Mr. Krugman:
A "great" American "leader" once said that deficits don't matter.
It's too bad the political party of his choice and his supporters across the pond
have forgotten that declaration. Politics make strange bedfellows, indeed.
A "great" American "leader" once said that deficits don't matter.
It's too bad the political party of his choice and his supporters across the pond
have forgotten that declaration. Politics make strange bedfellows, indeed.
13
"Gotten past it"? What, haven't you seen the "budget" just put out by the Republicans in Congress? Cut it all they say, especially Medicaid which "will bankrupt the country". I wish Krugman were right about this, but after the Republicans in 2017 have the majority in all branches of government, it will be THE focus of their budget.
13
Hmmmm! Funny how the media - CNN, MSNBC. Fox et. al. keep asking the Wealthy how to "jumpstart" the economy and DARNED if they don't come back with "Cut Taxes on the Wealthy" every, single time! During the heyday of America's Economic Engine- the Fifties and Sixties - tax rates on the Wealthy were 70-90%. We need to get back to that. Or burn the 1%, whichever. They're expendable.
28
“The 2016 election is still 19 mind-numbing, soul-killing months away.”
Dear Paul.
As you so often and so rightly point out, words Matter! And your words matter far more than most, especially to the people who care about the Common Good and the General Welfare as opposed to the perpetrators of the “enormous, destructive con job” you mentioned last Friday.
Your comment above is a thoughtform, Paul. It has a life. It exists and radiates in the mental field of Humanity. It will be registered by many individuals and will stick in their subconscious mental fields and radiate discouragement and despair. I am sure that you did not think of this when you wrote that sentence.
We very much need to clarify exactly what the cabal of perpetrators is up to and how they are working day and night to achieve their ends. We also need to understand that this is not the first time we have been engaged with this particular group of Retrogressors. And we need to know that we have defeated them over and over again in the long trek from the Divine Right of Kings or the “Powerful” to today, the most recent being the triumph of WWII.
The best thing that you do for us, is to put light on the facts and expose their goals and their methods. We can, and we will triumph again.
Dear Paul.
As you so often and so rightly point out, words Matter! And your words matter far more than most, especially to the people who care about the Common Good and the General Welfare as opposed to the perpetrators of the “enormous, destructive con job” you mentioned last Friday.
Your comment above is a thoughtform, Paul. It has a life. It exists and radiates in the mental field of Humanity. It will be registered by many individuals and will stick in their subconscious mental fields and radiate discouragement and despair. I am sure that you did not think of this when you wrote that sentence.
We very much need to clarify exactly what the cabal of perpetrators is up to and how they are working day and night to achieve their ends. We also need to understand that this is not the first time we have been engaged with this particular group of Retrogressors. And we need to know that we have defeated them over and over again in the long trek from the Divine Right of Kings or the “Powerful” to today, the most recent being the triumph of WWII.
The best thing that you do for us, is to put light on the facts and expose their goals and their methods. We can, and we will triumph again.
16
"In the United States, however, we seem to have gotten past that."
Not if "we" includes the Washington Post, we haven't. See this morning's Fred Hiatt column, bashing Chris Van Hollen for walking away from Bowles-Simpson.
Not if "we" includes the Washington Post, we haven't. See this morning's Fred Hiatt column, bashing Chris Van Hollen for walking away from Bowles-Simpson.
20
The austerity message resonates because most people running households are aware of the problems too much debt can cause. Lost in the noise about comparisons between household, business and public debt are the servicing of debt necessary to run each type of arrangement. It would be nice for government to forgo debt, but it isn't the end of the world to finance major projects with future revenues. It is what most people do when buying a home and car or when funding the businesses they run.
There is no shortage of information to guide decisions on debt. It can be shrill and nonsensical from any point of view, and it seems that shrill and nonsensical resonates with conservatives. The problem with scaring up support is found in following through on the fear mongering. Sam Brownback and Bobby Jindal are excellent public sector examples.
Al Qaeda and ISIS wish they could do as much damage to America as conservative politicians. It's almost enough to make you wonder who the greater terrorists are when America is crumbling because fiscal conservatives refuse to fund its common assets. The only difference between planes crashing into buildings and bridges slowly falling apart is the pace of ruin. Our conservative politicians managed to kill and maim more Americans than any terror organization producing a wonderful new iteration of Islamic dystopia in the bargain. Why do Republicans hate America?
There is no shortage of information to guide decisions on debt. It can be shrill and nonsensical from any point of view, and it seems that shrill and nonsensical resonates with conservatives. The problem with scaring up support is found in following through on the fear mongering. Sam Brownback and Bobby Jindal are excellent public sector examples.
Al Qaeda and ISIS wish they could do as much damage to America as conservative politicians. It's almost enough to make you wonder who the greater terrorists are when America is crumbling because fiscal conservatives refuse to fund its common assets. The only difference between planes crashing into buildings and bridges slowly falling apart is the pace of ruin. Our conservative politicians managed to kill and maim more Americans than any terror organization producing a wonderful new iteration of Islamic dystopia in the bargain. Why do Republicans hate America?
34
I doubt very much that American Journalism has gotten beyond the Mediamacro madness. You must consider the source. It is not coming from economists employed by the financial industry. It is not even coming from conservative politicians or the shills in conservative think tanks.
No, Mediamacro comes from the mavens of the media themselves. From the full spectrum of economic discourse they select and expound this single view as the undoubted truth because they know in their gut that it is so. They know this because the talking heads are all pulled from the ranks of the recently rich or perennially rich among us.
Austerity in government is no problem when you are gainfully employed at a very lucrative job. What care you if 25% are unemployed when you live on a generous expense account? It is far more important that the government do all that it can to insure your savings and portfolio are safe from inflation and that your bond holdings return a good income then that the economy of the masses be healthy.
Check the tailors of the empty suits on CNN and CNBC and you will know where Mediamacro comes from.
No, Mediamacro comes from the mavens of the media themselves. From the full spectrum of economic discourse they select and expound this single view as the undoubted truth because they know in their gut that it is so. They know this because the talking heads are all pulled from the ranks of the recently rich or perennially rich among us.
Austerity in government is no problem when you are gainfully employed at a very lucrative job. What care you if 25% are unemployed when you live on a generous expense account? It is far more important that the government do all that it can to insure your savings and portfolio are safe from inflation and that your bond holdings return a good income then that the economy of the masses be healthy.
Check the tailors of the empty suits on CNN and CNBC and you will know where Mediamacro comes from.
8
It's getting embarrassing. Krugman and his sidekicks don't want to talk about UK job growth. So let me spell it: the UK has more people in work than ever before (+30 million), is creating more jobs than the rest of Europe put together, is attracting more economic migrants than ever before, has replaced its lost public sector jobs with net new jobs in the private sector.
Krugman, Wren Lewis, Wolf et al expected a "depression" which means millions of permanently lost jobs and the labour force rate to decline.
Humbled and nowhere to hide the job taboo subject gets buried by them. So funny their egos trump any semblance of reality or credibility.
Krugman, Wren Lewis, Wolf et al expected a "depression" which means millions of permanently lost jobs and the labour force rate to decline.
Humbled and nowhere to hide the job taboo subject gets buried by them. So funny their egos trump any semblance of reality or credibility.
16
American Anglophiles revel in an envious imaginary media vision of Britain as in the "Masterpiece Theater" land where the British with a millennia of history are far more cultured, bright, wise, articulate and mannered than Americans. Americans tend to forget why we had a revolution and the world mess that we inherited from the British empire from imperial actions before, during and after two world wars.
12
"As I said, in the United States we have mainly gotten past that, for a variety of reasons — among them, I suspect, the rise of analytical journalism, in places like The Times’s The Upshot. "
An informed electorate is essential to a working democracy and we have historically gotten informed by the press. The last few decades the press has sloughed off that duty and has instead reported opinions and horse races and beauty pageants. If it really is the case that our journalist are again reporting facts and truth, maybe we can dig ourselves out of this hole republican dogma has put us in.
I shall hope, for despair is not an option. Yet.
An informed electorate is essential to a working democracy and we have historically gotten informed by the press. The last few decades the press has sloughed off that duty and has instead reported opinions and horse races and beauty pageants. If it really is the case that our journalist are again reporting facts and truth, maybe we can dig ourselves out of this hole republican dogma has put us in.
I shall hope, for despair is not an option. Yet.
16
A mantra for troubled times: "Debt to GDP ratio..OMMM...deb to GDP Ratio...."
Just keep chanting this and vote against whatever Paul Ryan proposes and all will be welfl.
Just keep chanting this and vote against whatever Paul Ryan proposes and all will be welfl.
8
Not surprising that Rupert Murdoch controls large swathes of media in both counties. He is a festering wound on society.
34
Look at the conditions for our last significant inflation in the 1970's
Payrolls at 52% of GDP vs 42% now
Gasoline prices at pump +400% vs -30% now
Rapid personal credit growth as baby boomers mortgaged their first homes vs relatively flat now.
While oligarchs, who are only paranoid about preserving the value of their assets, spin this deficit yarn on corporate-controlled media, only a few lonely voices are talking about the real threat to our way of life -- the rise of computers and robots which is reducing the need for human labor.
We must find a way to restore payrolls to a healthy 50% of GDP if we are to rebuild a strong middle class and save our democracy. Failure to address this will result in a collapse of wage-based demand, much like 1933 and everyone, including the oligarchs, will lose.
Payrolls at 52% of GDP vs 42% now
Gasoline prices at pump +400% vs -30% now
Rapid personal credit growth as baby boomers mortgaged their first homes vs relatively flat now.
While oligarchs, who are only paranoid about preserving the value of their assets, spin this deficit yarn on corporate-controlled media, only a few lonely voices are talking about the real threat to our way of life -- the rise of computers and robots which is reducing the need for human labor.
We must find a way to restore payrolls to a healthy 50% of GDP if we are to rebuild a strong middle class and save our democracy. Failure to address this will result in a collapse of wage-based demand, much like 1933 and everyone, including the oligarchs, will lose.
8
With robots doing the work, you will need make up lost payroll with dividends from corporations if you want personal income to be 50% of GDP.
5
" A few years ago, at the height of our own deficit fetishism, the American news media showed some of the same vices. "
"In the United States, however, we seem to have gotten past that. Britain hasn’t."
Really, the proposed Paul Ryan Republican budget does exactly that. It cuts Medicare, Medicaid and the Food Stamp Program. At the same time Republicans want to increase the defense budget by a couple of hundred billion dollars. Republicans never change, deficits only matter when the programs that are funded benefit the poor, those that need health care and the elderly. To a Republican deficits don't matter when it comes to the military industrial complex, corporate welfare or tax benefits for the already too wealthy. No the conversation has not changed Dr. Krugman.
"In the United States, however, we seem to have gotten past that. Britain hasn’t."
Really, the proposed Paul Ryan Republican budget does exactly that. It cuts Medicare, Medicaid and the Food Stamp Program. At the same time Republicans want to increase the defense budget by a couple of hundred billion dollars. Republicans never change, deficits only matter when the programs that are funded benefit the poor, those that need health care and the elderly. To a Republican deficits don't matter when it comes to the military industrial complex, corporate welfare or tax benefits for the already too wealthy. No the conversation has not changed Dr. Krugman.
15
Deficits matter because debt matters. If the first is large enough long enough, debt becomes debilitatingly large and impairs growth. This DESPITE desperate efforts by central banks to suppress interest rates to historic lows. Western nations pushed the debt envelope past the breaking point in 2008, and we've been picking up the pieces ever since. This fundamental problem is not solved by piling on more debt, particularly when once debt reaches 100% of GDP. At this level, if interest rates rise above GDP growth for too long, bankruptcy becomes a possibility and markets riot.
5
I do not know why you, or anyone else, could refer to the Gross National Domestic Product (GDP) of any nation as being any indication of that nation’s economic strength, unless the expense and the economic activity of spending borrowed money on wealth-consuming government activities such as infrastructure improvements, wars, law enforcement, water and sewers, streets and bridges, fire protection, welfare, government employee payrolls, social security and other similar wealth consuming activities paid for with tax collections are not included into that GDP.
A nation's GDP has nothing to do with that nation’s economic strength or the ability of that nation to repay their national debt, especially that part of the GDP activity that was government borrowing money from wealth-producing entities in the industrial wealth-creating nations and then spends that borrowed money to pay for wealth consuming bureaucratic government payrolls, infrastructure, unemployment benefits, education, welfare, retirement pensions, high speed rail, free medical services, housing, wars, social services, pork barrel projects and other tax-funded bureaucratic jobs that do not produce any new national wealth that the nation could tax in order to collect tax money to pay for their government activities?
With US federal and local government tax paid wealth consuming activities at more than 42 percent of the GDP and then included or added into the GDP, the GDP number for the USA is almost meaningless!
A nation's GDP has nothing to do with that nation’s economic strength or the ability of that nation to repay their national debt, especially that part of the GDP activity that was government borrowing money from wealth-producing entities in the industrial wealth-creating nations and then spends that borrowed money to pay for wealth consuming bureaucratic government payrolls, infrastructure, unemployment benefits, education, welfare, retirement pensions, high speed rail, free medical services, housing, wars, social services, pork barrel projects and other tax-funded bureaucratic jobs that do not produce any new national wealth that the nation could tax in order to collect tax money to pay for their government activities?
With US federal and local government tax paid wealth consuming activities at more than 42 percent of the GDP and then included or added into the GDP, the GDP number for the USA is almost meaningless!
5
What is austerity's final truth?
1. It does not work, OR
2. It is painful (yet mercifully finite)?
In the early-80s, Democrat, Paul Volcker's knee on US inflation's neck killed it cold. That enabled a frothy peace dividend, that under Clinton seemed both manna from Heaven and proof of Clinton's fiscal genius.
Neither mutually contradictory assumption fits, but seems austerity worked 'real good' for the American worker and his Dream.
The American worker's skills (if he still has many) are too low-grade or obsolete to pay him more than a more efficient machine or an unskilled immigrant.
Krugman man would surely agree that if 90% of workers made products that consumers really wanted, then earned enough to pay for life's needs like food, a house, a flat-screen, two cars, and a fishing boat with trailer, those equal Krugman's broad economic prosperity (and blue votes). Well, 90% of our workers can no longer competitively make wanted products. Solving that problem is not simply to open the credit valves wide either.
Volcker's killing past US inflation, ruled out no future inflation, if US money and credit suppliers later detached from reality. Britain's men-in-the-street strongly agree Gordon Brown spent them into a hole. Better a short, sharp austerity than live with inflation (even 2%/yr) and reality-detachment about inflation.
1. It does not work, OR
2. It is painful (yet mercifully finite)?
In the early-80s, Democrat, Paul Volcker's knee on US inflation's neck killed it cold. That enabled a frothy peace dividend, that under Clinton seemed both manna from Heaven and proof of Clinton's fiscal genius.
Neither mutually contradictory assumption fits, but seems austerity worked 'real good' for the American worker and his Dream.
The American worker's skills (if he still has many) are too low-grade or obsolete to pay him more than a more efficient machine or an unskilled immigrant.
Krugman man would surely agree that if 90% of workers made products that consumers really wanted, then earned enough to pay for life's needs like food, a house, a flat-screen, two cars, and a fishing boat with trailer, those equal Krugman's broad economic prosperity (and blue votes). Well, 90% of our workers can no longer competitively make wanted products. Solving that problem is not simply to open the credit valves wide either.
Volcker's killing past US inflation, ruled out no future inflation, if US money and credit suppliers later detached from reality. Britain's men-in-the-street strongly agree Gordon Brown spent them into a hole. Better a short, sharp austerity than live with inflation (even 2%/yr) and reality-detachment about inflation.
5
The whole house of cards collapses when there is no capacity to consume.
9
I regret to say that, when given the opportunity to emigrate to USA from Britain, I was happy to leave one wonderful country for another but one that, unbeknownst to me, suffered the same ignorance of economics as each other. In my 70+ years it has become obvious that the economy of a country does better when a capitalistic socialist government holds the reins. Americans almost to a man keep telling me how wonderful Margaret Thatcher was but she was a hawkish conservative whose eyes had become dimmed to the needs of 'her people'. Both USA and UK are more contented, more widely prosperous, as a progressive liberal and socialist government flourishes but believe the hype of far right conservatives when it comes to election time. The history of each country shows the effects on economy as the yoyo effect of periods in each extreme. During a Democrat (Labour) period the economy amazingly improves, with more share going to the middle class and below but, during a Republican (Tory) period the national debts increase, only the rich benefit and the population is depressed. Britain is due for a change in direction (according to the yoyo effect) as is America. UK may actually achieve a change while the US Republican party tears itself apart and loses the advantage. The outcomes will be interesting to see for political pundits but, in the end, it is the public at large that suffer from the gamesmanship.
15
Austerity is little more than a plutocratic trick. The European Commission just ordered France to rise taxes on some books from 5.5% to 20% (quadrupling of tax). Meanwhile it condones the world's greatest fraudster evasion of taxes, by the billions, within Europe.
3
Yes, but now we have the clear voice of reason, so all is not lost.
I used to think that Schiller was correct when he wrote "Mit der Dummheit kaempfen Goetter selbst vergebens".
After all, he was a clever fellow, and had a way with words.
But now I am beginning to wonder.
Perhaps humanity will prevail, after all.
Thanks in no small measure to Profs. Krugman, Stigler and Reich.
And Dr. Barbara Erlichman, of course.
You are hereby all awarded the emblem of Three Hearts and Three Lions.
Or perhaps it is Three Harts. I can never get my heraldry straight..
In any case, you are entitled to wear this emblem on your shield arm, or as a medallion over the heart.
Or some prefer to remain undecorated. It is up to you.
Your Friend,
Doc Who
I used to think that Schiller was correct when he wrote "Mit der Dummheit kaempfen Goetter selbst vergebens".
After all, he was a clever fellow, and had a way with words.
But now I am beginning to wonder.
Perhaps humanity will prevail, after all.
Thanks in no small measure to Profs. Krugman, Stigler and Reich.
And Dr. Barbara Erlichman, of course.
You are hereby all awarded the emblem of Three Hearts and Three Lions.
Or perhaps it is Three Harts. I can never get my heraldry straight..
In any case, you are entitled to wear this emblem on your shield arm, or as a medallion over the heart.
Or some prefer to remain undecorated. It is up to you.
Your Friend,
Doc Who
7
"thinking about job creation....." massive investment in renewable energy along with conservation will create jobs and will save the planet from global warming, which is caused by greenhouse gases--mostly emissions from burning coal and oil. Burning coal is completely unnecessary as there are readily available alternatives available in the short run, i.e. a mixture of solar/wind, hydro, and natural gas plus conservation. The time to do this is now, with solar panels at all time low prices and coming down.
Government should offer incentives to make this happen fast. A carbon tax on burning oil and coal with all the money subsidizing the purchase of renewable energy installations, including hybrid/electric vehicles, would not only do this, but would create jobs and bring the cost of energy down.
Energy from the sun is free. The grid is already in place, and computer technology and batteries are available to make this happen now. Using natural gas would be an interim solution to facilitate this.
The atmosphere surrounding our planet makes life possible on Earth. It is infinitely small. We are foolish to jeopardize this by continuing to burn fossil fuels, now that we know the dangers, dangers which the scientific community has pointed out in great detail.
We are still adding carbon to the atmosphere at a high rate. Present initiatives aim for some reduction, which is not enough. The target should be zero.
Government should offer incentives to make this happen fast. A carbon tax on burning oil and coal with all the money subsidizing the purchase of renewable energy installations, including hybrid/electric vehicles, would not only do this, but would create jobs and bring the cost of energy down.
Energy from the sun is free. The grid is already in place, and computer technology and batteries are available to make this happen now. Using natural gas would be an interim solution to facilitate this.
The atmosphere surrounding our planet makes life possible on Earth. It is infinitely small. We are foolish to jeopardize this by continuing to burn fossil fuels, now that we know the dangers, dangers which the scientific community has pointed out in great detail.
We are still adding carbon to the atmosphere at a high rate. Present initiatives aim for some reduction, which is not enough. The target should be zero.
7
The economy would be fine if the Republicans weren't constantly trying to keep money out of the hands of the majority of the population.
As long as the economy is designed to only function for the rich, the economy will be stagnant.
As long as the economy is designed to only function for the rich, the economy will be stagnant.
22
Professor Krugman,
Non-government jobs are only created by greedy businesses and greedy corporations in order for their employees to create new taxable wealth for those same businesses and corporations.
Only businesses and corporations increase the taxable wealth in their nations.
That privately held taxable wealth is then available for the federal and local governments to forcibly take or confiscate a portion of that wealth in the form of taxes in order for the government to raise funds in order to pay for those wealth-consuming government jobs and other activities.
The main political and economic goal of the USA, Detroit and the European Nations should be to re-industrialize in order to create new taxable national wealth and new non taxpayer paid jobs.
Federal US government austerity now might prevent bankruptcy of the US federal government and/or forced austerity or worse later.
As the USA completes the de-industrialization process, all of the high paying skilled STEM labor manufacturing jobs will be gone to the nations where those manufacturing jobs have been relocated.
US citizens should demand re-industrialization because only that will create a bigger economic pie, instead of US citizens demanding a larger and larger piece of the existing ever-shrinking economic pie that is left over.
Non-government jobs are only created by greedy businesses and greedy corporations in order for their employees to create new taxable wealth for those same businesses and corporations.
Only businesses and corporations increase the taxable wealth in their nations.
That privately held taxable wealth is then available for the federal and local governments to forcibly take or confiscate a portion of that wealth in the form of taxes in order for the government to raise funds in order to pay for those wealth-consuming government jobs and other activities.
The main political and economic goal of the USA, Detroit and the European Nations should be to re-industrialize in order to create new taxable national wealth and new non taxpayer paid jobs.
Federal US government austerity now might prevent bankruptcy of the US federal government and/or forced austerity or worse later.
As the USA completes the de-industrialization process, all of the high paying skilled STEM labor manufacturing jobs will be gone to the nations where those manufacturing jobs have been relocated.
US citizens should demand re-industrialization because only that will create a bigger economic pie, instead of US citizens demanding a larger and larger piece of the existing ever-shrinking economic pie that is left over.
4
The US will go bankrupt, run out of dollars the day after the NFL runs out of points.
Every time we tried austerity by eliminating deficits for more than 3 years and paying down the debt by 10% or more, we fell into depression. This happened 6 times.
Every time we tried austerity by eliminating deficits for more than 3 years and paying down the debt by 10% or more, we fell into depression. This happened 6 times.
23
Britain's Terrible, No-Good Economic Discourse
[ I love this sub-title, which is completely fitting. ]
[ I love this sub-title, which is completely fitting. ]
5
Professor Krugman,
The national wealth that is created and owned by private businesses and individuals is (almost) the only source of wealth available for the federal and local governments to forcibly take or confiscate a portion of in the form of taxes in order for the government to raise funds to pay for all of the bureaucratic employee payrolls, government activities, entitlements, government contracts, military contracts, pork barrel infrastructure improvements, pay to play business deals, political power influenced “Pay to Play” no-bid contract awards, unemployment benefits, income equalization, gigantic Lockheed-Martin type military contract(s), pork barrel infrastructure improvements, Solyndra type PAY TO PLAY business loan then bankruptcy deals, CGI Federal political power influenced PAY TO PLAY contract awards, wars, welfare, unemployment benefits, repay existing of future bond obligations (borrowed money), and other government expenses that pay citizens by expending national wealth for these non-wealth-creating activities that actually consumes and destroys the nation's wealth and national government economic capabilities.
If any nation's wealth-creating businesses leave that nation to escape taxation or go bankrupt because of taxation, then the sources for any government funding will reduce or disappear, and the government services will diminish or disappear.
The national wealth that is created and owned by private businesses and individuals is (almost) the only source of wealth available for the federal and local governments to forcibly take or confiscate a portion of in the form of taxes in order for the government to raise funds to pay for all of the bureaucratic employee payrolls, government activities, entitlements, government contracts, military contracts, pork barrel infrastructure improvements, pay to play business deals, political power influenced “Pay to Play” no-bid contract awards, unemployment benefits, income equalization, gigantic Lockheed-Martin type military contract(s), pork barrel infrastructure improvements, Solyndra type PAY TO PLAY business loan then bankruptcy deals, CGI Federal political power influenced PAY TO PLAY contract awards, wars, welfare, unemployment benefits, repay existing of future bond obligations (borrowed money), and other government expenses that pay citizens by expending national wealth for these non-wealth-creating activities that actually consumes and destroys the nation's wealth and national government economic capabilities.
If any nation's wealth-creating businesses leave that nation to escape taxation or go bankrupt because of taxation, then the sources for any government funding will reduce or disappear, and the government services will diminish or disappear.
4
Gerald, answer this question. Since private businesses and individuals pay their taxes in dollars, where would they get the dollars to do so if the federal government had not printed them and spent them back into the private sector?
11
Len Charlap,
Which came first, the chicken or the egg? (industry or tax paid public infrastructure)
Industry came first because without the wealth created by industry there would not be any wealth available to be confiscated by the government to create public infrastructure!
Even the early "company towns" had company provided infrastructure to support their workers.
Public funded infrastructure WAS NOT an essential part of the foundation to the creation of national wealth through industrialization.
During the industrialization period of the USA, private companies created their own company towns with conditions for workers similar to the conditions for workers in Bangladesh without any tax funded infrastructure support.
The company towns had only as much of their own infrastructure systems as they needed to support their industrial business and their employees.
These companies also printed their own paper company currency, which was only redeemable for rent in the company houses and for products at the company store.
The workers probably also used this currency for business and trade between themselves for various items that the worker's families produced and sold to each other.
Which came first, the chicken or the egg? (industry or tax paid public infrastructure)
Industry came first because without the wealth created by industry there would not be any wealth available to be confiscated by the government to create public infrastructure!
Even the early "company towns" had company provided infrastructure to support their workers.
Public funded infrastructure WAS NOT an essential part of the foundation to the creation of national wealth through industrialization.
During the industrialization period of the USA, private companies created their own company towns with conditions for workers similar to the conditions for workers in Bangladesh without any tax funded infrastructure support.
The company towns had only as much of their own infrastructure systems as they needed to support their industrial business and their employees.
These companies also printed their own paper company currency, which was only redeemable for rent in the company houses and for products at the company store.
The workers probably also used this currency for business and trade between themselves for various items that the worker's families produced and sold to each other.
3
Any discussion about govt. debts and, indeed, taxation, should include this fact as a starting point: "...the world’s richest people have more than $152 trillion at their disposal..." (source: BusinessWeek)
Government is becoming the weak player on the national and international scene. Wealth rules the world and corporations increasingly tell us how we can live, where we can go, what we can do and what we will be charged in rates fees and even punishments. The focus on government as a source of evil is a 19th century obsession birthed by the time of kings and queens. The real kings of these times are the holders of massive wealth.
Look at it another way: the wealthy believe the poor and the near poor should be punished for taking public benefits. So, they order the economy, in a time of recession, to be slowed further, shaking out the "excess" payments to those struggling.
This makes some sense in England, where being on "the dole" and living in "counsel flats" is a multi-generational way of life for many. As a larger proposition, however, it means that the progress of millions of people out of the lower economic classifications will be halted. The same applies here, too.
Keeping the economy growing provides benefits for those who are not rich. The Republicans say they want this, too, but not until the poor and the near poor have paid the necessary price, austerity. There is very little new in these arguments, they just get dressed in different clothes for each era.
Government is becoming the weak player on the national and international scene. Wealth rules the world and corporations increasingly tell us how we can live, where we can go, what we can do and what we will be charged in rates fees and even punishments. The focus on government as a source of evil is a 19th century obsession birthed by the time of kings and queens. The real kings of these times are the holders of massive wealth.
Look at it another way: the wealthy believe the poor and the near poor should be punished for taking public benefits. So, they order the economy, in a time of recession, to be slowed further, shaking out the "excess" payments to those struggling.
This makes some sense in England, where being on "the dole" and living in "counsel flats" is a multi-generational way of life for many. As a larger proposition, however, it means that the progress of millions of people out of the lower economic classifications will be halted. The same applies here, too.
Keeping the economy growing provides benefits for those who are not rich. The Republicans say they want this, too, but not until the poor and the near poor have paid the necessary price, austerity. There is very little new in these arguments, they just get dressed in different clothes for each era.
11
Many historically successful kings were seen by the people as their collective bargaining agent against the landed nobility.
Today, government is the people's remaining collective bargaining agent against an international interlocked directorship.
Today, government is the people's remaining collective bargaining agent against an international interlocked directorship.
5
"Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts."
This may be so, but we now have Ted Snooze who, if elected, plans to do away with just about everything.
what we sorely lack--and have , for many years, is TRUTH. We have a surfeit of data to prove this or that, but a dearth of TRUTH from any voice. and we have an electorate who are beyond the pale when it comes to choosing a leader. As one pundit said, it will likely be Hillary and Jeb--neither one fit to wear the crown but inevitably one will and we continue to spiral down. Same problem in Britain I'm guessing for the very same reasons.
Money in politics has beat us into the ground.
This may be so, but we now have Ted Snooze who, if elected, plans to do away with just about everything.
what we sorely lack--and have , for many years, is TRUTH. We have a surfeit of data to prove this or that, but a dearth of TRUTH from any voice. and we have an electorate who are beyond the pale when it comes to choosing a leader. As one pundit said, it will likely be Hillary and Jeb--neither one fit to wear the crown but inevitably one will and we continue to spiral down. Same problem in Britain I'm guessing for the very same reasons.
Money in politics has beat us into the ground.
8
The Bowles Simpsons escapade was Obama's first betrayal of his base and ceding power to Republicans and their toxic economic policies.
In endorsing it he gave into all their cries for austerity and Reaganomics.
And it has been a disaster ever since for The Middle Class and all but the Uber Class.
If he came into office swinging and hit the ground running, more in the vein of FDR, Sanders and Warren, the Far Right would not be as entrenched as it is today.
He thereby distinguished himself as the Chamberlain of Progressivism.
In endorsing it he gave into all their cries for austerity and Reaganomics.
And it has been a disaster ever since for The Middle Class and all but the Uber Class.
If he came into office swinging and hit the ground running, more in the vein of FDR, Sanders and Warren, the Far Right would not be as entrenched as it is today.
He thereby distinguished himself as the Chamberlain of Progressivism.
7
President Obama's books must be among the top unread best-sellers in the brief history of time because his conservatism shines through in them.
1
Frustrated by his inability to influence the American economy, beyond the current far left thinkers, Krugman is now offering his sage wisdom to the UK. At the end of the day, debt really will matter. As the next generations pay off an ever larger debt load at much higher interest rates than those in effect today, we will look back on Mr. Krugman's views as being not just wrong, but dangerously so. Be afraid, Britons. Be very afraid.
6
The US paid off its debt exactly once in 1835 which was followed in 1837 by the longest depression in our history.
The largest debt as a percentage of GDP in our history (about 40% larger than today's) was in 1946. When did that get paid off or even down? Was the generation after the greatest generation burdened by this debt?
The largest debt as a percentage of GDP in our history (about 40% larger than today's) was in 1946. When did that get paid off or even down? Was the generation after the greatest generation burdened by this debt?
10
70% of ALL U.S. debt was incurred by Reagan, Bush I and bush ii.
Did you know that Obama cut our deficits in half since elected? That the growth of government has slowed to historic levels?
The point of this piece, I believe, is to try to clear away the dust of misinformation that has been, for far too long, the narrative. It is a narrative that the koch bothers and their ilk have foisted on us to enrich themselves at our expense.
Be afraid of your own ignorance.
Did you know that Obama cut our deficits in half since elected? That the growth of government has slowed to historic levels?
The point of this piece, I believe, is to try to clear away the dust of misinformation that has been, for far too long, the narrative. It is a narrative that the koch bothers and their ilk have foisted on us to enrich themselves at our expense.
Be afraid of your own ignorance.
6
The GOP doesn't really care about deficits, when they took over in 2000, instead of using the surplus for deficit reduction, they just gave it away in tax cuts to the wealthy. They only use that argument against the DEMs when they are in power. You see where austerity has gotten Europe, that's what the GOP would like to impose on the US. Cut taxes, reward the wealthy and slash spending is all the GOP stands for anymore. Also suppressing woman and minorities are also GOP priorities.
