Paul Krugman

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“Opponents See The Birth Of A Neo-Dark Age”

December 19, 2016 in Excerpts, Politics | Permalink

Donald Trump promised during the election to do “unspeakable things” to terrorists, but the most dreadful of all might be what he does to American democracy. Many of his rallies seemed the night before Kristallnacht, with truth and decency only introduced to be mocked, sucker punched and desecrated. Who knows who may be harmed this time, but something awful seems ready to happen. A lot of evil has been unloosed, and some of the ones who helped free the demons are blissfully unaware. The others are overjoyed. America as a beacon for all, a land of liberty, may be a thing of the past.

Illiberal government’s ugly rise is far from just a U.S. issue. Two excerpts follow, one about our mess and another about a parallel travesty occurring in Europe.

The opening of Anthony Faiola’s excellent WaPo piece about Poland now being a state more driven by insanity than Solidarity: 

WARSAW — The Law and Justice Party rode to power on a pledge to drain the swamp of Polish politics and roll back the legacy of the previous administration. One year later, its patriotic revolution, the party proclaims, has cleaned house and brought God and country back to Poland.

Opponents, however, see the birth of a neo-Dark Age — one that, as President-elect Donald Trump prepares to move into the White House, is a harbinger of the power of populism to upend a Western society. In merely a year, critics say, the nationalists have transformed Poland into a surreal and insular place — one where state-sponsored conspiracy theories and de facto propaganda distract the public as democracy erodes.

In the land of Law and Justice, anti-intellectualism is king. Polish scientists are aghast at proposed curriculum changes in a new education bill that would downplay evolution theory and climate change and add hours for “patriotic” history lessons. In a Facebook chat, a top equal rights official mused that Polish hotels should not be forced to provide service to black or gay customers. After the official stepped down for unrelated reasons, his successor rejected an international convention to combat violence against women because it appeared to argue against traditional gender roles.•

The opening of Paul Krugman’s NYT op-ed “How Republics End,” which examines parallels between the fall of Rome and America’s potential faceplant:

Consider what just happened in North Carolina. The voters made a clear choice, electing a Democratic governor. The Republican legislature didn’t openly overturn the result — not this time, anyway — but it effectively stripped the governor’s office of power, ensuring that the will of the voters wouldn’t actually matter.

Combine this sort of thing with continuing efforts to disenfranchise or at least discourage voting by minority groups, and you have the potential making of a de facto one-party state: one that maintains the fiction of democracy, but has rigged the game so that the other side can never win.

Why is this happening? I’m not asking why white working-class voters support politicians whose policies will hurt them — I’ll be coming back to that issue in future columns. My question, instead, is why one party’s politicians and officials no longer seem to care about what we used to think were essential American values. And let’s be clear: This is a Republican story, not a case of “both sides do it.”

So what’s driving this story?•

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“Terrorism Is Just One Of Many Dangers In The World”

November 16, 2015 in Excerpts, Politics | Permalink

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The sidewalks in Paris weren’t yet dry when America’s leading ghoul Bill Kristol was being wheeled in front of cameras to call for 50,000 U.S. ground troops to be deployed to the Middle East, for a war that would no doubt last decades and get many thousands of people killed. All that money and death for something so impractical as a ground effort against a moving target, when a flexible, selective offensive is much safer and more intelligent. But what can you expect from this embalmed-looking buffoon, who seems at this point to only be able to get hard from inhaling the scent of soldier blood.

Of course, this routinely discredited dunderhead won’t be alone in calling for a large-scale war effort. With GOP rivals trying to out-extreme one another, the war drums are now to be pounded with many fists.

From Paul Krugman of the New York Times:

Think, for a moment, about what France is and what it represents. It has its problems — what nation doesn’t? — but it’s a robust democracy with a deep well of popular legitimacy. Its defense budget is small compared with ours, but it nonetheless retains a powerful military, and has the resources to make that military much stronger if it chooses. (France’s economy is around 20 times the size of Syria’s.) France is not going to be conquered by ISIS, now or ever. Destroy Western civilization? Not a chance.

So what was Friday’s attack about? Killing random people in restaurants and at concerts is a strategy that reflects its perpetrators’ fundamental weakness. It isn’t going to establish a caliphate in Paris. What it can do, however, is inspire fear — which is why we call it terrorism, and shouldn’t dignify it with the name of war.

The point is not to minimize the horror. It is, instead, to emphasize that the biggest danger terrorism poses to our society comes not from the direct harm inflicted, but from the wrong-headed responses it can inspire. And it’s crucial to realize that there are multiple ways the response can go wrong. …

Finally, terrorism is just one of many dangers in the world, and shouldn’t be allowed to divert our attention from other issues. Sorry, conservatives: when President Obama describes climate change as the greatest threat we face, he’s exactly right. Terrorism can’t and won’t destroy our civilization, but global warming could and might.•

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“None Of The Disasters Their Party Predicted Have Actually Come To Pass”

August 11, 2015 in Excerpts, Politics | Permalink

Rand Paul’s Weimar-like hyper-inflation hasn’t quite come to pass

—UPDATED msnbc

Paul Krugman was eviscerated for a Rolling Stone cover he wrote in 2014 about the accomplishments of the Obama Administration. It was mostly Liberals who were enraged, feeling the President had betrayed his promise. But the progress in the country in many areas was real, and since then environmentalism and diplomacy and science and civil rights have advanced in a number of ways. Gerrymandering and Citizens United are still among very real problems, but I never let political purity get in the way of important victories.

