Paul Krugman

Debunking the “Nation of Takers” Myth

A volunteer clears debris scattered around a burned CVS pharmacy in late April after riots in West Baltimore. (Photo: Gabriella Demczuk/The New York Times)

TRUTHOUT

By Paul Krugman, Krugman & Co. | Op-Ed

Last year marked the 50th anniversary of the war on poverty in the United States, and the date provoked a flurry of studies correcting some widespread myths. Perhaps the most notable was an enlightening progress report from the Council of Economic Advisers.

What needed correcting? Basically, the “nation of takers” narrative, according to which we have been contributing ever-greater sums toward helping the poor, all without making a dent in the poverty rate.

The reality is that spending on “income security” – which includes virtually everything that you could construe as aid to people with low incomes, except Medicaid – has basically been flat for decades, with a temporary (and appropriate) spurt due to unemployment benefits and food stamps during the Great Recession.

If you don’t believe this, think about it: Where are these big anti-poverty programs? We have food stamps and the earned-income tax credit. The Temporary Assistance for Needy Families program, a successor to old-fashioned welfare, is a shadow of the former program. So, outside health care, where are the huge sums we’re supposedly spending?

Meanwhile, it’s not true that poverty has remained unchanged; the official measure is known to be flawed, and a better one from the U.S. Census Bureau shows progress, although not as much as we’d like.

So it is somewhat disheartening to see this thoroughly debunked narrative emerging in some of the Baltimore-inspired discussion.

Paranoia Strikes Deep

You may think that the big news story lately has been the protests in Baltimore – or, if you have different priorities, either Kate’s baby or the Mayweather-Pacquiao fight. But in certain circles, the big thing has been the right-wing belief that operation Jade Helm 15, a military training exercise in Texas, is a cover for President Obama to seize control of the state and force its citizens to accept universal health care at gunpoint.

No, really – and this is being taken seriously both by Ted Cruz, the Republican senator and presidential candidate, and by the governor, who has ordered the Texas State Guard to keep watch on the feds and their possibly nefarious activities.

Before you pooh-pooh this, think about what would happen to a Democratic politician who gave similar credence to a left-wing conspiracy theory this far out. I can’t even think of what that theory might be.

And this isn’t an isolated incident. You should think of the panic over the Obamacare black helicopters as being part of a continuum that runs through inflation truthers like Harvard historian Niall Ferguson and conservative author Amity Shlaes, who insist that the government is cooking the economic books, to quantitative easing conspiracy theorists like (sadly) the economist John Taylor and Representative Paul Ryan, who declare that Ben Bernanke, the former head of the Federal Reserve, only enacted the policy to bail out Mr. Obama, to the general prevalence of “inflation derp,” the insistence that hyperinflation is just around the corner despite more than six years of failed predictions.

There’s something happening here. What it is ain’t exactly clear. But it’s quite remarkable, and pretty scary.

Paul Krugman: Europe Is About To Plunge Back Into Right Wing Fascism

Krugman giving a lecture at the German National Library in Frankfurt in 2008.

Paul Krugman is no left-wing hack trying to get attention.  American economists should take heed to what he has to say…

Addicting Info

Paul Krugman has a warning for Europe: Continuing to wage economic war on yourself in the form of austerity will have ugly and violent consequences. Not that they’re listening — austerity is far too popular with the Very Serious People for them to abandon it. But Krugman has this incredibly annoying (if you’re a conservative) habit of pointing out how the Very Serious People that love the idea of austerity keep cherry picking history:

Try to talk about the policies we need in a depressed world economy, and someone is sure to counter with the specter of Weimar, Germany, supposedly an object lesson in the dangers of budget deficits and monetary expansion. But the history of Germany after World War I is almost always cited in a curiously selective way. We hear endlessly about the hyperinflation of 1923, when people carted around wheelbarrows full of cash, but we never hear about the much more relevant deflation of the early 1930s, as the government of Chancellor Brüning — having learned the wrong lessons — tried to defend Germany’s peg to gold with tight money and harsh austerity.

And what about what happened before the hyperinflation, when the victorious Allies tried to force Germany to pay huge reparations? That’s also a tale with a lot of modern relevance, because it has a direct bearing on the crisis now brewing over Greece.

After World War I, Germany was economically crushed by the British and the French. They wanted Germany to pay them back for the cost of the war and Germany was powerless to resist. The burden of all that debt forced Germany to enact brutal austerity measures and that, predictably, resulted in a massive and prolonged depression. The resentment and desperation this caused led directly to the rise of the Nazi Party and we all know what came next.