13
I define the national wealth of any nation (or state, city, family, etc.) as the total value of all of privately owned taxable wealth that is located within and/or being created within the boundaries of that nation, but only if that existing wealth is available to redeem that nation’s currency instead of gold from that nation’s gold reserves, and also only if that wealth is taxable and therefore subject to confiscation by the various governmental taxing authorities to collect money to spend for various wealth consuming/destroying government activities such as infrastructure improvements, government payrolls, government benefits, wars, government contracts, and other government activities that consume the nation’s existing national wealth rather than create any new taxable national wealth.
This privately owned taxable wealth is also subject to being redeemed as collateral for freshly printed paper US Treasury Bonds denominated in US Dollars.
If the businesses in the USA (or any other nation) were making more profits in the USA, then there would be more US-located privately owned taxable wealth available for the US government to confiscate in order to pay for additional federal government wealth consuming federal government activities without borrowing BACK the foreigners US Dollars (US dollars that US consumers paid foreigners to manufacture US consumer goods) from those industrialized nations by selling freshly printed paper US Treasury Bonds to foreigners for US Dollars.
This privately owned taxable wealth is also subject to being redeemed as collateral for freshly printed paper US Treasury Bonds denominated in US Dollars.
If the businesses in the USA (or any other nation) were making more profits in the USA, then there would be more US-located privately owned taxable wealth available for the US government to confiscate in order to pay for additional federal government wealth consuming federal government activities without borrowing BACK the foreigners US Dollars (US dollars that US consumers paid foreigners to manufacture US consumer goods) from those industrialized nations by selling freshly printed paper US Treasury Bonds to foreigners for US Dollars.
1
You have confirmed, as if it were needed, your advocacy for profligate spending marks you not only as a consummate truth torturer but a toady of monumental proportions.
Please, at least, have the grace to admit trillions spent on illegals and those that don't or can't work and are, by world standards, living luxurious lives because socialist slavery aids the elitists dreams. The truth is a hard but rewarding road, give it a try.
Please, at least, have the grace to admit trillions spent on illegals and those that don't or can't work and are, by world standards, living luxurious lives because socialist slavery aids the elitists dreams. The truth is a hard but rewarding road, give it a try.
4
You bought the mantra of the coddled rich.
12
Illegal immigrants generally come here to work. They generally work hard for low pay, which is why American employers hire them. They also pay a lot of taxes. I they don't pay for themselves in the short run, they certainly cover a lot of those costs; and in the long run the economy grows more because they are here. One can be for or against immigration, but it's almost always a net positive for the economy (if not for all individuals). I don't know how you define socialism, but neither by textbook or any other terms is the United States a socialist country. It has a smaller government than any other OECD country except maybe Japan.
10
Republicans will always have people to pander to. There will be no end to stupid.
7
I don't think you can say the U.S. has gotten past the austeristy fixation given the House and Senate proposed budgets and the budgets' wide acceptance.
14
Why do 'economists employed by the financial industry' favor austerity? What benefit do these people find? Is it to keep public debt high; making as hard as possible for people to pay off old 18% credit debt?
9
The right has been been wrong, technically, on all major economic issues over the past 35 years. They have been correct in their marketing prowess. Their attitude is that if they repeat something enough, it must be true, and they've convinced people of these "facts." Austerity benefits is just one of the many....Growth of government over the past 50 years, failure of the Affordable Care Act, Voter Suppression Initiatives (I don't call them ID laws), Minimum Wage increase impact, Iraq (not just politically wrong, but economic as well),etc. Yet, polls show a significant % of americans trust the GOP on the economy. They tell a good fairy tale, and people believe them because, well, they feel it in their "gut."
16
"Unlike Greece, Britain has retained its own currency and borrows in that currency — and no country fitting this description has experienced that kind of crisis." So what does this say about the Euro and the EU? Was it all a big mistake (or conspiracy) of naïve neoliberals?
4
Here we have Mr. Krugman who is an actual economist who thinks in accord with the economic mainstream pointing to: A "media orthodoxy, [which] has become has become entrenched despite, not because of, what serious economists had to say." He refers to this strange phenomena as "mediamacro."
Last week we had the Prime Minister of Israel come to America and address our Congress about a nuclear threat which no intelligence agency in the world is willing to attest to, but which the US Government and Israel want us to take very seriously. Now Mr. Krugman has provided a word coined by Simon Wren-Lewis, which may adequately explain the prevalence of threats, both economic and existential which have no relationship to either Economists or Intelligence Agencies respectively. Now I can attribute them to "mediamacro!"
I guess that my next step is to identify the source of "mediamacro" funding, which might lead me to the source responsible for "mediamacro" thinking, which seems to dominate the thinking of the English Speaking People.
I knew that something was wrong when economists and intelligence agencies have not been the source of accurate information which we were then supposed to act upon. Now I have a word to explain the apparent logical contradictions "mediamacro!"
Last week we had the Prime Minister of Israel come to America and address our Congress about a nuclear threat which no intelligence agency in the world is willing to attest to, but which the US Government and Israel want us to take very seriously. Now Mr. Krugman has provided a word coined by Simon Wren-Lewis, which may adequately explain the prevalence of threats, both economic and existential which have no relationship to either Economists or Intelligence Agencies respectively. Now I can attribute them to "mediamacro!"
I guess that my next step is to identify the source of "mediamacro" funding, which might lead me to the source responsible for "mediamacro" thinking, which seems to dominate the thinking of the English Speaking People.
I knew that something was wrong when economists and intelligence agencies have not been the source of accurate information which we were then supposed to act upon. Now I have a word to explain the apparent logical contradictions "mediamacro!"
6
Many comments come from people quite apparently taken in by at least two big lies. It is hard to say which is the worse one, or which came first. They think the National Debt level doesn't matter, but it's really worse. They think level of government spending doesn't matter. But Dr. Krugman, and most Democrats, and of course most Republicans, agree that taxes should at least compensate for some of the government spending.
And since Democrats more likely are to be for higher taxes, you'd think they'd be for lowering the spending. But no.
No, they really think people will appreciate them for punishing the rich with any higher taxes. A sheer political reason there! That's also to try to guarantee there's nothing inconsistent about their being for spending enormous amounts, almost without any restraint.
The second lie is that it's only the Republican's fault if the National Debt DOESN"T go up 'enough', because ... we need to spend all that money ! Then it's also the Republican's fault if the National Debt ISN'T getting paid off, because ... it's we good Democrats who are for the higher taxes that would offset the federal spending. But that's silly because they really like the higher taxes, not to be offsetting the outrageous overspending, but to punish the rich and 'redistribute income', or 'level a playing field', anything they can think up! Then they credit Democrats, like in Pres. Clinton's 2nd term, for 'balancing the budget', another blatant inconsistency.
And since Democrats more likely are to be for higher taxes, you'd think they'd be for lowering the spending. But no.
No, they really think people will appreciate them for punishing the rich with any higher taxes. A sheer political reason there! That's also to try to guarantee there's nothing inconsistent about their being for spending enormous amounts, almost without any restraint.
The second lie is that it's only the Republican's fault if the National Debt DOESN"T go up 'enough', because ... we need to spend all that money ! Then it's also the Republican's fault if the National Debt ISN'T getting paid off, because ... it's we good Democrats who are for the higher taxes that would offset the federal spending. But that's silly because they really like the higher taxes, not to be offsetting the outrageous overspending, but to punish the rich and 'redistribute income', or 'level a playing field', anything they can think up! Then they credit Democrats, like in Pres. Clinton's 2nd term, for 'balancing the budget', another blatant inconsistency.
3
I call projection on this punishment obsession.
9
R. Karch,
If our children cannot work harder than we work as required to repay Ms. Yellen's freshly printed paper sovereign US Treasury bonds when these bonds become due, then the bondholders will redeem (deposit the bonds at a discount in a US bank) these bonds and write a check to purchase title to exist US located assets such as privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, stocks, bonds, other privately owned national wealth and similar assets that are located in the USA that were created by previous US generations prior to de-industrialization of the USA.
If our children cannot work harder than we work as required to repay Ms. Yellen's freshly printed paper sovereign US Treasury bonds when these bonds become due, then the bondholders will redeem (deposit the bonds at a discount in a US bank) these bonds and write a check to purchase title to exist US located assets such as privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, stocks, bonds, other privately owned national wealth and similar assets that are located in the USA that were created by previous US generations prior to de-industrialization of the USA.
2
The federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 36% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
Are you sure you want to pay down the debt?
Are you sure you want to pay down the debt?
11
Britain is trying hard to no put themselves into the same debt position as the US has. My childrens children will never be able to pay off the Obama debt that he has racked up.
2
The Obama debt thanks to Bush? Unfunded war debts have to be paid eventually, and that eventually was after Bush left office. Then there is the Bush tax cuts. Who did the help? The richest level of society. How much were taxes raised to pay for the Bush wars? Just because that is required there was no reason for Bush to enact them as normal governments have always done. Tax cuts to the richest. How about spending to get the economy going again? Yes, that was done by Obama. And if he hadn't, we would be making North Korea look prosperous.
8
You mean the debt Obama put on the books after Cheney hid it - so much of it went to his cronies.
My children's children would like to drink clean water, breath clean air, and see a tree older than they are, once in a while.
My children's children would like to drink clean water, breath clean air, and see a tree older than they are, once in a while.
5
Did you actually read the article? The main point is that deficit fears are hugely exaggerated.
7
Long ago the excellent political columnist Alan Watkins (in the slightly left leaning Observer) used to observe that Labour govenrments used to have their proclivity to run up debts crudely stopped by "a run on the pound". Krugman living in the land of the dollar does not think of this.
If you look at the budget coming out of Congress you realize that austerity/shifting more wealth to the wealthy is stronger than ever. Mainly because "free speech" anonymous contributions are buying that hard core agenda. "Cut social security, privatize medicaid, eliminate affordable health care and raise military spending, and trickledown will finally raise voodoo revenue" is not going anywhere as long as the 1% hope to considerably fatten their largess.
14
One moment, Professor, if you please. Just the other day you wrote favorably of Obama's halving the deficit in only one year longer than his early forecast.
When I asked if it wasn't our national debt that's the real problem, two knowledgeable critics pointed out how our economy has fared well, when it has, in comparison to the debt.
In philosophical overview I can't believe that our national debt doesn't matter. Or that we need never pay it off. Rather, I think, we haven't reached an extreme whose sudden collapse will expose the fallacy.
When I asked if it wasn't our national debt that's the real problem, two knowledgeable critics pointed out how our economy has fared well, when it has, in comparison to the debt.
In philosophical overview I can't believe that our national debt doesn't matter. Or that we need never pay it off. Rather, I think, we haven't reached an extreme whose sudden collapse will expose the fallacy.
1
We have only paid off our debt once, in 1835, and that was followed by the longest depression in our history. In fact all 6 times we paid it significantly down, we fell into depression. All of our serious collapses were caused by trying to pay down the debt. None by too high debt.
7
When Conservative ministers took office in May 2010 they found a note left by Liam Byrne Labour's departing Chief Secretary to the Treasury. It said: " "Dear Chief Secretary, I'm afraid there is no money. Kind regards - and good luck! Liam." He has since regretted his "flippancy" but the situation back then was not as rosy as Paul Krugman suggests. As for castigating the government and the media for obsessing about the deficit rather than focusing on job creation, it has obviously escaped Mr Krugman's notice that there are now more people in work in Britain than at any time in recent history. Confounding Labour's predictions of a million lost jobs, the employment rate in the UK now stands at 73.3%, the highest rate of people in work since the Office for National Statistics began keeping records in 1971. Perhaps it would be good to stop banging on about the deficit but as we go into the election, George Osborne's failure to eliminate that deficit by the end of the current parliamentary term is the opposition's main line of attack on the economic front.
1
Government do not create jobs - they just move them by borrowing or taxing from where would be if left alone to where the government wants them like Solyndra (bragging for a brief while).
Krugman never writes about where they get the money. Never.
Krugman never writes about where they get the money. Never.
1
Are you seriously claiming that the WPA and TVA didn't create jobs? That nobody worked on the Hoover dam? The Golden Gate Bridge? The construction of highways and freeways was done without any labor? This is plainly laughable at face value. You aren't embarrassed to make such a obviously untrue statement as though it were fact?
11
LMJr,
The members of any family, tribe, city, state, or nation can reflect the amount of their real taxable national wealth and financial security as a total of their net positive accumulation of privately owned taxable wealth including grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities, and/or other marketable products that is available for government confiscation via taxes to pay for government activities.
These taxable assets are then also available to be used for economic security for reserve use in times of emergency, to raise the standard of living for the members of that family, to pay for military defense, police, firemen, and teachers, to take care of those family members that cannot take care of themselves, and to construct infrastructure, and etc.
This taxable wealth is then also becomes available as collateral (products, commodities, and/or title to locally in-country located real estate assets) to redeem any printed paper currency that they might care to issue.
This privately owned wealth is then also available as “mortgage” collateral for any paper Treasury Bonds that they might care to print and sell or exchange, since if that government does not repay the bond, the bondholders can sell those bonds to a bank and buy US located National Wealth assets with that money.
That national wealth is then "as good as gold" for making their currency and then the freshly printed paper bonds have purchasing value.
The members of any family, tribe, city, state, or nation can reflect the amount of their real taxable national wealth and financial security as a total of their net positive accumulation of privately owned taxable wealth including grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities, and/or other marketable products that is available for government confiscation via taxes to pay for government activities.
These taxable assets are then also available to be used for economic security for reserve use in times of emergency, to raise the standard of living for the members of that family, to pay for military defense, police, firemen, and teachers, to take care of those family members that cannot take care of themselves, and to construct infrastructure, and etc.
This taxable wealth is then also becomes available as collateral (products, commodities, and/or title to locally in-country located real estate assets) to redeem any printed paper currency that they might care to issue.
This privately owned wealth is then also available as “mortgage” collateral for any paper Treasury Bonds that they might care to print and sell or exchange, since if that government does not repay the bond, the bondholders can sell those bonds to a bank and buy US located National Wealth assets with that money.
That national wealth is then "as good as gold" for making their currency and then the freshly printed paper bonds have purchasing value.
3
"Krugman never writes about where they get the money. Never"
You get the money from the people who profit from the stability and the resources a well-run country provides.
You get the money from the people who profit from the stability and the resources a well-run country provides.
4
Most comments come from people who are taken in by a least two big lies.
It is hard to say which is the worse one, or which came first.
They think the National Debt level doesn't matter, but it's really worse.
They think level of government spending doesn't matter. But Dr. Krugman, and most Democrats, and of course Republicans, agree that taxes should at least compensate for some of the government spending. And since Democrats are more for higher taxes, you should think they should also be for lowering the spending, if they are really being that 'austere' or thrifty.
But know, they really think people will appreciate them for punishing the rich with such higher taxes. A sheer political reason there!
That's to try to guarantee there's nothing inconsistent about also being for spending enormous amounts, almost without any restraint.
The second lie is that it's the Republican's fault if the National Debt DOESN"T go up, because for gosh sakes, we need to spend all that money! Then it's also the Republican's fault if the National Debt isn't getting paid off, because for gosh sakes, it's we good Democrats who are for the higher taxes that would offset the federal spending. Buts that's poppycock because really they like the higher taxes not to offset the overspending, but to punish the rich and 'redistribute income', or 'level a playing field', anything else. Then they credit Democrats, like Pres. Clinton, for 'balancing the budget', another blatant inconsistency.
It is hard to say which is the worse one, or which came first.
They think the National Debt level doesn't matter, but it's really worse.
They think level of government spending doesn't matter. But Dr. Krugman, and most Democrats, and of course Republicans, agree that taxes should at least compensate for some of the government spending. And since Democrats are more for higher taxes, you should think they should also be for lowering the spending, if they are really being that 'austere' or thrifty.
But know, they really think people will appreciate them for punishing the rich with such higher taxes. A sheer political reason there!
That's to try to guarantee there's nothing inconsistent about also being for spending enormous amounts, almost without any restraint.
The second lie is that it's the Republican's fault if the National Debt DOESN"T go up, because for gosh sakes, we need to spend all that money! Then it's also the Republican's fault if the National Debt isn't getting paid off, because for gosh sakes, it's we good Democrats who are for the higher taxes that would offset the federal spending. Buts that's poppycock because really they like the higher taxes not to offset the overspending, but to punish the rich and 'redistribute income', or 'level a playing field', anything else. Then they credit Democrats, like Pres. Clinton, for 'balancing the budget', another blatant inconsistency.
1
So in all of these years you have been posting, you still haven't bothered to understand the simple concept of Marginal Utility. Also, when posting about the supposed "big lies" that others tell, you might want to not start by lying about other people's positions.
9
R. Karch,
Everybody wants more and more Free Government Money!
Why can’t each and every US citizen get their income from some government agency payroll or government contract (like Greece), at maybe double the minimum wage scale to create income equality?
Where does all of that "Free Government Money" come from?
Only private businesses wealth creation activity creates new taxable wealth, and that new and existing privately owned taxable wealth is the primary source of funds to be confiscated by governments through taxes to pay for any and all government activities.
Government expenditures only consume a nation's taxable wealth and do not create any new taxable wealth.
Government Contracts to private businesses to create infrastructure, weapons, social programs are also paid for by the taxpayers and do not create national wealth, but those activities just consume national wealth that was created by other citizens who created new national wealth that was then confiscated by the government to pay for those government activities!
Everybody wants more and more Free Government Money!
Why can’t each and every US citizen get their income from some government agency payroll or government contract (like Greece), at maybe double the minimum wage scale to create income equality?
Where does all of that "Free Government Money" come from?
Only private businesses wealth creation activity creates new taxable wealth, and that new and existing privately owned taxable wealth is the primary source of funds to be confiscated by governments through taxes to pay for any and all government activities.
Government expenditures only consume a nation's taxable wealth and do not create any new taxable wealth.
Government Contracts to private businesses to create infrastructure, weapons, social programs are also paid for by the taxpayers and do not create national wealth, but those activities just consume national wealth that was created by other citizens who created new national wealth that was then confiscated by the government to pay for those government activities!
2
I am giving up reply to Karch and Gerald. Anyone cannot see the difference between money and real wealth and thinks the interstate highways did not create real wealth is hopeless.
5
Krugman's articles inevitably showcases his Keysian views on economies in general. Keysians don't seem to care or worry much about debt and deficits.
They think they can just print more worthless fiat money and spend their way out of economic slumps
They think they can just print more worthless fiat money and spend their way out of economic slumps
1
atiboy15,
The US Dollar is not yet a "FIAT CURRENCY" at this time.
The US dollar is still redeemable for title to almost any privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, stocks, bonds, other privately owned national wealth and similar assets that are located in the USA that were created by previous US generations prior to de-industrialization of the USA instead of Gold.
After foreigners convert their US Dollars for title to all of these things of value, then the US Dollar and US Treasury Bonds will become a "FIAT CURRENCY" with the purchasing value approaching the value of toilet paper.
The USA might also just print a bunch of fresh trillion dollar bills and repay those existing US Treasury bonds held by the Chi Coms with that newly printed paper “monopoly” money Trillion dollar bills.
That monopoly money is formally called Fiat Money.
Some examples of printing (Fiat money) Sovereign paper currency money to pay for their government activities are the Zimbabwe Dollar (ZWD), West African CFA (XOF), Tanzanian Shilling (TZS), Sierra Leonean Leone (SLL), Somali Shilling (SOS), Viet Nam Dong (VND), Rwandan Franc (RWF), Nigerian Naira (NGN), Liberian Dollar (LRD), Belarusian Ruble (BYR), Burundian Franc (BIF), Ugandan Shilling (PGX) and Mexican Peso!
Of course the above printed paper sovereign nation “FIAT” currencies have absolutely no value, except as novelties, or toilet paper.
The US Dollar is not yet a "FIAT CURRENCY" at this time.
The US dollar is still redeemable for title to almost any privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, stocks, bonds, other privately owned national wealth and similar assets that are located in the USA that were created by previous US generations prior to de-industrialization of the USA instead of Gold.
After foreigners convert their US Dollars for title to all of these things of value, then the US Dollar and US Treasury Bonds will become a "FIAT CURRENCY" with the purchasing value approaching the value of toilet paper.
The USA might also just print a bunch of fresh trillion dollar bills and repay those existing US Treasury bonds held by the Chi Coms with that newly printed paper “monopoly” money Trillion dollar bills.
That monopoly money is formally called Fiat Money.
Some examples of printing (Fiat money) Sovereign paper currency money to pay for their government activities are the Zimbabwe Dollar (ZWD), West African CFA (XOF), Tanzanian Shilling (TZS), Sierra Leonean Leone (SLL), Somali Shilling (SOS), Viet Nam Dong (VND), Rwandan Franc (RWF), Nigerian Naira (NGN), Liberian Dollar (LRD), Belarusian Ruble (BYR), Burundian Franc (BIF), Ugandan Shilling (PGX) and Mexican Peso!
Of course the above printed paper sovereign nation “FIAT” currencies have absolutely no value, except as novelties, or toilet paper.
1
I'm KEEN on getting a person in the WH who isn't beholden to some some money launderer who can make a stab at fixing out national situation. I guess that makes me a KEENSIAN too.
1
"They think they can just print more worthless fiat money and spend their way out of economic slumps"
Yes. It's worked well for us every time the economic markets tank.
And when the rules fade away, the markets tank every time.
You could call it welfare for the finance industry:
If there's no functioning society, there's no solid market.
Yes. It's worked well for us every time the economic markets tank.
And when the rules fade away, the markets tank every time.
You could call it welfare for the finance industry:
If there's no functioning society, there's no solid market.
4
Politicians of all flavors just latch onto the most convenient narrative for any topic as long as they can raise campaign funds on that narrative, its simplistic enough such that they can articulate it without getting into problems and voters will buy it. Get enough "experts" to back it and that's all they do....
Economic policy, defense policy, education....the environment, taxes....
Economic policy, defense policy, education....the environment, taxes....
2
Whenever the subject of "unsustainable" budget deficits arise, thereby calling for "austerity", I'm inclined to offer the same bit of data and pose the same question. The US has carried deficits almost continuously throughout its history, and nearly all nations currently engage deficits. We and they are all still here, and mostly managing to get by.
Therefore, what EXACTLY, and at what level, does the danger of deficits become real? Dr. Krugman? Anyone?
Therefore, what EXACTLY, and at what level, does the danger of deficits become real? Dr. Krugman? Anyone?
3
Actually, public debt is one of the most popular vehicles for savings, because it is considered very low risk. If there were no public debt, we'd all have to find riskier investments.
10
"we'd all have to find riskier investments." yes, like putting one's life savings in a bank at .025% interest rates . Balance is a word not much used these days--the scales are always tipped toward the needs of the 1% but a day of reckoning is coming. The lower end of the 99% have little left to lose, squatters rights will be in effect and the 1%, whose skyhigh condos will require those 60K mortgage payments every month, will be living in a world of dwindling income. Remember, it is the 99% who provide the wealth one way or another. The day of the world-wide boycott is coming to a city near you.
3
Don't ask me to justify the current prevailing monetary policy. I think it has wrecked all that was good about the banking industry.
2
The tone of your article suggests that you are giving the austerians some benefit of doubt....that they might just be honestly incorrect. They are not. Imposing austerity while a country has not yet recovered from a crippling recession is pure class warfare. Let's start calling out these people for what they are, and run them out of government.
133
Mr. Krugman is just a little misleading in his narrative. He conveniently neglects to mention the impact of central bank activity over the past 7 years and the artificial impact it has had on keeping interest rates low. Remove this central bank activity, which will happen at some point, and we will have quite a different story.
18
The central bank is there to try to keep economic activity at a reasonable level. That level is a small growth number with minimal inflation. One simply can't ignore the fed.
2
That is one way of looking at it. But if you are willing to correct for Central Bank Interventionism in your "what-if" analysis, you would need to make a further adjustment, namely that, in the absence of imperfect stimulus through monetary policy, we would have seen much much worse deterioration in the economy thereby forcing a fiscal stimulus. If the central bankers were partisan, perhaps they would have decided not to do anything and let the economy go to smithereens in what would have more starkly shown the pro-austerity politicians as the bankrupt ideologists they are (remember president Hoover in the wake of the great depression). Thankfully, Mr Bernanke was mature enough not to want to bet the future of an entire generation simply to make an academic point. One way or the other, the only reason we did not have a repeat of the great depression (though the great recession was no fun either), was because the economy received a major stimulus, in this case through the central bank who courageously chose un-orthodox action over ideologically-mandated, vacuous inaction. What the austerity people did was essentially show themselves as uncreative midst a crisis, stuck in the headlights, and in the end totally unfit for leadership or government (cue Mr McCain at the White House during the emergency meeting to discuss the economy prior to the 2008 election).
4
The central banks absolutely needed to act at the height of the crisis to head off a possible collapse of the financial markets. My point is that the deficit picture will change materially when interest rates normalize.
We have very few journalists who actually can have truly analytical take on economic policies, and unfortunately none on TV MSM who can challenge the right wing fantasies right when they are peddled. Effectively the viewer see this false narrative as if set in stone and widely accepted. Add to that the natural tendency to see macroeconomic problems from the house budget perspective, with blame directed at those nasty irresponsible borrowers and their liberal enablers, and you have conservative propaganda winning the day.
3
Journalist? Krugman's an economist and a scholar. He's the Real Deal, not like the Ayn Randian goof balls that abound.
I wish he'd explain the concept of American Exceptionalism to journalists - it's not Lake Woebegone's Above Average
I wish he'd explain the concept of American Exceptionalism to journalists - it's not Lake Woebegone's Above Average
6
You seem to believe the U.S. is beyond the crisis and everything is just peachy. The people who are making sacrifices in America are the savers and the millions who have fallen out of the work force and are no longer counted. You have a blind spot right in front of your face where you take credit for "analytical journalism". The game is in the seventh ending, to claim victory is a bit premature.
1
"As I said, in the United States we have mainly gotten past that, for a variety of reasons — among them, I suspect, the rise of analytical journalism, in places like The Times’s The Upshot."
Unfortunately, Paul, an overwhelming majority of the electorate don't read the NYT. They are too busy watching Fox News, wrestling and stock car races. And they vote Republican.
Unfortunately, Paul, an overwhelming majority of the electorate don't read the NYT. They are too busy watching Fox News, wrestling and stock car races. And they vote Republican.
6
"Allegedly factual articles would declare that debt fears were driving up interest rates with zero evidence to support such claims. Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts." From article.
However, there could come other bad results from excessive level of the National Debt, than interest rates getting too high. And, it seems it's resented, if ANY news articles are ever printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question is: Did the U.S. government EVER borrow irresponsibly? And isn't it strange if it never did, while it's easy to point out so many other nations where a government had 'borrowed irresponsibly' ? So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ? And isn't it strange if Dr. Krugman didn't ever write about that ? And could we detect a reason ?
A reason that seems immediately to come to his mind, is like:
" ... Reporters would ... cheer on proposals for entitlement cuts."
So Dr. Krugman considers welfare spending to be of preeminent importance, overriding any other national interests ?
However, there could come other bad results from excessive level of the National Debt, than interest rates getting too high. And, it seems it's resented, if ANY news articles are ever printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question is: Did the U.S. government EVER borrow irresponsibly? And isn't it strange if it never did, while it's easy to point out so many other nations where a government had 'borrowed irresponsibly' ? So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ? And isn't it strange if Dr. Krugman didn't ever write about that ? And could we detect a reason ?
A reason that seems immediately to come to his mind, is like:
" ... Reporters would ... cheer on proposals for entitlement cuts."
So Dr. Krugman considers welfare spending to be of preeminent importance, overriding any other national interests ?
1
Sorry, not convinced yet. A few more randomly capitalized words would strengthen the argument. And don't be so stingy with the exclamation points. You're welcome!
6
Krugman's US economic theory, which he would have the UK follow, rests on the same shaky foundation of our large financial institutions, TOO BIG TO FAIL.
3
Who can Professor Krugmans's policy of large amounts government spending of borrowed money not result in the same result as the Greek Government economic situation?
2
Didn't you read the column?
England denominates its debts in a fiat currency of its own, the Pound, which it can manage with monetary policy. Greece denominates its debt in Euros, which it cannot manage with its own monetary policy.
When a country has its own currency, and a local banking industry, only the international trade segments of its economy are materially affected by changing currency exchange rates.
England denominates its debts in a fiat currency of its own, the Pound, which it can manage with monetary policy. Greece denominates its debt in Euros, which it cannot manage with its own monetary policy.
When a country has its own currency, and a local banking industry, only the international trade segments of its economy are materially affected by changing currency exchange rates.
6
TOO BIG TO FAIL is in reality TOO BIG TO SUCCEED. Just think of Napoleon or Hitler--massive armies that FAILED because they were too big. The support system was too small. Millions of soldiers needed millions of pounds of food, horse or gas--take your pick--ammo, bandages, and it simply couldn't be supplied.
The 1% are getting to the point that they too will find it difficult to continue raking in the greenbacks because the 99% have little left to contribute. The 1% can shuffle paper for a while but soon enough the value of everything simply deteriorates--how much can anything be worth until it collapses. The ROI is eventually going to be the final arbiter.
With now 80 people owning the same wealth as the bottom 350 billion people on the planet, what's left. Probably most of those 350 billion live on a buck a day and the rest of us are headed there. The Forbe's list is a pretty good showing of where we stand--they may have all the money but so what--what can they do with it in the long run when there is no more. Who will cook their dinner?
The 1% are getting to the point that they too will find it difficult to continue raking in the greenbacks because the 99% have little left to contribute. The 1% can shuffle paper for a while but soon enough the value of everything simply deteriorates--how much can anything be worth until it collapses. The ROI is eventually going to be the final arbiter.
With now 80 people owning the same wealth as the bottom 350 billion people on the planet, what's left. Probably most of those 350 billion live on a buck a day and the rest of us are headed there. The Forbe's list is a pretty good showing of where we stand--they may have all the money but so what--what can they do with it in the long run when there is no more. Who will cook their dinner?
Modern 'conservatism' begins and ends with 'con'.....as in con game...as in con-artist.....as in Neo-Con-Artist, which is what modern conservatism has been reduced to.
There's almost a perfect null set of empirical data to support anything Neo-Con-Artists say - whether they be Britain's prevaricating David Cameron or it's mendacious Chancellor George Osborne or the entire Republican Voodoo Economic Caucus.
Trickle-down economics is the most famous Neo-Con-Artist fraud, followed closely by the Propaganda Academy Award winning 'austerity' fraud, 'beware inflation' fraud and deficit scaremongering 'fraud'.
All of these right-wing ruses completely discount basic economics and foster collapsed demand, collapsed wages, , collapsed job markets, collapsed economies and collapsed lives that promote government policies designed to enrich the 0.1% while hurting everyone else based on economic theories which don’t hold up in the real world ---- or based on lies for those who speak good English.
A very good thief must first be a very good liar and propagandist - and diverter of your attention - in order to pick your pocket with a smile.
Conservatives Without Conscience is the guiding principle of 'Con'servatism that reveals nothing but contempt that 'con'servatives have for the victims of their economic suffocation while slashing of all public safety nets for the benefit of the 0.1%.
Modern conservatism is a con game that never ends.
Conservatives = Lies = Snake Oil = 0.1% Welfare.
There's almost a perfect null set of empirical data to support anything Neo-Con-Artists say - whether they be Britain's prevaricating David Cameron or it's mendacious Chancellor George Osborne or the entire Republican Voodoo Economic Caucus.
Trickle-down economics is the most famous Neo-Con-Artist fraud, followed closely by the Propaganda Academy Award winning 'austerity' fraud, 'beware inflation' fraud and deficit scaremongering 'fraud'.
All of these right-wing ruses completely discount basic economics and foster collapsed demand, collapsed wages, , collapsed job markets, collapsed economies and collapsed lives that promote government policies designed to enrich the 0.1% while hurting everyone else based on economic theories which don’t hold up in the real world ---- or based on lies for those who speak good English.
A very good thief must first be a very good liar and propagandist - and diverter of your attention - in order to pick your pocket with a smile.