In Krugman’s most recent column, he states something obvious but very necessary in these times of attention deficits: Many of the candidates running for the GOP nomination promised the President’s policies, from the Affordable Care Act to investing borrowed money in the economy, would lead to financial calamity. They’ve been saying such things from early in his first term. Donald Trump predicted “massive inflation” and Rand Paul went so far as to raise the specter of America as a Weimar Republic. The Republican race may currently revolve around Trump’s Reality TV campaign, but sooner or later and certainly in the general-election, these terrible prognostications will be fodder.

Krugman’s opening:

What did the men who would be president talk about during last week’s prime-time Republican debate? Well, there were 19 references to God, while the economy rated only 10 mentions. Republicans in Congress have voted dozens of times to repeal all or part of Obamacare, but the candidates only named President Obama’s signature policy nine times over the course of two hours. And energy, another erstwhile G.O.P. favorite, came up only four times.

Strange, isn’t it? The shared premise of everyone on the Republican side is that the Obama years have been a time of policy disaster on every front. Yet the candidates on that stage had almost nothing to say about any of the supposed disaster areas.

And there was a good reason they seemed so tongue-tied: Out there in the real world, none of the disasters their party predicted have actually come to pass. President Obama just keeps failing to fail. And that’s a big problem for the G.O.P. — even bigger than Donald Trump.•

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“Information Technology That Excites The Twittering Classes May Not Be A Big Deal For The Economy”

May 25, 2015 in Excerpts, Politics, Science/Tech | Permalink

Paul Krugman’s New York Times column addresses the puzzling state of contemporary economics, suggesting the impact of the new technologies on production has been grossly overstated. That might be true. Really smart people have been convinced of completely wrong things before, and Silicon Valley’s effect on the bottom line might just be the latest example. Or maybe, as Krugman acknowledges, we’re only in the prelude of the big change or perhaps the current equations aren’t sufficient to capture the new normal.

The one thing I’ll add is that automation probably can be a big deal for the economy in another sense, even if it doesn’t promote a sea change in production. Apps and automated workplaces don’t necessarily have to hugely increase production to completely obviate workers. It could be an even exchange of computers supplanting labor, torpedoing traditional industries while turning out similar products and services–think Uberization–though who will be able to afford them is the question.

From Krugman:

One possibility is that the numbers are missing the reality, especially the benefits of new products and services. I get a lot of pleasure from technology that lets me watch streamed performances by my favorite musicians, but that doesn’t get counted in G.D.P. Still, new technology is supposed to serve businesses as well as consumers, and should be boosting the production of traditional as well as new goods. The big productivity gains of the period from 1995 to 2005 came largely in things like inventory control, and showed up as much or more in nontechnology businesses like retail as in high-technology industries themselves. Nothing like that is happening now.

Another possibility is that new technologies are more fun than fundamental. Peter Thiel, one of the founders of PayPal, famously remarked that we wanted flying cars but got 140 characters instead. And he’s not alone in suggesting that information technology that excites the Twittering classes may not be a big deal for the economy as a whole.

So what do I think is going on with technology? The answer is that I don’t know — but neither does anyone else. Maybe my friends at Google are right, and Big Data will soon transform everything. Maybe 3-D printing will bring the information revolution into the material world. Or maybe we’re on track for another big meh.

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“It Was A Who’s-Who Of Mistake-Makers”

May 15, 2015 in Excerpts, Politics | Permalink

I’ve said this before, but before we vote for any politician it would be really instructive to study where they stood at the time of the 2008 economic collapse and in its aftermath. Those who argued for austerity, for taking money out of a greatly diminished economy, should have to answer serious questions about that stance. 

In a similar vein, the Dubya tragedy of the Iraq War is playing out again with Jeb Bush running for President. That’s not merely because his brother oversaw the disaster–though he agreed, if fleetingly, that he would still have supported the invasion knowing what we now know–but also due his staffing up with some of the “stars” of his sibling’s inner circle. You shouldn’t be damned for making a mistake but perhaps you should be if it was such a damnable one.

From Paul Krugman at the New York Times:

Jeb Bush wants to stop talking about past controversies. And you can see why. He has a lot to stop talking about. But let’s not honor his wish. You can learn a lot by studying recent history, and you can learn even more by watching how politicians respond to that history.

The big “Let’s move on” story of the past few days involved Mr. Bush’s response when asked in an interview whether, knowing what he knows now, he would have supported the 2003 invasion of Iraq. He answered that yes, he would. No W.M.D.? No stability after all the lives and money expended? No problem.

Then he tried to walk it back. He “interpreted the question wrong,” and isn’t interested in engaging “hypotheticals.” Anyway, “going back in time” is a “disservice” to those who served in the war.