And yet, here we are, a little less than a century later and the European Union is imposing crushing austerity on Greece and several other countries (but Greece got it the worst). This, again predictably, has led to massive recession and/or depressions. But the European Union refuses to let up:

Despite this catastrophe, Greece is making payments to its creditors, running a primary surplus — an excess of revenue over spending other than interest — of around 1.5 percent of G.D.P. And the new Greek government is willing to keep running that surplus. What it is not willing to do is meet creditor demands that it triple the surplus, and keep running huge surpluses for many years to come.

What would happen if Greece were to try to generate those huge surpluses? It would have to further slash government spending — but that wouldn’t be the end of the story. Spending cuts have already driven Greece into a deep depression, and further cuts would make that depression deeper. Falling incomes would, however, mean falling tax receipts, so that the deficit would decline by much less than the initial reduction in spending — probably less than half as much. To meet its target, then, Greece would have to do another round of cuts, and then another.

So, despite austerity’s dismal track record, we’re left with Greece and several other countries suffering through depressions and recessions and crippled economies. And what do we see happening? Right wing extremism is on the rise again because when people are angry, they turn to the person that tells them who to blame — usually immigrants, homosexuals and Jews. For a current example, see Russia.

In the case of Greece, we dodged a bullet as they just elected a left wing government to end austerity instead of a right wing one interested in promoting racism, hatred and violence. But Krugman warns that the EU needs to change its approach or they’ll be courting disaster:

In any case, European creditors should realize that flexibility — giving Greece a chance to recover — is in their own interests. They may not like the new leftist government, but it’s a duly elected government whose leaders are, from everything I’ve heard, sincerely committed to democratic ideals. Europe could do a lot worse — and if the creditors are vengeful, it will.

Will the Nazi Party rise again and start a another World War? Not bloody likely. But that doesn’t mean right wing extremists won’t take control and cause untold misery if the European Union blindly demands more austerity. In other words: Those who refuse to learn from the past are doomed to repeat it.

KRUGMAN UNDRESSES THE GOP

Paul Krugman: California proves the GOP's "extremist ideology ... is nonsense"

Paul Krugman | (Credit: Reuters/Chip East)

Salon

The New York Times columnist explains how California’s success puts conservative dogma to shame

In his latest column for the New York Times, award-winning economist and best-selling author Paul Krugman argues that California’s recent success — and Kansas’ ongoing failure — is yet more proof that conservative anti-tax dogma “is nonsense.”

After citing Justice Brandeis’ famous claim that America’s states are laboratories for democracy, Krugman turns to compare and contrast California and Kansas, noting that while the former state has seen economic growth and a successful implementation of Obamacare, the latter has had a stagnant economy and a ballooning deficit.

Not incidentally, these states decided to take opposite approaches to economic policy, with California embracing “a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage” while Kansas “went all-in on supply-side economics, slashing taxes on the affluent” only to see paltry growth and a darkening fiscal picture.

“If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers,” Krugman writes. “Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housing bubble, is back to pre-recession levels.”

Does Krugman expect the California example to change conservatives’ minds? Hardly. “Has there been any soul-searching among the prophets of California doom, asking why they were so wrong?” he asks. “Not that I’m aware of. Instead, I’ve been seeing many attempts to devalue the good news from California by pointing out that the state’s job growth still lags that of Texas, which is true, and claiming that this difference is driven by differential tax rates, which isn’t.”

Krugman then explains why Texas and California diverge — and how it’s not for the reasons right-wingers think:

For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s housing prices. Despite the bursting of the bubble, home values in California are still double the national average, while in Texas they’re 30 percent below that average. So a lot more people are moving to Texas even though wages and productivity are lower than they are in California.

And while some of this difference in housing prices reflects geography and population density — Houston is still spreading out, while Los Angeles, hemmed in by mountains, has reached its natural limits — it also reflects California’s highly restrictive land-use policies, mostly imposed by local governments rather than the state. As Harvard’s Edward Glaeser has pointed out, there is some truth to the claim that states like Texas are growing fast thanks to their anti-regulation attitude, “but the usual argument focuses on the wrong regulations.” And taxes aren’t important at all.

