Showing posts with label Krugman. Show all posts
Showing posts with label Krugman. Show all posts

Monday, July 31, 2023

The Achilles’ Heel of the Rich and Powerful

By Kevin D. Williamson

Monday, July 31, 2023

 

Of course, Donald Trump has a valet problem. How could it be otherwise?

 

As Hunter S. Thompson observed in a different Palm Beach-related scandal many years ago—the infamous Pulitzer divorce case—“The servant problem is the Achilles’ heel of the rich. That is the weak reed, a cruel and incurable problem the rich have never solved—how to live in peace with the servants. Sooner or later, the maid has to come in the bedroom, and if you’re only paying her $150 a week, she is going to come in hungry, or at least curious, and the time is long past when it was legal to cut their tongues out to keep them from talking.”

 

The people with whom Trump surrounds himself are … not the “best people,” as he promised. (But if you are surprised that Trump has failed to keep a promise, you should have asked Mrs. Trump, or Mrs. Trump, or Mrs. Trump, for that matter, or maybe Stormy Daniels.) The list is one that a novelist would blush to invent: Mike Pence, the pious fraud who did Trump’s bidding right up until the moment doing so stopped serving his interests and now presents himself as the second coming of St. Francis; Rudy Giuliani, the knee-walking grifter who still remembers enough law that he already has stipulated the falsehood of his stolen-election nonsense—that swill is fine for the slavering proles in the Fox News audience, but even Giuliani wouldn’t try to defend it in court; Roger Stone, literally the kind of cuckold he likes to accuse others of being metaphorically; etc. And now Trump’s valet, Walt Nauta, is facing the prospect of time in a federal penitentiary after what reports describe as a truly clownish cloak-and-dagger affair involving “shush” emojis, sneaking through the hedges at Mar-a-Lago, and roping another minion into a scheme to destroy evidence when he did not have the technical chops to get the job done himself. These putzes make the White House Plumbers of Watergate infamy look like the Count of Monte Cristo crossed with Professor Moriarty. Criminal masterminds, they ain’t. 

 

Miles Taylor, former chief of staff at Homeland Security, recently told a podcast that part of his job was dumbing down security briefings for the “incandescently stupid” president. 

 

This fifty-page memo that we would normally give to any other president about what his options are is something Trump literally can’t read. … And so I had to write this incandescently stupid memo called something like, “Afghanistan, How to Put America First and Win.” And then bullet by bullet, I summed up this highly classified memo into Trump’s sort of bombastic language because it was the only way he was gonna understand. I mean, I literally said in there, “You know, if we leave Afghanistan too fast, the terrorists will call us losers. But if we wanna be seen as winners, we need to make sure the Afghan forces have the strength to push back against these criminals.” I mean, it was that dumb and that’s how you had to talk to him.

 

Some of you will know Taylor as “Anonymous,” author of a famous New York Times essay. He eventually quit the administration (when it was more convenient for him to do so), but do you know what he didn’t do? He didn’t say, “Mr. President, you are not smart enough to have this job, and you can’t even read a proper briefing. One of us has to go, and I imagine it will be me, but this needed to be said.” Now, this was a guy who plainly loathes Trump and what Trump stands for, and he stuck it out through what must have been some pretty humiliating service (one does get the feeling that he is getting the word out about that idiotic memo before someone else draws attention to it), and, that being the case, how likely do you think it is that somebody who wants to serve in the Trump administration—somebody who, for whatever perverse reason, admires the man and his moronically vicious/viciously moronic style of politics—is going to set him straight about anything? I have friends and colleagues who served in the administration in senior roles, and they typically defend that decision (assuming they haven’t gone all-in on Trump cultism) in terms of damage control, making the best out of a bad situation, giving good advice to the bumbling amateur in the Oval Office and the collection of miscreants, subordinate con-men, and incompetents surrounding him. But actually standing up to the guy? No, as far as I can tell, none of them ever did that. 

 

To a man like Trump, everybody is a servant. Even his current wife is, in effect, a former employee, having been part of the Trump Model Management stable before her marriage to the man with his name on the door. That’s one of the reasons Trump has such a hard time getting—and keeping—good help. Rex Tillerson wasn’t the secretary of state—he was just another valet, one of many. He knew what Trump was—“a f—–g moron,” in his own words—but he took the job. Some people in Trump’s orbit are happy to be treated as servants—there was never such a servile creature as Sean Hannity—but that isn’t how you get first-rate Cabinet secretaries, agency heads, or generals. One of the reasons for Trump’s failure as a president—and one of the reasons for his current legal troubles—is that anybody around him who had the brains and the guts to say, “Hey, dummy, you can’t do that!” got fired before he could explain things to the game-show host with whom the people of this country entrusted the nuclear codes for four long years. 

 

And that is why my money is on the actual valet to be Trump’s undoing. Trump is too cheap to buy the loyalty of a servant (he will only rent it) and he isn’t really the kind of goon he aspires to be—he inspires more contempt and pity than genuine fear. 