Take a moment to savor the cowardice and vileness of that last remark. And, no, that’s not hyperbole. Mr. Bush is trying to hide behind the troops, pretending that any criticism of political leaders — especially, of course, his brother, the commander in chief — is an attack on the courage and patriotism of those who paid the price for their superiors’ mistakes. That’s sinking very low, and it tells us a lot more about the candidate’s character than any number of up-close-and-personal interviews.

Wait, there’s more: Incredibly, Mr. Bush resorted to the old passive-voice dodge, admitting only that “mistakes were made.” Indeed. By whom? Well, earlier this year Mr. Bush released a list of his chief advisers on foreign policy, and it was a who’s-who of mistake-makers, people who played essential roles in the Iraq disaster and other debacles.•

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“Once Upon A Time, Israel Was A Country Of Egalitarian Ideals”

March 17, 2015 in Excerpts, Politics | Permalink

Today may be Netanyahu’s waterloo, or not, with the ideologue shifting further right at the eleventh hour, hoping to extend his time in office. One thing which shouldn’t be lost regardless of the election’s outcome, is that in addition to worries about diplomatic bungling and existential threats from without, the country is enduring serious income inequality. From “Israel’s Gilded Age,” by Paul Krugman of the New York Times:

Why did Prime Minister Benjamin Netanyahu of Israel feel the need to wag the dog in Washington? For that was, of course, what he was doing in his anti-Iran speech to Congress. If you’re seriously trying to affect American foreign policy, you don’t insult the president and so obviously align yourself with his political opposition. No, the real purpose of that speech was to distract the Israeli electorate with saber-rattling bombast, to shift its attention away from the economic discontent that, polls suggest, may well boot Mr. Netanyahu from office in Tuesday’s election.

But wait: Why are Israelis discontented? After all, Israel’s economy has performed well by the usual measures. It weathered the financial crisis with minimal damage. Over the longer term, it has grown more rapidly than most other advanced economies, and has developed into a high-technology powerhouse. What is there to complain about?

The answer, which I don’t think is widely appreciated here, is that while Israel’s economy has grown, this growth has been accompanied by a disturbing transformation in the country’s income distribution and society. Once upon a time, Israel was a country of egalitarian ideals — the kibbutz population was always a small minority, but it had a large impact on the nation’s self-perception. And it was a fairly equal society in reality, too, right up to the early 1990s.

Since then, however, Israel has experienced a dramatic widening of income disparities. Key measures of inequality have soared; Israel is now right up there with America as one of the most unequal societies in the advanced world. And Israel’s experience shows that this matters, that extreme inequality has a corrosive effect on social and political life.•

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“The Economy’s Behaviour Is Puzzling These Days”

February 27, 2015 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Paul Krugman is continually taken to task for predicting in 1998 that the Internet would be no more important economically than the fax machine by 2005. Culturally, of course, this new medium has been a watershed event. But he had a point on some level: the Internet–and computers, more broadly–still disappoint from a productivity perspective. Either that or all conventional measurements are insufficient to gauge this new machine. At his Financial Times blog, Andrew McAfee, co-author with Erik Brynjolfsson of 2014’s wonderful The Second Machine Age, wonders about the confusing state of contemporary economics. An excerpt:

The economy’s behaviour is puzzling these days. No matter what you think is going on, there are some facts — important ones — that don’t fit your theory well at all, and/or some important things left unexplained.

For example, if you believe that technological progress is reshaping the economy (as Erik and I do) then you’ve got to explain why productivity growth is so low. As Larry Summers pointed out on the first panel, strong labour productivity growth is the first thing you’d expect to see if tech progress really were taking off and reshaping the economy, disrupting industries, hollowing out the middle class, and so on. So why has it been so weak for the past 10 years? Is it because of mismeasurement? William Baumol’s “Cost Disease” (the idea that all the job growth has come in manual, low-productivity sectors)? Or is it that recent tech progress is in fact economically unimpressive, as Robert Gordon and others believe?

If you believe that tech progress has not been that significant, however, you’ve got to explain why labor’s share of income is declining around the world.•

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“They Therefore Threaten To Replace The Humans Who Once Made The Day-To-Day Decisions”

January 27, 2015 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

The dream of the automated workplace, shared by 1930s European Fascists and technologists in postwar America, is not only aimed at blue collars but white ones also, the secretaries under siege but bosses as well. In hs Aeon essay, “RoboCorp,” Daniel C. Morris makes digestible the complexities of cryptocurrency and DACs (Distributed Autonomous Corporations) while trying to work through the pros and cons of such an arrangement. An excerpt:

“…the true economic significance of automated systems and robotics remains troublingly unclear. While they make our daily lives easier by increasing the productive efficiency of each input unit of human labour, they displace jobs; automated factories need far fewer workers. John Maynard Keynes saw this coming 85 years ago, when he coined the term ‘technological unemployment’.

Technologists (and many economists) argue that workers who lose their simple or repetitive jobs to machines are thereby set free to perform more complicated tasks. One former factory worker might supervise his robot replacement, another might design them, and still others move into entirely new sectors of the economy. Until 2008, that logic seemed to largely hold true – automation increased efficiency without dramatically reducing employment.