Conservatives Without Conscience is the guiding principle of 'Con'servatism that reveals nothing but contempt that 'con'servatives have for the victims of their economic suffocation while slashing of all public safety nets for the benefit of the 0.1%.
Modern conservatism is a con game that never ends.
Conservatives = Lies = Snake Oil = 0.1% Welfare.
105
"It is much easier to bamboozle a man than to get him to admit that he has been bamboozled." Mark Twain
5
Just like the act of "not running" does not win foot races, the act of "not spending" does not end recessions or depressions. Our Great Depression was ended by monetizing and spending for the war effort. Countless Model T's that were simply rusting away were sold as scrap and the money was put to work. Junk was turned into money and the money was spent.
The fact is that too many of our financial elite would rather, like Scrooge McDuck, simply go swimming in their piles of money than to see it go back to being the fuel for doing and making things.
And going back to the non-running foot racer analogy, the financial geniuses you so rightly castigate, also believe that the longer the runner sits idle on the bench, the better shape he will be in. It is a good thing these guys aren't employed as athletic coaches.
The fact is that too many of our financial elite would rather, like Scrooge McDuck, simply go swimming in their piles of money than to see it go back to being the fuel for doing and making things.
And going back to the non-running foot racer analogy, the financial geniuses you so rightly castigate, also believe that the longer the runner sits idle on the bench, the better shape he will be in. It is a good thing these guys aren't employed as athletic coaches.
6
It wasn't that long ago the UK tortured criminals and imprisoned debtors. Not much has changed.
5
I suspect that the idea that we're past all the deficit craziness here is unfounded. As things heat up toward 2016, I expect the usual suspects will natter on about deficits and belt tightening and runaway spending and all the rest. Everyone knows that spending has skyrocketed under Obama and that it's out of control. Just ask the new declared Republican presidential candidate.
5
Paul Krugman has for years presented a well thought out wise adversity to austerity programs which cheat the general populace of needed services to survive. Of course, the 1% love austerity programs because it insulates them from paying more taxes which, by the way, would not affect their lifestyle in any way because they are SO rich, but would do a world of good for our nation.
Now that we are back to a Republican controlled legislature, its back to lies about a phony financial crisis, where the American People (99% of them) supposedly have to make sacrifices or the country will go down the drain. What the Republicans fail to mention is that President Obama has cut the Republican deficit in half!
Right now, we have President Obama, a Democrat, to veto the outrageous Republican budget which cuts Social Security, Medicare, Medicaid, and payments to nursing homes, etc.; but which also includes a TAX CUT FOR THE WEALTHY. Republicans are not even trying to hide anymore that they have declared war on the middle class. Can you imagine if we had a Republican President who would actually agree with this kind of evil budget.
In 2016, Americans really need to focus on what would happen if we got a conservative Republican President, as their survival literally depends on it.
Now that we are back to a Republican controlled legislature, its back to lies about a phony financial crisis, where the American People (99% of them) supposedly have to make sacrifices or the country will go down the drain. What the Republicans fail to mention is that President Obama has cut the Republican deficit in half!
Right now, we have President Obama, a Democrat, to veto the outrageous Republican budget which cuts Social Security, Medicare, Medicaid, and payments to nursing homes, etc.; but which also includes a TAX CUT FOR THE WEALTHY. Republicans are not even trying to hide anymore that they have declared war on the middle class. Can you imagine if we had a Republican President who would actually agree with this kind of evil budget.
In 2016, Americans really need to focus on what would happen if we got a conservative Republican President, as their survival literally depends on it.
12
One of the biggest problems with anti-austerity economics is that it "feels" wrong, because it runs counter to what we "should" do in our private everyday lives. When times are tough, when you feel like you might lose your job, why on earth would you spend more?... And more importantly the corollary, why wouldn't you cut back? People are actually quite good at taking private experiences and earned wisdoms and extrapolating and applying them to larger concerns. We are genetically predisposed to do so, because it is generally a good rule of thumb for hunter gatherers... Don't eat milky plants because they are probably poisonous. It just so happens that exporting individual best practices to a complex interdependant international economic system is generally a terrible idea. You are fighting 2 million years of evolutionary biology to suggest people do otherwise. At first it was very hard to believe the world was round despite the best scientific concensus. Why? Because it "feels" flat to most ordinary people. It takes time, reinforcement, proof and repeated confirmation of the counterintuitive until it becomes the obvious. For this reason, despite the fact that Krugman seems to be repeatedly beating a dead horse every single week, he is doing the Lord's work.
7
Given the way it’s pushed by right wing hypernationalists, I find the term “American exceptionalism” uncomfortably similar to fascist claims of superiority back in bygone days. Or are they really gone?
10
Did those fascist countries go around the world to step in as world cop when needed? There's a difference.
1
Austerity is similar to refusing to raise the credit card debt ceiling of a family by making a family work and then live off of its income instead of living off of its credit-card charges.
Raising the debt ceiling of a nation is the same as getting the limit raised on your credit card(s), and is absolutely not similar to giving a recovering alcoholic more booze on credit by increasing his credit limit at his favorite Liquor store charge account.
How many government contracts and government employees can the taxpaying working people afford to pay for?
I forgot that these government expenses are mostly being paid with borrowed money that our children will have to repay to the people that the US government is borrowing that money (bought US Treasury Bonds) from today!
We need to replace all those unqualified government bureaucrats with some people that know something about economics and finance.
The USA needs private jobs that create new national wealth in the USA, not more bureaucratic government payroll jobs and government infrastructure contracts that consume the remaining titles to the existing national wealth in the USA.
Raising the debt ceiling of a nation is the same as getting the limit raised on your credit card(s), and is absolutely not similar to giving a recovering alcoholic more booze on credit by increasing his credit limit at his favorite Liquor store charge account.
How many government contracts and government employees can the taxpaying working people afford to pay for?
I forgot that these government expenses are mostly being paid with borrowed money that our children will have to repay to the people that the US government is borrowing that money (bought US Treasury Bonds) from today!
We need to replace all those unqualified government bureaucrats with some people that know something about economics and finance.
The USA needs private jobs that create new national wealth in the USA, not more bureaucratic government payroll jobs and government infrastructure contracts that consume the remaining titles to the existing national wealth in the USA.
2
It seems to me that there's a direct correlation between the amount of financial rubbish that one encounters in a nation's media outlets and the number of such outlets that are owned and operated by Rupert Murdoch. Can't he just semi-retire to the Outback and find himself a nice little office with a printing press?
8
Whistling past the grave yard...we all know that if countries run deficits that are big enough for long enough, the will eventually have an economic meltdown a la Greece. No one agrees on precisely how much is too much. Mr. Krugman may be right that Britain and the US are far from what ever this number may be. However, he ignores that fact that deficits are simply morally wrong. It is wrong for one generation to borrow money that another generation will have to pay off. It is especially wrong when cost of the deficit goes to pay for current transfer payments like social security, medicare, and welfare rather than so called "investment in infrastructure". We even borrow money so that kids will have to pay for their own pre-k and head start programs. I am not arguing the merit of these programs, but simply questioning the ethics of making kids pay for these programs themselves. Even if we can borrow the money at "historically low" interest rates, I would maintain that it is unethical to pass these debts on to the next generation. Surely interest rates won't be as low for them as it is for us, and surely they will have new government programs that they will want to institute, rather than paying of the debt of their profligate parents.
2
Chip in New York, how do "we all know" what you say we know?
Greece is a small nation with a modest economy and bears virtually no relationship to ours, nor can reasonable analogies be drawn. Yet, it is fun, isn't it?
The Greek economy, for one thing, is tied up in rules and laws held over from medieval times. It is not a modern economy in the first place. They don't control their own currency, so they are in no way masters of their fate. That's why they have to supplicate to Germany. Greece is 50th in the world in terms of annual revenues (when corporations are included in the list). It is far below WalMart (!) on those terms.
When the southern European nations agreed to join the Euro, they thought they were getting a good deal. They thought the more industrialized northern nation-states would help pull them upward into more prosperous times. Instead, they found abundant loans and, when things went down, no way to deal with the problems. If they had retained their own currencies, they would likely not be in the shape they are in today.
As for ethics, every generation of Americans has passed along debts to the next. However, if you want to discuss injustice, look at the one trillion dollar debt piled onto college students to pay the salaries of professors, administrators and college presidents. That's a massive rip.
Greece is a small nation with a modest economy and bears virtually no relationship to ours, nor can reasonable analogies be drawn. Yet, it is fun, isn't it?
The Greek economy, for one thing, is tied up in rules and laws held over from medieval times. It is not a modern economy in the first place. They don't control their own currency, so they are in no way masters of their fate. That's why they have to supplicate to Germany. Greece is 50th in the world in terms of annual revenues (when corporations are included in the list). It is far below WalMart (!) on those terms.
When the southern European nations agreed to join the Euro, they thought they were getting a good deal. They thought the more industrialized northern nation-states would help pull them upward into more prosperous times. Instead, they found abundant loans and, when things went down, no way to deal with the problems. If they had retained their own currencies, they would likely not be in the shape they are in today.
As for ethics, every generation of Americans has passed along debts to the next. However, if you want to discuss injustice, look at the one trillion dollar debt piled onto college students to pay the salaries of professors, administrators and college presidents. That's a massive rip.
6
Well said, Chip. I don't claim to know how much is too much when it comes to debt. Hoiwever, it is a fact that our debt has more than doubled in the last 10 years. Interest rates today are near zero, a consequence of Fed action. Everyone agrees they will rise significantly in the coming years, which will require more and more revenue just to pay the interest on this ever-expanding debt. Forcing our children and grandchildren to pay the bill for our bar tab today just seems wrong to me.
1
Very well stated!
1
Has the U.S. actually gotten past Bowles-Simpsonism and our own version of "mediamacro"? Don't be too sure. The Republicans will play the same game as the British right in trying to win the 2016 election, and even though we hear about "income inequality" from more progressive Democrats, there's not a whole lot of indication that more centrist Democrats, as exemplified by Hillary Clinton, are going to make as issue of it. Both parties in our country are beholden to the financial and corporate interests that provide the big money for political campaigns, so they're likely to get their way no matter which party wins. The only difference is that Democrats are willing to run some deficits in order to preserve social programs, whereas the Republicans want to slash them in the name of "austerity." If the Republicans win the presidency in 2016, watch out!
7
Well penned, the both of you. My late grandfather owned a very successful business in England for 80 years. He once told me that under a Labour Government, he turned over more money and improved his business and the benefits for his employees than he ever did when the Tories were in control. The Tories behaved as Republicans wish to in our nation. Cameron will probably lose the election in May as since the horrors of Thatcherism, the British have shown little trust in the Tories. That is why Cameron could not win an overall majority when he ran first time.
6
This OP-ED is coming from the same columnist who said in a previous column that the Fed should keep up its easy money zero interest rate policies and we should continue to party on like it is the late 1990s and enjoy it while it lasts. The problem is that when the bubble bursts (Despite Janet Yellen's declarations that the Fed has tools and that stocks are not high by historical norms) the small investors, savers and those on fixed incomes end up losing their savings while the wealthy sell high and are able to socialize any loses. Easy for a multi-millionaire like Krugman to say "party on".
2
The case for austerity is based on the assumption that there are jobs available for those who, instead of working full-time, are enjoying life free of employment-related stress while collecting substantial welfare money. So we need to make joblessness more stressful. The case against austerity is that our economy will boom only if the government directly or indirectly hires everyone who is jobless so that more people can spend all their earnings and start borrowing to fulfill their newfound love of consumer affluence. And then there's the Republican platform that vows austerity at the federal level while shifting the burdens of government to the states, most of which continue to borrow and spend.
2
Actually, state and local borrowing, both in the aggregate, and as a proportion of their expenditures, has been falling since the statistical end of th Great Depression. If you use stylized facts, you should get them right.
2
Yes - a lot of fifty-year-olds with grad student loan debt would pay back those loans if they could find a job that would get them back into the workplace they retrained (and borrowed) to participate in.
To say nothing of the 30-somethings who would start families and move us along.
To say nothing of the 30-somethings who would start families and move us along.
4
It's not an assumption. We read about it in liberal media.
For the 'funemployed,' unemployment is welcome
http://www.latimes.com/local/la-me-funemployment4-2009jun04-story.html
For the 'funemployed,' unemployment is welcome
http://www.latimes.com/local/la-me-funemployment4-2009jun04-story.html
Great column - I'm not so sure though that we've actually gotten past it here with the Republican maniacs controlling Congress. And the Washington Post in the last week or so was still calling for reductions in entitlements, specifically Social Security.
11
Cramping down on government spending helps one demographic, those whose wealth depends on assets. The resulting deflation allows the cash and asset rich to pick up what others must sell at much lower prices due to deflation. If however, your income comes from selling stuff, you need as many people as possible to have money. So stop being mad at the 4.7% or 47% if you are a seller of goods and services. You need them.
2
Britain did one thing right. They decided to stay with the British Pound Sterling instead of entering the Euro zone. They can print money unlike Greece.
3
If we had let the major financial institutions fail, nationalize the banks, and had the individuals responsible for the 2008 financial meltdown actually lose their fortunes, we would not be having this austerity debate today.
10
No, because we'd be far too busy quarreling over who got the can of dog food we'd found in the rubble of the burned-out supermarket.
1
Actually this article is about the fixation of the UK major parties on the austerity myth. The debate is about which will cut more and which will impose a tiny bit more tax on the richest. Spending proposals have to be 'costed', no matter how tiny i.e. the source of funds has to be identified; otherwise the proposer is eviscerated on the national morning radio show.
At the moment, the only party to make some sense is the Scottish National Party and they may yet hold the balance of power.
At the moment, the only party to make some sense is the Scottish National Party and they may yet hold the balance of power.
3
Yea! We're better than Britain! Oh wait. Aren't we about to default and de-fund our government?
4
I agree with the general thesis of this column.
My sole disagreement is on the reference to the U.S. recovery with respect to the quality (not quantity) of U.S. job growth. Most of the jobs created in the U.S. recovery have been low-wage. Many Americans have taken jobs well below their skills and pre-recession rates of pay.
The U.S. needs more domestic investment (infrastructure, anyone?) and better domestic jobs.
My sole disagreement is on the reference to the U.S. recovery with respect to the quality (not quantity) of U.S. job growth. Most of the jobs created in the U.S. recovery have been low-wage. Many Americans have taken jobs well below their skills and pre-recession rates of pay.
The U.S. needs more domestic investment (infrastructure, anyone?) and better domestic jobs.
19
Those FTAs, MFNs and PNTRs that were created in the last 20 years by Democratic and Republican presidents, and economically required all US businesses to use foreign labor, environmental compliance and tax costs when those foreign costs are less than US costs because the US consumer will not pay anything extra for US made products.
Why don't you blame the US government for creating NAFTA, MFN/PNTR for Communist China, all the other subsequent Free Trade Agreements, and the other anti-business laws that allowed and economically required that US businesses to move as many as possible of their US factories and those associated jobs for US citizens overseas in order to reduce manufacturing costs!
As the US jobs leave, there is then a larger number of skilled workers available for businesses to choose from the labor pool to fill the remaining jobs and the wage scales decrease!
Why don't you blame the US government for creating NAFTA, MFN/PNTR for Communist China, all the other subsequent Free Trade Agreements, and the other anti-business laws that allowed and economically required that US businesses to move as many as possible of their US factories and those associated jobs for US citizens overseas in order to reduce manufacturing costs!
As the US jobs leave, there is then a larger number of skilled workers available for businesses to choose from the labor pool to fill the remaining jobs and the wage scales decrease!
1
Dear Larry,
The New Deal stripped the banks of the ability to prey upon the society which they were supposed to serve. The repeal of the Glass Steagall Act restored the right of predation to the banks in 1998, and the agent of the restoration was none other than Democrat, Bill Clinton.
As an idealogue you can probably relax, because the taxpayer has been on the hook for the excesses of the entire Shadow Banking System since the 2008 Financial Collapse. The Public Subsidy for the bankers is alive and well, and the guiding philosophy of Wall Street Anarchists is to privatize profit, while at the same time socializing the consequences of risk.
You and your kind no longer have to fear the Unions. The Unions are dead. The Defined Pension Benefit has been killed off, and a highly profitable, but inadequate system of 401 K retirement plans, has failed to guarantee the safety of workers in retirement, but who cares?
The banking system has developed an abhorrence for depository lending because it wants to trade on self inflicted volatility instead. When there is insufficient volatility to profitably trade, Jamie Dimon blames nearly non existent regulatory restraints.
We are all living as the fools in your fools paradise, but spare all of us the self righteous babble about Big Government and the sanctity of private money. Y'all have won the game. Why not just go off and gloat?
The New Deal stripped the banks of the ability to prey upon the society which they were supposed to serve. The repeal of the Glass Steagall Act restored the right of predation to the banks in 1998, and the agent of the restoration was none other than Democrat, Bill Clinton.
As an idealogue you can probably relax, because the taxpayer has been on the hook for the excesses of the entire Shadow Banking System since the 2008 Financial Collapse. The Public Subsidy for the bankers is alive and well, and the guiding philosophy of Wall Street Anarchists is to privatize profit, while at the same time socializing the consequences of risk.
You and your kind no longer have to fear the Unions. The Unions are dead. The Defined Pension Benefit has been killed off, and a highly profitable, but inadequate system of 401 K retirement plans, has failed to guarantee the safety of workers in retirement, but who cares?
The banking system has developed an abhorrence for depository lending because it wants to trade on self inflicted volatility instead. When there is insufficient volatility to profitably trade, Jamie Dimon blames nearly non existent regulatory restraints.
We are all living as the fools in your fools paradise, but spare all of us the self righteous babble about Big Government and the sanctity of private money. Y'all have won the game. Why not just go off and gloat?
12
Stephen J Johnston,
President Obama and the Democrats should have to answer embarrassing questions about Free Trade Agreements, almost Doubling the National Debt in the last six years, Most Favored Nation trade statuses for Communist China, Environmental Damage Claim Limitations from offshore drilling operations, Presidential Pardons for convicted felons, Hughes Aircraft Rocket Guidance Technology export license to Communist China, Solyndra type “pay to play” US government guaranteed business loans, CGI Federal political power influenced no-bid US government contract awards for many times the amount of the value of the contract, expensive Lockheed-Martin type military contract(s), welfare, unemployment benefits, pork barrel projects, green projects, infrastructure projects, wars, and etc.
President Obama and the Democrats should have to answer embarrassing questions about Free Trade Agreements, almost Doubling the National Debt in the last six years, Most Favored Nation trade statuses for Communist China, Environmental Damage Claim Limitations from offshore drilling operations, Presidential Pardons for convicted felons, Hughes Aircraft Rocket Guidance Technology export license to Communist China, Solyndra type “pay to play” US government guaranteed business loans, CGI Federal political power influenced no-bid US government contract awards for many times the amount of the value of the contract, expensive Lockheed-Martin type military contract(s), welfare, unemployment benefits, pork barrel projects, green projects, infrastructure projects, wars, and etc.
1
Larry Summers?
Yes, we now Krugman like's to use deficit spending at times to bolster the economy.
He is a true and loyal disciple of John Maynard Keynes. What he doesn't mention is how that money is spent.
Borrowing to refurbish infrastructure that aids productivity is one thing.
Borrowing to finance war and subsidize arms manufacturers in failed wars of choice is not productive and adds no lasting value to the economy.
Transfer payments are in between in that they go to purchase basic goods and services that people need but also adds little to nothing to productivity.
He is a true and loyal disciple of John Maynard Keynes. What he doesn't mention is how that money is spent.
Borrowing to refurbish infrastructure that aids productivity is one thing.
Borrowing to finance war and subsidize arms manufacturers in failed wars of choice is not productive and adds no lasting value to the economy.
Transfer payments are in between in that they go to purchase basic goods and services that people need but also adds little to nothing to productivity.
1
It is possible to be wrong and still have things come out alright.
For one, I believe that austerity works, in the long run, but it causes great problems for millions until it does and might, in fact, help to foster permanent poverty and dislocation in the economy generally. "Get your house in order" has great appeal, especially when people are told they, through their govt., have been living a big, happy lie.
Strong businesses and wealthy people like austerity. For others. It drives out weak competition in business, competitors who prefer to undercut prices to try to stay in business. With fewer, stronger competitors, it is easier for those remaining to assert their quality and raise prices.
The wealthy don't generally suffer by austerity, they prosper. If you already have a lot of money, the pressure is on how to keep it, not just make more. ("All my money is tied up in cash, Delores," to quote Steven King.) The best place in the world to be rich is in a country that is poor. Money then buys more and, again, there's less competition for "the best" products and services.
Regardless of the outcome, whether through "prime the pump" spending or huge cutbacks, the populace must be told that it all worked out and supporting evidence found, or created. The alternative is to blame everything on the last administration or prime minister and talk about how things are being done right now. Mr. Krugman is quite right to blame the news media for playing along
http://terryreport.com
For one, I believe that austerity works, in the long run, but it causes great problems for millions until it does and might, in fact, help to foster permanent poverty and dislocation in the economy generally. "Get your house in order" has great appeal, especially when people are told they, through their govt., have been living a big, happy lie.
Strong businesses and wealthy people like austerity. For others. It drives out weak competition in business, competitors who prefer to undercut prices to try to stay in business. With fewer, stronger competitors, it is easier for those remaining to assert their quality and raise prices.
The wealthy don't generally suffer by austerity, they prosper. If you already have a lot of money, the pressure is on how to keep it, not just make more. ("All my money is tied up in cash, Delores," to quote Steven King.) The best place in the world to be rich is in a country that is poor. Money then buys more and, again, there's less competition for "the best" products and services.
Regardless of the outcome, whether through "prime the pump" spending or huge cutbacks, the populace must be told that it all worked out and supporting evidence found, or created. The alternative is to blame everything on the last administration or prime minister and talk about how things are being done right now. Mr. Krugman is quite right to blame the news media for playing along
http://terryreport.com
5
Re austerity perhaps working in the long run:
As Keynes said famously, "In the long run, we are all dead."
As Keynes said famously, "In the long run, we are all dead."
2
It's not the federal deficit, it's the federal debt that matters. Krugman knows that, but always deflects from that reality. The debt has risen from less than $11 trillion to more than $17 trillion in the 6 years of the Obama administration. Useless stimulus spending, unprecedented Fed purchases of federal debt, and just plain wasteful spending by Democrats on more social programs like Obamacarwe have exploded the federal debt. Come on Krugman, tell the truth for a change.
5
You realize that Obamacare is actually reducing deficit, right?
5
Well, if we're gonna mention "the truth," and all, let's start with the way that Obamacare seems to have dropped our health care spending and insurance costs, as well as improving Medicare's financial outlook quite a bit.
3
Far better than being dead. When you can't eat, you die. You know what I mean? No jobs, no food. Or, worse, no jobs, more social security payouts....
"The 2016 election is still 19 mind-numbing, soul-killing months away."
I am not sure how this is a topic sentence for the subject of your article, but it certainly captures the mood among many U.S. citizens. Nineteen months. How will we bear it? Mind-numbing. We will be forced to listen to the moribund, disingenuous political insights of such as Ted Cruz or Scott Walker or Chris Christie or their ilk. Soul-killing. The feeling of ultimately being trapped into choosing between the standard bearers of two of the most disturbing political dynasties in our history, the Bushes and the Clintons. Nineteen months with not a breath of fresh air. If ever there was a time for a third party, it is now.
I am not sure how this is a topic sentence for the subject of your article, but it certainly captures the mood among many U.S. citizens. Nineteen months. How will we bear it? Mind-numbing. We will be forced to listen to the moribund, disingenuous political insights of such as Ted Cruz or Scott Walker or Chris Christie or their ilk. Soul-killing. The feeling of ultimately being trapped into choosing between the standard bearers of two of the most disturbing political dynasties in our history, the Bushes and the Clintons. Nineteen months with not a breath of fresh air. If ever there was a time for a third party, it is now.
18
Vincent A--Where do I sign?
Good column as usual, Dr. Krugman. I am even more cynical. I believe that attention to deficits allows governments, particularly conservative governments, to reign in expectations about the effectiveness of government programs. By banging the austerity drum and fears about deficits, allows conservative governments to underfund essential services in the name, hilariously, of "responsible government". The Brits have been trying to destroy their "welfare state" since Margaret Thatcher. This continues. Same here in US and represents why so many conservatives hate Obama in my opinion. By making competent governance and supporting important government programs, he undercuts the plutocrats who want a permanently weakened and discredited system.
14
If Shakespeare were around to day he would write: Let's kill all the economists."
5
Just so's ya know, Shakespeare's little joke was aimed at the way lawyers sophistically argued anything for pay and covered up the truth, not the way scholars pointed out what reality looked like.
3
Only the failed free-market ideologists. They're the ones that's caused all the damage. But take all the lawyers and finance people with them.
4
Which economist would you kill first, Eric? And by what means?
Please elaborate. You know you want to.
Please elaborate. You know you want to.
2
"There was no real austerity in the UK, so austerity has been vindicated, so let there be more, real, severe, poor-and-middle-class-harming austerity!"
This could be the slogan of the British Conservative Party. Or they could make it even more simple so the US GOP could adopt it:
"Thatcherism is dead, long live Thatcherism!"
This could be the slogan of the British Conservative Party. Or they could make it even more simple so the US GOP could adopt it:
"Thatcherism is dead, long live Thatcherism!"
5
"Deficits Do Not Matter"...Dick Cheney.
Paul, who knew that someone who was so wrong about everything else got this one right?
Paul, who knew that someone who was so wrong about everything else got this one right?
12
"In the United States, however, we seem to have gotten past that. Britain hasn’t." Have we gotten past this? Paul, have you seen the Republican House Budget?
8
We still live in the time of Galileo, though we think live in scientifically advanced world. However, what Krugman or other Keynesian economists talk about is 'helicocentrism' of economics and what British/US journalists, conservative politicians , or monetarist/supply side/ libertarian economists talk about is mostly 'geocentrism'. We all ridicule view of historial Vatican on Galileo, but the reality is
most of us still believe in 'geocentrism' of economics.
most of us still believe in 'geocentrism' of economics.
2
"Deficit fetishism" sure has an eye-catching ring to it Dr. K.. Let's let Britain deal with their issues, and look here at the U. S..
Fiscal year 2001 saw a $5.8 T debt, and a $10.6 T GDP. FY 2008 saw $10.0 T debt, and a $14.7 T GDP. Last year in FY 2014, we saw the debt surpass GDP with $17.8 T to $17.7 T respectively, and this year the debt will be $18.6 T compared to a GDP of $18.2 T. Clearly, we have a trend here.
Fiscal year 2015 will have a GDP growth of 2.4%, and our national debt will grow by 4.5%. To add to this trend, we will have over one-half trillion dollar deficits for the next five years, and the CBO has stated we'll have a higher debt to GDP ratio for at least a decade down the road.
The Fed is now in a trap. It must keep rates as low as possible for decades as long as the debt stays where it is or the rug gets pulled out from under us. It must continue to purchase Treasury Notes to finance the deficits, and this increases the monetary supply, but it also contributes to income inequality. This is a great system for the 0.01%, but bad for everyone else.
The 'new normal' is that governments will outspend revenue, central banks will buy government debt, and every nation will have a debt larger than GDP. But what do I know? I'm just a deficit fetishist.
Fiscal year 2001 saw a $5.8 T debt, and a $10.6 T GDP. FY 2008 saw $10.0 T debt, and a $14.7 T GDP. Last year in FY 2014, we saw the debt surpass GDP with $17.8 T to $17.7 T respectively, and this year the debt will be $18.6 T compared to a GDP of $18.2 T. Clearly, we have a trend here.
Fiscal year 2015 will have a GDP growth of 2.4%, and our national debt will grow by 4.5%. To add to this trend, we will have over one-half trillion dollar deficits for the next five years, and the CBO has stated we'll have a higher debt to GDP ratio for at least a decade down the road.
The Fed is now in a trap. It must keep rates as low as possible for decades as long as the debt stays where it is or the rug gets pulled out from under us. It must continue to purchase Treasury Notes to finance the deficits, and this increases the monetary supply, but it also contributes to income inequality. This is a great system for the 0.01%, but bad for everyone else.
The 'new normal' is that governments will outspend revenue, central banks will buy government debt, and every nation will have a debt larger than GDP. But what do I know? I'm just a deficit fetishist.
1
@Dan Romig
What you've given here, Dan, is a snapshot. But a snapshot no different than the one you'd get as a business that needs to 'spend money to make money'. There's ALWAYS a moment in ANY business when you can pick a time period and make the argument "we're spending more than we're taking in...I see a trend here" and make it look like we need to cut spending. But, as with any business, that's not the whole story. The better question is: What's the purpose of the spending? Is it possible that its worth spending more at this time than we're taking in? And if our spending is denominated in the currency we print and everyone else uses to denominate theirs, do debt, interest, and inflation mean what we think it means?
The best question of all is: What, exactly, is gained by this fabled notion that a trillion(s)-dollar economy should operate with only incidental debt (and preferably none at all)?
And that brings us back to the popular notion that a federal government of 50 states can or should operate like a household. It can't, nor should it. Why? Because no system in the real world scales up on a 1:1 basis. Just like you can't scale up a kitchen recipe designed for a family of 4, or a chemical process designed for a product in grams, and simply multiply that up to the size of nations, or into the industrial tonnage of product, without dealing with the contraints and consequences of the change in scale. The consequences of modern governance demands a level of debt.
What you've given here, Dan, is a snapshot. But a snapshot no different than the one you'd get as a business that needs to 'spend money to make money'. There's ALWAYS a moment in ANY business when you can pick a time period and make the argument "we're spending more than we're taking in...I see a trend here" and make it look like we need to cut spending. But, as with any business, that's not the whole story. The better question is: What's the purpose of the spending? Is it possible that its worth spending more at this time than we're taking in? And if our spending is denominated in the currency we print and everyone else uses to denominate theirs, do debt, interest, and inflation mean what we think it means?
The best question of all is: What, exactly, is gained by this fabled notion that a trillion(s)-dollar economy should operate with only incidental debt (and preferably none at all)?
And that brings us back to the popular notion that a federal government of 50 states can or should operate like a household. It can't, nor should it. Why? Because no system in the real world scales up on a 1:1 basis. Just like you can't scale up a kitchen recipe designed for a family of 4, or a chemical process designed for a product in grams, and simply multiply that up to the size of nations, or into the industrial tonnage of product, without dealing with the contraints and consequences of the change in scale. The consequences of modern governance demands a level of debt.
3
Every modern government has been doing what you fear they'll do in the future since roughly the reign of Henry II.
5
"The 'new normal' is that governments will outspend revenue, ..."
There's an extremely easy way to correct that.
There's an extremely easy way to correct that.
4
The media doesn't know any more about economics than do the Republicans. Both are scarily ignorant on the subject. I am no expert but a lot of the stuff we read or hear about just defies common sense.
12
"...close to three percent of GDP." no need to massage the numbers upward. UK growth has barely exceeded 2% over the last two years and still falls short of that of the United States. You will notice that the UK had far lower GDP growth in 2012 during austerity and...what do you know, the growth picked up after the British government eased off the austerity.
4
Politics is all about controlling the narrative. It doesn't matter what is factually true.
In this country the Republican politicians of my generation have understood that a clever use of words frames all political discussion.
Think "War on Terror." "The Patriot Act." "Obamacare." These are all examples of how they steered the nation's political discourse in ways that were to their advantage. "Stand Your Ground" is another one. They provide political cover for doing something completely different than the phrase implies.
"War on Terror" gives cover to the police state surveillance spending and a war without end profiteering economy.
"Patriot Act" eliminates inconvenient civil liberties so the police state mechanism can function without annoying legal checks and balances.
"Obamacare" encourages poor whites to think a black man in the White House is giving away stuff to other black people.
"Stand Your Ground" means you can shoot a black person and get away with it if you want.
Misogyny, racism, and homophobia are all the fears and biases that you need in your political tool box to create the environment you need to win. Assuming you understand that controlling the narrative is the goal. Which the Republicans do.
By winning the propaganda battle the Republicans have the power to continue on with their real mission, which is to amass more wealth and concentrate it in the hands of the .1%
In this country the Republican politicians of my generation have understood that a clever use of words frames all political discussion.