 

But you’ll notice that every time he fired some uppity underling who wasn’t with the program, four more popped up begging for the job. Sure, they are reliably incompetent, dishonest, and morally repugnant, but there are a lot of them, and the servile temperament is simply born into some people. As Hunter Thompson once wrote of the denizens of the grimy edges of Palm Beach: “These are servants and suckfish, and they don’t really matter in the real Palm Beach, except when they have to testify.”

 

Economics for English Majors

 

In a column about congestion pricing in New York City, Paul Krugman of the New York Times writes: “Now, nobody is suggesting a ban on driving into Manhattan.” When you read in the Times that “nobody is suggesting x,” then you can be sure that progressives are on the verge of proposing that we mandate x. It took about five minutes to go from “nobody is talking about gay marriage” to “bake that gay-wedding cake, peon, or we’ll seize your assets.” 

 

In fact, people have been talking about a ban on driving in Manhattan since Dwight Eisenhower was in the White House. “We propose the banning of all cars from Manhattan Island, except buses, small taxis, vehicles for essential services (doctor, police, sanitation, vans, etc.), and the trucking used in light industry,” Dissent magazine wrote way back in 1961. Professor Krugman’s Times colleague Fahrad Manjoo has suggested banning private cars from Manhattan. Manjoo was inspired by the Practice for Architecture and Urbanism’s proposal, forthrightly described as “banning private cars from Manhattan.” There’s more: “It’s time to ban cars from Manhattan,” James Nevius writes in Curbed. The Guardian has considered the question sympathetically, as has Business Insider, commentators you can read at Y Combinator and Reddit, Crain’s, etc. I suppose it is possible that all of these are nobodies in Professor Krugman’s estimate, but, from my point of view, it looks like a whole lot of nobodies are suggesting a ban on driving into Manhattan.

 

Professor Krugman advocates a less radical path, adding a fee and letting people respond to economic incentives. 

 

Is either proposal a good policy? 

 

Professor Krugman, who used to be a first-rate economist before he became a third-rate newspaper columnist, touches on the economic questions only lightly, instead throwing the red meat that readers have come to expect of the Times’s op-ed pages, arguing that the soundness of the policy is so strongly endorsed by the experts that the only explanation for its not being implemented is “sabotage” on the part of affluent suburbanites Times readers should hate. New York Times class warfare is a very funny kind of class warfare—class warfare sponsored by Cartier!—but, there you have it:

 

Might a congestion charge have some undesirable side effects, like increased truck traffic in the Bronx? Policies always do — but given the sheer size of the costs one inflicts by driving into Manhattan, it’s inconceivable that these would undermine the basic case. Should New Jersey be getting some revenue from the fees? Maybe, although hundreds of thousands of New Jersey residents commute into New York by train or bus, and these commuters would gain from reduced congestion after they arrive.

 

What’s really striking is how few people stand to benefit from New Jersey’s attempt to block or delay congestion charges. Fewer than 60,000 New Jersey residents, out of a state labor force of almost five million, commute into New York City by car. They are also, as it happens, relatively affluent, with a median annual income of more than $100,000, relatively well able to handle the extra cost. For this, New Jersey is trying to sabotage crucial policy in a neighboring state?

 

Truck traffic in the Bronx is a real issue—it already is a real issue and has been for a long time, and it is becoming more of an issue every day as people of the sort who subscribe to the New York Times move into shiny new buildings in Manhattan-adjacent Bronx neighborhoods such as Mott Haven. Also, the Bronx is a place where real people live and work—the toll scheme would function, at least in part, as a pollution-transfer plan, sparing the city’s central business district while dumping the externalities on outlying areas. Assuming that these outer-borough types matter in the great human calculus as much as the ones who reside in Manhattan do and given that the effects on their neighborhoods is unknown at this time, scarcely having entered into the thinking of such commentators as Professor Krugman, it is not precisely “inconceivable that these would undermine the basic case” for a congestion fee. If we are interested in the long-term health of the city, then we probably should consider the fact that most of the fastest-growing neighborhoods in New York are outside of Manhattan. 

 

Congestion fees—and outright prohibitions on private vehicles—are policies that have been implemented with limited success in some very specific contexts. London is one of the most famous cases. Its congestion fee does seem to have reduced traffic by about10 percent—though the exact size of the effect remains hotly contested—while unintended consequences (including reduced sales at some London department stores, for example) have been significant. The original program was going to—all together now!—“pay for itself,” with the collections farmed out to a contractor that would turn a profit on the system, sharing some of the proceeds with the city of London. That failed in more or less the way you would expect, and now the system is run on a nonprofit basis and run pretty poorly, with about 26 percent of congestion charges going uncollected and rampant fraud. It does produce a dividend, but a modest one. Are we all sure New York City will do much better, because it is so famous worldwide for the excellence of its municipal administration? More successful models can be found in the places you would expect it: Singapore, which has used congestion pricing since the 1970s, and Stockholm, where the usual Swedish bureaucratic competency keeps things orderly. 