But automated logistics and financial systems aren’t just putting rivets into holes. These robots, whether DACs or more centralised systems, are now able to move money around an economy programmatically. They therefore threaten to replace the humans who once made the day-to-day decisions required to run businesses and organisations. Would that be so bad? The machines have already come for the manual and clerical workers; perhaps there’s a certain kind of grim satisfaction in watching them close in on the executive class, too. And yet it would be hasty to predict a broadly egalitarian outcome. The US economist Paul Krugman sees the broader risk: that we will end up ‘a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.’•

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“Mr. McConnell And His Colleagues Have Done Everything They Could To Undermine Effective Policy”

November 7, 2014 in Excerpts, Politics, Urban Studies | Permalink

I hope we’re not going to get lectures about how Democrats lost so many states in the midterm elections because they didn’t communicate their message clearly enough, they didn’t find the “magic words.” Nothing presents more clarity than a family desperate for healthcare visiting doctors for the first time in years. You can’t be clearer than life and death. I don’t think those people have been “tricked” if they then choose to elect politicians desperate to take that benefit from them, as they did with Mitch McConnell in Kentucky. Sure, it would have been great for the media to explain recently how universal healthcare lifts the threshold for a plague in America, imported or “home-grown,” than to engage in ceaseless fearmongering about Ebola, a virus yet to claim a single U.S. citizen on American soil. But I think the people get the media and government they deserve. If they want to vote their ideology and aspirations rather than their reality, that’s what going to happen. The matter with Kansas, at long last, may be Kansans. From Paul Krugman at the New York Times:

“But the biggest secret of the Republican triumph surely lies in the discovery that obstructionism bordering on sabotage is a winning political strategy. From Day 1 of the Obama administration, Mr. McConnell and his colleagues have done everything they could to undermine effective policy, in particular blocking every effort to do the obvious thing — boost infrastructure spending — in a time of low interest rates and high unemployment.

This was, it turned out, bad for America but good for Republicans. Most voters don’t know much about policy details, nor do they understand the legislative process. So all they saw was that the man in the White House wasn’t delivering prosperity — and they punished his party.

Will things change now that the G.O.P. can’t so easily evade responsibility? I guess we’ll find out.”

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“Does Amazon Really Have Robber-Baron-Type Market Power? When It Comes To Books, Definitely.”

October 20, 2014 in Books, Excerpts, Science/Tech, Urban Studies | Permalink

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Following up on Franklin Foer’s New Republic call to arms about Amazon’s price-setting power, here’s an excerpt from Paul Krugman’s balanced look in the New York Times at the robber baron of books:

“Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.

So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.

And on that front its power is really immense — in fact, even greater than the market share numbers indicate. Book sales depend crucially on buzz and word of mouth (which is why authors are often sent on grueling book tours); you buy a book because you’ve heard about it, because other people are reading it, because it’s a topic of conversation, because it’s made the best-seller list. And what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

So can we trust Amazon not to abuse that power?”

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“Obama Has Emerged As One Of The Most Consequential And, Yes, Successful Presidents In American History”

October 9, 2014 in Excerpts, Politics | Permalink

I’m likely in the minority as someone who voted twice for President Obama and is very pleased with the results. He’s been bolder in certain ways than I anticipated, and I think he’s avoided a lot of twentieth-century pitfalls and set us up well for the twenty-first-century landscape. Most of his most ardent critics seem to me frivolous or hypocritical or dangerous. We’re a brighter, better-positioned nation for his leadership. Paul Krugman feels similarly about 44, as he demonstrates in his Rolling Stone essay, “In Defense of Obama.” The opening:

“When it comes to Barack Obama, I’ve always been out of sync. Back in 2008, when many liberals were wildly enthusiastic about his candidacy and his press was strongly favorable, I was skeptical. I worried that he was naive, that his talk about transcending the political divide was a dangerous illusion given the unyielding extremism of the modern American right. Furthermore, it seemed clear to me that, far from being the transformational figure his supporters imagined, he was rather conventional-minded: Even before taking office, he showed signs of paying far too much attention to what some of us would later take to calling Very Serious People, people who regarded cutting budget deficits and a willingness to slash Social Security as the very essence of political virtue.

And I wasn’t wrong. Obama was indeed naive: He faced scorched-earth Republican opposition from Day One, and it took him years to start dealing with that opposition realistically. Furthermore, he came perilously close to doing terrible things to the U.S. safety net in pursuit of a budget Grand Bargain; we were saved from significant cuts to Social Security and a rise in the Medicare age only by Republican greed, the GOP’s unwillingness to make even token concessions.

But now the shoe is on the other foot: Obama faces trash talk left, right and center – literally – and doesn’t deserve it. Despite bitter opposition, despite having come close to self-inflicted disaster, Obama has emerged as one of the most consequential and, yes, successful presidents in American history. His health reform is imperfect but still a huge step forward – and it’s working better than anyone expected. Financial reform fell far short of what should have happened, but it’s much more effective than you’d think. Economic management has been half-crippled by Republican obstruction, but has nonetheless been much better than in other advanced countries. And environmental policy is starting to look like it could be a major legacy.”