Think "War on Terror." "The Patriot Act." "Obamacare." These are all examples of how they steered the nation's political discourse in ways that were to their advantage. "Stand Your Ground" is another one. They provide political cover for doing something completely different than the phrase implies.
"War on Terror" gives cover to the police state surveillance spending and a war without end profiteering economy.
"Patriot Act" eliminates inconvenient civil liberties so the police state mechanism can function without annoying legal checks and balances.
"Obamacare" encourages poor whites to think a black man in the White House is giving away stuff to other black people.
"Stand Your Ground" means you can shoot a black person and get away with it if you want.
Misogyny, racism, and homophobia are all the fears and biases that you need in your political tool box to create the environment you need to win. Assuming you understand that controlling the narrative is the goal. Which the Republicans do.
By winning the propaganda battle the Republicans have the power to continue on with their real mission, which is to amass more wealth and concentrate it in the hands of the .1%
34
"Allegedly factual articles would declare that debt fears were driving up interest rates with zero evidence to support such claims. Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts." From article.
However, there could come other bad results from excessive level of the National Debt, than interest rates getting too high.
And, it seems it's resented, if ANY news articles are ever printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question then is: Did the U.S. government EVER borrow irresponsibly?
And isn't it strange if it never did, while it's easy to point out so many other nations where a government had 'borrowed irresponsibly' ?
So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ?
And isn't it strange if Dr. Krugman didn't ever write about that ?
And could we detect a reason ?
The reason that seems immediately came to his mind, like in today's article, is like: " ... Reporters would ... cheer on proposals for entitlement cuts."
Dr. Krugman considers welfare spending to be of preeminent importance,
overriding any other national interests ?
However, there could come other bad results from excessive level of the National Debt, than interest rates getting too high.
And, it seems it's resented, if ANY news articles are ever printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question then is: Did the U.S. government EVER borrow irresponsibly?
And isn't it strange if it never did, while it's easy to point out so many other nations where a government had 'borrowed irresponsibly' ?
So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ?
And isn't it strange if Dr. Krugman didn't ever write about that ?
And could we detect a reason ?
The reason that seems immediately came to his mind, like in today's article, is like: " ... Reporters would ... cheer on proposals for entitlement cuts."
Dr. Krugman considers welfare spending to be of preeminent importance,
overriding any other national interests ?
"welfare spending" ??
I'm not sure where you get that idea -- and I wonder what you mean by the term. Does it include Social Security or Medicare,both entitlement programs to which the recipients contribute? Does it include Medicaid, which helps preserve public health? Or Obamacare, which has had the effect of not only providing insurance to people but cutting the rate of increase of meidcal care costs to non-welfare recipients?
It seems to me that Mr. Krugman would rather see a rise in the minimum wage than expansion of assistance programs that are needed otherwise to enable fulltime workers to meet the financial obligastions associated with a safe and secure life. Wouldn't you prefer to see workers get paid for their work in a manner consistent with maintenance of a middle class lifestyle?
I'm not sure where you get that idea -- and I wonder what you mean by the term. Does it include Social Security or Medicare,both entitlement programs to which the recipients contribute? Does it include Medicaid, which helps preserve public health? Or Obamacare, which has had the effect of not only providing insurance to people but cutting the rate of increase of meidcal care costs to non-welfare recipients?
It seems to me that Mr. Krugman would rather see a rise in the minimum wage than expansion of assistance programs that are needed otherwise to enable fulltime workers to meet the financial obligastions associated with a safe and secure life. Wouldn't you prefer to see workers get paid for their work in a manner consistent with maintenance of a middle class lifestyle?
5
Good article Dr Krugman except that you are wrong about us being over it. As soon as the republicans start pushing their budgets hard, the press will fall in line and report it as factual. Never forget the press and republicans are owned by the same people.
31
Well, those folks are hoping that the people who will be harmed are too busy treading water to pay attention to the "news."
1
The Torres are only in office because of the coalition with Labour. Cameron is not the bet PM for the job. It's time for a push for real paying jobs with benefits, just like the US needs. When will the simple truth be learned?
27
Er..Labour are the Opposition, not in the Coalition. The Coalition consists of the Tories and the Liberal Democrats.
A very interesting article highlighting mediamacro. Its all pervasive and not just in regard to the deficit but to much of current affairs. Even in partisan newspapers the narrative is the same, albeit viewed from opposing viewpoints.
More analytical journalism is needed in the UK by the sound of it!
A very interesting article highlighting mediamacro. Its all pervasive and not just in regard to the deficit but to much of current affairs. Even in partisan newspapers the narrative is the same, albeit viewed from opposing viewpoints.
More analytical journalism is needed in the UK by the sound of it!
1
The Upshot is the cure?
The articles I've read there are more the disease. In the last few months I have seen mention there of the Krugman line that I did not see six months ago. The orthodoxy of smug establishment thirty something's, but with statistics, is what I find there. It is good news that reality on the economy is now given a place in the orthodoxy after seven years instead of just deficit reduction but it is a new arrival.
The articles I've read there are more the disease. In the last few months I have seen mention there of the Krugman line that I did not see six months ago. The orthodoxy of smug establishment thirty something's, but with statistics, is what I find there. It is good news that reality on the economy is now given a place in the orthodoxy after seven years instead of just deficit reduction but it is a new arrival.
2
Too much of what passes for journalism is simply consensus reporting - groupthink in other words. If the press keeps hearing the same phrases to describe a situation all the time from the same Very Serious People, they begin to assume that's the entire story. Plus... if they want to keep access to those sources, questioning or even contradicting what they say is not going to get them any favors.
There's also the market-driven aspect of journalism - that is, report what people don't want to hear or don't want to believe, and you'll find it harder to sell papers, air time, etc. That doesn't mean people want good news all the time - they'll go with bad news if it confirms their worst fears and/or prejudices. The late Terry Prattchett in "The Truth" tossed off the cynical observation about the newspaper business that "People don't want News - they want Olds." They want to hear the world is what they think it is.
And of course, we shouldn't forget that media consolidation means that corporate overlords are going to have input into exactly what news gets heard and how it is spun.
There's also the market-driven aspect of journalism - that is, report what people don't want to hear or don't want to believe, and you'll find it harder to sell papers, air time, etc. That doesn't mean people want good news all the time - they'll go with bad news if it confirms their worst fears and/or prejudices. The late Terry Prattchett in "The Truth" tossed off the cynical observation about the newspaper business that "People don't want News - they want Olds." They want to hear the world is what they think it is.
And of course, we shouldn't forget that media consolidation means that corporate overlords are going to have input into exactly what news gets heard and how it is spun.
5
Unfortunately, we will start hearing negative whining about deficits , entitlements, tax cuts and the "job creators" as we get closer to 2016. When will they change the record?
10
Dr. Krugman mentions: "Allegedly factual articles would declare that debt fears were driving up interest rates with zero evidence to support such claims. Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts."
However, there could be many other bad results of excessive level of the National Debt, besides interest rates getting too high.
It seems it's resented, if ANY news articles are printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question then is: Did the U.S. government EVER borrow irresponsibly?
And isn't it strange if it never did, while it's easy to point out so many other nations where a gov't had 'borrowed irresponsibly' ?
So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ?
And isn't it strange that Dr. Krugman never ever wrote about that ?
And could we detect a reason ?
The reason that seems immediately to come to his mind, like in today's article, is: " ... Reporters would ... cheer on proposals for entitlement cuts."
Dr. Krugman considers welfare spending to be of preeminent importance,
overriding any other national interests !
However, there could be many other bad results of excessive level of the National Debt, besides interest rates getting too high.
It seems it's resented, if ANY news articles are printed about the National Debt or its need to be addressed.
Then he wrote about Britain today: " The narrative I’m talking about goes like this: In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means. As a result, by 2010 Britain was at imminent risk of a Greek-style crisis; ..."
My question then is: Did the U.S. government EVER borrow irresponsibly?
And isn't it strange if it never did, while it's easy to point out so many other nations where a gov't had 'borrowed irresponsibly' ?
So wouldn't it be strange if the U.S. borrowed by now $17 TRILLION or more, that it NEVER DID 'borrow irresponsibly' ?
And isn't it strange that Dr. Krugman never ever wrote about that ?
And could we detect a reason ?
The reason that seems immediately to come to his mind, like in today's article, is: " ... Reporters would ... cheer on proposals for entitlement cuts."
Dr. Krugman considers welfare spending to be of preeminent importance,
overriding any other national interests !
As a child studying history, I recall many times thinking that the world was truly different "now", and crazy people will never again run nations, since people must have learned lessons from history. Boy, was I wrong. In my life, we have witnessed many horrors repeat themselves, from stupid wars to genocides.
The same thing has happened in economic policy. We have "mediamacro" misinforming us on a daily basis, so seemingly intelligent people are always wrong about economic policy. Trying to engage them in debate is tantamount to trying to explain nuclear physics to a parakeet.
The same thing has happened in economic policy. We have "mediamacro" misinforming us on a daily basis, so seemingly intelligent people are always wrong about economic policy. Trying to engage them in debate is tantamount to trying to explain nuclear physics to a parakeet.
15
I agree! My generation was pretty confident that some of the worst of history was behind us, dated from earlier times.
One of the shocking things about the past thirty years has been the adoption of ignorant, contrary to reality, thinking about the economy, foreign affairs, all of it!
On a daily basis I hope that the pendulum will swing into a correction of this awful greedy, selfish, violent stage of American history.
One of the shocking things about the past thirty years has been the adoption of ignorant, contrary to reality, thinking about the economy, foreign affairs, all of it!
On a daily basis I hope that the pendulum will swing into a correction of this awful greedy, selfish, violent stage of American history.
2
Governments have never learned anything from history, or acted on principles deduced from it.
Georg Wilhelm Friedrich Hegel
Georg Wilhelm Friedrich Hegel
As a British expat, the first time I read Mr Krugman referring to 'VSP' or 'Very Serious People', it rang so true! Despite what he may think about VSPs in the USA, the picture is far worse in the UK, where the media looks up to and defers to those perceived to have 'authority'. Although we don't deny climate change, and are horrified by gun culture, when a false narrative takes hold (e.g. austerity) it is much for difficult for us Brits to question and repudiate it!
5
and the reason why (the mislabeled) 'austerity' in Europe actually has won the discourse - is - that the discourse was misleading from the beginning.
It never was about 'austerity' versus 'government spending' -(like in the US)
It always was was 'austerity' if one can't reform.
And I'm not talking about 'reforms' like cutting wages or social services.
I'm talking about reforms to collect taxes from Rich 'freeloaders' -(to use a conservative idiom)
AND reforms of economical structures - which are based far too much on the service- and financial industrie. Because focusing on these industries too much furthers unemployment and inequality - like the inequality between a London waitress which can't afford London anymore because so called Investors and Bankers have made the city unliveable for everybody who doesn't belong to their (snooker) club.
It never was about 'austerity' versus 'government spending' -(like in the US)
It always was was 'austerity' if one can't reform.
And I'm not talking about 'reforms' like cutting wages or social services.
I'm talking about reforms to collect taxes from Rich 'freeloaders' -(to use a conservative idiom)
AND reforms of economical structures - which are based far too much on the service- and financial industrie. Because focusing on these industries too much furthers unemployment and inequality - like the inequality between a London waitress which can't afford London anymore because so called Investors and Bankers have made the city unliveable for everybody who doesn't belong to their (snooker) club.
55
Interesting nuance, and not one that it would be easy to argue against. But I do not think the structural reforms you mention are a problem or necessity in the UK, which is what this article is discussing. Greece is a different problem, and I believe Dr Krugman's point all along was that comparing most other large economies in Europe (or the US) to Greece and its structural predicament was false and completely irrelevant....
1
'But I do not think the structural reforms you mention are a problem or necessity in the UK,'
You might talk to a London waitress about that.
-(or a NY waiter probably can tell you too - what 'structural reforms' have to be implented urgently to mak NY again a 'liveable place for people who don't belong to the snookers clubs)
You might talk to a London waitress about that.
-(or a NY waiter probably can tell you too - what 'structural reforms' have to be implented urgently to mak NY again a 'liveable place for people who don't belong to the snookers clubs)
and it is true too that Greece's example -(and the sorry financial state of a lot of other European country) - has been the cause for many Brits -(not only in the media) to rethink their relationship with money -(to say it politely)
Because who in the world wants to ultimately go begging Germany?
-(or the US - which could hand out the dough for free - as it can print for free...)
Because who in the world wants to ultimately go begging Germany?
-(or the US - which could hand out the dough for free - as it can print for free...)
2
Before Thatcher, Britain was known as the "Sick Man of Europe."
No one wants to go back to those days.
No one wants to go back to those days.
2
It's easy to confuse economic narratives with political ones. Here, as in Britain, "mediamacro" reflects the partisan political version fed through supportive media that has, as you cogently demonstrate, no relation to economic reality. In the U.S. we have Fox with its hard-right, conservative Republican megaphone blaring 24/7. Fox is run by Rupert Murdoch who is also a media mogul in Britain and provides that same voice to the Tories there as he does Republicans here. If the Democratic Party is to flourish, it has to find or create its own "mediamacro" megaphone beyond your thoughtful and insightful columns.
116
Yes, but remember that Bowles-Simpsonism was 50% Democrat. It is all too facile to blame MediaMacro on the right alone. In fact, most of Pres. Obama's economic positions are disliked by the liberal left as well....
1
It doesn’t matter whether you live in the U.S., with a hodgepodge of entitlement programs that are ill-synchronized, duplicative and largely ineffective if one looks at our “poverty” rate; or Britain, with far less duplication and dysfunction but a far more extensive network of social welfare help – if you’re not spending massively more than you take in, The Professor thinks you’re being “snookered”.
He wonders at fears of inflation when interest rates are low, not mentioning that they’re low because central banks have kept them artificially low, and that in truth they are the mere reflections of a U.S. that has kept HERS so low artificially and perforce.
And his argument about British austerity initially causing loss of growth ignores the Thatcher experience: her measures initially caused a collapse of growth as an economy sought to heal itself from decades of individual dependency, extensive public ownership of the means of production, and unions running riot. What happened when that healing took root? Thatcherite Britain began a period of explosive prosperity and growth it hadn’t seen since before the onset of WWII. But, after a long period of time, in came Labour again, to take credit for what had been wrought by a Tory and to begin again the incremental process of destruction.
This is why Brits kicked Labour out and brought back the Tories. They’ve come to realize that The Professor’s assumption that public sector jobs = private sector jobs is an exploded fallacy.
He wonders at fears of inflation when interest rates are low, not mentioning that they’re low because central banks have kept them artificially low, and that in truth they are the mere reflections of a U.S. that has kept HERS so low artificially and perforce.
And his argument about British austerity initially causing loss of growth ignores the Thatcher experience: her measures initially caused a collapse of growth as an economy sought to heal itself from decades of individual dependency, extensive public ownership of the means of production, and unions running riot. What happened when that healing took root? Thatcherite Britain began a period of explosive prosperity and growth it hadn’t seen since before the onset of WWII. But, after a long period of time, in came Labour again, to take credit for what had been wrought by a Tory and to begin again the incremental process of destruction.
This is why Brits kicked Labour out and brought back the Tories. They’ve come to realize that The Professor’s assumption that public sector jobs = private sector jobs is an exploded fallacy.
And just how is it that Mr. Luettgen was able to read the minds of the Brits who "kicked Labour out and brought back the Tories"? The Tory victory could be attributed to a variety of factors, Mr. Brown's lack of charisma any notable accomplishments while PM and the increased popularity of the Liberal Democrats being the most obvious. But it is intellectually dishonest to claim or suggest the victory was due to the Brits' realization of the fallacy "that public sector jobs = private sector jobs".
It gets tiresome to read right-wingers distort and misrepresent history to make a point. Of course Lefties do this as well. However, the Right seems to do it so shamelessly and carelessly, and with such regularity, that truth becomes an obstacle to the pursuit of truth. Willful blindness and self-deception become useful coping skills when the occasional truth sneaks or finds its way into the remnants of the conscience of the right-wing polemicist. But sadly, he never permits himself to think he might have erred in the first place.
For forward he must march against the forces of liberalism, progressivism, and all other isms to his left. Vigilant he must always remain in calling out the purported wrongheadedness of people like the "Professor". Shameless, careless and untruthful he will always be in doing so.
It gets tiresome to read right-wingers distort and misrepresent history to make a point. Of course Lefties do this as well. However, the Right seems to do it so shamelessly and carelessly, and with such regularity, that truth becomes an obstacle to the pursuit of truth. Willful blindness and self-deception become useful coping skills when the occasional truth sneaks or finds its way into the remnants of the conscience of the right-wing polemicist. But sadly, he never permits himself to think he might have erred in the first place.
For forward he must march against the forces of liberalism, progressivism, and all other isms to his left. Vigilant he must always remain in calling out the purported wrongheadedness of people like the "Professor". Shameless, careless and untruthful he will always be in doing so.
5
Prof. Krugman…Think about this reality…After six years of historically low interest rates worldwide, What percentage of a median bond portfolio is made up of very low interest bearing bonds? It’s one thing to hold a 5% bond that has inflated in value due to low interest rates and still collect 5% on your invested capital, compared to holding a much depreciated 2% bond when long term interest rates return to the more normal 5% range. In the first case you have the option of cashing out with large profits. In the second case, you are locked into invested capital losses until the bond nears maturity.
I don’t believe the Fed is that concerned about creating unemployment by increasing rates, but instead, is concerned about the inflated stock market values and trillions of low interest paying bonds on the books of many investors.
I don’t believe the Fed is that concerned about creating unemployment by increasing rates, but instead, is concerned about the inflated stock market values and trillions of low interest paying bonds on the books of many investors.
The right to free speech doesn't include shouting fire in a crowded theatre. Neither should it include the incessant (macro media) repetition of outright lies that panic the credulous while ensuring all the money and all the power goes to the loudest shouters.
4
As ever, Paul Krugman - and, I should add, Simon Wren-Lewis - have it right.
But you will never, ever find their views, unexpurgated, anywhere in the British mainstream media. Some commentators in 'The Guardian' are expressing views which contain some of elements but in a rather pallid and wan version of Paul Krugman's necessarily waspish analysis.
When I rehearse these Keynsian arguments on the utter unimportance of the 'the deficit' with people, I am met with a look of dumb disbelief.
But you will never, ever find their views, unexpurgated, anywhere in the British mainstream media. Some commentators in 'The Guardian' are expressing views which contain some of elements but in a rather pallid and wan version of Paul Krugman's necessarily waspish analysis.
When I rehearse these Keynsian arguments on the utter unimportance of the 'the deficit' with people, I am met with a look of dumb disbelief.
3
Unfortunately, too many people confuse deficit with national debt. They also think federal budgets should work like household budgets.
One more loud and ignorant declaration from the right that will be the undoing of us all, here as well as in the UK.
One more loud and ignorant declaration from the right that will be the undoing of us all, here as well as in the UK.
1
The Republicans want to balance the budget on the backs of poor people by cutting "Medicare, Medicad, Society Security, Food Stamps, etc.
I have a better, simpler way: Lets cut the Military Budget in half. I'm tired of endless war. Are you?
I have a better, simpler way: Lets cut the Military Budget in half. I'm tired of endless war. Are you?
11
Perhaps "we", meaning liberals and economists, have gotten past the austerity is good mantra, but not the rank and file. Conservative media, especially in red states, continue to moan about the deficit, call for slashing safety nets, while insisting on even higher defense expenditures to keep ISIS from storming our beaches.
I'm not sure what it will take to convince those voters who are being punished to stop protecting the rich and kick the Republicans out.
I'm not sure what it will take to convince those voters who are being punished to stop protecting the rich and kick the Republicans out.
144
The media controls the info (lies) we all read. Who controls/owns the media in the red states?
2
Not only do we need more analytical journalism to debunk the distorted and false economic claims and sky-is-falling debt hysteria of Republican politicians, we need journalists to question ridiculous statements when they are made. For example, when a Republican tells a journalist he doesn't believe in global warming, climate change and man's contribution to earth's warming because he is not a scientist, I'm waiting for the journalist to follow up and ask does this Republican believes in nuclear weapons? After all, if you can't see those pesky atoms and you are not a scientist, how can you know that an atomic bomb is real? Did Hiroshima really happen? Is Zeus really the cause of lightning strikes? Do you have to be a theologian to know?
2
After Watergate I saw that the GOP decided that if they couldn't control the media, they'd buy it, which they did. As the GOP veered right, so did the media.
4
On a memorable New Year's eve that I spent in the Middle East, a British ex-pat remarked to me that essentially, the British are a simple people, who keep their their lives in order - good friendship, hard work, times at the pubs and sporting events, and a lot of inner strength. In some cases, their memories of their parents during WWII are as fresh as yesterday.
So the British will survive the results of this election, just as they have Hitler's bombings, Thatcherism and its evisceration of their manufacturing and unions, being Bush's abettor for the Iraq debacle (though their opposition was much stronger than our Congress), and the more recent effects of the recession and the austerity fix that was tried.
But if there's a signal to the politicians in this country that the word might be getting through that conditions for most are not improving, due that the scales are tilted too far by the financial industry, it may come now. They may be a simple people, but their political sense is much more refined than what occurs in this country.
So the British will survive the results of this election, just as they have Hitler's bombings, Thatcherism and its evisceration of their manufacturing and unions, being Bush's abettor for the Iraq debacle (though their opposition was much stronger than our Congress), and the more recent effects of the recession and the austerity fix that was tried.
But if there's a signal to the politicians in this country that the word might be getting through that conditions for most are not improving, due that the scales are tilted too far by the financial industry, it may come now. They may be a simple people, but their political sense is much more refined than what occurs in this country.
57
Borrowing rates are, to a large degree, a consequence of political and societal stability; thus Japan's continued ability to borrow at such low rates. This is the supreme irony of the budget hawks in this country. The louder they scream and the more upward resource redistribution they con through congress concealed in the yellow of the 'Don't Tread On Me" flag, the greater the yawning chasm between the very few and the very many. As this accelerates, our stability at all levels will continue to erode, causing the very rate appreciation these Januses proclaim to fear so deeply.
Fortunately, the moneyed few driving the redistribution are wedded so closely to this country; otherwise I'd fear that their inclination for self preservation and great patriotism wouldn't kick in and would instead result in a continued push down this path. Wait.....Whoops!
Fortunately, the moneyed few driving the redistribution are wedded so closely to this country; otherwise I'd fear that their inclination for self preservation and great patriotism wouldn't kick in and would instead result in a continued push down this path. Wait.....Whoops!
4
There has been a startling growth in the Green party in England. Suggest people look into it! They have become the third largest party there, but it is still not getting much press:
https://www.greenparty.org.uk/
"Imagine a political system that puts the public first. Imagine an economy that gives everyone their fair share.
"Imagine a society capable of supporting everyone’s needs. Imagine a planet protected from the threat of climate change now and for the generations to come."
https://www.greenparty.org.uk/
"Imagine a political system that puts the public first. Imagine an economy that gives everyone their fair share.
"Imagine a society capable of supporting everyone’s needs. Imagine a planet protected from the threat of climate change now and for the generations to come."
7
Could Britain's blindness, by praising austerity's 'benefits', be due to economists flying so high in their complicate hubris, that simple down-to-Earth solutions were consistently bypassed, a toxic reliance on data instead (similar to what the U.S.'s ex-Fed Chairman Greenspan had, the aggressive subprime lending notwithstanding)? I guess we humans are unique in capriciousness, not wanting to be humble enough to learn from the mistakes of others.
1
One must remember that debt reduction is much more difficult than debt accrual. An economy must grow faster than the rate of debt growth for the number to come down; modern governments can never conceivably pay debt down, especially with the changes to demographics we are currently experiencing and what is around the corner. It's easy to goose the economy with extra money in the short-term, but the additional debts will result in fewer choices in the long-run.
Japan currently can borrow at very low rates, but give it not even 10 more years and we could be looking at a very different Japan (maybe not, but the potential is there...especially with its demographic trends). On the other hand, people are not particularly worried about the fiscal house of Britain in 10 years since they have been reasonably responsible.
Overall, it's easy to largely deficit spend now, but you must remember that if you do so, you will lose the option in the future.
Japan currently can borrow at very low rates, but give it not even 10 more years and we could be looking at a very different Japan (maybe not, but the potential is there...especially with its demographic trends). On the other hand, people are not particularly worried about the fiscal house of Britain in 10 years since they have been reasonably responsible.
Overall, it's easy to largely deficit spend now, but you must remember that if you do so, you will lose the option in the future.
1
That is not even the slightest bit true at the level of a nation with its own sovereign currency. Debt is a zero-sum game: all monies owed by a nation are also assets owned by private citizens, companies, and frequently the government itself. The net change in wealth is exactly zero. Ergo, the absolute or relative amount of debt matters not in the slightest.
What matters is the interest paid on that debt, which is a combination of many factors including the perception of investors regarding the nation's economic future. A future of growth means that rates should be higher. A future of stagnation means that rates should be lower.
There is no conceivable mechanism by which a nation like Japan, Britain, or the U.S. could have its debts "come due" and be unable to be repaid save for gross malfeasance on the part of its governing body -- for example, the recent attempts by Republicans in the U.S. Congress to force the nation to default on its debt.
What matters is the interest paid on that debt, which is a combination of many factors including the perception of investors regarding the nation's economic future. A future of growth means that rates should be higher. A future of stagnation means that rates should be lower.
There is no conceivable mechanism by which a nation like Japan, Britain, or the U.S. could have its debts "come due" and be unable to be repaid save for gross malfeasance on the part of its governing body -- for example, the recent attempts by Republicans in the U.S. Congress to force the nation to default on its debt.
3
I fundamentally disagree--the absolute or relative amount of debt does matter. Sure, a nation whose debt is in its own currency can always pay it back by inflating it away--please see pre-WW2 Germany. While a nation certainly can inflate its way out of debt, such an approach is highly undesirable and more importantly, such a position to be in is highly undesirable--please see WW2. The change in wealth is negative in such a case, as debts paid in dollars whose value is below the dollars lent plus interest accrued result in less wealth. As such, the absolute or relative amount of debt does matter.
Japan, for example, has a debt worth roughly 200% of GDP, but the Japanese save so much money for retirement that the Japanese for the most part purchased the debt the government accrued--hence the country's ability to borrow cheaply and it's relative financial stability over the past decade. As the Japanese grow older, money invested in Japanese debt will be pulled out to finance personal retirements. Japan will need to roll over that debt--who will buy the debt the baby boomers no longer own? Foreigners will, and probably at higher interest rates. Japan faces considerable challenges over the next 10-20 years, because it spent so handsomely before. Britain, on the other hand, does not face such considerable challenges, because it has less debt.
Japan, for example, has a debt worth roughly 200% of GDP, but the Japanese save so much money for retirement that the Japanese for the most part purchased the debt the government accrued--hence the country's ability to borrow cheaply and it's relative financial stability over the past decade. As the Japanese grow older, money invested in Japanese debt will be pulled out to finance personal retirements. Japan will need to roll over that debt--who will buy the debt the baby boomers no longer own? Foreigners will, and probably at higher interest rates. Japan faces considerable challenges over the next 10-20 years, because it spent so handsomely before. Britain, on the other hand, does not face such considerable challenges, because it has less debt.
Debt to GDP ratios are useless. GDP is an important indicator, for sure, but it has no practical application to accounting. The most important ratio is debt service to revenue. Paul, please take note.
3
The British voters understand well which side of the bread is buttered, and will vote accordingly.
It is a persistent claim of economist Paul Krugman that the less educated do not know what's good for them, and will vote against their own financial interests.
They do not.
Winning politicians understand this very well, witness " It is the economy stupid".
It is a persistent claim of economist Paul Krugman that the less educated do not know what's good for them, and will vote against their own financial interests.
They do not.
Winning politicians understand this very well, witness " It is the economy stupid".
1
Yep, Krugman makes that claim persistently. And the fact that, in the US, Republicans receive more than 1% of votes cast vindicates him. They do.
2
And what will your response be to a hung Parliament?
This has little to do with economics; after all, numbers can be twisted to prove any point. What we are really dealing with are liberal attempts to advance the role of government as the ultimate authority and answer to all of society's ills. Governments have long used economics to advance one political agenda or another. The New Deal remade American society and ushered in a new age of big government as the answer to everything. PK promotes the "debt is good" idea as a means of solidifying government control over, and responsibility for, all aspects of our lives. That's the liberal agenda hiding behind "economics".
3
Trickle-Down Larry, "Everyone knows" the New Deal was "bad" and led to evil things. And government is "evil" and should be "drowned in a bathtub". The conspiratorial nostrums of the American Right are so tiring. Isn't it funny how the 40 years after the New Deal were the most broadly prosperous in American history? On the other hand, during the sway of the Gilded Age, its aftermath (the Great Depression) led to the death of a quarter-million people from exposure during the winter of 1932 in cities of mass unemployment before FDR brought the Dole.
Since Ronald Reagan's elevation and the co-elevation of a globalized Wall Street, the working man has only known growing poverty. The evils of the "liberal agenda" appears to be believing that government should help those in need. The funny thing is that this would not be necessary if the right-wing investors would do what they espouse economically: i.e., invest in the American economy to produce jobs that create real jobs rather than McJobs. But they haven't and working people cannot exist on McJobs. We have debt because gov't backfills the hole left by the investment vacuum of a broken national economy. It's that simple.
Since Ronald Reagan's elevation and the co-elevation of a globalized Wall Street, the working man has only known growing poverty. The evils of the "liberal agenda" appears to be believing that government should help those in need. The funny thing is that this would not be necessary if the right-wing investors would do what they espouse economically: i.e., invest in the American economy to produce jobs that create real jobs rather than McJobs. But they haven't and working people cannot exist on McJobs. We have debt because gov't backfills the hole left by the investment vacuum of a broken national economy. It's that simple.
4
The New Deal stripped the banks of the ability to prey upon the society which they were supposed to serve. The repeal of the Glass Steagall Act restored the right of predation to the banks in 1998, and the agent of the restoration was none other than Democrat, Bill Clinton.
As an idealogue you can probably relax, because the taxpayer has been on the hook for the excesses of the entire Shadow Banking System since the 2008 Financial Collapse. The Public Subsidy for the bankers is alive and well, and the guiding philosophy of Wall Street Anarchists is to privatize profit, while at the same time socializing the consequences of risk.
You and your kind no longer have to fear the Unions. The Unions are dead. The Defined Pension Benefit has been killed off, and a highly profitable, but inadequate system of 401 K retirement plans, has failed to guarantee the safety of workers in retirement, but who cares?
The banking system has developed an abhorrence for depository lending because it want to trade on self inflicted volatility instead. When there is insufficient volatility to profitably trade, Jamie Dimon blames nearly non existent regulatory restraints.
We are all living as the fools in your fools paradise, but spare all of us the self righteous babble about Big Government and the sanctity of private money. Y'all have won the game. Why not just go off and gloat?
As an idealogue you can probably relax, because the taxpayer has been on the hook for the excesses of the entire Shadow Banking System since the 2008 Financial Collapse. The Public Subsidy for the bankers is alive and well, and the guiding philosophy of Wall Street Anarchists is to privatize profit, while at the same time socializing the consequences of risk.
You and your kind no longer have to fear the Unions. The Unions are dead. The Defined Pension Benefit has been killed off, and a highly profitable, but inadequate system of 401 K retirement plans, has failed to guarantee the safety of workers in retirement, but who cares?
The banking system has developed an abhorrence for depository lending because it want to trade on self inflicted volatility instead. When there is insufficient volatility to profitably trade, Jamie Dimon blames nearly non existent regulatory restraints.
We are all living as the fools in your fools paradise, but spare all of us the self righteous babble about Big Government and the sanctity of private money. Y'all have won the game. Why not just go off and gloat?
3
Private markets can't solve even the most trivial of our significant problems.
2
People assume that deficits and debt are a terrible thing because they don't understand how a nation that borrows in its own currency to get out of a recession is completely different than a family or business. Dr. Krugman, you agonize too much about why people fail to understand something that seems so simple to you and other mainstream economists. It's not because Very Serious People snookered the common man; it's because the common man employs what he takes to be common sense: a government shouldn't spend more than it takes in. Most politicians and pundits also believe this. Since the crisis began in 2008, there has never been a serious article in a prominent magazine explaining in sufficient depth why the family analogy isn't true. This is unbelievable but true.