 

(I like to imagine how the domestic politics would play in in New York’s version: No congestion charge if you are driving in to get an abortion, but you’ll pay double if you work at an investment bank—and if you are a “BIPOC pangender person” New York probably will end up paying you to drive down Lexington Avenue.)

 

There are other things New York City and its partners in the region could do to make other forms of transportation more attractive: For example, a mass-transit system in which riders were more likely to arrive on time and less likely to be murdered or rat-bit would probably do wonders. Indeed, the cynic in me thinks of these proposals as a means of punishing people who have noticed how badly the powers that be in New York and environs have run things, in particular those who have responded by taking matters—and the steering wheel—into their own hands. That’s a pattern: The conventional public schools fail, so declare war on charters, private schools, homeschoolers, etc; the police and prosecutors won’t do their jobs, so blame gun shops and the law-abiding people who shop there; etc. Fixing transit in and around New York City is a political nightmare, because it involves many different agencies (the imbeciles who run the Long Island Railroad and Metro North are not the same imbeciles who run the subways) and jurisdictions and rivalrous political and economic incentives: The people who run Stamford, Connecticut, would rather be the place where the banks are located than the place where young bankers get on the train to go to work, and the worse things get on Metro North, the better the case for doing business in Stamford or Greenwich or wherever. I am not suggesting that the town fathers across Connecticut are engaged in “sabotage,” to use Professor Krugman’s overwrought word, but surely the tradeoffs in play affect how they calculate their priorities. 

 

If you want fewer cars on the street, then, by all means, make it more expensive to put cars on the street. (And if you want fewer people to save and invest, raise taxes on savings and investment. And if you want to reduce the value of work, raise taxes on work income. Etc.) If it doesn’t reduce traffic, then your fee wasn’t high enough. You could put a 5,000 percent tax on parking, if you wanted to. Or you could do what “nobody is talking about” doing, and prohibit cars from the places you don’t want cars.  

 

But if you want to make life in New York radically better, fix the dang trains. It’s a tough one to take on. That’s why I always hope one of these so-called New Right creeps will get into local and state government—you want to be Mussolini, let’s first see if you can make the trains run on time. 

 

Elsewhere, in the Financial Press … 

 

Everything you ever wanted to know about sex from … the Wall Street Journal. It isn’t as weird as it sounds. But if the Financial Times comes out with a dating app …

 

Words About Words

 

Yuval Levin has wise things to say about revolutions. And, more to our purpose here, he knows what the word “enormity” means, which is something evil, not something enormous. 

 

There were some Americans who thought the same, at least in the early stages of the French Revolution. One of them was the principal author of the Declaration of Independence, so his view certainly has to be taken seriously. But it’s worth seeing that for all of his zeal for the French Revolution while it was happening, Thomas Jefferson concluded late in his life, after seeing what became of the Revolution, that it had gone too far, and that if the king and the people had reached an arrangement more like the moderate American regime (or even like the limited monarchy of the British), they could have averted “those enormities which demoralised the nations of the world, and destroyed, and is yet to destroy millions and millions of its inhabitants.”

 

Those enormities were a function of the unbounded radicalism of the revolution itself, and of the fact that they then led to military dictatorship and the Napoleonic wars. This was not where the American Revolution pointed, because while the American Revolution sought to ground political life in the core and fundamental truth that we are all equal under God, it did not take this truth to require a politics of radical disjuncture.

 

In Other Wordiness … 

 

Professor Krugman talks about “sabotage.” But spare a thought for “cabotage.” You will not find a more amusing explanation. 

 

Burning Bright … 

 

In British-y Englishness, this bit from the BBC about the latest indictments of Donald Trump gave me an interesting mental image:

 

Ahead of Mr Nauta’s arrival, Mr de Oliveira is said to have asked a Mar-a-Lago valet not to tell anyone about the visit because Mr Nauta wanted it to be a secret.

 

Prosecutors claim that, when Mr Nauta and Mr de Oliveira met that evening, they walked around with a torch and pointed at surveillance cameras in a tunnel near the storage room.

 

Of course, as the British speak, a torch is a flashlight. 

 

But it isn’t impossible to imagine these very stable geniuses walking around with the flaming kind of torch. 

 

In Closing

 

She haunted many a low resort

Near the grimy road of Tottenham Court;

She flitted about the No Man’s Land

From The Rising Sun to The Friend at Hand.

And the postman sighed, as he scratched his head:

“You’d really ha’ thought she’d ought to be dead

And who would ever suppose that that

Was Grizabella, the Glamour Cat!”