Paul Krugman slams Wall Street for “undermining our economy and our society”

Paul Krugman slams Wall Street for "undermining our economy and our society"

Paul Krugman (Credit: AP/Lai Seng Sin)

I know this is the second consecutive Salon article, but economist, Paul Krugman has something to say and I wanted to share it…

Salon

The New York Times columnist argues that America’s large financial sector has done more harm than good

In his latest column for the New York Times, best-selling author and award-winning economist Paul Krugman argues that the financial sector of the American economy is not only outsized but that it’s hurting the economy and making Americans’ lives worse.

Citing journalist Michael Lewis’ new book on high-frequency trading — which opens with a story about an expensive tunnel being drilled for fiber-optic cable to cut down the communication time between Chicago’s futures markets and the stock market in NYC by three milliseconds — Krugman argues that American public policy has become overly influenced by high finance, with inequality and economic instability as a result. “[American] society,” Krugman writes, “is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.”

After claiming that the large financial sector in the U.S. doesn’t increase overall prosperity and doesn’t promote economic stability, Krugman writes that its primary function seems to be to prey off of less powerful economic actors. “[Wall Street’s] playing small investors for suckers,” Krugman says, “causing them to waste huge sums in a vain effort to beat the market.” The result, Krugman posits, is a select few Wall Street players making a lot of private profits while contributing little to the overall public.

Krugman continues:



In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. [NYU Professor Thomas] Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.

 

Paul Krugman bashes Paul Ryan for yet another “con job”

Paul Krugman bashes Paul Ryan for yet another

Paul Krugman, Paul Ryan (Credit: Reuters/Bob Strong/AP/Mary Altaffer/photo composite by Salon)

Salon

It’s been a while since the New York Times’ premiere liberal columnist, Paul Krugman, had reason to flay one of his favorite targets, chief GOP wonk and former vice presidential candidate Paul Ryan. But with the GOP suddenly talking about how much it wants to help America’s poor — a development Krugman calls “fake compassion” — the award-winning economist and best-selling author once again has a reason to take Ryan to the woodshed.

In his latest column for the Times, Krugman writes that while Ryan’s new attack on liberalism —a lengthy report, supposedly on the efficacy of government-funded anti-poverty measures — is less of a sham than efforts from years past, the Wisconsin congressman has still ultimately produced “a con job.”

Krugman applauds Ryan for “citing a lot of actual social science research” but insists that the GOPer has falsely represented the conclusions of most of the research he cites. “In some cases,” Krugman writes, “Mr. Ryan and colleagues outright misstate what the research says, “drawing outraged protests from a number of prominent scholars about the misrepresentation of their work.”

But where Ryan’s report really goes wrong, Krugman argues, is in its ideological assumptions — chiefly, it’s unexamined belief that anti-poverty measures make the poor lazy and drains them of their ambition. “Mr. Ryan would have us believe that the ‘hammock’ created by the social safety net is the reason so many Americans remain trapped in poverty,” Krugman writes. “But the evidence says nothing of the kind.”

More from Krugman at the New York Times:



After all, if generous aid to the poor perpetuates poverty, the United States — which treats its poor far more harshly than other rich countries, and induces them to work much longer hours — should lead the West in social mobility, in the fraction of those born poor who work their way up the scale. In fact, it’s just the opposite: America has less social mobility than most other advanced countries.

And there’s no puzzle why: it’s hard for young people to get ahead when they suffer from poor nutrition, inadequate medical care, and lack of access to good education. The antipoverty programs that we have actually do a lot to help people rise. For example, Americans who received early access to food stamps were healthier and more productive in later life than those who didn’t. But we don’t do enough along these lines. The reason so many Americans remain trapped in poverty isn’t that the government helps them too much; it’s that it helps them too little.

Which brings us back to the hypocrisy issue. It is, in a way, nice to see the likes of Mr. Ryan at least talking about the need to help the poor. But somehow their notion of aiding the poor involves slashing benefits while cutting taxes on the rich. Funny how that works.

Paul Krugman: GOP’s Obamacare lies hurt American families

Paul Krugman: GOP's Obamacare lies hurt American families

(Credit: AP Photo/ Francisco Seco)

As comprehensive and satisfying a take-down of the modern GOP as you will read…(Salon)

Salon

Award-winning economist and best-selling author Paul Krugman’s latest column for the New York Times is an unapologetic attack on the Republican Party for, in Krugman’s words, “trying to deceive voters” and, in the process, “deceiving themselves.”

What’s got Krugman riled up this time is the GOP’s official response to President Obama’s 2014 State of the Union address, in which Washington congresswoman Cathy McMorris Rodgers argued Obamacare “is not working” and, as proof, cited the experience of one of her constituents, Bette Grenier, who claimed to have seen her monthly premiums increase by a whopping $700.