6
Even the "family analogy" is a myth, at least for a majority of Americans. I do not know too many people who buy a new car, a house, or a their child's college education, who actually pay cash for these items.
The only difference between an individual paying for a home, a car, or a college education on credit, and a government's deficit spending, is indebted individuals will eventually die, and either they will die without having paid off their debt, or have an estate to leave to their heirs, while in theory a government has an infinite lifespan, and carry debt on a permanent basis.
The only difference between an individual paying for a home, a car, or a college education on credit, and a government's deficit spending, is indebted individuals will eventually die, and either they will die without having paid off their debt, or have an estate to leave to their heirs, while in theory a government has an infinite lifespan, and carry debt on a permanent basis.
1
Mr. Estes, well, Professor Krugman has explained the differences between family and government debt here in the NY Times.
1
If US media (except for the rightwing media such as the WSJ and Fox News) no longer go on and on about debt and deficits and the need to cut Social Security and Medicare now, now, now!, it is to an incredible extent due to the sustained efforts of Paul Krugman to expose this humbuggery, ignorance and downright lying by journalists, a few of whom work for the NYT. He deserves the thanks of millions if not billions of people around the world. Of course he won't get it. Perhaps he might re-locate to London for a year or so and do them the favor of exposing if not educating the worst UK offenders.
23
Professor Krugman seems to make a great deal of sense. How does austerity help an economy that is suffering from way too much productive capacity and way too little demand?
I am reminded that a metal that has very little use and is melted down into bricks and ingots and stored in vaults is still considered of great value.
The developed world's economy is in decline and much like in the medical establishment in the 18th and 19th century the economic cure in the 21st century seems to be bleeding. When the patient dies I am sure we will be told he wasn't bled enough.
La plus ca change.
I am reminded that a metal that has very little use and is melted down into bricks and ingots and stored in vaults is still considered of great value.
The developed world's economy is in decline and much like in the medical establishment in the 18th and 19th century the economic cure in the 21st century seems to be bleeding. When the patient dies I am sure we will be told he wasn't bled enough.
La plus ca change.
15
The biggest reason the US doesn't look like Europe right now is that we have Janet Yellen, and Europe doesn't.
Yellen has been extremely courageous, both as Fed vice-chair and chair, doing everything she could to counteract the recession by pumping in monetary supply (M1), even as the critics claimed she was destroying everything good in the universe. She was innovative in how she got that money out there, but the fact is that she made the right call, convinced Ben Bernanke to go with it, and has continued making the right call as the recession let up.
Yellen has been extremely courageous, both as Fed vice-chair and chair, doing everything she could to counteract the recession by pumping in monetary supply (M1), even as the critics claimed she was destroying everything good in the universe. She was innovative in how she got that money out there, but the fact is that she made the right call, convinced Ben Bernanke to go with it, and has continued making the right call as the recession let up.
25
We should be arguing about the need for government services not deficits!
If the left would just stop arguing about deficits, accept the right's insistence on the need for a balanced budget in the long run, accept the fact that there is no free lunch, start arguing about what really matters—that is, start arguing about what people actually care about: education, infrastructure, research, healthcare, Social Security, Medicare etc.—and accept the fact that taxes will have to be raised in order to finance the government services that people actually care about, people would start to listen to what the left has to say.
As I have said before, any fool who has been in debt knows that, eventually, debt does matter, and simply telling people that debt doesn't matter isn't fooling anyone except those on the left who are fooling themselves.
It seems to me that the left arguing about deficits instead of arguing about the need for government services such as roads, bridges, water treatment facilities, public health, education, research, healthcare, Social Security, Medicare and the need to increase taxes on corporations and adding additional tax brackets at the top while the right argues about cutting wasteful government spending and taxes is the reason why we have a Republican Congress today.
It's time to get real. Arguing about deficits isn't working. Argue about the need for government services!
If the left would just stop arguing about deficits, accept the right's insistence on the need for a balanced budget in the long run, accept the fact that there is no free lunch, start arguing about what really matters—that is, start arguing about what people actually care about: education, infrastructure, research, healthcare, Social Security, Medicare etc.—and accept the fact that taxes will have to be raised in order to finance the government services that people actually care about, people would start to listen to what the left has to say.
As I have said before, any fool who has been in debt knows that, eventually, debt does matter, and simply telling people that debt doesn't matter isn't fooling anyone except those on the left who are fooling themselves.
It seems to me that the left arguing about deficits instead of arguing about the need for government services such as roads, bridges, water treatment facilities, public health, education, research, healthcare, Social Security, Medicare and the need to increase taxes on corporations and adding additional tax brackets at the top while the right argues about cutting wasteful government spending and taxes is the reason why we have a Republican Congress today.
It's time to get real. Arguing about deficits isn't working. Argue about the need for government services!
35
Mr. Blackford: Yours is a terrific statement. I would add one more thig to it, however. We also need to argue about increasing the tax base, not just raise taxes in order to fund these services/infrastructure.
Policies to encourage US-based manufacturing to reverse decades of off-shoring would enable a tremendous increase in the tax base as well as provide the opportunity for true, full employment with livable wages and sustainable growth in this country.
Action to generate the things we really need and fostering the environment to funding them is what we need discussed from all available bully pulpits and worked in Washington.
Policies to encourage US-based manufacturing to reverse decades of off-shoring would enable a tremendous increase in the tax base as well as provide the opportunity for true, full employment with livable wages and sustainable growth in this country.
Action to generate the things we really need and fostering the environment to funding them is what we need discussed from all available bully pulpits and worked in Washington.
6
I see your point. But the Republicans insist that most of the services you list should be taken care of by the private sector: specifically healthcare, research, education, social security. The only expenses they might agree to are for roads and bridges and, of course, the military. So far as I can see, they do not feel that government has any responsibility for the public good. If people in our society do not succeed in life, it's their own fault regardless of race, gender or class, and they should suffer the consequences. Cream rises to the top even if it starts at the bottom of the jar. Unfettered capitalism rewards the most capable individuals and solves all problems. Hogwash, to be sure, but this is their argument and the philosophy behind their policies.
4
Jeff: And the Democrats let Republicans get away with arguing that we should turn our government over to their friends in the private sector so the government can collect our taxes to pay private businesses like Halliburton!
The Democrats don't explain to the American people why it is necessary for the government to provide these services and why markets guided by the profit system fails to provide them efficiently. Instead, Democrats argue about deficits, and the public only hears on side of the argument about the need for government provided public services.
It's just nuts!
The Democrats should argue about what people care about, not about deficits!
The Democrats don't explain to the American people why it is necessary for the government to provide these services and why markets guided by the profit system fails to provide them efficiently. Instead, Democrats argue about deficits, and the public only hears on side of the argument about the need for government provided public services.
It's just nuts!
The Democrats should argue about what people care about, not about deficits!
3
Borrowing money for productive uses like growing income is the conservative holy grail. Turning deficit into a negative serves some agenda other than conservationism.
The media might benefit studying the Dalio template to separate the frivolous from the real. See economicprinciples.org for the template.
The media might benefit studying the Dalio template to separate the frivolous from the real. See economicprinciples.org for the template.
1
This is yet another example of how people do not learn from history or experience in economic matters. Britain's debt was much higher at the end of the Napoleonic wars, but the country reached its peak of prosperity in the following decades. As the historian Macaulay wrote in 1855: "At every stage in the growth of that debt the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt went on growing; and still bankruptcy and ruin were as remote as ever...They erroneously imagined that there was an exact analogy between the case of an individual who is in debt to another individual and the case of a society which is in debt to a part of itself; and this analogy led them into endless mistakes about the effect of the system of funding." (History of England Vol. 4).
33
Pertinent & valuable, certainly (who now reads Macaulay?)
But sir, he writes of "the case of a society which is in debt to a part of itself." Our case is vastly different: we are in great debt to much of the rest of the world. And as I seem to remember good Professor Krugman, our answer to any problem here, given the strength of the dollar, is simply to print more money. That is (to my mind), we are to cope with foreign debts if they become demanding by cheapening our currency & betraying the prudent & the money-savers in our own society. Somehow not right.
But sir, he writes of "the case of a society which is in debt to a part of itself." Our case is vastly different: we are in great debt to much of the rest of the world. And as I seem to remember good Professor Krugman, our answer to any problem here, given the strength of the dollar, is simply to print more money. That is (to my mind), we are to cope with foreign debts if they become demanding by cheapening our currency & betraying the prudent & the money-savers in our own society. Somehow not right.
Mr. Werner, but we are not "cheapening our currency," because if we were interest rates would be much higher. Krugman's argument is that given the current situation, we can print money, not that printing money is always the correct solution.
4
We've all been snookered on budget deficits. It's because we have to balance our household budgets. Household budgets are not the same as country budgets and that distinction has escaped most of us. I don't pretend to understand economics. There are a few things I do understand. If people cannot find jobs they cannot pay taxes. That means the government gets less money and has less to spend on things that citizens use or need. Cutting taxes during the prosperous times is not a good idea. It's better to build up extra funds and save them for the bad times. It's also better for a country to invest in its citizens more when times are bad so that if and when things improve the country is in the position of having people working rather than collecting unemployment or losing the skills they had. It's not good to have people dropping out of the workforce and this is what the constant Congressional stalemate has led to in America.
Austerity is good for households as long as it doesn't mean choosing between medication, food, and shelter at once. It can be good for a country if it doesn't sacrifice citizens well being. All too often it does. Perhaps the austerity should be applied to corporate welfare across the world so that there is no advantage in basing a business in the Bahamas as opposed to Great Britain. As human beings we all need food, medicine, shelter, and the ability to pay for those things. Corporations are not people. Corporations are things.
Austerity is good for households as long as it doesn't mean choosing between medication, food, and shelter at once. It can be good for a country if it doesn't sacrifice citizens well being. All too often it does. Perhaps the austerity should be applied to corporate welfare across the world so that there is no advantage in basing a business in the Bahamas as opposed to Great Britain. As human beings we all need food, medicine, shelter, and the ability to pay for those things. Corporations are not people. Corporations are things.
41
It's worse than that. Households don't do what the "national economy as household" meme-lovers think they do. Example: In almost every case of a home mortgage, the household debt as a percentage of annual income is FAR over and above the national debt: GDP ratio that makes the Simpsons, Bowleses, innumerate Republicans, and corporate-loving Democrats bray to the skies about impending doom.
At least Obama has stopped enabling the braying crowd, finally, after 3/4 of his Presidency is done.
At least Obama has stopped enabling the braying crowd, finally, after 3/4 of his Presidency is done.
6
Dr. Krugman as always an excellent article, I would however suggest that Britain is certainly as proficient as we in America are at spinning numbers too achieve whatever result they want; we did after all lead the way with Milton Friedman and his band of merry fraudsters: I would also humbly suggest that the economic numbers on inflation have nothing to do with reality and everything to do with dismantling the costs of safety nets such as social security by the continued lie of no inflation, something the wealthy are not buying into as evidenced by the continued price rise in stocks, luxury real estate, art, even collector autos: the rich created and continue to perpetuate the fraud, fully understanding it will result in a weaker, more pliable populace. We do desperately need more spending Paul but on infrastructure, not funding wars for special interests and certainly not by financial engineering, although it does appear this will continue as the fed has printed itself into a corner it can't get out of, hence the wealthy throwing money at anything that MIGHT retain some value. So I repeat Dr. K. many good points but I suspect the economists and pseudo economists among us might want to lump the economic drivel coming out worldwide with the same degree of disdain as the WMD drivel espoused by Cheney and the gang.
10
The lingo PK taps into is in & of itself a form of analytical fetishism. A barrier of sorts that casts a shadow of silence over a veiled neoliberal agenda of pauperization. The making of failed states is nothing to sweep over. Nothing to gloss over when a government can't & won't even provide for the basic needs of its citizenry. Ask anybody, if they'd rather be happily silent about it, then let me call them the names that befit the calamities their silence begets, in public. Britain & Greece do not need PK or anybody's help if such support entails more of the same convoluted tomfoolery. I'm a front row reader of these narratives & from where I sit the full picture includes a lot more pain that allowed into frame & a lot of misunderstanding over mislabeled austerity measures. At least my tears exit via the right holes.
1
How's your recent track record, Bill?
1
Poseur alert!
1
Snookered is too nice of a word for what these "serious" people have done to our world economy. The rich have used their wealth to purchase the media and lie to the masses about the evils of deficits. Deficits that don't matter when ever there is a war monger who needs a few trillion or more corporate welfare to fund.
Deficits are not the largest economic problem, deficits are a political strategy they are no problem at all. Lack of jobs and hope for the people is a much larger problem and the rich are soon going to find out how much of a problem it really is.
Deficits are not the largest economic problem, deficits are a political strategy they are no problem at all. Lack of jobs and hope for the people is a much larger problem and the rich are soon going to find out how much of a problem it really is.
22
We've endured five years of Tory lies (what's new) about the economy, as Dr K says. Everything they say is prefaced by 'we inherited a terrible economy from Labour' and then lies about the deficit and as Dr K says, a quiet backtrack on austerity but still victimising segments of the poor. Unfortunately given the way the polls look and the rise of the Scottish National party it looks like the Tories may well get a majority in May and we'll have another five years of policies designed to enhance the well off at the expense of the poor, with particular targeting of immigrants and neglect of health, housing and education.
25
The Tory narrative is remorseless, unchanging and just plain wrong.
3
The foundations for this misconstrued austerity are philosophical, not economic, not political.
The asceticism driving the deficit fundamentalists' beliefs is consistent across Germany, the British Isles, and other Northern-European-influenced nations. It arises from assumptions about the nature of reality founded in the cold, dreary, resource-poor geography of the northern countries, a geography that drove the people from those countries out to become global imperialists and colonists. Colonialism is nothing but the cry of resource-poor Northern Europeans transformed into violence and exploitation.
On the other side is the belief that the universe is rich with substance, with its own logic and variety, that merely needs to be understood, and lived with, not fought with and controlled. The fundamental assumption here is that there is more than enough for everybody, and greed -- such as the .001% suffer from -- is a terrible mental illness.
This mental illness has, unfortunately, plagued much of the world for far too long; the real question is whether the patient will ever have a chance to recover at this point.
The asceticism driving the deficit fundamentalists' beliefs is consistent across Germany, the British Isles, and other Northern-European-influenced nations. It arises from assumptions about the nature of reality founded in the cold, dreary, resource-poor geography of the northern countries, a geography that drove the people from those countries out to become global imperialists and colonists. Colonialism is nothing but the cry of resource-poor Northern Europeans transformed into violence and exploitation.
On the other side is the belief that the universe is rich with substance, with its own logic and variety, that merely needs to be understood, and lived with, not fought with and controlled. The fundamental assumption here is that there is more than enough for everybody, and greed -- such as the .001% suffer from -- is a terrible mental illness.
This mental illness has, unfortunately, plagued much of the world for far too long; the real question is whether the patient will ever have a chance to recover at this point.
28
Your column makes a key observation: when the conservative plutocracy talks about sacrifices to stave off their perceived debt crises, it's always on the backs of someone other than them, such as the poor, and often the unemployed poor. A good example is the failure to extend unemployment benefits, and now there's talk of further reducing the SNAP (food stamp) program.
This same mentality extends to other areas, like the foreign policy hawks who are more than willing to send other people's offspring to fight extended wars overseas.
And returning to economics,have we really got past this deficit mentality in this country? Today, it would be impossible to raise taxes on the rich to pay for federal spending on infrastructure projects. We'd see middle and working class jobs growing much faster if we did so. Among a number of reasons the nation's economy boomed in the fifties and sixties was federal spending on the interstate highway system (justified, back then, on the basis of national defense). We'd never see that today.
This same mentality extends to other areas, like the foreign policy hawks who are more than willing to send other people's offspring to fight extended wars overseas.
And returning to economics,have we really got past this deficit mentality in this country? Today, it would be impossible to raise taxes on the rich to pay for federal spending on infrastructure projects. We'd see middle and working class jobs growing much faster if we did so. Among a number of reasons the nation's economy boomed in the fifties and sixties was federal spending on the interstate highway system (justified, back then, on the basis of national defense). We'd never see that today.
69
An established business or business model is hard pressed to change. What appears to be on the backs of someone else is merely the by-product of what is competition and the ways and means of escalating profits. To manufacture a gallon of Coca-cola takes over a thousand gallons of clean potable water, same with milk. Does this mean that our ways and means of producing should be abandoned as clean water becomes less and less so? Don't bet on it. And who is the first to get hurt when there is no clean water around? Those without direct access to the source. Republicans are merely bagmen for the bosses who put up the fences to sustain their access to the source of their profits as well as all the resources it takes to make them.
12
These republicans show their patriotism by wearing flag pins, refusing to pay their share of taxes, and sending other people's children to fight their wars.
It must end.
It must end.
4
Swinging from one threat to the next is the conservative method of governing, of gaining political power. This is a historic fact: conservatives use fear to secure votes.
Deficit spending for profit is always possible for conservatives. The Iraq war was a net deficit but reaped billions for the oil instability industry, the defense industry, and "reconstruction" which outright stole billions. Catch-22 is a reliable tool to clarify and justify conservative policy. Reduce taxes (revenue) to raise revenue, lower taxes on the rich to stimulate the economy (when every new dollar they get is buried in trust funds or speculation), reduce social welfare during economic crisis (which always increases the deficit more than it could ever reduce it) are all measures that are conservative dogma and always fail.
Failure, in conservative circles, is no measure of failure. Staying the course, with resolute determination is always preferable to admitting a mistake. Take Iraq for example. Where would we be now if we just left the middle east?
Only conservatives can exploit failure and show the kind of courage it takes to stick with it.
Deficit spending for profit is always possible for conservatives. The Iraq war was a net deficit but reaped billions for the oil instability industry, the defense industry, and "reconstruction" which outright stole billions. Catch-22 is a reliable tool to clarify and justify conservative policy. Reduce taxes (revenue) to raise revenue, lower taxes on the rich to stimulate the economy (when every new dollar they get is buried in trust funds or speculation), reduce social welfare during economic crisis (which always increases the deficit more than it could ever reduce it) are all measures that are conservative dogma and always fail.
Failure, in conservative circles, is no measure of failure. Staying the course, with resolute determination is always preferable to admitting a mistake. Take Iraq for example. Where would we be now if we just left the middle east?
Only conservatives can exploit failure and show the kind of courage it takes to stick with it.
34
Very well done. The theme works so well they're now using it when framing the Israel Mid East argument. Now, once again, it's all our fault and of course Obama's. Richard Haas is saying flatly the wealthy Jewish supporters agree with the right thus Clinton beware.
Once again I can here the war drums and the media is subtly worse this time compared to Iraq.
Anyway, nice comment.
Once again I can here the war drums and the media is subtly worse this time compared to Iraq.
Anyway, nice comment.
1
Unfortunately we are NOT finished with Bowles-Simpsonism. Look at the proposed Republican budgets in both House & Senate. We see the same ideas, only worse. Instead of investing in our country at very low borrowing rates and employing many people, they propose slashing support for the poor, who can't find employment. Also they want to destroy Medicare--the cheapest medical insurance plan in USA- & Social Security for the middle class and lower taxes for the rich.
Does Prof. Krugman have ideas for effective opposition to this proposed economic madness??
Does Prof. Krugman have ideas for effective opposition to this proposed economic madness??
40
While I broadly agree with the sentiments being expressed here, the claim that the British economy wasn't operating beyond it's real capacity in 2007 is ludicrous. It was experiencing a huge real estate boom not dissimilar to that in the US but with the difference that RE is a much more important component of the British economic mix than it is here as anyone who knows diddly about the British economy is aware. In fact putting some more air back into the RE bubble has been a major contributor to the apparent improved British economic performance of the last couple of years.
22
That was an asset bubble. Krugman's point was that had the UK economy been operating above capacity, there would have been mounting inflation, and there wasn't. What there was was an unsustainable over-extension of private debt.
10
voreason
Well there was actually some modest inflation. The unsustainable extension of private debt to which your refer was being used principally to fuel a housing purchase and construction boom which overheated the entire economy.
Well there was actually some modest inflation. The unsustainable extension of private debt to which your refer was being used principally to fuel a housing purchase and construction boom which overheated the entire economy.
For some reason, Dr. K appears to think deficit and debt bed-wetting has either left American shores or has subsided. It has most definitely not. The upcoming soul-destroying, billionaire-bought election will prove that as the GOP blames soaring debt, debt, DEBT on the Kenyan Keynesian instead of the economic conditions failed free-market ideology has produced, Democrats will cower, whimper, and refuse to put the blame where it belongs (failed market ideology), and the media-ocrity will play along as stupidly as only it can as if the last 6 going on 34 years hasn't happened.
70
All true. Blame the bail out. If they would have applied the free market solution they espouse to them in 09, at minimum the argument would be with new/different money.
1
The ancient Greeks taught that when the ruling class gets too selfish, nations collapse. See the Anacyclosis, and also the story Hercules' Choice, teaching responsible leadership. Nonetheless, ideologies preaching the opposite constantly rise up from the ashes, only to prove the Greeks right yet again. See for examples Hayek/Rand (trickle-down), George Fitzhugh (Confederacy) and Sir Robert Filmore (Medieval Absolutism) Corporations are supposed to serve two purposes - private profit and the public good. The privileges afforded corporations by the law are not free. These worthless false narratives serve only to prolong a psychopathic business culture that is despicable, destructive and unsustainable.
101
Unfortunately, under law, there is no duty for a corporation to serve the public good, so long as it refrains from illegal acts. the duty of the corporation through its officers and directors is to its shareholders.
6
Just one same correction to MRO: While it is true that for a brief period in the middle of the last century corporations served "stakeholders" - - - shareholders, employees, the community at large - - - that hasn't been true for many decades. Today's corporations exist only to "maximize shareholder value". To do otherwise is actionable today in a court of law. Management somehow became the main beneficiaries of our new regime, raking in huge compensation at the expense of shareholders and every one else. But no matter, "maximize shareholder value" is what we believe is true.
4
The conservative mindset is that worldly fortunes are a reflection of morality. Those who restrain their desires and sacrifice, individuals and nations, are rewarded.
Reality is so unsatisfyingly nuanced.
Reality is so unsatisfyingly nuanced.
29
Agreed--"Behind every great fortune is a great crime" Balzac
1
I've wondered whether modern societies, because of issues, such as climate change, macroeconomics, etc., which can't be understood by naive experience, have become too complex for governments and populaces to understand and, thus, too complex for us to be able to successfully manage our affairs and govern ourselves.
And it doesn't matter what the form of government is. Whether or not Sir Winston Churchill's comment that democracy is the worse form of government there is, except for all the others that have been tried, is still true, both democracies and totalitarian regimes fail to establish sound policies to manage macroeconomics, climate change, and a variety of social issues; instead, everything devolves to subjective standards of truth or an equivalence based on false controversies, thus ignoring epistemologically sound knowledge, facts, and even observed experience, whenever those realities contradict the philosophy on which group identity is based.
Without thus being able to see the links between causes and their respective effects, we are lost in a world where everything can be true, nothing is falsifiable, and so truth becomes whatever most seems to benefits our interests; reality becomes whatever suits us, until reality finally delivers consequences so severe that they can't be denied. And even, then, though the consequences will be undeniable, the causes of them won't be identified and understood.
Modern societies are in an epistemological crisis.
And it doesn't matter what the form of government is. Whether or not Sir Winston Churchill's comment that democracy is the worse form of government there is, except for all the others that have been tried, is still true, both democracies and totalitarian regimes fail to establish sound policies to manage macroeconomics, climate change, and a variety of social issues; instead, everything devolves to subjective standards of truth or an equivalence based on false controversies, thus ignoring epistemologically sound knowledge, facts, and even observed experience, whenever those realities contradict the philosophy on which group identity is based.
Without thus being able to see the links between causes and their respective effects, we are lost in a world where everything can be true, nothing is falsifiable, and so truth becomes whatever most seems to benefits our interests; reality becomes whatever suits us, until reality finally delivers consequences so severe that they can't be denied. And even, then, though the consequences will be undeniable, the causes of them won't be identified and understood.
Modern societies are in an epistemological crisis.
24
Not just modern.... The myth that all hunter-gatherer or farm-based societies were wise stewards of the resources available and sustainable is just that: a myth.
1
I agree completely. Our collective head is stuck in a cloud of magic while reality is swallowing us like quicksand.
1
Thanks for this; we need to stop trying to use reason and logic to convince people who are deaf to these (according to George Lakoff, nearly all of us).
I've been wondering whether, when the climate catastrophe we're heading for finally occurs, if any of the so-called skeptics will finally connect the dots.
Did a little experiment with some co-workers, and others. It appears that what they will say is the cause as they drown/parch/starve: SIN, I say, SSSIIIIINNN.
Yes, indeed, all that will be because Jesus disapproves of abortion, gay rights, women with opinions, black people staying on the sidewalk, and other, um, abominations.
I give up.
I've been wondering whether, when the climate catastrophe we're heading for finally occurs, if any of the so-called skeptics will finally connect the dots.
Did a little experiment with some co-workers, and others. It appears that what they will say is the cause as they drown/parch/starve: SIN, I say, SSSIIIIINNN.
Yes, indeed, all that will be because Jesus disapproves of abortion, gay rights, women with opinions, black people staying on the sidewalk, and other, um, abominations.
I give up.
2
Of course there was inflation that led to less tax receipts that prompted the world's governments to institute austerity measures, not just because of concern over deficits but because the price of crude oil peaked in July 2008 at 147 dollars after a steep rise the few preceding years. If you don't think there was inflation, you make a lot more money than most people. Clearly, the price of oil impacted the worlds economies and led to fewer tax receipts. The fourth quarter 2008 Standard and Poor's retail index showed a large decline in consumer spending. Yes indeed, there was inflation that inhibited the economies and led to concerns over deficits.
2
Patrick, you state that inflation caused reduced tax receipts. It is true that inflation increased by just under 1% from 2007 to 2008 in Great Britain.
But, you go on to mention that in the fourth quarter of 2008 there was a large decline in consumer spending that inhibited the economy and led to concern over deficits.
I think you are connecting the wrong dots.
Could the reduced tax receipts have been due to the second largest recession in history, which started in the fourth quarter of 2008, with millions losing their jobs and unemployment in Great Britain rising to the highest level in 16 years?
Any (Keynesian) economist would tell us that is the time for governments to spend money to offset reductions in consumer spending - not to implement austerity measures that pull more money out of the economy.
The time and way to pay down deficits is when the economy is booming and by increasing taxes to repay dollars spent to pull the economy out of recession.
But, you go on to mention that in the fourth quarter of 2008 there was a large decline in consumer spending that inhibited the economy and led to concern over deficits.
I think you are connecting the wrong dots.
Could the reduced tax receipts have been due to the second largest recession in history, which started in the fourth quarter of 2008, with millions losing their jobs and unemployment in Great Britain rising to the highest level in 16 years?
Any (Keynesian) economist would tell us that is the time for governments to spend money to offset reductions in consumer spending - not to implement austerity measures that pull more money out of the economy.
The time and way to pay down deficits is when the economy is booming and by increasing taxes to repay dollars spent to pull the economy out of recession.
8
"B"........the bottom line I wrote of is that the price of oil brought on the great world recession.
"Even debt-crisis countries like Italy and Spain can borrow at lower rates than Britain pays."
This means that British rates are a bit high, relative to what others pay. Still low objectively, but rates must also be seen as relative.
Yet Britain has been doing austerity. It has done so more than France and Italy and Spain anyway, which started so much worse.
So austerity has produced higher interest rates, not lower. It has produced the opposite of what it claims, produced the problem for which it claims to be the solution.
Rates go up for many reasons, not just inflation. Crippling the economy will send rates up too, because money has more productive places to go.
Austerity is a loser on its own terms, a really bad idea.
This means that British rates are a bit high, relative to what others pay. Still low objectively, but rates must also be seen as relative.
Yet Britain has been doing austerity. It has done so more than France and Italy and Spain anyway, which started so much worse.
So austerity has produced higher interest rates, not lower. It has produced the opposite of what it claims, produced the problem for which it claims to be the solution.
Rates go up for many reasons, not just inflation. Crippling the economy will send rates up too, because money has more productive places to go.
Austerity is a loser on its own terms, a really bad idea.
109
Great post Mark - several of us got the early jump on you today but I won't be surprised if this passes most of us in thumbs if anyone's counting. The only reason I care is that it is nice to be noticed and they seem to help.
12
To Mark:
It seems the problem is not the rates, but the level of the interest rates.
Economists should find a way to determine what is the correct level for rates.
They should according to thermodynamical kinds of equations be seeking by themselves the right levels. The Fed thinks it knows what the correct levels are. But it could be wrong on that.
You wrote: " ... Yet Britain has been doing austerity. ...
So austerity has produced higher interest rates, not lower. It has produced the opposite of what it claims, produced the problem for which it claims to be the solution."
How do you know the higher rates were really a problem? If you don't, then the conclusion you drew, that 'austerity is ... a really bad idea',
could be erroneous.
It seems the problem is not the rates, but the level of the interest rates.
Economists should find a way to determine what is the correct level for rates.
They should according to thermodynamical kinds of equations be seeking by themselves the right levels. The Fed thinks it knows what the correct levels are. But it could be wrong on that.
You wrote: " ... Yet Britain has been doing austerity. ...
So austerity has produced higher interest rates, not lower. It has produced the opposite of what it claims, produced the problem for which it claims to be the solution."
How do you know the higher rates were really a problem? If you don't, then the conclusion you drew, that 'austerity is ... a really bad idea',
could be erroneous.
Gary -- Thanks.
Yes, it is nice to be noticed. We are not writing to ourselves here. If nobody reads it, why bother?
I am not available at the new times articles are now posted. Many will always get the jump on me now. In many cases I don't bother to post my own comments, just recommend others because I'm too late for anybody to read me. It is nice to see that many of the same ideas get here without my help.
By the looks of it, many who once made early comments are not available at the new times, and are making far fewer contributions. I suppose that is a deliberate choice by the NYT. So be it, it is what it is, as our military guys put it. It's their paper.
Yes, it is nice to be noticed. We are not writing to ourselves here. If nobody reads it, why bother?
I am not available at the new times articles are now posted. Many will always get the jump on me now. In many cases I don't bother to post my own comments, just recommend others because I'm too late for anybody to read me. It is nice to see that many of the same ideas get here without my help.
By the looks of it, many who once made early comments are not available at the new times, and are making far fewer contributions. I suppose that is a deliberate choice by the NYT. So be it, it is what it is, as our military guys put it. It's their paper.
4
Cameron's austerity zeal is attested to by the cuts in UK defense spending at a time when Russian bombers intrude on British airspace and the UK Defense Minister warns of a real Russian threat. They won't even go for weaponized Keynesianism at a time when they have a real threat.
9
I remember a time when news organizations strove to adhere to the ethics of journalism, viewed themselves as having a significant role as the Fourth Estate in keeping the elites honest, and tried to seek out and tell the citizenry the truth (call it the old WWII Edward R. Morrow-BBC model of journalism and news reporting).
But those values are fading, & news organizations are now media outlets following the business model, which means they are more concerned with ratings, market share, money, power, and entertainment value than with factual and important investigative reporting.
In order to do the real work of journalism and reporting, journalists, genuine experts, and academics must remain independent from the power elite, but today they eagerly try to strike up relationships with and hobnob with economic and political elites, take the elite's press releases and report them as news, & hope they will be well rewarded for promoting what the financial and business elites want promoted rather than sacked for being too independent and telling it like it is.
So now it's NOT about news as nonfiction; it's about carefully crafted narratives, which eases us into the world of propaganda and fiction. Then just repeat the narrative in many forms and ways by a variety of "expert" disinformation specialists.
As Krugman says: "Hence the preference for a narrative prioritizing tough talk about deficits, not hard thinking about job creation."
And Ayn Rand is an economist!
But those values are fading, & news organizations are now media outlets following the business model, which means they are more concerned with ratings, market share, money, power, and entertainment value than with factual and important investigative reporting.