“Grizabella, the Glamour Cat”

T. S. Eliot

 

If you listen to people explain why they hated the film adaptation of Cats, in 27 cases out of 30 the answer boils down to the fact that the film is, more or less, Cats, the infamously inscrutable Broadway sensation that made a billion and a half dollars and ran for almost two decades but which does not have much in the way of what you might call a plot. Jennifer Hudson was fine as Grizabella in the film, and she knows how to handle “Memory,” which is to Cats what “Don’t Cry for Me, Argentina,” is to Evita—the main reason most people sit through the show at all. As I wrote when the Cats film premiered, Hudson was a sensible choice for the role, but there was a missed casting opportunity for someone who was in many ways—some of them tragic—born to play that role: Sinéad O’Connor. 

 

O’Connor knew her way around a big Broadway showstopper, as she showed on her recording of “Don’t Cry for Me, Argentina.” (Madonna does not fare well in the inevitable comparison between their takes.) The singer Alison Moyet marveled that O’Connor was “as beautiful as any girl around and never traded on that card,” which is, of course, not true. In an era in which REM was making baroque and cinematic miniature films inspired by Gabriel Garcia Marquez stories, O’Connor’s most famous contribution to the music-video genre consisted of a sustained close-up of her face. She knew what she looked like. The famous buzzcut may have been intended as a feminist statement, but it also enhanced her beauty rather than detracting from it. 

 

O’Connor was a sort of real-life Grizabella, once a great beauty who fell into reduced circumstances, ostracized, lonely, hungry to be once again embraced by her tribe. Grizabella was rejected on moral grounds (the “low resort” of Tottenham Court is an oblique reference to prostitution) that served, at least in part, as a cover for the envy her glamor had once inspired—Sinéad O’Connor certainly knew something about that. 

 

T. S. Eliot omitted the Grizabella poem from Old Possum’s Book of Practical Cats on the grounds that it was “too sad for children.” O’Connor lost a 17-year-old son to suicide and attempted to kill herself a dozen times before her death last week. She spent much of the last part of her life making a spectacle of herself, trying on new identities by the month—lesbian, asexual, radical splinter Catholic, Muslim—at one point, she was ordained a priest by a rogue pseudo-Catholic sect and at another point she started going by the Islamic name Shuhada’ Sadaqat.

 

She was from time to time dinged by stupendously ignorant people because her most famous song, “Nothing Compares 2U,” was Prince’s composition rather than hers. But “Nothing Compares” was as much her song as Carl Perkins’ “Blue Suede Shoes” belonged to Elvis Presley, as did Mike Stoller and Jerry Lieber’s “Hound Dog,” originally written for Big Mama Thornton. (Nobody seems to have cared that Luciano Pavarotti didn’t write his own tunes.) O’Connor’s voice on its own would have been sufficient, but she was a very good writer, too: How many of her contemporaries could boast of anything to compare to “The Emperor’s New Clothes,” “Mandinka,” or “The Last Day of Our Acquaintance”? Her politics were daft, naturally, and occasionally vicious, as in her admiration for the Irish Republican Army. But if you are getting your political views from pop singers, the problem is with you, and even the sustained moral illiteracy of the lyrics cannot spoil “Black Boys on Mopeds”—there are many famous singer-songwriters who never have and never will write anything as fine as that. 

 

Success, beauty, money, fame, international celebrity, glamor—none of these offers protection against the encroachments of time and loss, the slow and repetitious beatdown of ordinary human sadness. There is a special kind of suffering reserved for beautiful women, in whom the natural effects of age are treated as a degradation. A beautiful woman needs a second act—and you can be sure that the world will do its utmost to deny her that, as though her beauty were the one fixed point in the universe around which her life must revolve, as though there is nothing else for her to be. Sinéad O’Connor from time to time got herself on the right track in her search for shelter in religion and relief in art, but she seemed to need more than these have to offer—of all the addictions to break, celebrity may be the hardest. Performers, like politicians, have a perverse need to be loved by strangers, and while O’Connor was more than resilient enough to face the world’s scorn and outrage, she was not strong enough to endure its indifference. The world moved on, and she could not. 

 

I imagine she would reject that characterization, perhaps in these words:

 

He thinks I just became famous

And that’s what messed me up

But he’s wrong.

 

But the singer isn’t the song, and, in this case, you want to listen to the song even if you must necessarily take the singer as a cautionary example:

 

Whatever it may bring

I will live by my own policies.

I will sleep with a clear conscience.

I will sleep in peace.

 

I do hope so. Rest in peace, at last. 

 

I like to imagine O’Connor being greeted in the afterlife by the sainted Pope John Paul II, who arrived at that far shore no less in need of a Redeemer than she does. They will, I think, have a good deal to talk about. 

Monday, August 2, 2021

Paul Krugman Keeps Getting COVID Wrong

By David Harsanyi

Friday, July 30, 2021

 

When you believe every tribulation of mankind can be solved by a smart technocratic state mandate, you tend to see everything through the prism of politics. So it goes with Nobel Prize–winner Paul Krugman, who now claims that the Delta variant spike — the one that ran through Britain recently — is a “red-state crisis” with “nakedly political roots.” And by “political roots,” Krugman is talking about the reluctance of certain governors, specifically Ron DeSantis, to embrace draconian shutdowns and mandates.