Before explaining the problems with Grenier’s story, Krugman makes quick work of McMorris Rodgers’ assertion that Obamacare is not working. He notes that sign-ups, while slightly behind projections due to the disastrous rollout of Healthcare.gov, are nevertheless happening at a rapid speed, and that most insurance companies are thus far not concerned that the applicant pool is too old and sick (which could lead to higher premiums for everyone else).

“[T]he law,” Krugman declares, “is doing its job.”

Moving on to Bette Grenier, Krugman, like Salon’s Brian Beutler, points out that Gernier’s story almost immediately fell apart once it was examined by members of Washington state’s media.

The biggest problem with her tale was the fact that Grenier, if she wanted to, could have found a much cheaper alternative than the $700-hike plan, but she refused, saying, “I wouldn’t go on that Obama website.”

Moreover, Krugman notes that Grenier’s prior insurance was pretty bad — it was barebones, had “a $10,000 deductible” and “[offered] very little financial protection.”

But instead of blaming Grenier, Krugman charges Republicans like McMorris Rodgers, who rely on “misleading stories at best, and often outright deceit” in order to portray Obamacare as an unmitigated disaster.

“Who pays the price for this deceit?” Krugman asks. “In many cases, American families. Although health care enrollment is actually going pretty well at this point, thousands and maybe millions of Americans have failed to sign up for coverage because they believe the false horror stories they keep hearing.”

But they’re not the only ones. Krugman also engages in a little bit of concern trolling, warning the GOP that their confidence in Obamacare’s malfunctioning is leading them to a false sense of security about their chances in November’s elections. “[C]onservative politicians aren’t just deceiving their constituents,” Krugman writes, “they’re also deceiving themselves.”

“Right now, Republican political strategy seems to be to stall on every issue, and reap the rewards from Obamacare’s inevitable collapse,” he continues. “Well, Obamacare isn’t collapsing — it’s recovering pretty well from a terrible start. And by the time that reality sinks in on the right, health reform will be irreversible.”

KRUGMAN: We Are On The Brink Of A Technology Revolution That Will Transform Our Economy

Paul Krugman, Laureate of the Sveriges Riksban...

As a quasi techie, this article caught my eye…

Business Insider

A life-changing technology revolution, which we thought it was decades away, is upon us, says economist Paul Krugman, author of “End This Depression Now!

“So far the information technology revolution doesn’t hold a candle to previous technology revolutions,” Krugman said in an interview with Business Insider editor-in-chief Henry Blodget.

“The really big revolutions were the ones that took place largely towards the end of the 19th century that actually powered growth for a long time after that.”

But now, with driverless cars becoming a reality, technology is closer to affecting our physical world — transportation, productivity and efficiency, among others.

Watch Krugman making the case against technology pessimists below.

http://www.businessinsider.com/paul-krugman-on-technology-and-the-economy-2013-2

Paul Krugman Explains Why He Really Didn’t Want That Treasury Job, Anyway

A new commenter inadvertently led me to this article.  Thank you and welcome, Ed Darrell  for your   original suggestion to read You need to watch this: Paul Krugman, ‘Jobs NOW, the key to our recovery’ .

Washington Monthly

In a fascinating and sprawling interview with Bill Moyers, airing this weekend on the PBS show, Moyers & CompanyNew York Times columnist and Nobel laureate Paul Krugman explained why he didn’t want to be nominated to the post of Treasury secretary, even after 235,000 people signed an online petition urging the president to appoint him, and offers his take on Jack Lew, the president’s nominee:

PAUL KRUGMAN: …I probably have more influence…, doing what I do now, than I would if I were inside trying to, you know, do the court power games that come with any White House — even the best — which I don’t think I’d be any good at. So no, this is fine. And what the president needs right now is he needs a hardnosed negotiator. And rumor has it that’s what he’s got, so.

BILL MOYERS: In Jack Lew?

PAUL KRUGMAN: That’s right. The president can’t pass major new legislation. He can’t formulate major new programs right now. What he has to do now is bargain down or ride over these crazy people in the Republican Party. And we what we need now is not deep thinking from the treasury secretary. If the president wants deep thinkers, he can call Joe Stiglitz, he can call other people. What he needs from the Treasury secretary is somebody who’s going to be very effective at dealing with these wild men and making sure that nothing terrible happens.