In order to do the real work of journalism and reporting, journalists, genuine experts, and academics must remain independent from the power elite, but today they eagerly try to strike up relationships with and hobnob with economic and political elites, take the elite's press releases and report them as news, & hope they will be well rewarded for promoting what the financial and business elites want promoted rather than sacked for being too independent and telling it like it is.
So now it's NOT about news as nonfiction; it's about carefully crafted narratives, which eases us into the world of propaganda and fiction. Then just repeat the narrative in many forms and ways by a variety of "expert" disinformation specialists.
As Krugman says: "Hence the preference for a narrative prioritizing tough talk about deficits, not hard thinking about job creation."
And Ayn Rand is an economist!
92
I remember when reporters were 'of the people' not multi millionaires. In the past they helped the helpless. Today they represent the rich.
1
PB
You must be really really old I am well into my seventh decade and I can't remember when the media presented anything but a distorted view reflecting the desired propaganda of the entitled. Most of America's media has always supported looking under the bed for boogie men since Hearst remembered the Maine
The rise of American "conservatism" , McCarthy , Viet Nam and Reagan could never have happened if America had an engaged independent media.
You must be really really old I am well into my seventh decade and I can't remember when the media presented anything but a distorted view reflecting the desired propaganda of the entitled. Most of America's media has always supported looking under the bed for boogie men since Hearst remembered the Maine
The rise of American "conservatism" , McCarthy , Viet Nam and Reagan could never have happened if America had an engaged independent media.
If personal career success in the media were not tied so much to signing on to agreeing to certain beliefs, it would probably be a different picture. So another point of intervention might be to stop supporting the use of "experts" in the media and focus more, again, on news reporting and the facts of incidents that have occurred -- and without rearranging those facts into the most alarmist configuration that can be thought of.
17
I have read a lot of comments, and most people seem to believe they know what the facts are, and the other guy does not.. Here is a little test I have been posting so you can see if you are correct. The statements are based on data and historical facts, not theory or opinion.
True or False
1. Significantly (say, no deficits for more than 3 years) paying down the federal debt has usually been good for the economy.
2. The single payer health care systems of other developed countries produce no better results at not much lower costs.
3. The very high top tax rates after WWII combined with high real (ratio of taxes actually paid to GDP) corporate taxes stifled economic growth.
4. The devastation of WWII caused the output of Europe to stay low for many (>10) years.
5. A small ratio of federal debt to GDP has always insured prosperity.
6. Inequality such as we have today (Gini about 0.50) has usually encouraged entrepreneurship thus helping the economy.
7. Our ratio of our corporate taxes actually paid to GDP is among the highest of all developed countries.
8. Since WWI, the cause of severe inflation in developed countries has usually been the printing of money.
9. As a percentage of GDP, today's federal debt service is the highest in many years.
10. Inequality such as we have today is an aberration; the history of capitalism has shown that periods like 1946 - 1973 with low inequality are the norm.
True or False
1. Significantly (say, no deficits for more than 3 years) paying down the federal debt has usually been good for the economy.
2. The single payer health care systems of other developed countries produce no better results at not much lower costs.
3. The very high top tax rates after WWII combined with high real (ratio of taxes actually paid to GDP) corporate taxes stifled economic growth.
4. The devastation of WWII caused the output of Europe to stay low for many (>10) years.
5. A small ratio of federal debt to GDP has always insured prosperity.
6. Inequality such as we have today (Gini about 0.50) has usually encouraged entrepreneurship thus helping the economy.
7. Our ratio of our corporate taxes actually paid to GDP is among the highest of all developed countries.
8. Since WWI, the cause of severe inflation in developed countries has usually been the printing of money.
9. As a percentage of GDP, today's federal debt service is the highest in many years.
10. Inequality such as we have today is an aberration; the history of capitalism has shown that periods like 1946 - 1973 with low inequality are the norm.
37
I love this quiz Len - it's brilliant - and your research showing that depressions have followed every time the budget has been balanced for 3 years a few weeks ago was quite powerful as well.
8
Tell me Len, every single one is False, right? I don't know much about the history of inequality, but the only period I know of with inequality as extreme as today's was the Gilded Age, which I believe lasted from the early 20th century until the Great Depression began its great destruction of wealth.
6
In my second comment below, I meant to say that the only period in American history that I know of with inequality anywhere near as extreme as that of today was the Gilded Age - of course there have been other nations past and present with higher inequality than either of America's Dark Ages of economic injustice.
2
To say the US is past this kind of talk makes me think Dr. K might be living a bit in a bubble. The most recent GOP budget (appropriately lambasted by K last week) and the ensuing media coverage, is evidence that we may still be in the midst of it. We still have conservatives insisting that we can have the values of the 1950s and the consequent strengths of society without the wage and tax structures of that time. The chicken and egg are separable, they insist, and we can have the chicken without the egg. I doubt this thing will go away soon - too many large salaries depend on not understanding.
50
With the US spending almost 18% of GDP (as of 2012) on healthcare and the UK spending just over 9% of GDP on healthcare, their budget is more stale than ours. The changes occur over a larger base.
Their current government's attack on pensions is misguided and will not help the Tories or the UK as a whole.
Their current government's attack on pensions is misguided and will not help the Tories or the UK as a whole.
6
Mr Krugman, Britain was running a deficit of 10% in 2010. At that rate national debt would have been doubled in about 8 years (when you include interest on debt).
The point you always miss is that Austerity was something Europe HAD to do. It wasn't a policy choice. What responsible government would allow the debt to double in 8 years, and what responsible lender would then lend to this government. To a large extent austerity has achieved what was required, Germany now has a budget SURPLUS and Britains deficit has more than halved. You will see an easing of austerity over the next 5 years. This is what prudent governments do.
The point you always miss is that Austerity was something Europe HAD to do. It wasn't a policy choice. What responsible government would allow the debt to double in 8 years, and what responsible lender would then lend to this government. To a large extent austerity has achieved what was required, Germany now has a budget SURPLUS and Britains deficit has more than halved. You will see an easing of austerity over the next 5 years. This is what prudent governments do.
2
But in the US, the federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
It seems that austerity has always been a bad idea her.
It seems that austerity has always been a bad idea her.
9
No-one claims austerity is some kind of stimulus. Its the opposite of stimulus. No-one claims its going to make countries boom. On the contrary it reduces demand. Simultaneously, it is still necessary given the points i made in my original comment.
1
Caezar, perhaps I should have said that your points do not apply to a country that can print its own money, and whose debts are in its own currency which is the world's reserve currency.
2
To me elections have become nothing but Kabuki theater put on by the oligarch that really run this country. We are forced to choose from a essentially one party system (Republicrats) that get all the face time in the corporate controlled media. A "people's" candidate never gets noticed. Then you have the voting block that has become completely dependent on government transfer payments who will elected a ham sandwich if their free money is threatened.
What democracy I say?
What democracy I say?
2
In addition to mediamacro fantasies, it is the practice of publishing articles suggesting that both but differing views on a particular subject or concept are some how equal in value and credibility that is hurting this country the most, and it is apparently done for the sole purpose of appearing unbiased and retaining the readership of both persuasions. Usually, the articles are devoid of facts altogether. The opposing argument or view is simply just stated. There is usually no effort to explain anything, as if the reporter didn't have the slightest idea as to the meaning of what was being said in the first place. For some one who wanted to learn about what is really going on in their country, this obviously doesn't work very well and would have to go elsewhere for the "news." It is kind of like reporting the baseball scores as 1-1, or 2-2, all the time. Life is not a game, but we need to make choices and the framework for making a choice does not exist in our society via the media without an incredible amount of digging. Many of us do not need to be told what to think. We read Mr. Krugman, for example, not just because we respect him, but his views actually explain the phenomenon we are witnessing. To make the right choice, understanding the situation is a prerequisite. When the opinion page becomes consistently more newsworthy than the rest of the paper, we have what we now have.
; a lot of non-informed people, who think if their team just gets one more run, they will win.
; a lot of non-informed people, who think if their team just gets one more run, they will win.
6
Like you've said before, the narrative that "we spent too much and must now tighten our belts," has a moral aspect to it. It makes people feel like they understood that someone did something morally wrong, which leads to doing moral good by...presumably...austerity. It's a fallacy, of course, in that the ones doing the wrong are the ones at the top levels of government and finance. But don't expect them to admit fault -- or stop being corrupt and greedy -- anytime soon.
4
Mr.Krugman, you just gave narrative to conservatives that is better than they can think of. Stop helping conservative.
I guess, I'm starting to understand what I once overheard my father say - "you can expect anything in an election year." (There has got to be a better way.)
4
can someone please explain that if the government goes further into debt, why would my interest rate on debt go up?
1
There's no direct reason why it would have to. But if people are convinced that government borrowing would lead to inflation (i.e. "mediamacro"), then inflation would lead to higher rates for all borrowers.
3
They cannot because it will not.
1
Competition raises prices.
I occasionally read the elite British media like "The Economist" and "The Financial Times." Both of those publications have an elitist point of view that feels like Republican-lite to an American. British elites have enough noblesse oblige to feel appalled at the pre-Obamacare state of American healthcare, but on other economic issues, "The Economist" and "The FT" are rather conservative. So, certainly, the elite British media does push a rather conservative fiscal point of view.
6
The economy in Britain seems to be in good shape, so that would seem to militate against a change. Also, as a watcher of the program "Prime Minister's Questions" on C-Span, I can tell you there is no one in the Labour Party that vaguely approaches the stature of Cameron. He's a pretty fair orator and a schooled rationalist. The English love their language and sound oratory is a pre-requisite for the job. Furthermore, Conservatism in England is far left of the middle of our political spectrum. They have universal health care and it works pretty well. And Cameron tweets daily about home buyer subsidies and other nonsense that would be anathema to our Congress. And, of course, you are forgetting the unbelievable frugality of the English. Bridging the gap between micro and macro there is virtually impossible, and ironically, our English ancestry is probably the antecedent of the same foible here. Let's remember how Gordon Brown was vilified by guess who, Rupert Murdoch in 2008. How much better off would England be if he had retained power? Perhaps a little better off but worried always they would have to pay the price for over-spending. You are right, of course regarding the narration of events, but my assertion is that Conservatism in Britain is not that "Conservative."
8
As I said, in the United States we have mainly gotten past that, for a variety of reasons — among them, I suspect, the rise of analytical journalism, in places like The Times’s The Upshot.
-------------
Or maybe...
the reason the austerity myth was allowed to advance, unchallenged, for as long as it did was that the usual ways of communication were upset. The economists, who should have stuck to publicly being known for their eonomic positions, wanted to be celebrity journolists too -- sharing their musical tastes, political opinions, effluvia, as well as their wise, economic thoughts. They became... writers in the popular news pages.
But... they weren't very persuasive writers, and their main economic mix got lost with their other hosts of opinions. They tried to serve many masters, and their economic wisdom -- for which the real writers, politicians and interviewers should have been dependent on -- got downplayed in the shuffle.
In trying to have all things, they dropped the ball on economically advancing their case. The Upshot and self-proclaimed wonks -- what a cool fun popular term! culture-making we are... -- advanced, and their careers advanced, but again, at what cost? The serious stuff got lost and the country continued to segregate economically.
Ah, what's it matter? The booze is strong, the songs playing, it's all good. Let others stay straight, focused and on message; it would have likely played out even this way even if everyone had stayed in role=win
-------------
Or maybe...
the reason the austerity myth was allowed to advance, unchallenged, for as long as it did was that the usual ways of communication were upset. The economists, who should have stuck to publicly being known for their eonomic positions, wanted to be celebrity journolists too -- sharing their musical tastes, political opinions, effluvia, as well as their wise, economic thoughts. They became... writers in the popular news pages.
But... they weren't very persuasive writers, and their main economic mix got lost with their other hosts of opinions. They tried to serve many masters, and their economic wisdom -- for which the real writers, politicians and interviewers should have been dependent on -- got downplayed in the shuffle.
In trying to have all things, they dropped the ball on economically advancing their case. The Upshot and self-proclaimed wonks -- what a cool fun popular term! culture-making we are... -- advanced, and their careers advanced, but again, at what cost? The serious stuff got lost and the country continued to segregate economically.
Ah, what's it matter? The booze is strong, the songs playing, it's all good. Let others stay straight, focused and on message; it would have likely played out even this way even if everyone had stayed in role=win
So if Greece and Spain can borrow at such low rates, why is Puerto Rico stuck with sky high interest rates? And they have a balanced budget.
4
I dunno, perhaps because when it comes time for the elites to put their money where their mouths are, they balk? Balanced budgets traditionally herald a financial crash, they know this, and act accordingly with their own money, but encourage us rubes, (aka the bottom 80%,) to think different. How can there be financial winners unless there are financial losers?
Greece is a special case. The reason Spain, Italy & Portugal have such low rates is they have the power of the ECB behind them. With its QE program, we're going to see a lot more capital chasing fewer assets, resulting in high bond prices (and resulting lower rates). This is something that modern economists such as Krugman dont fully understand, there is a huge tsunami of capital out there looking for a home, any home. The economic models they learning in university are very out of date.
Very true, Bloomberg News flogs the macromedia idea ever chance they get. And if one of their guests brings it up they really pile on and if possible stick a couple of boots and gouge a few eyes on the way out of the dog pile. As Paul K says it was other people sacrificing and for the most part news anchors didn't sacrifice a dime of income or wealth and made a bunch back in the rebound in financial assets. I guess the moral, beware of The Main Stream Media bearing rosy scenarios or economic narratives they probably don't understand the validity of.
5
the mainstream media exists to serve the corporations that have acquired it. The media is corporate, not liberal or conservative...It's agenda is whatever the owners (the media cartel) says it is.
1
And again - after 2008 Britain was in a complete panic, that the business model -(modeled after the US business model) - putting nearly all of their bets on financial services had collapsed. And that there was no way for a sustainable economical future of any kind.
And yes - then 'Greece' - but not so much concerning Greeces interest rates or any other monetary issues - but 'Greece' as the example of a country which is consuming itself into the ground and has nothing -(no exports) - to show that it could be payed for.
And that would have been Great Britains destiny if it wouldn't have been for the worlds Billionaires who save the Island -(for the time being) -
By buying up London and pumping up prices (not value) - they gave Britains GDP a tremendous lift and made it possible that on paper Knightsbridge and Mayfair alone is as much worth as the whole Brazilian economy.
And that right now dominates the discourse in Britain.
-(which actually is a relevant economic discourse)
And yes - then 'Greece' - but not so much concerning Greeces interest rates or any other monetary issues - but 'Greece' as the example of a country which is consuming itself into the ground and has nothing -(no exports) - to show that it could be payed for.
And that would have been Great Britains destiny if it wouldn't have been for the worlds Billionaires who save the Island -(for the time being) -
By buying up London and pumping up prices (not value) - they gave Britains GDP a tremendous lift and made it possible that on paper Knightsbridge and Mayfair alone is as much worth as the whole Brazilian economy.
And that right now dominates the discourse in Britain.
-(which actually is a relevant economic discourse)
3
"... for other people to make sacrifices."
And, voila, we're back to Dick Cheney, again!
And, voila, we're back to Dick Cheney, again!
23
"In the years before the financial crisis, the British government borrowed irresponsibly, so that the country was living far beyond its means."
But you seem to recommend that approach with everything the US does, Mr Krugman. One op-ed has you bemoaning the consumer debt levels, yet you also write that spending more for things like healthcare and green energy and reducing the use of cheap fuels, is good?
The US government borrows to meet the suggestions of pundits like you. And you drop all pretense that increasing debt is bad, so long as the money goes to fund programs your political agenda prefers.
But you seem to recommend that approach with everything the US does, Mr Krugman. One op-ed has you bemoaning the consumer debt levels, yet you also write that spending more for things like healthcare and green energy and reducing the use of cheap fuels, is good?
The US government borrows to meet the suggestions of pundits like you. And you drop all pretense that increasing debt is bad, so long as the money goes to fund programs your political agenda prefers.
2
Karlos assumes:
"Debt and the deficit are bad. Reducing them is good."
These are historically wrong.
Every time we had a balanced budget for more than 3 years, that period was immediately followed by a depression. This has happened 6 times. Deficits are necessary for prosperity.
In 1946 the debt was 121% of GDP--37% higher than we have today. We had deficits for 21 of the next 27 years; debt increased 75%. And we had prosperity. The GDP grew at an average of 3.8%, real household income surged 74% and we got the interstate highway system, Medicare and managed to fight a war, too.
On the other hand look at what happened after WWI. In sharp contrast to what we did after WWII, we had balanced budget (surpluses) from 1920 - 1930. We reduced the debt by 38%, On October 29, 1929 the debt was only 16% of GDP. AND THEN WHAT HAPPENED?
As another commenter put it, "A growing economy needs a growing money supply or there will be deflation as X amount of dollars chases greater amounts of goods and services. A fiscal surplus destroys money, exacerbating the problem. Accordingly, regularly running surpluses is like bleeding a patient..."
I would like to know when has debt negatively impacted our economy?
"The definition of insanity is doing the same thing over and over and expecting different results" - source unknown
"Those who don't know history are destined to repeat it." - Edmund Burke or George Santayana
"Debt and the deficit are bad. Reducing them is good."
These are historically wrong.
Every time we had a balanced budget for more than 3 years, that period was immediately followed by a depression. This has happened 6 times. Deficits are necessary for prosperity.
In 1946 the debt was 121% of GDP--37% higher than we have today. We had deficits for 21 of the next 27 years; debt increased 75%. And we had prosperity. The GDP grew at an average of 3.8%, real household income surged 74% and we got the interstate highway system, Medicare and managed to fight a war, too.
On the other hand look at what happened after WWI. In sharp contrast to what we did after WWII, we had balanced budget (surpluses) from 1920 - 1930. We reduced the debt by 38%, On October 29, 1929 the debt was only 16% of GDP. AND THEN WHAT HAPPENED?
As another commenter put it, "A growing economy needs a growing money supply or there will be deflation as X amount of dollars chases greater amounts of goods and services. A fiscal surplus destroys money, exacerbating the problem. Accordingly, regularly running surpluses is like bleeding a patient..."
I would like to know when has debt negatively impacted our economy?
"The definition of insanity is doing the same thing over and over and expecting different results" - source unknown
"Those who don't know history are destined to repeat it." - Edmund Burke or George Santayana
16
Hey Karlos. You may want to reread the article. Professor Krugman was describing the false narrative being pushed by austerians, not his analysis of British spending practices. He was making fun of the assertion you try to play gothcha with...and fail.
3
Len, you really need to stop repeating this nonsense. Debt is clearly anti-correlated with growth. Using 2014 data for countries with more than 10% unemployment, the correlation coefficient between government debt as a fraction of GDP to five year growth was negative 0.60. (By the way, correlations only have a range of -1 to 1, so a correlation with a magnitude of 0.6 IS significant.) The correlation coefficient of per capita government spending to 5 year growth was negative 0.67. The correlation coefficient of deficit as a percent of GDP to 5 year growth was negative 0.35. You continue to cherry pick and massage numbers but any time I test your assertions against broad, real world data they come up short.
1
Perhaps a single episode of economic history helps to explain
Great Britain's ' misleading fixation on budget deficits' and tight monetary policy. At the end of WWII, Great Britain was economically-financially broken.
In 1976, the economy was in deep trouble. No growth and rising inflation. The Chancellor of the Exchequer had to ask an emergency loan from the IMF. As a conditionality for the loan, drastic budget cuts had to be made which, in turn, reduced inflation and stabilized the pound.
By 1979 currency controls were lifted and the pound allowed to float. Today, financial services -based on a strong currency- are the backbone of Britain's economy and prosperity.
Bottomline: The 'fixation' with budget deficits is not an academic exercise for the Brits. It is the only choice if the country is to retain its dominant position as a major global financial center.
Great Britain's ' misleading fixation on budget deficits' and tight monetary policy. At the end of WWII, Great Britain was economically-financially broken.
In 1976, the economy was in deep trouble. No growth and rising inflation. The Chancellor of the Exchequer had to ask an emergency loan from the IMF. As a conditionality for the loan, drastic budget cuts had to be made which, in turn, reduced inflation and stabilized the pound.
By 1979 currency controls were lifted and the pound allowed to float. Today, financial services -based on a strong currency- are the backbone of Britain's economy and prosperity.
Bottomline: The 'fixation' with budget deficits is not an academic exercise for the Brits. It is the only choice if the country is to retain its dominant position as a major global financial center.
2
By 1979 the North Sea oil was in full flow. You can't discuss the British economy, or for that matter Thatcherism, without some mention of oil. And luck.
I truly hate the term "Entitlement Reform". This term suggest that things like Social Security and Medicare are things that we just get from the Government for free rather than something that we pay into all of our working lives.
I hear many conservatives plans to do away with both. Plans to take Social Security and hand it over to greedy Wall St. banker whose only concern is how much money they make for themselves. Plans to take Medicare and make it a voucher system in which seniors can buy their own medical insurance without realistically suggesting how someone over the age of 65 is supposed to do so.
I hear many conservatives plans to do away with both. Plans to take Social Security and hand it over to greedy Wall St. banker whose only concern is how much money they make for themselves. Plans to take Medicare and make it a voucher system in which seniors can buy their own medical insurance without realistically suggesting how someone over the age of 65 is supposed to do so.
11
Austerity is not dead in the US, it's just getting started. At the state and municipal levels pension obligations are driving severe cuts to even essential services such as police and fire protection, public schools and care for disabled people -- not to mention foolish curtailment of planned infrastructure replacement and expansion. The pain is far from over and it is mostly being inflicted on the least able.
17
It is also being inflicted on states with Republican governors and legislatures.
The laboratory of democracy (all 50 states) will show us what works and what does not. So far, Kansas, with an extreme Governor, Sam Brownback, is leading the charge for austerity. And they are having some very serious problems. A few more years of that and one wonders what Gov. Brownback will blame the problem on, because Obama will be out of office.
The laboratory of democracy (all 50 states) will show us what works and what does not. So far, Kansas, with an extreme Governor, Sam Brownback, is leading the charge for austerity. And they are having some very serious problems. A few more years of that and one wonders what Gov. Brownback will blame the problem on, because Obama will be out of office.
2
Great Britain, the Great Tax Haven - The City of London and the quaint and numerous British overseas territories and crown dependencies - is getting their comeuppance and beaten at their own tax avoidance game by multinationals shifting profits earned in GB to subsidiaries in Luxembourg, Netherlands, and Ireland. Thatcher snookered Reagan after the 1983 US Supreme Court Container Corp. decision that approved California's use of worldwide combined reporting - a tax haven killer app that ignores the inter-company profit-shifting accounting maneuvers. She pressured Reagan to pressure California and the other ten states that had adopted this method to back off and restrict this method to the water's edge - to just US domestic entities. The water's edge loophole allows multinational corporations but not national and smaller corporations to shift profits earned in the US to foreign subsidiaries. The biggest beneficiaries are foreign-based multinationals operating in the US because the US profits that they shift overseas are never repatriated - no repatriation with a foreign parent. What a "special" relationship we have with Britain. What used to be Britain's gain and our loss is now Luxembourg's gain but it is still our loss. Britain is no friend to any country that is suffering deficits caused by tax avoiding multinational corporations.
7
Re: "...perhaps the problem is the reporter who is either ignorant or lazy."
No, there are plenty of brilliant, hard working, brave, and honest economists, who challenge the status quo, and write in ways which are data driven, convincing - and who advocate for policies which would quickly provide dramatic benefits for society, were they to be given prominent platforms from which to speak.
My personal favorite is Dean Baker: http://www.cepr.net/index.php/beat-the-press/
I strongly recommend regular reading of his blog. He is on vacation, but his analysis and writing are eye opening.
Reporters with national platforms and large audiences are not randomly chosen. In the case of economists from "think tanks", they are actively chosen by their willingness to come up with the desired conclusion.
In the mainstream media, economic writers are not selected randomly either. While they may not be actively recruited based on ideology, any writer coming up with conclusions or reporting disliked by advertisers, powerful politicians, or the owners of the media outlets themselves (who in many cases are part of huge multinational corporations, with their own particular financial interests) - will be rejected.
A similar process occurs with our elected officials. Any candidate not approved by the financial elite, is culled from the field, regardless of how popular (and beneficial) his/her policies might be with the public at large.
No, there are plenty of brilliant, hard working, brave, and honest economists, who challenge the status quo, and write in ways which are data driven, convincing - and who advocate for policies which would quickly provide dramatic benefits for society, were they to be given prominent platforms from which to speak.
My personal favorite is Dean Baker: http://www.cepr.net/index.php/beat-the-press/
I strongly recommend regular reading of his blog. He is on vacation, but his analysis and writing are eye opening.
Reporters with national platforms and large audiences are not randomly chosen. In the case of economists from "think tanks", they are actively chosen by their willingness to come up with the desired conclusion.
In the mainstream media, economic writers are not selected randomly either. While they may not be actively recruited based on ideology, any writer coming up with conclusions or reporting disliked by advertisers, powerful politicians, or the owners of the media outlets themselves (who in many cases are part of huge multinational corporations, with their own particular financial interests) - will be rejected.
A similar process occurs with our elected officials. Any candidate not approved by the financial elite, is culled from the field, regardless of how popular (and beneficial) his/her policies might be with the public at large.
13
Interesting, yet nowhere does Professor Krugman mention GDP growth of Great Britain's economy. From 2013 on the United Kingdom has shown growth at close to three percent of GDP. So in this article we have an economist discussing a countries economic failure and yet doesn't mention some of the most basic statistics . But as the saying goes , facts are stubborn thing.
UK Economic growth.
http://www.tradingeconomics.com/united-kingdom/gdp-growth
Now lets compare that to France, Professor Krugman's favorite country.
http://www.tradingeconomics.com/france/gdp-growth
And there we have zero economic growth over the same time frame.
And what about Japan, Professor Krugman's second favorite country. Well, better than France but not much to brag about when you realize that Japan primed the pump with trillions of yen and has a deficit of over 200% of GDP.
http://www.tradingeconomics.com/japan/gdp-growth
UK Economic growth.
http://www.tradingeconomics.com/united-kingdom/gdp-growth
Now lets compare that to France, Professor Krugman's favorite country.
http://www.tradingeconomics.com/france/gdp-growth
And there we have zero economic growth over the same time frame.
And what about Japan, Professor Krugman's second favorite country. Well, better than France but not much to brag about when you realize that Japan primed the pump with trillions of yen and has a deficit of over 200% of GDP.
http://www.tradingeconomics.com/japan/gdp-growth
33
America has quadrupled our GDP over the past 35 years and median wages are the same as they were in 1979. Growth with unequal distribution is worse than no growth at all.
9
Sorry, but I don't see the same results from the trading economics chart on UK growth. Expanding it out to cover 2000 - 2014, it shows quarterly growth from 2000 to 2008 bouncing between 0.3% and 1.4%. Then 2008-09 it plummets below -2% before climbing up to +1% in 2010. Since then, when Prof. Krugman states that the government imposed "harsh austerity," it wobbled between 0.8% and -0.2% at the end of 2012. Starting in 2013, the GDP growth rate has moved from negative to a high of +0.8%; the most recent results show it dropping down to 0.5%. Citing results starting in 2013 doesn't show the whole picture, and I read Prof. Krugman's article to refer to the larger picture. Instead, the longer timeframe might just reinforce his analogy of stopping self-inflicted pain.
5
Actually, he does talk about it. I think his argument is that the UK throttled growth by imposing austerity measures, and when they eased up on the austerity, growth resumed. His conclusion is that it is therefore backwards to claim that austerity worked, when it was the exact opposite. Read it again?
5
While it can be argued that austerity is faulty economics, it may indeed be an excellent political argument for addressing entitlement spending and bureaucracy it spawns. I wonder what Paul would say about shifting from that entitlement/bureaucracy model of government stimulus to one that was pointed at investments in infrastructure, research, and the like.
Entitlement spending? You mean like massive corporate tax breaks and industry subsidies? The tax loopholes for the 1%? The war industry non-compete contracts and waste such as planes that don't work after billions in development? Those entitlements? Or the earned benefits of Social Security and Medicare?
16
Krugman was addressing the UK not the US. However, my question was about the character of the stimulus spending he would support, or is all stimulus spending the same? What would be his policy perspective be if the UK spent as he suggests, but less on pensions and bureaucracy and more on the future...roads, bridges, seaports, research etc.
Have we gotten past the MediaMacro view of economics in the US?
Judging by the media response to a British style Ryan budget, that will probably pass Congress, we are on the same wavelength as the British media.
Our rationale for savaging the social contract is the non-sensical premise that we have to slash and burn because baby boomers are retiring in droves and will do so for ever. Republicans are trying to "save" SS and Medicare by privatizing or disappearing those programs, and the media gives them a pass while not questioning why billionaires should continue paying a thousand times less of their income than middle class taxpayers to support those programs.
I believe we have our own media herd mentality, often driven by "gut feeling" and outright propaganda, but rarely by factual data (it's too hard for the Everyman to comprehend)!
Judging by the media response to a British style Ryan budget, that will probably pass Congress, we are on the same wavelength as the British media.
Our rationale for savaging the social contract is the non-sensical premise that we have to slash and burn because baby boomers are retiring in droves and will do so for ever. Republicans are trying to "save" SS and Medicare by privatizing or disappearing those programs, and the media gives them a pass while not questioning why billionaires should continue paying a thousand times less of their income than middle class taxpayers to support those programs.
I believe we have our own media herd mentality, often driven by "gut feeling" and outright propaganda, but rarely by factual data (it's too hard for the Everyman to comprehend)!
23
The flip side of the same coin is the ever growing financial illiteracy of the public, both in Britain and the US as well. Any number of surveys shows the decline of personal finance acumen, let alone the more difficult subject of economics. Politicians love a low information electorate, they can substitute just about any rumor, innuendo or half truth and the media, with its own version of ignorance, will follow meekly along.
169
Yeah. The trouble the our country has is that low info voters have been sold a bill of goods on many issues especially on the economy which is really the whole ball game.
There are 2 main problems with the economy. The first is inequality which takes money from the people who need it & will spend it and gives it to the people who do not need it, spend a much smaller percentage, and use the rest to speculate.
The low info voter is in favor of reducing inequality, but to a large extant opposed to the methods to do so. Many are opposed to raising taxes on the rich because they have been told that all taxes are evil. A dollar sent to DC will be swallowed up by some horrible monster, never to be seen again. They have been taught that unions are evil in spite of what we saw after WWII or see today in countries like Germany.
The second way to help the economy is more federal deficit spending, but people are unable to understand that federal spending is income for the private sector, people & businesses. If you use tax dollars, all you do is to put back money you have already taken out of the private sector; deficits can get NEW money to the people who need it.
The lo info voter believes that all debt is bad because it may be bad for him. He cannot see the difference between himself and a huge country that lasts a long time and can print the currency its debt are in.
From many comments in the Times, I have learned that data will change not his mind
There are 2 main problems with the economy. The first is inequality which takes money from the people who need it & will spend it and gives it to the people who do not need it, spend a much smaller percentage, and use the rest to speculate.
The low info voter is in favor of reducing inequality, but to a large extant opposed to the methods to do so. Many are opposed to raising taxes on the rich because they have been told that all taxes are evil. A dollar sent to DC will be swallowed up by some horrible monster, never to be seen again. They have been taught that unions are evil in spite of what we saw after WWII or see today in countries like Germany.
The second way to help the economy is more federal deficit spending, but people are unable to understand that federal spending is income for the private sector, people & businesses. If you use tax dollars, all you do is to put back money you have already taken out of the private sector; deficits can get NEW money to the people who need it.
The lo info voter believes that all debt is bad because it may be bad for him. He cannot see the difference between himself and a huge country that lasts a long time and can print the currency its debt are in.
From many comments in the Times, I have learned that data will change not his mind
4
Prof Krugman is correct in blaming the media. But rather than the ownership of the media, perhaps the problem is the reporter who is either ignorant or lazy.
I suspect that the reporters themselves are not well versed in economics and swallow the opinion of the latest pundit. If the reporter does not know what questions to ask how can she/he get answers that are meaningful to the reader.
Most of us do not understand economics. We trust the news article assuming that the person's stated views have stood the test of time. Can it be that every one quoted in the news has been hundred percent accurate in their analysis and prediction in the past? Of course not, but one hardly sees any mea culpa from the person being interviewed. and few articles summarize the person's past pronouncements.