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“Depression Is Their Normal State, Except When Spending Is Supported By Bubbles”

October 7, 2014 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

In a review of Martin Wolf’s The Shifts and the Shocks in the New York Review of Books, Paul Krugman argues that the financial bubble may not have led to the 2008 crash but merely briefly masked an economy that has stalled in a long-term way. An excerpt:

“Emphasizing the need to reduce financial fragility makes sense if you believe that the legacy of past financial excess is the reason we’re in so much trouble now. But are we sure about that? Let me offer two reasons to be skeptical.

First, while the depression that overtook the Western world in 2008 clearly came after the collapse of a vast financial bubble, that doesn’t mean that the bubble caused the depression. Late in The Shifts and the Shocks Wolf mentions the reemergence of the ‘secular stagnation’ hypothesis, most famously in the speeches and writing of Lawrence Summers (Lord Adair Turner independently made similar points, as did I). But I’m not sure whether readers will grasp the full implications. If the secular stagnationists are right, advanced economies now suffer from persistently inadequate demand, so that depression is their normal state, except when spending is supported by bubbles. If that’s true, bubbles aren’t the root of the problem; they’re actually a good thing while they last, because they prop up demand. Unfortunately, they’re not sustainable—so what we need urgently are policies to support demand on a continuing basis, which is an issue very different from questions of financial regulation.

Wolf actually does address this issue briefly, suggesting that the answer might lie in deficit spending financed by the government’s printing press. But this radical suggestion is, as I said, overshadowed by his calls for more financial regulation. It’s the morality play aspect again: the idea that we need to don a hairshirt and repent our sins resonates with many people, while the idea that we may need to abandon conventional notions of fiscal and monetary virtue has few takers.”

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“Sad To Say, There’s Method In Their Fraudulence”

May 5, 2014 in Excerpts, Politics, Science/Tech | Permalink

Paul Krugman is concerned that the Affordable Care Act has been damaged by a concerted conservative effort to defame it with lies. I wonder if this will end up being a long-term concern. The greatest benefit, I think, of a decentralized media is that while politicized bullshit still works, it has a pretty short shelf life. The Republican playbook, in which coded language could sway the masses, doesn’t have much of a lasting impact in the Information Age. That’s not to say that the GOP won’t do well in midterm elections–that’s usually the way for the party out of the Oval Office. But Obamacare isn’t going away, and the Republicans are going to have a steep uphill climb in the next national election. From Krugman’s “Inventing a Failure“:

“Now comes the latest claim — that many of the people who signed up for insurance aren’t actually paying their premiums. Obviously this claim is part of a continuing pattern. It also, however, involves a change in tactics. Previous attacks on Obamacare were pretty much fact-free; this time the claim was backed by an actual survey purporting to show that a third of enrollees hadn’t paid their first premium.

But the survey was rigged. (Are you surprised?) It asked insurers how many enrollees had paid their first premium; it ignored the fact that the first premium wasn’t even due for the millions of people who signed up for insurance after March 15.

And the fact that the survey was so transparently rigged is a smoking gun, proving that the attacks on Obamacare aren’t just bogus; they’re deliberately bogus. The staffers who set up that survey knew enough about the numbers to skew them, which meant that they have to have known that Obamacare is actually doing O.K.

So why are Republicans doing this? Sad to say, there’s method in their fraudulence.

First of all, it fires up the base. After this latest exercise in deception, we can be fairly sure that Republican leaders know perfectly well that Obamacare has failed to fail. But the party faithful don’t. Like anyone who writes about these issues, I get vast amounts of mail from people who know, just know, that insurance premiums are skyrocketing, that far more people have lost insurance because of Obummercare than have gained it, that all the horror stories are real, and that anyone who says otherwise is just a liberal shill.

Beyond that, the constant harping on alleged failure works as innuendo even if each individual claim collapses in the face of evidence. A recent poll by the Kaiser Family Foundation found that a majority of Americans know that more than eight million people enrolled in health exchanges; but it also found a majority of respondents believing that this was below expectations, and that the law was working badly.”

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“Who Determines What A Corporate CEO Is Worth?”

April 10, 2014 in Books, Excerpts, Politics, Science/Tech | Permalink

The new technologies have chosen winners and losers with little regard for fairness. If you were a really good travel agent or bookstore owner, your livelihood is gone. But Major League Baseball owners, not exactly innovative people, have become mega-rich because they happened to have endless hours of content that’s not likely to be time-shifted, in an era when regional cable exploded. And low ratings–or no ratings–haven’t thus far made much of a difference.

Technology, however, isn’t likely the sole factor in the new wave of income inequality. Politics plays a vital role. From Paul Krugman’s New York Review of Books piece on French economist Thomas Piketty’s new volume on haves and have-nots:

“Capital still matters; at the very highest reaches of society, income from capital still exceeds income from wages, salaries, and bonuses. Piketty estimates that the increased inequality of capital income accounts for about a third of the overall rise in US inequality. But wage income at the top has also surged. Real wages for most US workers have increased little if at all since the early 1970s, but wages for the top one percent of earners have risen 165 percent, and wages for the top 0.1 percent have risen 362 percent. If Rastignac were alive today, Vautrin might concede that he could in fact do as well by becoming a hedge fund manager as he could by marrying wealth.