 

Throughout the pandemic, Krugman would write a breathless column about the coming apocalypse in Florida or Texas every time a new spike occurred. Alternatively, he would simply ignore inconvenient spikes elsewhere. “Getting other people sick isn’t an ‘individual choice,’” Krugman groused last summer, calling Florida the COVID-19 “epicenter,” with the “daily death toll now consistently exceeding that of the whole European Union.” A few months later, when California, one of the most aggressively mandated states, experienced infection rates that were “unparalleled” in the nation according to CNN, Krugman, as far as I can tell, had nothing to say.

 

There is always an element of unsightly wish-casting to his selective outrage. “Reality is coming for white supremacists driving golf carts,” he warned last summer, linking to a Bloomberg piece about rising infection rates among people 75 and older in Florida. Krugman kept insinuating that Florida would surpass New York. Thankfully for Floridians, as with most Krugman prophecies, this one never came to pass.

 

New York State’s fatality rate — Krugman was a big Cuomo booster — is 279 per 100,000, second worst in the nation after New Jersey. Florida remains at 170 per 100,000, which is 25th in the nation. (In the end, California performed better with 163 per 100,000, right behind MAGA-land, West Virginia.) Still, Florida had better outcomes than numerous blue states. Add to that the fact that the state happens to be home to an older, more susceptible population, and the lower fatality rate is even more impressive. Florida’s fatality rate for citizens over the age of 65 is lower than 40 states’. Ron DeSantis prioritized the elderly early but limited state interference in business, and this is what irks Krugman the most.

 

Krugman points out that New York has five COVID patients hospitalized per 100,000 today, while Florida has 34. He’s great at making arguments using snapshots. Hospitalizations are indeed a problem in Florida right now. Deaths from the Delta variant, however, remain low everywhere.

 

Overall, the United States vaccine rate isn’t an outlier. Nearly 57 percent of Americans have one shot, slightly below the European Union average. And 49 percent of Americans are fully vaccinated, which is slightly better than the European Union average. (New Zealand, Krugman’s favorite nation, is at 14.5 percent.) The state of Florida has a 48.7 percent vaccination rate — higher than in many European nations, all red states, and also Illinois, Georgia, Arizona, and Michigan.

 

Vaccine hesitancy, of course, is a complicated matter. No doubt, conservatives in rural areas are less trustful of government. As are minorities in urban areas. Krugman glides over this latter, inconvenient problem by claiming that nefarious conservative ideology drives skepticism in Florida, but that black and Hispanic skepticism is fueled by lack of “information and trust.”

 

First of all, there are plenty of reasons not to trust public-health officials who have corroded societal trust by politicizing “science” and inconsistent messaging. But lack of information? In New York City, the information capital of the world, the black vaccination rate is 31 percent — lower than any state average. One suspects the lack of trust in Brooklyn is quite similar to that in Oklahoma. But Krugman would never waste a good crisis.

 

Instead, he wants us to return to “mask mandates for sure, and maybe even partial lockdowns” — even though the evidence shows us they’ve failed. Safetyism is the lifeblood of statism, and COVID has given people the excuse they need to normalize endless intrusions.

Wednesday, October 21, 2020

Paul Krugman’s Epic Summer

By Casey B. Mulligan

Wednesday, October 21, 2020

 

Professor Paul Krugman “has a good understanding of the essentials of international trade (the basis for his Nobel Prize Award) and explains them well,” I wrote in December in my new book about President Trump and his economic team. But I added that Krugman “is wrong about most [other] economic subjects . . . [and] helpful for predicting mistakes that would be made by the President’s opponents.” Now is a good time to assess whether the data still support such a harsh evaluation, with special attention to schooling, the economic recovery, and taxation.

 

Krugman on schooling

 

Throughout the summer of 2020, Professor Krugman opined on the consequences of renewing in-person schooling. I found that remote learning in the U.S. has an opportunity cost of $1.6 billion per school day because pupils learn more effectively in person. While still in the realm of obvious economic results, Krugman agreed that “nobody knows . . . how we can educate America’s children without normal schooling.” Nevertheless, his amateur and partisan theory of disease trumped that assessment. He advised his five million followers that reopening school this fall would “be a complete disaster” that “would kill thousands” as it “disastrously reinforc[ed] the pandemic.”

 

Israel had an outbreak early in the summer that coincided with its reopening schools. In his opinion, that by itself justified withholding hundreds of billions of dollars of human capital from America’s children. (He showed his followers the series for Israeli cases through August 1, rather than the less alarming trend for deaths). Never mind that Sweden had not even closed schools in the spring, while several other countries reopened (without second waves) before the end of June. Never mind that already in June the American Academy of Pediatrics saw “a much smaller role in driving the spread of the disease than we would expect.” Never mind the promising results from summer camps and daycare centers here at home.