We need reporters who understand their subject like Gretchen Morgensen and ask hard hitting questions. Without such reporting we will be swayed by a well written article which may be short on facts.
I suspect that the reporters themselves are not well versed in economics and swallow the opinion of the latest pundit. If the reporter does not know what questions to ask how can she/he get answers that are meaningful to the reader.
Most of us do not understand economics. We trust the news article assuming that the person's stated views have stood the test of time. Can it be that every one quoted in the news has been hundred percent accurate in their analysis and prediction in the past? Of course not, but one hardly sees any mea culpa from the person being interviewed. and few articles summarize the person's past pronouncements.
We need reporters who understand their subject like Gretchen Morgensen and ask hard hitting questions. Without such reporting we will be swayed by a well written article which may be short on facts.
22
Yes, there are too many communications majors, especially on TV. We need economics majors, science majors, and other subject matter experts asking the questions.
9
Good point, Lynn but the corporate media ownership doesn't pay for that kind of talent who can be (and are) scooped up , for example,by Wall Street as analysts.
And the corporate broadcast media find it far more lucrative to hire industry hacks or apologists as "experts." For example, retired Generals and CIA officials to push the corporate line of their employers.
And the corporate broadcast media find it far more lucrative to hire industry hacks or apologists as "experts." For example, retired Generals and CIA officials to push the corporate line of their employers.
Since journalists, no matter their training, have been shown to self censor to maintain "credibility" (and employment), wouldn't it be easier to stop watching TV?
The UK has good reasons to be cautious. They are a relatively small country with their own currency, and rely on imports for such necessary things as food and machinery. If other countries wouldn't take their money, they would be in a very bad pickle indeed.
2
Politics is about people and most people have fears and guilt about their personal finances which can easily be exploited by politicians and the media. On the other hand few people outside a college campus have any idea about the workings of macroeconomic theory. So it's very easy to sell a narrative that says "oh gosh we've overspent and need to tighten our belts," regardless of whether that narrative has any basis in fact.
11
I think it is very rational to want balanced budgets, in fact responsible, if not an innate sense of fairness to those that come after us. An analogy for my feelings would be an inherited family business that a group of siblings run, with their children working in the same business. When a need/opportunity to borrow to improve competitiveness is at hand the company should borrow. When some disaster, self made or otherwise strikes, the company should borrow to stay afloat. When debt repayment is taking place, the underworked siblings should work at reasonable capacity to keep the debt consistent with earnings and likely future earnings. The underworked siblings are America's present day haves, they are not working at their reasonable capacity, or in other words paying the taxes necessary to justify their spending. They benefit most now from the family business, and as such should give the most of themselves to keep it going.
7
There are two simple facts thatBryan cannot seem to grasp. One is:
The federal government can print money.
The U.S. can never go bankrupt unless we want to. It will run out of money the day after the NFL runs out of points. Now we cannot print arbitrarily large sums ad infinitum. When the economy has achieved its full potential or we have shortages, printing too much money will cause severe inflation. That is certainly not the case today.
The other fact is:
ONLY the federal government can print money.
No one else has a printing press. The population increases. The dollar loses value. The economy grows. As all this happens, the private sector needs more and more money. Only the federal government can provide the new money. The preferred way to do this is for the government to finance via gross deficits worthwhile projects such as infrastructure repair, education, research, etc. If we do this wisely, we will reap long term benefits and get money in the hands of the people who need it and will spend it, and out of the hands of the people who do not need it and will speculate with it.
What has happened if this fact is ignored? All 6 times we have eliminated deficits long enough to substantially pay down the debt, we have suffered a depression.
The finances of a huge country that lasts a long time, can print its own money and whose debt is in its own currency is very different fro your personal finances or those of your business.
The federal government can print money.
The U.S. can never go bankrupt unless we want to. It will run out of money the day after the NFL runs out of points. Now we cannot print arbitrarily large sums ad infinitum. When the economy has achieved its full potential or we have shortages, printing too much money will cause severe inflation. That is certainly not the case today.
The other fact is:
ONLY the federal government can print money.
No one else has a printing press. The population increases. The dollar loses value. The economy grows. As all this happens, the private sector needs more and more money. Only the federal government can provide the new money. The preferred way to do this is for the government to finance via gross deficits worthwhile projects such as infrastructure repair, education, research, etc. If we do this wisely, we will reap long term benefits and get money in the hands of the people who need it and will spend it, and out of the hands of the people who do not need it and will speculate with it.
What has happened if this fact is ignored? All 6 times we have eliminated deficits long enough to substantially pay down the debt, we have suffered a depression.
The finances of a huge country that lasts a long time, can print its own money and whose debt is in its own currency is very different fro your personal finances or those of your business.
8
The problem is that balancing the budget or worse, running surpluses when so much of our resources are not being utilized is near criminal macroeconomic mismanagement. Yes, the tax system must be reformed to prevent chronic bubble formation and to direct economic activity to create greater aggregate demand lower down the socio-economic scale. Unlike your household budget where income funds spending, monetarily sovereign nations like the UK and the US, taxes do not fund spending, all sending is money creation and all taxing is money destruction. They are not related.
4
Your analogy is terrible. A family business is not a national economy where my spending is your income and your spending is my income. Please keep your feelings out of it and learn what Dr. Krugman is trying to teach through his writings.
1
Across Europe, politicians and the general public have been wrongly fixated on paying down public debt and curtailing deficit spending during an historic recession. The result has been economic depression in certain parts of the EU and stagnant growth nearly everywhere else, even in Germany. Europe must abandon its public austerity in order to stop the downward spiral.
Perhaps Professor Krugman can better convince them that abandoning public austerity during depressed times does not mean abandoning responsible public budgeting for all time. It means only that when there is too little private investment, the state purse must pick up the slack until the self-reinforcing downward cycle is finally replaced by a self-reinforcing virtuous cycle. Once there is a self-sustaining recovery, their governments should put their books in order.
Here we have had a mediocre recovery after a mediocre stimulus program that we ended far too early. Worse, we failed to devote our stimulus to the most important work of all -- infrastructure improvement.
We still require massive investment in our failing infrastructure for its own sake. If we no longer require stimulus spending, which is not clear to me, we nevertheless require infrastructure spending, which we can fund with loans at historically low rates along with cuts to our military budget and a corresponding curtailment of our (ruinous) military interventions abroad.
Perhaps Professor Krugman can better convince them that abandoning public austerity during depressed times does not mean abandoning responsible public budgeting for all time. It means only that when there is too little private investment, the state purse must pick up the slack until the self-reinforcing downward cycle is finally replaced by a self-reinforcing virtuous cycle. Once there is a self-sustaining recovery, their governments should put their books in order.
Here we have had a mediocre recovery after a mediocre stimulus program that we ended far too early. Worse, we failed to devote our stimulus to the most important work of all -- infrastructure improvement.
We still require massive investment in our failing infrastructure for its own sake. If we no longer require stimulus spending, which is not clear to me, we nevertheless require infrastructure spending, which we can fund with loans at historically low rates along with cuts to our military budget and a corresponding curtailment of our (ruinous) military interventions abroad.
19
Perhaps the greatest intellectual challenge for people inhabiting the modern world is understanding the constancy of change. Their minds rush toward ideas that are essentially static; truths that are taught in school, aphorisms, touchstones of life. The "balance sheet" is just such a touchstone.
What is balance, when the items on the sheet are in constant flux? It is projection that is the skill required here, not memorization. "Is" is not the operable verb for the modern economy. Because as soon as it "is," it "was." It is what comes next that matters.
What is balance, when the items on the sheet are in constant flux? It is projection that is the skill required here, not memorization. "Is" is not the operable verb for the modern economy. Because as soon as it "is," it "was." It is what comes next that matters.
4
Conservatives in Britain seem calm and rational compared to our Republicans over here when it comes to social issues and economic matters. We'll see how the debates go in early April but so far in things like Prime Minister's Questions, the Labour Party isn't making any headway in either defending their record or making much out of the mess of austerity.
In the minds of most Britons, it seems that either they've forgotten or forgiven the Tories for the mistake of austerity and seem satisfied that Cameron has come to his sense with the country on a better track. but after the election, watch for more tax cuts for the wealthy at the expense of the poor.
In the minds of most Britons, it seems that either they've forgotten or forgiven the Tories for the mistake of austerity and seem satisfied that Cameron has come to his sense with the country on a better track. but after the election, watch for more tax cuts for the wealthy at the expense of the poor.
6
This mania for "austerity" (or at least budget cuts in the name of "fiscal discipline") still dominates in the Red states. Right now the Arkansas Legislature is in session, having started the session with the new (Republican) Governor's signature Tax Cuts.
So of course there is no additional money for Prisons (Badly needed) or Education. And it turns out the solution for the state highway funding shortfall is to suggest shifting portions of the system back onto the counties. After a proposal to take money from the state Universities for Highways died.
The persisting problem is how to get the voters away from the Propaganda Channel. They always imagine all cuts will only affect some perceived "other" whom they don't particularly care for.
Repeat, endlessly, "Our government does NOT have a spending problem, it has a (Deliberately engineered) Revenue Problem." And ask "cui bono." Maybe we can reach enough voters to avoid a disaster in 2016.
So of course there is no additional money for Prisons (Badly needed) or Education. And it turns out the solution for the state highway funding shortfall is to suggest shifting portions of the system back onto the counties. After a proposal to take money from the state Universities for Highways died.
The persisting problem is how to get the voters away from the Propaganda Channel. They always imagine all cuts will only affect some perceived "other" whom they don't particularly care for.
Repeat, endlessly, "Our government does NOT have a spending problem, it has a (Deliberately engineered) Revenue Problem." And ask "cui bono." Maybe we can reach enough voters to avoid a disaster in 2016.
243
And ultimately, though job-creation is much needed compared to fighting deficits, the largest elephant in the room is inequality. Elections will move more and more towards dealing with our large-scale poverty and small-group plutocracy. There lies our greatest crimes against humanity, America and compassion. I'm glad Krugman fights the deficit facade folks, but I even more like Bittman's columns that address the greatest scourge of all - selfish greed and it's poisonous trail.
21
To find Britains good economic discourse you just have to read the Guardian -
As the Guardian writes:
'It is the received wisdom that in the runup to the financial crisis that hit in 2008, the UK economy was too heavily dependent on credit-fuelled consumer spending and on financial services. A shift towards more manufacturing and exports is required if a sustainable economic future is to be built.
...as there has been a marked postwar shift in economic power from manufacturing to services.
...as the services sector's share of the economy has risen from 46% to 79%.
---as the UK economy has long been a dominant player in financial services, along with the US, but growth in the sector between 2006 and 2009 was particularly rapid. By 2009, the sector accounted for 10% of UK GDP, the highest of all G7 economies...
And it's true - that it is no good economic discourse if just the Guardian writes about it and not British or American economists.
-(as concerning the change to a service and financial dominated economy ails the US as much as Britain)
As the Guardian writes:
'It is the received wisdom that in the runup to the financial crisis that hit in 2008, the UK economy was too heavily dependent on credit-fuelled consumer spending and on financial services. A shift towards more manufacturing and exports is required if a sustainable economic future is to be built.
...as there has been a marked postwar shift in economic power from manufacturing to services.
...as the services sector's share of the economy has risen from 46% to 79%.
---as the UK economy has long been a dominant player in financial services, along with the US, but growth in the sector between 2006 and 2009 was particularly rapid. By 2009, the sector accounted for 10% of UK GDP, the highest of all G7 economies...
And it's true - that it is no good economic discourse if just the Guardian writes about it and not British or American economists.
-(as concerning the change to a service and financial dominated economy ails the US as much as Britain)
8
You used the word "pontificate" late in this column. In the Catholic church, the Pontiff (pope), when he speaks ex cathedra (with the full authority of the office), has been considered infallible on matters of faith since 1869.
We desire certainty. We rubes who desire to understand economics often feel confused when presented with IS/LM charts and trade jargon like "bowlderized semi-certainties" (I just made that one up). To counter such confusion, we have two choices, as we do in other matters of faith vs. reason: We can believe the man in the robes or our lyin' eyes.
Someone once said something about belief because one's job description requires belief, but with austerians and others who are addicted to infallibility, it appears that ego trumps even job security. Can you imagine the spiritual root canal most people would have to suffer in order to relinquish magical thinking in economics and other realms?
You've discussed the Confidence Fairy. Who else could that personage be but the successor to fantastic concoctions to which so many small children are not only introduced but also assured that they are, indeed, real. When I was about 10, I wondered why, after they had misled me about Santa, the aforementioned T Fairy, the Easter Bunny, and other characters we beatified on Sunday, my parents would ever again expect me to believe them.
So, Professor, it appears that economics will always be a clash of religions, only in economics' case, one of them just might be right.
We desire certainty. We rubes who desire to understand economics often feel confused when presented with IS/LM charts and trade jargon like "bowlderized semi-certainties" (I just made that one up). To counter such confusion, we have two choices, as we do in other matters of faith vs. reason: We can believe the man in the robes or our lyin' eyes.
Someone once said something about belief because one's job description requires belief, but with austerians and others who are addicted to infallibility, it appears that ego trumps even job security. Can you imagine the spiritual root canal most people would have to suffer in order to relinquish magical thinking in economics and other realms?
You've discussed the Confidence Fairy. Who else could that personage be but the successor to fantastic concoctions to which so many small children are not only introduced but also assured that they are, indeed, real. When I was about 10, I wondered why, after they had misled me about Santa, the aforementioned T Fairy, the Easter Bunny, and other characters we beatified on Sunday, my parents would ever again expect me to believe them.
So, Professor, it appears that economics will always be a clash of religions, only in economics' case, one of them just might be right.
43
There is one core religion in Economics, although they call it a theory. It's called supply/demand equilibrium. Artificial means to influence either one of these is doomed to fail, eventually. Krugman seems to always forget this in the hopes of furthering his desire for central control.
4
Perhaps men like Mr. Krugman need to divorce their spiritual beliefs (or lack thereof) with their economic knowledge.
I do wonder, had Mr. Krugman not so delighted on pushing his "confidence fairy" and PIGGS language and his "pontificating" terms, that you've picked up on here, and in essence: mocking so many people for their beliefs in ethics and fairplay, whether more people would take his economic wisdom seriously and not tune him out so readily.
He knows the answers, but no one listens to him!
But why Paul? How could you have teamed with a less offensive, more persuasive writer to make your case? (not Ezra Klein, et al., who are really little versions of you, in the personal style, minus the economic wisdom)
If you, like Congress, had learned to respect people's work whom you personally find offensive their lifestyles and religious beliefs -- and stopped delighting in stirring the pot -- perhaps you could have kept your own non-economic views out of the spotlight.
It's like poor Larry Summers. In trying to be a scientist of all things -- social, gender, behavioral -- he lost the main thing he should have been respected for: knowledge of numbers, graphs and markets, not people.
He should learn to self edit, prioritize the message, and work out his gender beliefs in quieter ways. Even is he was right: what did he gain in voicing off, when he should have stuck to that which he knows best... economics/numbers.
We DO need ethics, Mr. Krugman.
Good guys win 2.
I do wonder, had Mr. Krugman not so delighted on pushing his "confidence fairy" and PIGGS language and his "pontificating" terms, that you've picked up on here, and in essence: mocking so many people for their beliefs in ethics and fairplay, whether more people would take his economic wisdom seriously and not tune him out so readily.
He knows the answers, but no one listens to him!
But why Paul? How could you have teamed with a less offensive, more persuasive writer to make your case? (not Ezra Klein, et al., who are really little versions of you, in the personal style, minus the economic wisdom)
If you, like Congress, had learned to respect people's work whom you personally find offensive their lifestyles and religious beliefs -- and stopped delighting in stirring the pot -- perhaps you could have kept your own non-economic views out of the spotlight.
It's like poor Larry Summers. In trying to be a scientist of all things -- social, gender, behavioral -- he lost the main thing he should have been respected for: knowledge of numbers, graphs and markets, not people.
He should learn to self edit, prioritize the message, and work out his gender beliefs in quieter ways. Even is he was right: what did he gain in voicing off, when he should have stuck to that which he knows best... economics/numbers.
We DO need ethics, Mr. Krugman.
Good guys win 2.
1
For Doug - In "Wealth and Democracy." Kevin Phillips points out that there is a feedback in economic distribution because as the rich get richer, they use their wealth to get more power. They then use their power to get more wealth and so on. There seems to be a tipping point where this process becomes impossible to reverse. When inequality becomes bad enough, the country soon goes down the tubes. He gives several examples, e.g. the 18th century decline of the Dutch Republic. Chrystia Freeland used 14th century Venice to illustrate this process in a Times article, but history is replete with other examples.
According to Phillips, the great success of America has been that before the tipping point was reached, something has always happened that reverse the flow of money upwards, e.g. the rise of unions, FDR's reforms.
Will that happen this time?
According to Phillips, the great success of America has been that before the tipping point was reached, something has always happened that reverse the flow of money upwards, e.g. the rise of unions, FDR's reforms.
Will that happen this time?
6
When you have a free press eventually the media ends up in the hands of the financial elites. What agenda do you suppose those elites are going to push?
58
Pls explain? Do you mean "free" as in at no cost or "free" as in unfettered?
People seem to think that money comes first. What comes first is work, meaningful work for all.
33
I own a small business in Central London with about 50 employees. From our £5 million in gross revenues we pay approximately £2m (40% of revenue) in sales tax, payroll tax, real estate tax, corporation tax and finally dividend tax. My employees take home about £1.3m while the my partners and I take home about £200K.
The government's take is mind numbingly, TEN times more than the shareholders' take. This tax burden has actually RISEN under the current government (from 37 to 40% of revenues). Most small businesses in the area report similar sums.
So the view from across the Atlantic is very different from realities on the ground. We see no decrease in the amount we pay the government. However, there has been a welcome reduction in the size of the government.
Mind you, the level and quality of public service has NOT declined under the current government. The funding for health, education, welfare etc has not been touched. But the number of employees delivering the service has been rationalised. And these former public servants have been absorbed in the economy because the unemployment rate is approaching pre-crisis levels while the economy is growing robustly.
I would argue that the British economy has avoided the snooker and, to use a cricket metaphor, is now on the front foot.
The government's take is mind numbingly, TEN times more than the shareholders' take. This tax burden has actually RISEN under the current government (from 37 to 40% of revenues). Most small businesses in the area report similar sums.
So the view from across the Atlantic is very different from realities on the ground. We see no decrease in the amount we pay the government. However, there has been a welcome reduction in the size of the government.
Mind you, the level and quality of public service has NOT declined under the current government. The funding for health, education, welfare etc has not been touched. But the number of employees delivering the service has been rationalised. And these former public servants have been absorbed in the economy because the unemployment rate is approaching pre-crisis levels while the economy is growing robustly.
I would argue that the British economy has avoided the snooker and, to use a cricket metaphor, is now on the front foot.
5
Begging your pardon, but there seems to be something 'not quite cricket' with regards to your figures. Are you saying you make less than your employees?
3
Keep in mind that part of the money you have taken out in taxes ensures that you have good healthcare. In the US, that has to be part of the contract negotiation between the employer and the employee. So the 5-10% that the average employee will pay if they have health insurance for their family is, if you will, an added tax that you don't have to deal with directly. That would, in effect, lower your net tax burden to something more like 32-37%, as compared to the US.
2
In England as here bad ideas never die. There is no penalty
for being wrong
What we have learned form politics here is that deficits only matter
when a Dem is in the White House.
Austerity does not work. You cannot starve your way to
prosperity. So what else is new?
for being wrong
What we have learned form politics here is that deficits only matter
when a Dem is in the White House.
Austerity does not work. You cannot starve your way to
prosperity. So what else is new?
121
The Labour party leadership has done a terrible job rebutting the macromedia falsehoods. No charisma, either.
Maybe, just maybe, if SWL or PK and other leading economists are involved in economic discussions on TV leading up to the election it might change perceptions.
But it is probably too late, especially when key newspapers are run by non-resident, billionaire Conservative supporting owners and hedge fund donations overwhelm advertising and promotion.
Some democracy.
Maybe, just maybe, if SWL or PK and other leading economists are involved in economic discussions on TV leading up to the election it might change perceptions.
But it is probably too late, especially when key newspapers are run by non-resident, billionaire Conservative supporting owners and hedge fund donations overwhelm advertising and promotion.
Some democracy.
52
What I have seen is that conservative ideas and ideology benefits only the one percent If the American people do not learn that, we are doomed.
145
In my opinion, we have the very same kind of thinking in much of Yurp!
5
Krugman holds up Japan as an example of governments being able to borrow money, even when they have been extremely profligate. He fails to mention that the party buying most Japanese government debt is the Bank of Japan. Yes, governments can write themselves IOU's and then print money to buy them. If they engage in this behavior, then there is no way for the bond market to punish them for their profligate behavior. However, such price setting has many externalities, including robbing the elderly of interest on their savings while their cost of living is increased in dollar terms through the loose monetary policies.
3
The Fed bought up $4 trillion in mostly federal debt through QE while maintaining near zero interest rates. Inflation has barely budged. Clearly monetary policy alone is not nearly as determinant on inflation as monetarist would have us believe.
7
Since most banks are now financial institutions no matter what the Fed does you will never see depositors rates increase unless you are willing to gamble your money on one of their new investment products. Think through financial institutions are borrowing money at zero and loaning it out at 3%-11% yet their saving products are paying less than 1%. No the banks want you in the "market" where they can gamble your money and say sorry the market went down and your money was lost. The banks learned something from the melt down forget about the old stable products the market pays better for banks.
1
There is a common thread between there and here, namely who is behind the misinformation. The finance industry and large corporate interests that the media caters to and has the pull to place their mouthpieces in government is behind the inflation/austerity trope along with the related the poor don't work, cutting taxes solves everything and structural unemployment.
These are also the same people who cry when the notion of a raise in salary for anyone below C-level, any kind of accountability or complying with any sort of regulation.
On both sides of the pond, they get way more attention than they deserve. And if the current republican budget is anything to go by, I don't think this is at all on the wane here.
These are also the same people who cry when the notion of a raise in salary for anyone below C-level, any kind of accountability or complying with any sort of regulation.
On both sides of the pond, they get way more attention than they deserve. And if the current republican budget is anything to go by, I don't think this is at all on the wane here.
276
Since 2009, the GOP have been obstinate, blocking everything the Dems put forth. Now they control both chambers, but they refuse to govern. The only way the GOP can govern is through self-inflicted crises like government shutdowns, Homeland Security blackmail, and endless/pointless investigations and assorted other shenanigans/schemes to inflict the most damage possible on the government they profess to hate.
Ironic these bullies/ideologues run for office so they can destroy the very thing that gives them the authority and legitimacy. Once you render the purpose of government impotent, you no longer have any legitimacy or standing. But hey, logic, reason and discourse are not really their strong suit…
Ironic these bullies/ideologues run for office so they can destroy the very thing that gives them the authority and legitimacy. Once you render the purpose of government impotent, you no longer have any legitimacy or standing. But hey, logic, reason and discourse are not really their strong suit…
176
Republicans claim our government is broken. When elected, they make sure their claim is realized. This is not a coincidence, nor incompetence. It is their plan.
98
So spence you're saying the Democrats have clean hands?
It's a dirty game spence
and everyone's playing
(and... winning!)
The only real winners in america now
are those refusing or unallowd (immigrants)
to play those rich man's inheritance, non-work games
(and make it big, with more money than they know what to do with)
The government is pretty much captured
our schools/institutions too, healthcare -- check;
best thing one can do is to think like the newcomer immigrant:
day by day, invest in life, teach your children well.
What we're seeing here, big picture
is like what happened to the wasps of america
in the late 19th century and turn of the century.
A dying out of old america hoarding all their old capital
or wasting it down -- music! drinks! flesh?;
while new america -- a whole new face --
is just getting started, a foothold, survival mode...
You wait -- the artists will do the telling,
not the economists. They are to focus on the present
with knowledge of the past -- not future-predictors.
It's not natural to have them in that role.
~Out.
It's a dirty game spence
and everyone's playing
(and... winning!)
The only real winners in america now
are those refusing or unallowd (immigrants)
to play those rich man's inheritance, non-work games
(and make it big, with more money than they know what to do with)
The government is pretty much captured
our schools/institutions too, healthcare -- check;
best thing one can do is to think like the newcomer immigrant:
day by day, invest in life, teach your children well.
What we're seeing here, big picture
is like what happened to the wasps of america
in the late 19th century and turn of the century.
A dying out of old america hoarding all their old capital
or wasting it down -- music! drinks! flesh?;
while new america -- a whole new face --
is just getting started, a foothold, survival mode...
You wait -- the artists will do the telling,
not the economists. They are to focus on the present
with knowledge of the past -- not future-predictors.
It's not natural to have them in that role.
~Out.
1
If only they had a plan!
1
The economic conditions Krugman describes are akin to Sherlock Holmes' dog which didn't bark. Increasing deficits should drive up interest rates. If they haven't it doesn't mean long standing economic principles are wrong, it means the world's economies are so moribund the usual results aren't being seen. But it doesn't mean breaking them will get any better result, as we have seen in this country. When economies cease being about the production of goods and services and are resting upon speculation and fraud (stock prices being unhinged from value and the unprecedented financial manipulations of the last decade) you have a recipe for a "dead parrot" economy (hint, it isn't "resting"). Until there is meaningful financial reform and interest rates are allowed to rise to give savers an alternative to Wall Street roulette we won't stand a chance of a long term economy. As for Krugman's favorite prescription, more government spending and higher taxes, that is just feeding a dead parrot, in itself a loosing proposition.
2
what does government deficit spending and your borrowing costs have in common? the economy could be booming and deficits could go up at the same time or the economy could be in depression and deficits could fall. it can happen cause deficits are caused by the government spending exceeding taxes collected. it has nothing to do with the economic conditions at any given time
8
the economy could be in depression and deficits could fall????
not in general
not in general
Public opinion in many countries is now dominated and molded by the conservative media. We have lost our democracy and live under the thumb of Rupert Murdoch and his media allies.
The conservative media is not doing journalism. It produces fear, smear, and propaganda for the conservative political agenda.
How has this happened? Businesses and political parties agree that advertising works. That’s why they spend so much on it. For the past generation, hundreds of billions of dollars have been spent operating the conservative media. It has functioned to promote the conservative agenda. As the conservative media expanded, journalists who did not acquiesce were fired or demoted. There are no comparable resources for a counter point of view.
MSM provides no alternative. It is owned by large corporations. It does very little journalism. What MSM produces now is infotainment and he-said-she said stories. As a result, conservative politicians have learned they can do and say anything. In MSM it is immediately legitimized, and in the conservative media it is promoted.
The conservative media is not doing journalism. It produces fear, smear, and propaganda for the conservative political agenda.
How has this happened? Businesses and political parties agree that advertising works. That’s why they spend so much on it. For the past generation, hundreds of billions of dollars have been spent operating the conservative media. It has functioned to promote the conservative agenda. As the conservative media expanded, journalists who did not acquiesce were fired or demoted. There are no comparable resources for a counter point of view.
MSM provides no alternative. It is owned by large corporations. It does very little journalism. What MSM produces now is infotainment and he-said-she said stories. As a result, conservative politicians have learned they can do and say anything. In MSM it is immediately legitimized, and in the conservative media it is promoted.
37
In the 'vast right wing conspiracy' trope, the Right has funded scrores of think tanks and policy pushing organizations, amounts to hundreds, perhaps thousands of individuals all writing and doing research from a preconceived political position. Meanwhile the corporations which own the MSM have cut back on personnel while maintaining the same level of output, reducing most 'reporters' to stenographers, rushing about to file by deadline, without the luxury of analysis or thought.
Add a couple of heavy hitters (Fox, WSJ, talk radio) to amp the volume of every taking point favorable and you have effectively created yoyr own echo chamber, whch now includes the MSM. Just look at the coverage the now-discredited "restaurants closing in Seattle because of the minimum wage" got everywhere, but look at how many trumpeted the actual findings, days later, when the original piece was so thoroughly debunked.
Discourse, nay even *thought* has been seriously coopted, and unless the MSM steps up (for whih I have little hope) I don't see an exit from this highway.
Add a couple of heavy hitters (Fox, WSJ, talk radio) to amp the volume of every taking point favorable and you have effectively created yoyr own echo chamber, whch now includes the MSM. Just look at the coverage the now-discredited "restaurants closing in Seattle because of the minimum wage" got everywhere, but look at how many trumpeted the actual findings, days later, when the original piece was so thoroughly debunked.
Discourse, nay even *thought* has been seriously coopted, and unless the MSM steps up (for whih I have little hope) I don't see an exit from this highway.
3
There is an extremely limited range of business opinion in the UK. On the TV you are stuck with the BBC and the cable firms. The Beeb tends to draw it's talking heads from the City of London, and Sky News (i.e. News Corp) and Bloomberg give the same pro-austerity opinions they give in the US.
In terms of broadsheet newspapers there is the Financial Times - pro austerity with few exception, most notably Martin Wolf - the Times (News Corp again) and the Telegraph (the Barclay Brothers). Both Times and Telegraph are extremely pro-Conservative. That leaves the Guardian and Independent. American readers will know the Guardian for its work (in Cooperation with the Grey Lady) on Snowden, for which it won the Pulitzer last year. Unfortunately both papers are see add left-leaning and consequently are not seen as having "good" business desks.
The Mail and Express have never had much of a relationship with fact, mostly catering to the prejudices of their older middle-class readership. It makes them a lot of money.
All this, combined with an a sense of academic commentators) means that the anti-Austerity line is nowhere near as widely reported as the U.S. The Guardian and Indo do their best but, believe me, there are areas of the stockbroker belt in Surrey and it surroundings where you would be lucky to find a copy of the Guardian.
In terms of broadsheet newspapers there is the Financial Times - pro austerity with few exception, most notably Martin Wolf - the Times (News Corp again) and the Telegraph (the Barclay Brothers). Both Times and Telegraph are extremely pro-Conservative. That leaves the Guardian and Independent. American readers will know the Guardian for its work (in Cooperation with the Grey Lady) on Snowden, for which it won the Pulitzer last year. Unfortunately both papers are see add left-leaning and consequently are not seen as having "good" business desks.
The Mail and Express have never had much of a relationship with fact, mostly catering to the prejudices of their older middle-class readership. It makes them a lot of money.
All this, combined with an a sense of academic commentators) means that the anti-Austerity line is nowhere near as widely reported as the U.S. The Guardian and Indo do their best but, believe me, there are areas of the stockbroker belt in Surrey and it surroundings where you would be lucky to find a copy of the Guardian.
25
If austerity is such a bad thing, and I agree that it is, then what are the root causes of our need to tell that story? A big, but only part, of the story is the Euro and how keeping it has caused so many countries to contort their economies to keep it floating. So, what would I t take to dismantle the euro system? It would be a big affair that must be managed right or a larger problem would be exposed. Still, the advantages of letting countries like Portugal, Greece, and Ireland off the hook to print their own money and let inflation rectify their economies are highly attractive. Rather than discussing and attempting to expose the lies we tell ourselves to keep the Euro afloat, someone needs to state the obvious, that the euro has no clothes.
4
Reply to Denis Pombriant: Your arguments about the Euro make a lot of sense, but your reply assumes that the only possible correction is for all EU countries to have individual currencies. I'm afraid that the world is an unsettled place right now. The major economic players, such as the US and China aren't necessarily evil, but they have their own priorities and biases. There are also a number of smaller countries, like Russia and Saudi Arabia, that supply critical goods to Europe.
If Europe goes back economically to being a large number of small countries with different economic policies then they will be much weaker. Europe has many issues that cross national boundaries, in particular energy, natural resources, and environmental policy.
I would suggest that Europe wants the benefits of a Federation without any concomitant loss of state sovereignty. The separate colonies that formed the US also wanted that, but realized in the end that "united we stand, but divided we fall". Dr. Krugman and many others have outlined steps that would have to be taken to keep the Euro going. Europeans will have to make a difficult choice soon.
If Europe goes back economically to being a large number of small countries with different economic policies then they will be much weaker. Europe has many issues that cross national boundaries, in particular energy, natural resources, and environmental policy.