What explains this dramatic rise in earnings inequality, with the lion’s share of the gains going to people at the very top? Some US economists suggest that it’s driven by changes in technology. In a famous 1981 paper titled ‘The Economics of Superstars,’ the Chicago economist Sherwin Rosen argued that modern communications technology, by extending the reach of talented individuals, was creating winner-take-all markets in which a handful of exceptional individuals reap huge rewards, even if they’re only modestly better at what they do than far less well paid rivals.

Piketty is unconvinced. As he notes, conservative economists love to talk about the high pay of performers of one kind or another, such as movie and sports stars, as a way of suggesting that high incomes really are deserved. But such people actually make up only a tiny fraction of the earnings elite. What one finds instead is mainly executives of one sort or another—people whose performance is, in fact, quite hard to assess or give a monetary value to.

Who determines what a corporate CEO is worth? Well, there’s normally a compensation committee, appointed by the CEO himself. In effect, Piketty argues, high-level executives set their own pay, constrained by social norms rather than any sort of market discipline. And he attributes skyrocketing pay at the top to an erosion of these norms. In effect, he attributes soaring wage incomes at the top to social and political rather than strictly economic forces.”

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“The Sheer Meanspiritedness Of The Obamacare Opponents Will Become Ever More Obvious”

May 27, 2013 in Excerpts, Politics, Urban Studies | Permalink

Fears can divide and threats can hold people in place. But what if those boogeymen are cast aside even for a little while? What if the curtain is drawn back and the worst fears are never realized?

The biggest worry that his enemies have had about President Obama from the very beginning isn’t that he would fail but that he would succeed, that he could present a plausible alternative to the harmful reality most Americans have been facing since the start of the Reagan revolution. And we’ve stayed there thanks to the use of wedge issues and demonizing. But the President wanted to transform that. Time, technology and demography are on his side.

What if health-care reform makes our lives better while costing us less money? What if gay marriage isn’t harmful to the moral fabric of society but actually improves it? What if women having control over their lives makes for a healthier, more secure country? What if all the things that we’ve been told are un-American actually make for a stronger America? Once we know the truth, how will lies ever work again?

A brief explanation from Paul Krugman, if you missed it on this Memorial Day holiday, of the potential of Obamacare in action:

“Still, here’s what it seems is about to happen: millions of Americans will suddenly gain health coverage, and millions more will feel much more secure knowing that such coverage is available if they lose their jobs or suffer other misfortunes. Only a relative handful of people will be hurt at all. And as contrasts emerge between the experience of states like California that are making the most of the new policy and that of states like Texas whose politicians are doing their best to undermine it, the sheer meanspiritedness of the Obamacare opponents will become ever more obvious.

So yes, it does look as if there’s an Obamacare shock coming: the shock of learning that a public program designed to help a lot of people can, strange to say, end up helping a lot of people — especially when government officials actually try to make it work.”

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“Everyone Loves A Morality Play”

May 19, 2013 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Maybe it’s the fairy tales we’re read as children or the guilt sometimes used to shape us into adults, but our economic policy in the aftermath of collapse is often guided by a false sense of morality. It’s dangerous and can make a bad situation worse, can land us in Hoovervilles. From Paul Krugman’s New York Review of Books piece about a slate of just-published volumes about financial austerity, a passage about the psychology that makes us feel good but is bad for us:

“Everyone loves a morality play. ‘For the wages of sin is death’ is a much more satisfying message than ‘Shit happens.’ We all want events to have meaning.

When applied to macroeconomics, this urge to find moral meaning creates in all of us a predisposition toward believing stories that attribute the pain of a slump to the excesses of the boom that precedes it—and, perhaps, also makes it natural to see the pain as necessary, part of an inevitable cleansing process. When Andrew Mellon told Herbert Hoover to let the Depression run its course, so as to ‘purge the rottenness’ from the system, he was offering advice that, however bad it was as economics, resonated psychologically with many people (and still does).

By contrast, Keynesian economics rests fundamentally on the proposition that macroeconomics isn’t a morality play—that depressions are essentially a technical malfunction. As the Great Depression deepened, Keynes famously declared that ‘we have magneto trouble’—i.e., the economy’s troubles were like those of a car with a small but critical problem in its electrical system, and the job of the economist is to figure out how to repair that technical problem. Keynes’s masterwork, The General Theory of Employment, Interest and Money, is noteworthy—and revolutionary—for saying almost nothing about what happens in economic booms. Pre-Keynesian business cycle theorists loved to dwell on the lurid excesses that take place in good times, while having relatively little to say about exactly why these give rise to bad times or what you should do when they do. Keynes reversed this priority; almost all his focus was on how economies stay depressed, and what can be done to make them less depressed.

I’d argue that Keynes was overwhelmingly right in his approach, but there’s no question that it’s an approach many people find deeply unsatisfying as an emotional matter. And so we shouldn’t find it surprising that many popular interpretations of our current troubles return, whether the authors know it or not, to the instinctive, pre-Keynesian style of dwelling on the excesses of the boom rather than on the failures of the slump.”

