At the London Review of Books, of all places, Christian Lorentzen has a less-than-admiring portrait of Paul Krugman, who was in London in May plugging his latest book. Krugman went on the BBC’s “Hardtalk” to take questions from journalist Sarah Montague:
A strange theatre ensues whenever Krugman is engaged by a journalist rather than a peer with similar expertise or a politician with actual if undeserved authority. The journalist reminds him of the people who’ve dismissed his ideas and he just shakes his head and says these Very Serious People are wrong. When the journalist goes the other way and flatters him, his ego creeps out:
Montague: If you were advising the Greek government now, what would you say to them?
Krugman: Ah well, you know, I’ve actually had conversations, not with them, but you know, with European politicians.
Montague: With whom?
Krugman: Um, I can’t tell you that.
Montague: But has there been a European government that’s asked for your advice?
Krugman: No, no, I’ve just had conversations.
His face takes on a pained expression, he stammers, puts his finger to his cheek, and for a moment shuts his eyes. You get the sense he’s thinking, why am I not in charge? There’s something sad about the spectacle.
It is, as James Taranto might say, the sad spectacle of a former Enron adviser.
Krugman went on another show to argue against Jon Moulton, chairman of Better Capital, and Andrea Leadsom, a Tory MP and former banker. Lorentzen recounts the following exchange:
“I find his view reckless, frankly,” Leadsom said, “I can’t believe that somebody as incredibly highly regarded as you could honestly think that the answer is to go and borrow more money.” Krugman told her she was confusing an economy with a household.
Late yesterday afternoon, Krugman posted a mini-classic of Krugmanesque analysis on his New York Times blog. It seems “totally obvious to me,” he wrote, that economists and Fed officials are making erroneous assumptions “without realizing it.” They’re making “exactly the same mistake” he demonstrated in 1998 with a chart. We should “pursue unconventional policies on a sufficient scale,” by which I think he means going out and borrowing a lot more money: totally obvious to him.
Back in Europe, a lot of countries are learning that the comparison of a country’s budget to that of a household is not quite as irrelevant as Krugman suggested. In fact, for some of them, the analogy may now be totally obvious.
Keynesian economics: Gambling with other peoples money.
Ah, Christian Lorentzon. The guy who got fired after he was creepily suggesting to a younger, female co-worker that she should have sex with him if she wants to advance her career.
His ‘takedown’ is light on facts and high on tattling gossip. It’s basically an attempt to characterassassinate Krugman. Nobody with enough working digits will be persuaded, aside from the already biased.
As for Europe. People keep mixing up countries like Spain on the one hand and Germany on the other. Or Portugal on the one hand, and Holland on the other. Or Greece on the one hand, and Sweden on the other.
It’s not the level of spending or even the amount of taxes. Scandinavia is the region in the world with the highest taxes of all. Yet their debt-to-GDP is very low, they have free education, almost free healthcare(and lower healthcare costs).
But the right doesn’t want to talk about Scandinavia, because it mucks up their propaganda. They’d rather pretent that Southern Europe is the same as all of Europe, even if the 4-5 countries we’re talking about constitute less than 17 % of all European countries, they’re dragging everyone down.
Another note: it’s telling that Lorentzon seems to infer that if you’re not selected by the President’s inner team you’re somehow a failure.
I can tell you for sure, and you know this too, that tons more people listen to Paul Krugman than they do to Robert Reich. And Reich himself has been literally throwing himself at the media.
That’s because Krugman was always the greater intellect, and the braver intellectual. And if you go to an Ivy grad school today and look in your econ department. For just about anyone who ins’t a Republican, Krugman is a God. This man is building a legacy. His standing in the current establishment is irrelevant.
Your point about Scandinavia makes no sense. In the USA, the government is spending close to 24% of GDP, while only bringing in something between 10 and 15% in taxes, I believe. My understanding is that Krugman would advise spending an even higher percentage of GDP, financed mostly thru debt, since raising taxes on the "rich" can't bring in enough $$ to make much of a difference. (in fact, I think raising rates on the rich would reduce tax revenue, but Krugman would deny it).
I don't know the guy, but Scandinavia makes perfect sense as a counter argument if the argument is that too much government is bad for economic policy. n nKrugman gets all sorts of arguments thrown at him. Spending levels, deficits, total debt, etc. Just trying to figure out which argument you are dealing with is hard. But for each case there are example countries all over Europe. n nKrugman has been a proponent of restoring higher taxes onto the rich. And based on couple recent interviews it has to do with the funding of programs like SS & Medicare. Increasing those taxes on the rich would definitely ensure their solvency. n nHe has also said that revenues would go up tremendously if we reached full employment. Purely in dollar terms and also as a portion of GDP as many of the temporary tax breaks implemented during the recession could be ended. The growth in GDP would also drive down government spending as a percentage of GDP. n nFinally, as relevant to this article, most of the pain in Europe comes from the cuts to spending. Not in trying maintain their debts. The downgrades have come as a result of their shrinking economies, which Krugman has attributed to austerity and capital flows in the private market.
Actually it makes perfect sense. Their spending of government as a % of GDP is twice ours. Yet their national debt is less than half of ours.
Also, another interesting fact:
In the last 100 years, which stock market has performed best in the world? Not America’s(although we’re at #2).
It’s Sweden.
And besides, they don’t pay the healthcare premiums we do, they don’t pay the enormous education costs we do. It’s all for free. So if you look at disposable income, they actually earn more.
But of course all these facts are uncomfortable. Let’s just pretend that Greece is the same as Europe!