I would suggest that Europe wants the benefits of a Federation without any concomitant loss of state sovereignty. The separate colonies that formed the US also wanted that, but realized in the end that "united we stand, but divided we fall". Dr. Krugman and many others have outlined steps that would have to be taken to keep the Euro going. Europeans will have to make a difficult choice soon.
1
"So, what would I t take to dismantle the euro system?"
Three trillion?
Three trillion?
The left in the UK right now does not appear able to push back effectively on this right wing nonsense. Partly its that the leader of the Labour party is not charismatic and while I think he gets it he is also not leading from the front. The BBC which did used to be more centrist has been compromised by years of right wing attacks and the rest of the mainstream media has a right wing bias, its a dangerous thing.
12
It's the illusion of magical thinking. It only takes a good snake oil salesman, careerists disguised as journalists and "think" tank personalities, and an electorate ignorant of history, defined as anything before yesterday.
England will elect the wrong leaders again, then slowly sink into the sea.
England will elect the wrong leaders again, then slowly sink into the sea.
6
Technology shapes policy. With 24-hour cable news, the deadline to go on air with "breaking news" is always imminent. No time to think, no time to analyze, no time to be sensible. Just grab the easiest, canned explanation available: the faux sensible common denominator. No matter that it's wrong. It's easy, and that's all that matters when the camera is always rolling. Modern technology is often our friend, but often an old fashioned slower, more contemplative and wiser pace would serve us better. This print column, twice a week, has been a far surer guide to policy than all the 'breaking news" flashes offered up by cable news. Talking heads mouthing mindless mush must be ignored if anything sound and sensible, wise and useful is to be understood.
12
If you look at the deficits since 2010, you can see they have dramatically fallen from $1.5T in FY 2010 to $564B today. Hmm, that's a 62% drop in 5 years. http://useconomy.about.com/od/people/fl/Deficit-by-President.htm
But the way the MSM handles economic news here, Obama hasn’t done enough even though the top 1%/ companies are enjoying the 2nd Gilded Age. Except for endless wars which no one in Congress wants acknowledge or pay for by raising taxes, our economy has been on the mend. With close to 16 million people with healthcare insurance, rising housing prices and lower employment, people are more optimistic about the future. But there are still many issues that are not being addressed as Bernie Sanders states.
“The last point that I want to make is that I believe that the best thing we can do in a budget is to move to a full employment economy with jobs that are paying workers a living wage. When we do that, by investing in infrastructure, by investing in education, by investing in research and development, we not only improve the lives of our people, but we also lower our deficits and lower our national debt.” http://www.budget.senate.gov/democratic/public/index.cfm/press-releases-...
Unfortunately, voters here are snookered by their Congressmen; who bow to their corporate Masters while doing little, if anything for the people. It seems nothing will get done until 2016 or later. The status quo of “Do Nothing” rules…
But the way the MSM handles economic news here, Obama hasn’t done enough even though the top 1%/ companies are enjoying the 2nd Gilded Age. Except for endless wars which no one in Congress wants acknowledge or pay for by raising taxes, our economy has been on the mend. With close to 16 million people with healthcare insurance, rising housing prices and lower employment, people are more optimistic about the future. But there are still many issues that are not being addressed as Bernie Sanders states.
“The last point that I want to make is that I believe that the best thing we can do in a budget is to move to a full employment economy with jobs that are paying workers a living wage. When we do that, by investing in infrastructure, by investing in education, by investing in research and development, we not only improve the lives of our people, but we also lower our deficits and lower our national debt.” http://www.budget.senate.gov/democratic/public/index.cfm/press-releases-...
Unfortunately, voters here are snookered by their Congressmen; who bow to their corporate Masters while doing little, if anything for the people. It seems nothing will get done until 2016 or later. The status quo of “Do Nothing” rules…
9
The numbers you quote are for annual deficit spending not the national debt which is growing and in our era of low interest rates requires 7% of the annual budget to pay interest. When interest rates revert to the historic norm that percentage will grow significantly.
2
Why are sensible people celebrating the fact that under Obama the deficit has been cut in half? This is exactly the opposite of what we should be doing. As a percent of GDP, debt service is the lowest in 60 years. We can lock in ultra low interest rates to get money to invest in worthwhile projects like infrastructure repair, education, research, a new power grid, etc. which would put people back to work now besides the obvious long term benefits.
Heck, since there is absolutely no sign of inflation, we could even print the money the private sector needs to provide good jobs.
Once we get the economy growing again the debt would fade in insignificance as the larger debt (as a percent of GDP) after WWII did.
Or we can keep cutting the deficit until we get surpluses as we did after WWI when we got the large war debt down to 16% of GDP in October of 1929. And how did that work out?
Heck, since there is absolutely no sign of inflation, we could even print the money the private sector needs to provide good jobs.
Once we get the economy growing again the debt would fade in insignificance as the larger debt (as a percent of GDP) after WWII did.
Or we can keep cutting the deficit until we get surpluses as we did after WWI when we got the large war debt down to 16% of GDP in October of 1929. And how did that work out?
4
I agree with you completely Professor Krugman.
In every journalistic coverage I see, there is no one I hear take a critical look to debunk the theories and proclamations of the mainstream media. George Osborne is even shown up to be a success, though being a failure.
A recent programme called "The Super Rich and Us" on the BBC covered how England was the biggest tax heaven on earth because the mega-rich were aspiring to and acquiring the British / English lifestyle, in the process raising the overall GDP, despite not paying any taxes and masking the effect of greater impoverishment on the other side.
There is only one of you, Professor. No one shines the light like you, or has shown us where it is.
In every journalistic coverage I see, there is no one I hear take a critical look to debunk the theories and proclamations of the mainstream media. George Osborne is even shown up to be a success, though being a failure.
A recent programme called "The Super Rich and Us" on the BBC covered how England was the biggest tax heaven on earth because the mega-rich were aspiring to and acquiring the British / English lifestyle, in the process raising the overall GDP, despite not paying any taxes and masking the effect of greater impoverishment on the other side.
There is only one of you, Professor. No one shines the light like you, or has shown us where it is.
31
Mediamacro? Let’s ask, how much media monopoly exists in Britain? What about Murdoch influence? But then there’s the opposing Guardian. Compare that to US corporate media monopoly, with 5 or 6 companies owning all. And Fox network everywhere.
Our media monopolies and local stations get big profits from fees for political ads, lasting over our extremely drawn out campaigns---the world’s longest and costliest. Ad fees are what require check writing by Adelson & Koch billionaire donors for their chosen ones.
In contrast, Britain has more public financing of campaigns, and strict limits on private donations. This should make some difference in big money effect. If it doesn’t, then what is causing their mono messages? Their public BBC media has always been much better funded by public funds than our NPR/PBS, which our congress is hostile to.
But one thing really interesting that we lack---- their House of Commons Question Time, on Cspan every Sunday here. This last episode was crowded to the rafters with standing room only MPs, and the din of each side of the house yelling their group chants of hear, hear! was so long & loud, the Speaker had to interrupt and tell them to shut up so the questioners could be heard. Not much decorum there, and very combative all ‘round. Cameron and Milliband went at each other with conviction and vehemence, each with very convincing sounding facts. Good show, as they say.
That’s what we need—Question time once a week –in congress!
Our media monopolies and local stations get big profits from fees for political ads, lasting over our extremely drawn out campaigns---the world’s longest and costliest. Ad fees are what require check writing by Adelson & Koch billionaire donors for their chosen ones.
In contrast, Britain has more public financing of campaigns, and strict limits on private donations. This should make some difference in big money effect. If it doesn’t, then what is causing their mono messages? Their public BBC media has always been much better funded by public funds than our NPR/PBS, which our congress is hostile to.
But one thing really interesting that we lack---- their House of Commons Question Time, on Cspan every Sunday here. This last episode was crowded to the rafters with standing room only MPs, and the din of each side of the house yelling their group chants of hear, hear! was so long & loud, the Speaker had to interrupt and tell them to shut up so the questioners could be heard. Not much decorum there, and very combative all ‘round. Cameron and Milliband went at each other with conviction and vehemence, each with very convincing sounding facts. Good show, as they say.
That’s what we need—Question time once a week –in congress!
24
A question : which pigs must be pushed away from the trough, how and how far ? I agree with Krugman's contention that our policies should make employment growth, rather than debt reduction, a main priority. However, any true reform in the finance system has to decide which financial services add to the real economy (creating jobs) and which are simply skimming operations (like flash trading and many uses of derivatives) which enrich a few without benefitting anybody else. In 2009 both parties were talking about saving the overstuffed banking system and virtually nobody was talking about putting Americans back to work. Despite my irony, I don't think these decisions are easy. However, the debate seems to avoid plunging into the basic issues.
12
It's curious, nay, downright weird, that in these days of sub one-percent interest rates, we are not borrowing heavily to fix our aging infrastructure. Sooner or later, it has to be done, and the price is never going to be cheaper.
Just one example:
Gov. Christie torpedoed the NY/NJ tunnel project for $7 billion, because of fear of cost overruns. Well, Governor, sooner or later the region's metaphorical back is going to be against the wall, and you won't have a choice but to build it for four or five times that much.
Governor Christie doesn't appear to be much of an accountant or economist.
And I certainly wouldn't hire him as a financial adviser.
Just one example:
Gov. Christie torpedoed the NY/NJ tunnel project for $7 billion, because of fear of cost overruns. Well, Governor, sooner or later the region's metaphorical back is going to be against the wall, and you won't have a choice but to build it for four or five times that much.
Governor Christie doesn't appear to be much of an accountant or economist.
And I certainly wouldn't hire him as a financial adviser.
23
Why borrow? The US is the sole source US dollars in the world, why would it have to "borrow" dollars from anyone. Mint the $60 trillion coin and be done with it.
Interestingly, the value of the British currency has remained relatively stable against the dollar since 2010-2011 while it has substantially strengthened against the Euro. One would think a weaker Euro against both the dollar and BP would be very good for European exporters, and less than desireable for British exporters, and British employment. Unless, of course, you are already in the already oversized British financial services sector. Very few bankers want a weaker currency, since it may reduce international capital flows from areas with weakening currencies. They appear to be having their way, probably with a little help from their Murdochian friends.
Which is another way of saying British economic policy may be largely influenced by those in its finance sector rather than those in the rest of the economy. Sound familiar?
Which is another way of saying British economic policy may be largely influenced by those in its finance sector rather than those in the rest of the economy. Sound familiar?
10
Krugman is the man, as far as I'm concerned, in seeing and explaining the politics of economics, but I'm not so impressed by the part of his fan base that suggest conservative policies alone are what hold back Europe and the U.S from once again becoming the economic juggernauts they were in the years following WWII.
Industrial farming has been a pivotal source of such expansion, where machines replaced people in the fields and those people moved to cities and towns to manage machines in factories. This invariably leads to unsustainable growth rates for a period of time and is exactly what is beginning to run out of fuel in China.
England didn't get the huge post war surge because its' industrial revolution was already years ahead of the rest of the world at that time.
Industrial farming has been a pivotal source of such expansion, where machines replaced people in the fields and those people moved to cities and towns to manage machines in factories. This invariably leads to unsustainable growth rates for a period of time and is exactly what is beginning to run out of fuel in China.
England didn't get the huge post war surge because its' industrial revolution was already years ahead of the rest of the world at that time.
1
"UK national debt peaked in the late 1940s at over 230% of GDP. From the early 1950s to early 1990s, we see a consistent decrease in the debt to GDP. Using the above measure of national debt, UK debt as a % of GDP reached a low of 25% in 1993. (1) Since then UK public sector debt has increased to the present level of 77% of GDP.
The main reason UK debt to GDP fell in the post-war period was the sustained period of economic growth and near full employment until the late 1970s. This growth saw rising real incomes which in turn led to higher tax revenues and falling debt to GDP ratios.
Higher government spending
Firstly, debt to GDP was definitely not reduced through cutting government expenditure.
http://www.economicshelp.org/blog/11697/debt/post-war-boom/
The main reason UK debt to GDP fell in the post-war period was the sustained period of economic growth and near full employment until the late 1970s. This growth saw rising real incomes which in turn led to higher tax revenues and falling debt to GDP ratios.
Higher government spending
Firstly, debt to GDP was definitely not reduced through cutting government expenditure.
http://www.economicshelp.org/blog/11697/debt/post-war-boom/
4
America has its share of fantasies...
The stock market went up and growth is supposedly in the plus column, so people have been talking about a recovery for years, even though 4 out of 5 people basically never experienced said recovery based upon little things like wealth and income.
People think they have "health care" because they were forced to buy health insurance even though said insurance does not cover them well enough to keep them out of financial trouble if they should ever actually need serious medical attention due to high deductibles, co-payments, out-of-network exclusions and myriad other incomprehensible limits on coverage.
People think they live in a democracy even though the candidates for each of the two parties are plugged into the elections by moneyed interests years before the political conventions even choose their respective venues, far from which intrepid protestors will meekly march in circles fenced in by barriers and surrounded by a militarized police force in riot gear.
As for the press...you know what?
Just, never mind...
The stock market went up and growth is supposedly in the plus column, so people have been talking about a recovery for years, even though 4 out of 5 people basically never experienced said recovery based upon little things like wealth and income.
People think they have "health care" because they were forced to buy health insurance even though said insurance does not cover them well enough to keep them out of financial trouble if they should ever actually need serious medical attention due to high deductibles, co-payments, out-of-network exclusions and myriad other incomprehensible limits on coverage.
People think they live in a democracy even though the candidates for each of the two parties are plugged into the elections by moneyed interests years before the political conventions even choose their respective venues, far from which intrepid protestors will meekly march in circles fenced in by barriers and surrounded by a militarized police force in riot gear.
As for the press...you know what?
Just, never mind...
23
"People think they live in a democracy" but they live in a disguised Two-party Vichy Empire!
5
Britain's mediamacro problem also struggles with the fact that the country's financial capital, political capital, and media capital are all tied up in a single echo chamber - London.
It is somewhat easier in the U.S. to fight austerity (or any other juggernaut of VSP insanity) with our financial, political and media capitals not being so concentrated, despite the efforts of the Faux Noise network 24-hour fog horn.
Though, whilst patting ourselves on the backs, we shouldn't forget that our own politicians have veered so far into the ditch that they earned us a debt down-grade for the first time in our history, as well as a government shut-down in 2013 for no apparent purpose other than to fulfill 2012 campaign promises.
And digging deeper, Britain has the same campaign-funding issues that we have over here, where the cons are being funded by hedge fund managers:
http://www.theguardian.com/politics/2015/feb/05/conservatives-bankrolled...
We're lucky that our VSP's have to cover more geographic bases in order to control the financial, political, and media messages - it's harder for them to drown truth in the bath tub.
It is somewhat easier in the U.S. to fight austerity (or any other juggernaut of VSP insanity) with our financial, political and media capitals not being so concentrated, despite the efforts of the Faux Noise network 24-hour fog horn.
Though, whilst patting ourselves on the backs, we shouldn't forget that our own politicians have veered so far into the ditch that they earned us a debt down-grade for the first time in our history, as well as a government shut-down in 2013 for no apparent purpose other than to fulfill 2012 campaign promises.
And digging deeper, Britain has the same campaign-funding issues that we have over here, where the cons are being funded by hedge fund managers:
http://www.theguardian.com/politics/2015/feb/05/conservatives-bankrolled...
We're lucky that our VSP's have to cover more geographic bases in order to control the financial, political, and media messages - it's harder for them to drown truth in the bath tub.
9
"Reporters would drop all pretense of neutrality and cheer on proposals for entitlement cuts."
When I think of "entitlement" spending the bloated military budget comes to mind, not Social Security and Medicare. So let's stop using Republican speak, please.
Austerity shrinks an economy. Sen. Bernie Sanders, ranking member of the Senate Budget Committee, made the case last week for growing the economy:
“The last point that I want to make is that I believe that the best thing we can do in a budget is to move to a full employments economy with jobs that are paying workers a living wage. When we do that, by investing in infrastructure, by investing in education, by investing in research and development, we not only improve the lives of our people, but we also lower our deficits and lower our national debt.
“When people are working at decent-wage jobs they are paying taxes. And, when people are paying taxes we reduce the deficit and the national debt.”
"The Rich Get Much Richer, and the Republicans Think They Need More Help"
http://readersupportednews.org/opinion2/277-75/29157-the-rich-get-much-r...
When I think of "entitlement" spending the bloated military budget comes to mind, not Social Security and Medicare. So let's stop using Republican speak, please.
Austerity shrinks an economy. Sen. Bernie Sanders, ranking member of the Senate Budget Committee, made the case last week for growing the economy:
“The last point that I want to make is that I believe that the best thing we can do in a budget is to move to a full employments economy with jobs that are paying workers a living wage. When we do that, by investing in infrastructure, by investing in education, by investing in research and development, we not only improve the lives of our people, but we also lower our deficits and lower our national debt.
“When people are working at decent-wage jobs they are paying taxes. And, when people are paying taxes we reduce the deficit and the national debt.”
"The Rich Get Much Richer, and the Republicans Think They Need More Help"
http://readersupportednews.org/opinion2/277-75/29157-the-rich-get-much-r...
256
Yes! Superb comment.
3
A new Pew study indicates that the Times readership is mostly quite political. Even the Economist and Wall Street Journal don't seem to appeal widely to conservatives.
Still, I can dream of The Upshot gaining some readers among non-liberals.
Still, I can dream of The Upshot gaining some readers among non-liberals.
8
Right wingers avoid most news sources that make a least a token effort to avoid bias for a reason: Reality has a liberal bias.
The world is in fact more than 10,000 years old, evolution and natural selection are in fact how life as we know it came to exist. On the right they even deny these simple facts. Seriously try to think of any republican candidate for major electoral office that is on record saying the Universe is more than 10,000 years old.
The world is in fact more than 10,000 years old, evolution and natural selection are in fact how life as we know it came to exist. On the right they even deny these simple facts. Seriously try to think of any republican candidate for major electoral office that is on record saying the Universe is more than 10,000 years old.
17
It is hard to believe that the country that gave the world Keynes, one of the greatest if not the greatest economist in history, has so foolishly shunned the principle of using fiscal stimulus to deal with weak demand that he explained in his theory.
Let's not pretend for a second that the US has really moved beyond all of its problems though, because our own economy is operating at nowhere near optimum. In fact, after considering that it would take decades to overcome the negative effects brought on by conservative domination of our own political discourse for the past four decades, the British don't look pathetic at all – they are only slightly more misguided for the time being.
I like to look at both Europe and the US and see them for all the pent up potential that will one day be unleashed if the conservative spell on the masses can be broken. When we get income taxes back at more progressive levels and restore power to the unions, we'll see our economies take off like rockets again, as they did during the greatest period of economic expansion in American history, 1950-1980.
Sometimes it seems that Europe and the US take one step forward and two back, but the younger generation is more ethnically diverse than ever, and hope springs eternal that they will lead us to economic policy that better represents the interests of all working stiffs, regardless of race.
Let's not pretend for a second that the US has really moved beyond all of its problems though, because our own economy is operating at nowhere near optimum. In fact, after considering that it would take decades to overcome the negative effects brought on by conservative domination of our own political discourse for the past four decades, the British don't look pathetic at all – they are only slightly more misguided for the time being.
I like to look at both Europe and the US and see them for all the pent up potential that will one day be unleashed if the conservative spell on the masses can be broken. When we get income taxes back at more progressive levels and restore power to the unions, we'll see our economies take off like rockets again, as they did during the greatest period of economic expansion in American history, 1950-1980.
Sometimes it seems that Europe and the US take one step forward and two back, but the younger generation is more ethnically diverse than ever, and hope springs eternal that they will lead us to economic policy that better represents the interests of all working stiffs, regardless of race.
325
Same country, remember, that gave us the Puritans.
4
Lorem, I'm talking modern economic history here, mainly since everything that's known about recovering from depressions was taught by Keynes and has been confirmed by hard experience in recovering not only from the Great Depression but also from every recession since: More government spending was utilized in every single case.
12
There are fewer and fewer Americans who remember what life was like when we had a strong and prosperous middle class. They can't imagine what life was like when we had one family member working and bringing home enough to provide for the entire family, build a home, buy two cars, take yearly vacations, have 100% medical coverage (with Doctors who made house calls), send all the kids to college; and, earn a pension to live on for the rest of one's life.
Those are the things I miss most about the economically secure middle class life we once had in America. The Social and Economic Darwinism that the Republicans prefer isn't the kind of world I had envisioned for my kids and grand kids.
Those are the things I miss most about the economically secure middle class life we once had in America. The Social and Economic Darwinism that the Republicans prefer isn't the kind of world I had envisioned for my kids and grand kids.
16
I agree with Tim Kane. Professor Krugman very curiously writes a column without mentioning media concentration. Doesn't economic discourse always point out the merits of efficiency when they talk about conglomerates taking over businesses so that they grow horizontally and vertically? A few newspaper groups gather news and print the same news articles across the smaller regional papers, relevant or not - what could possibly grow wrong? If this economic principle had improved democracy Professor Krugman would be boasting, because it doesn't he writes about generalities and publishes at 4 a.m. NY time. Here are some specifics Professor Krugman does not mention : 1. "Why I have resigned from the Telegraph Peter Oborne 17 February 2015 - The coverage of HSBC in Britain's Telegraph is a fraud on its readers. If major newspapers allow corporations to influence their content for fear of losing advertising revenue, democracy itself is in peril”.
2. “A business owned by the Barclay brothers restructured a £1.25bn debt with assistance from HSBC in the period when their newspaper, the Daily Telegraph, failed to publish a negative story about the bank, the Financial Times reports today.”
Wikipedia contains more details about the impact of media concentration than Professor Krugman; that is a big shame.
2. “A business owned by the Barclay brothers restructured a £1.25bn debt with assistance from HSBC in the period when their newspaper, the Daily Telegraph, failed to publish a negative story about the bank, the Financial Times reports today.”
Wikipedia contains more details about the impact of media concentration than Professor Krugman; that is a big shame.
51
I don't know why you're coming down on Krugman here. You criticize him for generalizations: what do you recall referring to what "economic discourse" is "always pointing out"?
Does he ever make that kind of generalization about newspapers? What "economic discourse" does? Do you know Krugman's views of monopoly?
And I hardly think it's Krugman's fault, or anyone's that the Times puts up its op ed pages at 4:00 am. (His blog is almost always updated during daytime hours, by the way.) Why does that make a difference?
And, um, The Financial Times pointed that out, did they? As did the Independent and the Guardian? All British newspapers? I see what you mean. Blame Krugman and the New York Times for not writing the article you would have written and for hiding out at 4:00 am NY Times.
Does he ever make that kind of generalization about newspapers? What "economic discourse" does? Do you know Krugman's views of monopoly?
And I hardly think it's Krugman's fault, or anyone's that the Times puts up its op ed pages at 4:00 am. (His blog is almost always updated during daytime hours, by the way.) Why does that make a difference?
And, um, The Financial Times pointed that out, did they? As did the Independent and the Guardian? All British newspapers? I see what you mean. Blame Krugman and the New York Times for not writing the article you would have written and for hiding out at 4:00 am NY Times.
7
What you are saying is that journalists/pundits will write what sells. And why does their false narrative sell?
The wholesale lack of macroeconomic understanding in the broader public. That has many causes, from the lack of exposure in school to the lack of interest in the public in learning the ins-and-outs of ANY complicated issue. (See the work of Philip Converse 50 years ago to that of more current political academics.)
Newspapers have gone through consolidation as their business model failed to deliver the income in a world of Internet advertising, from Craigslist to eBay. As the Professor states, British economic academics, explicitly Simon Wren-Lewis, have been pointing out the failings of the current U.K. economic policy for the entire period. So how does a resignation letter by a responsible journalist get the necessary coverage even if the media was less concentrated? Is a report in the FT read by a significant number of people?
Certainly media concentration is part of it, but how many aspects of an issue can be covered in any depth in 750 words, the length of Professor Krugman's column? What he says has to be put in the context of all of his other columns before a complaint of not covering an aspect can be credible.
The wholesale lack of macroeconomic understanding in the broader public. That has many causes, from the lack of exposure in school to the lack of interest in the public in learning the ins-and-outs of ANY complicated issue. (See the work of Philip Converse 50 years ago to that of more current political academics.)
Newspapers have gone through consolidation as their business model failed to deliver the income in a world of Internet advertising, from Craigslist to eBay. As the Professor states, British economic academics, explicitly Simon Wren-Lewis, have been pointing out the failings of the current U.K. economic policy for the entire period. So how does a resignation letter by a responsible journalist get the necessary coverage even if the media was less concentrated? Is a report in the FT read by a significant number of people?
Certainly media concentration is part of it, but how many aspects of an issue can be covered in any depth in 750 words, the length of Professor Krugman's column? What he says has to be put in the context of all of his other columns before a complaint of not covering an aspect can be credible.
9
"As I said, in the United States we have mainly gotten past that, for a variety of reasons — among them, I suspect, the rise of analytical journalism, in places like The Times’s The Upshot."
You give yourself far too little credit, Professor Krugman. It isn't the media that saved our economy. You did. If it wasn't for the tour de force of column after column, blog post after blog post over the first few years of the recession, relentlessly calling out those who might have made a false move, we'd all have been toast.
In the end, however, we only managed to squeak by. The next two years of all-GOP in both houses of Congress is going to require more of that most excellent Krugman column and blog post writing in a media environment that hasn't changed for the better.
America's voters are even less well-informed than they were six and seven years ago and far more detached from day to day news. Whether it is because they are harried by six years of harsher living conditions or disgusted by a polarized and partisan media, the dangers today are greater than ever. Misinformation abounds. Lies abound. The only constant is the single-mindedness with which the GOP continues to pursue its mission: the complete suffocation of government and the erasure of any and all of the progressive achievements since the New Deal.
We need massive teach-ins between now and the next election. Neoliberalism, if allowed to go on, will be America's undoing. They're almost there...
You give yourself far too little credit, Professor Krugman. It isn't the media that saved our economy. You did. If it wasn't for the tour de force of column after column, blog post after blog post over the first few years of the recession, relentlessly calling out those who might have made a false move, we'd all have been toast.
In the end, however, we only managed to squeak by. The next two years of all-GOP in both houses of Congress is going to require more of that most excellent Krugman column and blog post writing in a media environment that hasn't changed for the better.
America's voters are even less well-informed than they were six and seven years ago and far more detached from day to day news. Whether it is because they are harried by six years of harsher living conditions or disgusted by a polarized and partisan media, the dangers today are greater than ever. Misinformation abounds. Lies abound. The only constant is the single-mindedness with which the GOP continues to pursue its mission: the complete suffocation of government and the erasure of any and all of the progressive achievements since the New Deal.
We need massive teach-ins between now and the next election. Neoliberalism, if allowed to go on, will be America's undoing. They're almost there...
589
Some reading:
Polarization: who is to blame?
http://www.rimaregas.com/2015/03/polarization-who-is-to-blame-analysis/
Polarization in American Politics: Pew Research
http://www.rimaregas.com/2014/06/polarization-in-american-politics-pew-r...
Polarization: who is to blame?
http://www.rimaregas.com/2015/03/polarization-who-is-to-blame-analysis/
Polarization in American Politics: Pew Research
http://www.rimaregas.com/2014/06/polarization-in-american-politics-pew-r...
5
Speaking of the US media and selectivity in what gets reported and analyzed... A highly, highly recommended read from William Greider whose piece, But Is Hillary Ready For Us, is a very worthy and germane read. I've not read this kind of analysis anywhere else. So, if the Brits got the wool pulled over their eyes, where exactly does that put us?
Read on:
"Meanwhile, the Center for American Progress, the shadow think tank that speaks for Clinton-Obama politics, issued a more substantive agenda in a 161-page report from its self-appointed “Commission on Inclusive Prosperity.” The co-chair was Lawrence Summers, former Treasury secretary under Bill Clinton and senior adviser to Obama. He performed an intellectual conversion equivalent to a double somersault in gymnastics. The new ideas were actually old ideas that progressive advocates have championed for decades to no avail. They were ignored or rejected by Summers himself and the two Democratic presidents he served.
Never mind, the message is: Hillary gets it. She’s ready to confront the inequality thing. She will bring fresh ideas to the campaign on how to reverse the deterioration of middle-class American life. Her list includes everything from parental leave to care for newborn infants to equal pay for women and paid vacations for all working people."
http://www.rimaregas.com/2015/03/william-greider-but-is-hillary-ready-fo...
Read on:
"Meanwhile, the Center for American Progress, the shadow think tank that speaks for Clinton-Obama politics, issued a more substantive agenda in a 161-page report from its self-appointed “Commission on Inclusive Prosperity.” The co-chair was Lawrence Summers, former Treasury secretary under Bill Clinton and senior adviser to Obama. He performed an intellectual conversion equivalent to a double somersault in gymnastics. The new ideas were actually old ideas that progressive advocates have championed for decades to no avail. They were ignored or rejected by Summers himself and the two Democratic presidents he served.
Never mind, the message is: Hillary gets it. She’s ready to confront the inequality thing. She will bring fresh ideas to the campaign on how to reverse the deterioration of middle-class American life. Her list includes everything from parental leave to care for newborn infants to equal pay for women and paid vacations for all working people."
http://www.rimaregas.com/2015/03/william-greider-but-is-hillary-ready-fo...
16
"We need massive teach-ins between now and the next election."
And we need to reinstate the Fairness Doctrine.
And we need to reinstate the Fairness Doctrine.
131
Isn't Britain's media dominated by Rupert Murdock?
If so, wouldn't it have been easier to point that out?
The rest of the column would then be redundant.
I once thought that Cameron's government would declare austerity a success 18 months prior to the election and then declare that it was time to start investing in Britain again - so that by election time Britain would be experiencing decent growth, and the electorate would have forgotten all the lousy years he had put them through.
It had not occurred to me that the Tory's could just continue with austerity and then rely upon a narrative coming from the media that was a complete lie, fabrication. I guess I just forgot about the power and the mendacity of the man who is Rupert Murdock and his dominance over Britain's media circle, er circus.
Still, I want to believe that the British are better at this than we are. I saw their debates last time, and it was quite inspiring. I want to believe, that, unlike our Democratic party, that Labor will put on a vigorous campaign and shine a light upon the truth and press it home with vigor.
If so, wouldn't it have been easier to point that out?
The rest of the column would then be redundant.
I once thought that Cameron's government would declare austerity a success 18 months prior to the election and then declare that it was time to start investing in Britain again - so that by election time Britain would be experiencing decent growth, and the electorate would have forgotten all the lousy years he had put them through.
It had not occurred to me that the Tory's could just continue with austerity and then rely upon a narrative coming from the media that was a complete lie, fabrication. I guess I just forgot about the power and the mendacity of the man who is Rupert Murdock and his dominance over Britain's media circle, er circus.
Still, I want to believe that the British are better at this than we are. I saw their debates last time, and it was quite inspiring. I want to believe, that, unlike our Democratic party, that Labor will put on a vigorous campaign and shine a light upon the truth and press it home with vigor.
279
Tim, yes it is strange for Krugman to write a column citing media influence in UK, and never once mention the notorious, dominant Murdoch who has scandalously influenced govt and the press. Aren't some of his miscreants now in prison? Labor is putting on a vigorous campaign---see the House of Commons Prime Minister's Question Time on Cspan for fireworks from both sides.
6
Wow -- way to blame Krugman for your guesses! Murdoch (spelling) does not own the BBC, or the Guardian, or a host of other British media outlets. He's awful, yes, and he may own the government, but he doesn't dominate the media in Britian any more than in the US.
And your view that Labour (sp) will shine a light on truth? Sure.
And your view that Labour (sp) will shine a light on truth? Sure.
6
Look, the problem is Labour is also promising to cut the deficit. That's the problem. So vigorous campaign or not, this is the thing that Krugman is complaining about.
6
sadly, the Brits have recently matched the Americans in failure-to-vote considerations, as their turnout in this century is less than 60%...
however, theirs is currently a "compromise-government", while ours is nothing close to that...
for the US in 2016, people have to be sold on ideas that they can identify with and believe in, then they have to be persuaded to vote, and ultimately they actually need to cast a ballot...
the current 114th Congress that we have is the result of ballots cast by only 19% of eligible voters...