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“The Era Of Hamstrung Government Seems To Be Coming To An End”

April 1, 2013 in Excerpts, Politics | Permalink

Paul Krugman is looking at California as a microcosm for America–as it often is–wondering whether moderate liberal rule with the freedom to make decisions will be a federal-level bellwether. Though it’s unlikely President Obama will ever know governance without obstruction. An excerpt:

“California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.

And that’s where things get really interesting — because the era of hamstrung government seems to be coming to an end. Over the years, California’s Republicans moved right as the state moved left, yet retained political relevance thanks to their blocking power. But at this point the state’s G.O.P. has fallen below critical mass, losing even its power to obstruct — and this has left Mr. Brown free to push an agenda of tax hikes and infrastructure spending that sounds remarkably like the kind of thing California used to do before the rise of the radical right.

And if this agenda is successful, it will have national implications. After all, California’s political story — in which a radicalized G.O.P. fell increasingly out of touch with an increasingly diverse and socially liberal electorate, and eventually found itself marginalized — is arguably playing out with a lag on the national scene too.

So is California still the place where the future happens first? Stay tuned.”

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“Easy Answers Like ‘Skills Training’ Won’t Necessarily Help Much”

February 3, 2013 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Technological innovation leads to great wealth for a few but the struggle with creative disruption can last for most people for decades–until, at long last, hopefully, prosperity arrives. But until then–wow–painful! From a new Business Insider interview with Paul Krugman about the rise of the machines:  

“Whereas from about 1980 to 2000, the discussion about inequality was mostly seen as labor vs. labor (high-paid, high-skilled workers vs low-paid, low-skilled workers) the new story is about labor vs. capital a topic that is more taboo.

[Krugman] notes that there have been periods before where workers went several decades without reaping the benefits of capital-favoring technologies (the industrial revolution), and it’s possible that we’re in a period like that now, which unfortunately means that easy answers like ‘skills training’ won’t necessarily help much.’

As for the specific technologies that he’s intrigued by right now, he mentioned driverless cars and speech recognition, both of which use ‘big data’ to accomplish something that we previously thought required human intelligence.”

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“His Argument Also Runs Counter To What I Have Been Saying In Congress”

January 28, 2013 in Excerpts, Politics, Science/Tech | Permalink

The last time professional chucklehead Joe Scarborough used his flat-earth theory–if many people believe the round earth is flat, then the person who believes that the round Earth is round is a fool–he ended up being embarrassed by his scurrilous criticism of pollster Nate Silver. But some people never learn. He’s now lambasting New York Times economist Paul Krugman about deficit spending not because the MSNBC pundit has some sort knowledge or proof, but because, in Scarborough’s mind, Krugman’s reasoning “runs counter to conventional wisdom across the Western world.” Sooner or later, the “other people disagree with this guy” theory will work the way some shit eventually sticks to a wall. The opening of Scarborough’s new Politico column “Paul Krugman vs. the World“:

“Nobel Prize-winning economist Paul Krugman came on Morning Joe Monday to discuss his latest book and the state of affairs in Washington. Mr. Krugman’s view is that Americans would be better off if its government ran deeper deficits and ignored its longterm debt. That, of course, runs counter to conventional wisdom across the Western world, which is exactly why the New York Times columnist believes Spain and Great Britain are suffering through endless recessions.

His argument also runs counter to what I have been saying in Congress and in the media since 1994. So it would be no surprise that the guy who wrote this, and this, and this and this over the past week would take exception to Mr. Krugman’s words. But most of our viewers did not tune in to hear me talk over the Nobel Prize winner. They tuned in to hear Paul Krugman. So I did my best to give him space.”

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“How Do You Maintain Such A Lovely Beard?”

May 1, 2012 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Full, but not unruly. (Image by Prolineserver.)

Two questions from the excellent Ask Me Anything that Paul Krugman just did on Reddit, one about the cause of American income disparity and one about his fabulous beard:

“[–]Ashoat 382 points  ago

I want to ask about your perspective on increasing wealth and income disparities. There a couple camps on this issue, and it seems that mainstream economists haven’t yet formed a consensus on the cause for this.

Greg Mankiw and others seem to believe that the main cause of increasing income and wealth inequality is a changing labor market that rewards and values high-skilled laborers more and more. Consequently, he argues that attempts at addressing income inequality issues should be heavily based on education reform.

On the other hand, you’ve made the point that a lot of the increases in income and wealth inequality come from shifting fiscal policies and government regulation. You seem to argue that decreased taxes on the rich and more lenient policies in regards to financial industry have resulted in an economy that unduly favors certain individuals. Sorry if I’m putting words in your mouth!

I have the following two questions:

  • Do you think any of the increased disparity has resulted from the shifting labor market?
  • Do you think it makes sense to focus efforts on improving higher education and increasing access to it?

[–]nytimeskrugman[S] 573 points  ago

Well, if you look at the Congressional Budget Office report from last fall, it shows that about half the rise in income inequality is accounted for by the divergence of the 1 percent from everyone else. That part is NOT about education and returns to skills — the next 19 have about as much education as the top 1, or if you prefer, hedge fund managers and high school teachers have roughly comparable education levels. So something else is driving at least half the rise in inequality, and probably more.

