I got around to reading Krugman this morning, and his Fancy Theorists of the World Unite got me going. (What Krugman's good at.)
But before I expressed my outrage I thought I ought to read the "remarkable editorial by Stephen Moore in the WSJ" that PK was talking about. All the while I'm reading it, I'm thinkin I read this before... Where did I read this before?
Noahpinion.
So, Krugman's take is "the all-out embrace of anti-intellectualism" in the WSJ post.
Noah's take is, I guess, "macroeconomics IS based on common sense" (from his post title). Noah's post didn't make sense to me the first time I read it, but it didn't seem to deserve a second go. (Unusual for Noah, for me.)
The other guy (David Glasner)'s take seems to be that macro is NOT based on common sense. (I couldn't force myself to read the whole article, but he talks of "the law of comparative advantage" and how it doesn't make sense but it's true.)
So I'm thinking Glasner and Noah completely disagree. But I still don't want to re-read either post. The WSJ guy, on the other hand, was simple and straightforward. Full of irrelevant and mis-applied arguments, but nice and simplistic.
I want to look at just one thing the WSJ guy -- Stephen Moore -- said in the article. I think you'll like it:
Macroeconomics simply took basic laws of economics we know to be true for the firm or family—i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid—and turned them on their head as national policy.
Petty economics, micro, says debts have to be repaid. According to Stephen Moore, Dr. Stephen Moore of the Wall Street Journal.
That's good, right? Now if we could only hold the petty economists to that view!
The debt of the Federal government did not increase first. It only began increasing after the private economy tanked in the 1970s. And why did the private economy tank? Because of the excessive accumulation of private-sector debt.
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| Federal (red) and Non-Federal (blue) debt relative to prices |
7 comments:
Let me chose a different passage from Moore's screed.
That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.
What the White House is telling us is that if the unemployed have a little bit of money to spend, it keeps the economy from falling even further, and might save a job or lead to another one being created. Moore is, above all, a liar. If he is ever right about anything, it is a coincidence, in the service of some fell agenda.
the White House wants to take more money from the son who works and give it to the one who doesn't work.
Gosh - another lie.
The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire.
One may argue against the CAP idea - but not like this. Some measure of intellectual integrity is required.
The next para implicitly resurrects the "lump of labor fallacy: that I have personally discredited.
There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. Another god damned lie. And the reasons the stimulus had a low multiplier were 1) about 40% was wasted on tax cuts with a multiplier of 0, and 2) most of the rest went to save existing jobs rather than create new ones, because local governments are just that bad off.
I hate to resort to ad hominem, but when someone has a proven track record as a liar and a hack, it is no longer a fallacy to discount what they say.
So, Dr. Moore is right: If the private sector had repaid its debt, none of these economic problems would have ever happened.
That is your theory, not something that you know.
Now I must go scrub my brain with a brillo pad and hug a squid.
JzB
Yes, it is my theory.
I don't think it is productive to call somebody a liar.
There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. Also the "I am insane" fallacy at the root of much modern economics, in addition to the lump of labor.
Yes, dollars have pictures of presidents on them, and say US Government, Department of Treasury, Federal Reserve, etc. But in Moore's WSJ reality they come from the private economy. Yeah, uh huh, right.
I think that when you can find someone lying repeatedly, and that person has a public forum, it is vitally important to call him exactly what he is - a liar.
The entire edifice of conservatism is based on lies. Consider, for example, the "miracle" of Texas, WMD's, the lump of labor "fallacy."
Etc, etc and so forth.
Cheers!
JzB
Hi Art
In regard to private sector debt, have you listened to Paul McCulley?
http://www.bloomberg.com/video/73591226/
I like is characterization
"the household sector has checked into the Betty Ford center for balance sheet repair"
-jim
Hey jim. Yeah, McCulley sure looks relaxed these days. Brilliant guy, I think.
What caught my ear in that interview was the Europe thing. McCulley says monetary union is not sufficient. He says fiscal union is needed. I don't like it. It means the tax policies of the European states must merge into a common policy. It is the next step to complete abandonment of state sovereignty, almost all the way there now, with economic improvement as the driving force.
It is just so WRONG to change the political situation to solve economic problems.
It is just so WRONG to change the political situation to solve economic problems.
Really? Consider the New Deal and the Great Society. Politics and economics are more than just joined at the hip. They are two faces of the same dragon.
Monetary policy and fiscal policy have to work together. Otherwise you have policy nonsense.
It is the next step to complete abandonment of state sovereignty,
Don't hold your breath. The union of European states and their common currency will not last. It's coming unraveled at the edges now.
Cheers!
JzB
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