad than some had feared. 

By the way, the Obama’s stimulus package is giving Paul Krugman “post-partisan depression”. Now that is definitely a great thing.

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Paul Krugman, Neo-Keynesian economist and controversial NY Times columnist, has won this years Nobel prize in economics (or more accurately the “Nobel Memorial Prize in Economic Sciences”).

A round-up of reactions follows.

Jonathan Adler writes at Volokh:

This morning, the 2008 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Princeton economist Paul Krugman “for his analysis of trade patterns and location of economic activity.” The award was bestowed for his academic work — which many have suggested was Nobel-worthy for some time — not his political commentary, though the latter may have played a role. […] [I] want to make clear that I believe Krugman’s Nobel is well-deserved. He is clearly among the most important economists of his generation.

Tyler Cowen gives a great summary of Krugman’s work at Marginal Revolution:

Krugman is very well known for his work on strategic trade theory, as it is now called.  Building on ideas from Dixit, Helpman, and others, he showed how increasing returns could imply a possible role for welfare-improving protectionism.  Krugman, however, insisted that he did not in practice favor protectionism; it is difficult for policymakers to fine tune the relevant variables.  Boeing vs. Airbus is perhaps a simple example of the argument.  If a government can subsidize the home firm to be a market leader, the subsidizing country can come out ahead through the mechanism of capturing the gains from increasing returns to scale. […] I am most fond of Krugman’s pieces on economic geography, in particular on cities and the economic rationales for clustering.  He almost single-handedly resurrected the importance of “location theory,” an all-important but previously neglected branch of economics.

Libertarian/Anarcho-Capitalist economist Bryan Caplan writes, also at Marginal Revolution:

There are lots of good reasons to be annoyed with Paul Krugman. (Like here, here, and here). But as a cock-eyed optimist, I’m very happy to have him around. Think about it: The world’s most famous left-wing economist:

1. Blames European unemployment on labor market regulations that hold wages above the market-clearing level. (The Accidental Theorist, Part 1)

2. Publicly and articulately advocates free trade without hemming or hawing. (Pop Internationalism)

3. Identifies anti-globalization activists as the enemies of the world’s poor. (The Accidental Theorist, Part 3)

4. Titles an essay “In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All” (The Accidental Theorist, Part 3)

5. Points out that if you oppose Big Government, you should favor cutting Social Security, Medicare, and other popular programs. (“The Lost Fig Leaf”) Sure, he’s hoping to scare us away from libertarian rhetoric, but there’s no use running away from the truth.

I can’t imagine Paul Samuelson doing any of the above, much less Galbraith. At least in economics, the intellectual climate hasn’t been as good as it is now for a century.

Daniel Davies is happy:

I can’t help thinking that this is actually Krugman’s reward for being the public voice of mainstream sensible Keynesianism for the last fifteen years, starting with the use of the liquidity trap to explain the Japanese slump, going through his prediction of the Asian crises and onward to today. In which case, well done the Nobel [see note 1 again] committee – Krugman’s NYT column has been more use to the public standing of economists than more or less anything published in the journals.

For the record, I don’t much agree with Krugman’s overall poltical/economic philosophy. (No surprises here, for I am a libertarian and he a Neo-Keynesian.) I also think that his NY Times column is bad, especially when he delves into politics. However, while I have not read any of his academic papers, I see no reason to suspect that the prize is not well-deserved. The Econ Nobel is one area where winners can hold radically different views as long as their papers are worthy, and Krugman’s award is a continuation of that tradition. So, congratulations.

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