But that’s not the most interesting part of the interview. Believe it or not, where it gets really fascinating is in Moyers’ discussion with Krugman on the difference between a recession and a depression. (As the title of Krugman’s new book, End This Depression Now!, he thinks what we’re in is the latter.)

While he concedes that the current depression, as he sees it, is not as horrific as the Great Depression of the 1930s, Krugman asserts that it’s likely worse than we perceive, because things that once made a depression obvious to all — breadlines, “will work for food” signs and the like — have take new forms in the the electronic age, and at a time when some public welfare, however meager, is available, and all acting in concert to hide widespread suffering from view:

KRUGMAN: Somebody said that food stamps are the soup kitchens of the modern depression. That there’re a lot of people who would be standing in line to get that soup, who are instead, and it’s a good thing, who are instead getting — I guess it’s now called SNAP, Supplementary Nutritional Assistance Program — but who are getting those debit cards, and are getting essential food stuffs. And they’re at the grocery store and they look like anybody else. But the fact of the matter is they are still as desperate, they’re getting by day to day with the aid of a trickle of government aid, just like the people who were standing in line at the soup kitchens in the ’30s, but they’re not visible. They, we don’t have guys selling apples in street corners partly because, you know, the city licensing wouldn’t allow that anymore.

I totally buy that. I know lots of people of all generations who consider themselves middle-class, but are living hand to mouth. The young people working marginal jobs with no prospects and an unimaginable pile of college debt. The middle-aged people short-selling homes that were theirs for years. The old people who never earned enough to invest in mutual funds.

I know them. Don’t you?

The complete Moyers interview:

Paul Krugman: We’re In Big Trouble If Romney Elected

I believe that Nobel Prize winner for economics, Paul Krugman has been right since the beginning of the Obama administration regarding this country’s path toward economic recovery.

At that time, Krugman warned Obama in an editorial, that his stimulus was too small and would only slow down the country’s economic comeback.  As it turned out, he was right and he’s right about the country being in trouble if Romney is elected.

The Huffington Post

If Mitt Romney is elected president, the U.S. will experience an economic disaster the likes of which have been recently seen in Ireland, according to Paul Krugman.

“Ireland is Romney economics in practice,” the Nobel-Prize winning economist and New York Times columnist said on the Colbert Report on Monday. “I think Ireland is America’s future if Romney is president.” (h/t Politico.)

“They’ve laid off a large fraction of their public workforce, they’ve slashed spending, they’ve had extreme austerity programs, they haven’t really raised taxes on corporations or the rich at all, they have 14 percent unemployment, 30 percent youth unemployment, zero economic growth,” Krugman said.

Romney, the likely Republican nominee for president, recently suggested that the government should lay off more firemen, policemen, and teachers, according to CNN.Romney’s campaign website says that if elected president, Romney would aim to slash federal spending at least 18 percent by the end of his first term.

Conservatives like Romney loved Ireland’s economic program before the country fell into a depression, in part because it had “the lowest corporate tax rates,” Krugman said on the Colbert ReportIreland fell into recession again at the end of last year.

After Krugman finished his criticism of Romney’s economic plan, there was a pause as Colbert tried to think of a good retort. “Well the Irish can handle it, OK? The Irish do very well in bleak, depressing times,” Colbert said. “They’ve got those jigs and everything that they do.”

Paul Krugman Appears On ‘Newsnight,’ Battles British Conservatives On U.K. Austerity Policies (VIDEO)

The Huffington Post

For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.

Krugman, the Nobel Prize-winning economist and left-leaning New York Times columnist, appeared on the BBC program “Newsnight” this Wednesday, jousting with two British deficit hawks over the U.K.’s austerity agenda.

The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.Krugman Newsnight

“We are not a household. We are an economy,” said Krugman. “Your spending is my income, and my spending is your income.”

As Krugman pointed out during the “Newsnight” segment, and later in a NYTcolumn, the austerity question is one that extends beyond Great Britain. Eurozone countries are in the midst of their own austerity struggle right now, one whose effects have been felt most strongly in Greece, where government spending cuts have resulted in riots and strikes and boosted the political fortunes of the far-left, anti-austerity Syriza party.

And in the United States, economists and politicians are engaged in an ongoing debate over the best way to jump-start the lagging economy — and here, too, Krugman hasrepeatedly counseled against the kind of major government spending cuts that conservative policymakers have championed.

Krugman’s argument is that such cuts would cause a major contraction in the American economy, a point that even Mitt Romney, the presumptive Republican nominee for president, appeared to echo in an interview with Time a few days ago.