 

Many schools did in fact dare to open. The Mulligan children were enrolled in a couple of them, which were able to deliver thousands of pupil-days of in-person schooling without a single confirmed case of COVID-19 among students, faculty, or staff. Using a larger dataset, Brown University professor Emily Oster found that “schools aren’t super-spreaders . . . fears from the summer appear to have been overblown.” Krugman had no business stoking those fears with an improbable scenario from outside his expertise, when he knew that the human-capital costs to children of e-learning were enormous and guaranteed.

 

Krugman on the recovery

 

This spring Congress hastily prepared a pandemic assistance package that ultimately proved to pay the unemployed almost $1,000 per week (primarily a special $600 “bonus”), which was more than most of the beneficiaries were earning before they were laid off. At the macro level, the package resulted in a record increase in personal incomes at the same time that production and spending had dropped record amounts. The package, it seems, had gone too far and needed to be modulated when its major provisions expired in July.

 

Professor Krugman had, to put it charitably, a unique perspective. “I’ve been doing the math, and it’s terrifying . . . the end of benefits will push down overall consumer spending . . . more than 4 percent,” he wrote in early August. Furthermore, he insisted that drop would be followed by “a substantial ‘multiplier’ effect, as spending cuts lead to falling incomes, leading to further spending cuts.”

 

Although not mentioned to his readers, Krugman’s conclusion is the opposite of a decades-long consensus in our profession. Government can help the poor and unemployed with redistributive policies but is constrained by an “equity-efficiency tradeoff.” Arthur Okun likened the tradeoff to a leaky bucket, “The money must be carried from the rich to the poor in a leaky bucket. Some of it will simply disappear in transit, so the poor will not receive all the money that is taken from the rich.” If nothing else, a worker should retain at least a small amount of what he produces rather than giving it all over to the public treasury. Failing to heed this advice would reduce aggregate output and incomes.

 

Even putting incentives aside, there is pesky arithmetic. Aggregate spending includes not only the spending of government program participants, but also the spending (both consumption and investment) of those who finance the government. When government redistributes, the taxpayers and lenders to our government have less to spend and save on other things. Even a foreign lender who decides to lend that extra $1 million to our government may well be lending less to U.S. households and companies. At best, redistribution from workers to the unemployed reallocates demand rather than increasing its total.

 

Economics is an empirical science and even Okun’s tradeoff should continually be compared with real-world data.  Let’s look at the spending data beginning in August when unemployment payments were about $50 billion per month less than they were before. August retail sales showed a normal monthly increase despite the absence of so many unemployment bonuses. With the bonuses still gone, retail sales surged in September.



Professor Krugman’s error is not new. Years ago, he failed to recognize that there are two fundamentally different types of government spending. One type is transfers, which often pay people for not working or producing. The other type is government purchases of goods and services that pay people for working and producing a good or service for government use. Transfers and government purchases are economic opposites yet, as I explain in my review of his 2012 book, Krugman insists on using studies of the effects of government purchases (military, road construction, etc.) to project the effects of government transfers such as unemployment benefits.

 

Krugman on taxes

 

Returning to a 2017 theme, Professor Krugman asserts that “the channel through which corporate tax cuts are supposed to raise wages is . . . higher investment.” He also concludes that “repealing those corporate tax cuts won’t reduce wages . . . because of the preponderance of monopoly rents in modern corporate profits.”

 

Although I agree that the corporate tax is related to aggregate investment, I am surprised that he forgot so easily the conclusions of his generation of public-finance economists. They thought that the economic damage from business taxes came at least as much from distorting the allocation of investment across regions, industry, and firms as from reducing the total amount to be invested. My generation calls it “misallocations.” A prime example of misallocation is the low productivity of residential capital as compared with non-residential business capital. Raising taxes on business only makes that misallocation worse.

 

Professor Krugman also seems to forget how monopolies and cartels exercise their market power, which is to withhold some of their production in order to jack up prices. The Organization for Petroleum Exporting Countries (OPEC) is a famous example: They (try) to raise oil prices by instructing their members to produce less. Even if Krugman were correct that many corporations are monopolies, taxing them will only cause them to produce less, exaggerating the misallocation that comes from monopoly. Corporate-tax revenge on the monopolies may be sweet, but it lowers productivity and wages.

 

Here’s an idea that they still teach at in-person schools: Use competition policy rather than tax policy to deal with imperfect competition.

Tuesday, April 28, 2020

If a Tree Falls and Paul Krugman Does Not Hear . . .


By Kevin D. Williamson
Tuesday, April 28, 2020

Paul Krugman of the New York Times writes that he has not “heard any Republican complaints about Trump’s huge bailouts for farmers, whose distress is largely the result of his own policies.”

Perhaps it is the case that Professor Krugman has not heard such complaints.