That doesn’t mean that market forces play no role, but it says that it’s nowhere close to the whole story, or even most of it — a point that people like Mankiw refuse to acknowledge.

By all means let’s expand access to higher education — but I’d say that the biggest reason to do that it is not so much to reverse inequality as to stop the ongoing decline in social mobility. Horatio Alger has left the building; it’s getting ever harder for Americans born into the lower half of the income distribution to move up. And more aid for college would help make climbing the ladder easier.

[–]lifeofquill 114 points  ago

How do you maintain such a lovely beard?

[–]nytimeskrugman[S] 140 points  ago

Shave around it every day, and get your wife to clip it fairly often.”

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“What We Are Experiencing Is Indeed A Depression”

April 19, 2012 in Excerpts, Politics, Urban Studies | Permalink

For more than 30 years, American conservative politicians, often bearing flags and crosses, have exploited fears and prejudices and promised to return us to an earlier, grander time that never existed. But they really just wanted our money. As we’ve been led down this dark path, other global economies have progressed, leaving the middle class in the U.S. especially vulnerable. From “Economy Killers,” a Salon essay by Paul Krugman and Robin Wells about the polarized non-response to the Great Recession:

“America emerged from the Great Depression and the Second World War with a much more equal distribution of income than it had in the 1920s; our society became middle-class in a way it hadn’t been before. This new, more equal society persisted for 30 years. But then we began pulling apart, with huge income gains for those with already high incomes. As the Congressional Budget Office has documented, the 1 percent — the group implicitly singled out in the slogan ‘We are the 99 percent’ — saw its real income nearly quadruple between 1979 and 2007, dwarfing the very modest gains of ordinary Americans. Other evidence shows that within the 1 percent, the richest 0.1 percent and the richest 0.01 percent saw even larger gains.

By 2007, America was about as unequal as it had been on the eve of the Great Depression — and sure enough, just after hitting this milestone, we plunged into the worst slump since the Depression. This probably wasn’t a coincidence, although economists are still working on trying to understand the linkages between inequality and vulnerability to economic crisis.

Here, however, we want to focus on a different question: Why has the response to the crisis been so inadequate? Before financial crisis struck, we think it’s fair to say that most economists imagined that even if such a crisis were to happen, there would be a quick and effective policy response. In 2003 Robert Lucas, the Nobel laureate and then-president of the American Economic Association, urged the profession to turn its attention away from recessions to issues of longer-term growth. Why? Because, he declared, the ‘central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades.’

Yet when a real depression arrived — and what we are experiencing is indeed a depression, although not as bad as the Great Depression — policy failed to rise to the occasion.”

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“There Is A Real Chance That These Lies Will Succeed In Killing Health Reform Before It Really Gets Started”

March 19, 2012 in Excerpts, Politics, Urban Studies | Permalink

Not so long ago, both sides of the aisle agreed that America was going to grow ill and poor if we didn’t have comprehensive health-care reform. Now because of politics, lobbyists and ignorance, the Affordable Care Act, a reasonable first step in reform, is under constant attack. From Krugman:

“For now, however, most of the disinformation involves claims about costs. Each new report from the Congressional Budget Office is touted as proof that the true cost of Obamacare is exploding, even when — as was the case with the latest report — the document says on its very first page that projected costs have actually fallen slightly. Nor are we talking about random pundits making these false claims. We are, instead, talking about people like the chairman of the House Republican Policy Committee, who issued a completely fraudulent press release after the latest budget office report.

Because the truth does not, sad to say, always prevail, there is a real chance that these lies will succeed in killing health reform before it really gets started. And that would be an immense tragedy for America, because this health reform is coming just in time.

As I said, the reform is mainly aimed at Americans who fall through the cracks in our current system — an important goal in its own right. But what makes reform truly urgent is the fact that the cracks are rapidly getting wider, because fewer and fewer jobs come with health benefits; employment-based coverage actually declined even during the ‘Bush boom’ of 2003 to 2007, and has plunged since.

What this means is that the Affordable Care Act is the only thing protecting us from an imminent surge in the number of Americans who can’t afford essential care. So this reform had better survive — because if it doesn’t, many Americans who need health care won’t.”

 

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“If It Were Announced That We Faced A Threat From Space Aliens And Needed To Build Up To Defend Ourselves, We’d Have Full Employment In A Year And A Half”

February 20, 2012 in Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Paul Krugman is the subject of a new Playboy Interview conducted by Jonathan Tasini. Because a monthly magazine covering current events is completely crazy at this point, the two mostly stick to more general policy questions, and there’s some good stuff there. (If you click the link at work, be advised that there are bare boobs and butts all over the page, though none belong to Krugman.) An excerpt:

“KRUGMAN: The point is there’s a tremendous amount of suffering. A lot of America is much worse off than it was four years ago. I think the main reason you should be angry about it is that it’s gratuitous. This doesn’t have to be happening. We actually have the tools to make most of this go away. If we could throw aside the political prejudices and bad ideas that are crippling us, in 18 months we could be back to something that feels like a much better economy.

PLAYBOY: So people in America today are suffering when they don’t have to be because of policy makers who won’t do the right thing?

KRUGMAN: That’s right. I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.”

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