Is he listening?

From Politico, “The president’s $12 billion farm bailout gets an ugly reception among many Republicans in Congress”:

“This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Sen. Ron Johnson (R-Wis.). “I’m very exasperated. This is serious.”

“Taxpayers are going to be asked to initial checks to farmers in lieu of having a trade policy that actually opens and expands more markets. There isn’t anything about this that anybody should like,” said Sen. John Thune of South Dakota, the No. 3 GOP leader. He suggested the new spending might need to be offset by cuts in other funding areas.

. . . Sen. Ben Sasse (R-Neb.) said Trump is giving farmers “golden crutches,” while Sen. Pat Toomey (R-Pa.) said “this bailout compounds bad policy with more bad policy.” Toomey and GOP Sens. Jeff Flake of Arizona and Bob Corker of Tennessee said their legislation to tie the president’s hands on tariffs should pick up new steam now that the Trump administration is distorting the market.

. . . Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) was unenthused with the bailout because he worries such payments could become permanent, but he said farmers who supported Trump are likely to welcome the aid given the dire straits in the heartland.

I timed myself: Finding those complaints took just under a minute. But it is hard to find such things if you are not looking for them.

What’s worse is that Professor Krugman goes on to criticize the reporting done on deficit politics, even though he does not seem to be very familiar with that reporting.

The New York Times opinion pages continue to exhibit shockingly low intellectual standards, especially in comparison to the often excellent (and often irreplaceable) work done in the rest of the newspaper. An opinion column need not go through something like the peer-review process that one of Professor Krugman’s academic papers would have seen, but putting the word “opinion” at the top of the page does not license a self-respecting writer to ignore questions of fact.

Friday, February 14, 2020

Sanders and Socialism (and Krugman)


By Kevin D. Williamson
Friday, February 14, 2020

Paul Krugman writes:

Bernie Sanders isn’t actually a socialist in any normal sense of the term. He doesn’t want to nationalize our major industries and replace markets with central planning; he has expressed admiration, not for Venezuela, but for Denmark.

Three sentences (two joined by semicolon), three thoughts:

1.      Bernie Sanders calls himself a socialist. He has for a long time. He has been affiliated with other socialists and socialist institutions over the years. At some point, we should take the man at his word. Paul Krugman says Bernie Sanders is not a socialist. Bernie Sanders says Bernie Sanders is a socialist. Maybe Bernie Sanders has a say in that.
2.      Senator Sanders does want to nationalize some major industries, health care prominent among them. He also proposes to enact political controls over other key industries, such as media and banking, that would amount to something close to nationalization. He would subject media companies’ business decisions to political control and would have the federal government own and operate banks.
3.      Senator Sanders has expressed admiration for Venezuela. It is simply untrue to write, as Professor Krugman does, that he has not. Then-Representative Sanders went as far as to sign a letter of support for Venezuelan dictator Hugo Chávez in 2003. And the policies that Sanders proposes are not actually very much like Denmark’s, while his promise of “revolution” is familiar stuff from the experience of Venezuela and other similar cases.

Tuesday, January 10, 2017

When Do Deficits Matter?



By Kevin D. Williamson
Monday, January 09, 2017

It has long been rumored that Paul Krugman does not write the New York Times column that appears under his name. I have no reason to believe that that is true, but I hope it is. There are not many situations in which the reputation of a winner of the Nobel prize and the John Bates Clark medal would be improved by an act of intellectual dishonesty, but this is one of them.

Like homelessness and military casualties, U.S. government deficits are an issue that bleep into visibility on the progressive radar almost exclusively during Republican presidencies. On October 23, 2016, Professor Krugman wrote that the “debt scolds should be ignored,” and that Hillary Rodham Clinton, then presumed to be the next president, should engage in “years of deficit-financed infrastructure spending, if she can.” A grand total of 78 days later, Professor Krugman declared, “Deficits matter again.”

As the kids say, Life comes at you pretty fast.

There is some explanation for this beyond simple hypocrisy.

In her very clear-eyed 2010 profile of Professor Krugman, Larissa MacFarquhar, of The New Yorker, considers the economist’s late-life discovery of politics. “In his columns, Krugman is belligerently, obsessively political, but this aspect of his personality is actually a recent development,” she writes, noting that his work has been strongly influenced by his economist wife, who has focused on making his prose “angrier.” She finds Krugman to be an out-of-touch new-media partisan, dividing his time between Princeton and his beachfront home in St. Croix. Strange that such a life would produce so much bitterness. Is Professor Krugman the world’s angriest economist? It isn’t his anger that is in question: “It’s been a long time — years now — since he did any serious research,” MacFarquhar notes.

Professor Krugman is familiar enough with the workings of social media to anticipate being called out on his remarkably quick — 78 days! — turnaround from scold of deficit scolds to deficit scold. It is unconvincing stuff. He argues that deficit-financed federal activism in the wake of the financial crisis was justified as a form of “depression economics” and that this represents a general consensus in the macroeconomic-policy literature. (It should be noted that this is not his particular area of economic expertise.)

What has changed, he says today, is that the unemployment numbers and wage figures suggest that we have returned to full employment, and hence the emergency measures he advocated earlier are no longer needed. Even if we buy that policy story entirely, the employment and wage figures today are not radically different from what they were 78 days ago, and that demand for deficit-financed spending 78 days ago was, in Professor Krugman’s own prescription, something that should be extended for years into the future.

What has changed since October 23, 2016, is not the labor markets. What has changed is what happened on November 8, 2016. Professor Krugman is simply another cracked Democratic partisan looking for any cudgel with which to beat the incoming Republican government. He was, by all accounts (even those of economists who disagree with him), a very fine economist. He is an incompetent newspaper columnist. The skills are not necessarily transferable.

What’s really a shame about all this is that we could use Krugman the economist just at the moment. In the December 23 issue of National Review, Robert D. Atkinson offered a provocative cover story, “The Case for a National Productivity Strategy,” in which he advocated a vision of “Trumponomics” that would be oriented toward raising overall U.S. labor productivity as an avenue to wider middle-class prosperity. Atkinson, the founder of the Information Technology and Innovation Foundation, has argued for a number of ideas that might strike some more traditional conservatives as an updating of what the Right used to scoff at as “industrial policy,” i.e., putting the White House Office of Science and Technology Policy in charge of a national program for developing automation research, creating a special “innovation box” in the tax code that reduces the tax on profits from “innovation,” doubling the research-and-development tax credit, etc.

The president-elect seems to have similar if less thought-out views, and he is hardly the first. George W. Bush, of the Harvard Business School, was to be the “MBA president,” putting his business expertise into the service of reforming the schools, entitlements, and the tax code, among other things. The events of September 11, 2001, ensured that he never got the chance, but what Bush promised was not so different from what Trump promises and what Ross Perot promised before him: the familiar, ancient formulation of “running the government like a business.”

The limits of that vision were addressed some years ago by an economist not very well-known outside of professional circles, a fellow by the name of Paul Krugman, who authored a persuasive cold-water essay titled “Competitiveness: A Dangerous Obsession.” He began by dismissing (only slightly sneeringly) President Bill Clinton’s insistence that each of the world’s nations is “like a big corporation competing in the global marketplace.” Programs of investment in — see if this sounds familiar — “infrastructure and high technology” were, Professor Krugman argued, political evasions based on economic errors. “Every few months a new best-seller warns the American public of the dire consequences of losing the ‘race’ for the 21st century,” Professor Krugman wrote. “A whole industry of councils on competitiveness, ‘geo-economists,’ and managed-trade theorists has sprung up in Washington.” Many of them, he lamented, occupied high positions in the Clinton administration. What he found was that real changes in standards of living were closely correlated with per-worker productivity — not with changes in productivity in comparison to workers in other countries — and that the most productive workers tended to be found in the most capital-intensive sectors. The vision of countries competing like Pepsi and Coke (his metaphor) is irreparably defective. Neo-mercantilist policies of trade restriction and the like, being based on that error, will not produce the desired results. Krugman:

If top government officials are strongly committed to a particular economic doctrine, their commitment inevitably sets the tone for policy-making on all issues, even those which may seem to have nothing to do with that doctrine. And if an economic doctrine is flatly, completely and demonstrably wrong, the insistence that discussion adhere to that doctrine inevitably blurs the focus and diminishes the quality of policy discussion across a broad range of issues, including some that are very far from trade policy per se.

If partisanship in the context of economic doctrine is something like a fever, then ordinary political partisanship is more like brain cancer. Which of course helps to explain the difference between Paul Krugman the economist and Paul Krugman the columnist.

Of course deficits matter. They mattered during the George W. Bush administration, they mattered during the Barack Obama administration, and they will matter during the Donald Trump administration, though it is always an open question whether congressional Republicans will act like they matter. A country with a modest amount of public debt can run relatively small deficits more or less indefinitely given sufficiently robust economic growth. (That’s the difference between Rex Tillerson’s having a $15 million mortgage and my having one.) But the United States is not that country, and there is a great deal more to our overall public financial picture than formal debt as such, including unfunded entitlement liabilities and unfunded public-pension liabilities that are not federal obligations today but that could very well end up being federal obligations in the future. (Consider those coal-miner pensions that everybody was making a fuss about two weeks ago.) And the deficit matters even if you believe, as Professor Krugman sometimes does, that deficit-financed federal spending programs are the right medicine in times of economic crisis.

There will be many occasions to consider deficit spending over the next several years, and much of that debate will happen in the context of a national-competitiveness debate of the kind that Professor Krugman criticized so trenchantly during the Clinton years. Paul Krugman might have contributed something useful to that debate, rather than spending the back half of his career as an upmarket Rosie O’Donnell.