Potpourri
==> Murray Sabrin has been our man in Cuba. Here’s an article in a series of posts on his visit.
==> Jerry O’Driscoll doesn’t heart Bernanke.
==> John Papola also caught something that I noticed about the Stiglitz/Krugman exchange (on inequality): Stiglitz quite explicitly said that low consumption spending was the reason for our recession, and when Krugman disagreed, he did NOT say, “No, it’s low demand, which could just as well be investment spending.” No, Krugman said (paraphrasing) “Hey rich people might consume a lot too, by buying yachts.” So John needs to apologize to no one–I have a certain grad student in mind–for his Christmas videos portraying Keynesians in practice as being “underconsumptionists.” I don’t know what more you would have to see, to give John a pass on that score.
==> A guy sent me this link to Krugman’s upcoming appearance at his school, hoping for some tips on what to ask.
==> Check out the Contrarian Take Databank at Forbes.
==> The cinematic von Pepe sends this clip of Iceland’s president talking about letting banks fail. (He also mentions social safety net stuff, but nobody’s perfect.)
==> I tried my best to offend people in this article on the dentist who fired his employee for being too attractive.
==> Is this Garret Jones analysis right? The notion that government spending shouldn’t count in GDP the same way that private spending does, is commonplace in our circles, but Jones is saying something different here. He’s claiming that there is a qualitatively different treatment–officially–in the GDP stats between government and private hires. Does anyone know if that is right?
==> A scary post on ObamaCare from David R. Henderson.
The Papola thing is just terrible, Bob. First of all, Krugman was addressing Stiglitz’s argument that the problem was that the average Joe wasn’t getting enough wealth to consume all the output we make. The right way to answer that maldistributionist theory is NOT to cite investment spending, because that only goes to make consumer goods, and if they won’t be bought, there is no sense in investing! Krugman answered Stiglitz the only way Stiglitz can be answered: the rich are quite capable of consuming too, thank you.
Secondly, Papola was intellectually dishonest in his quote. He ripped Krugman out of context and claimed that Krugman said “an economy” can be based upon luxury goods. That is is a deliberate attempt to make Krugman look nutty by putting words in his mouth. Not nice.
GC wrote:
The right way to answer that maldistributionist theory is NOT to cite investment spending, because that only goes to make consumer goods, and if they won’t be bought, there is no sense in investing!
Well if you’re an underconsumptionist too, Gene, then it’s not surprising you take the underconsumptionist side on this one. There’s nothing wrong with that.
(I had that Papola thing up in my browser for a while now; I don’t remember off the top of my head if I endorse his treatment of Krugman, but I know for sure he and I both caught that Krugman missed an obvious opportunity to correct Stiglitz’s “error” of saying the recession is due to low consumer demand. Again, it’s neat how you and Daniel and Ken B. keep seeing all this brilliant stuff that Krugman could have said, but for some reason didn’t.)
Also, my comment here sounds way more catty in print, than in my head as I’m typing. Just FYI.
“Again, it’s neat how you and Daniel and Ken B. keep seeing all this brilliant stuff that Krugman could have said, but for some reason didn’t”
Dude, this is the bread and butter of your Krugman Kontradictions! What are you talking about? My responses are always bringing you back to the plain English of what he wrote.
Maybe the guy going to the Krugman appearance should ask him if it matters whether the increase in aggregate demand comes from consumption or investment. That would help clarify his position.
Clarify his position on what?
John is convinced that Keynesians are fundamentally underconsumptionists. Thinking that spending on consumption could help now is not the same thing as being an underconsumptionist. I think that and I’m not an underconsumptionist.
Well, doesn’t it make you a…. I dunno… temporal underconsumptionist?
Reading the article it seems that Krugman is saying everyone should consume, even the rich. Whereas Stiglitz focuses on the causes of the “rich” getting “richer” using funny assumptions as to what the heck that generalization of “rich” really means ( Krugman just wants GDP to be high, who cares what is consumed. Stiglitz thinks this scenario can be controlled by targeting classes).
Both men seem very funny in their analysis, and seem to take little regard for the business cycle. I remember Krugman saying deficits are great until GDP reaches 2-3% consistently. Kuehn and Gene here seem to keep uplifting the idea that unrealistic models can describe the economy, so they defend Krugman even when a man like Papola is simply pointing out that consumption is a bad thing if there is no realistic proportion of savings to direct people to consume and create real wealth. Defending Krugman here is a sad reality of the zombies pedants become when they believe in the statist dogma the intelligentsia beats them over the head with.
Let’s not forget Krugman accepts a rise in GDP, even if Obama is consuming capital to fund military goods. I’m glad Robert Murphy corrects you statists with your own silly magic models and statist jargon.
re: “Reading the article it seems that Krugman is saying everyone should consume, even the rich.”
I suppose I missed the “should”.
re: “Defending Krugman here is a sad reality of the zombies pedants become when they believe in the statist dogma the intelligentsia beats them over the head with.”
And Bob wonders why the contributions of people like Papola to the economic discourse bother me! On facebook I was told that people who have come to the conclusions I have are inherently pro-terrorism, pro-war, and pro-natural disaster (and she learned that from Papola, she said), and now I’m a zombie pedant that believes in statist dogma. Not only do I believe in statist dogma – I haven’t even had the dignity of coming to my statist dogma independently! It has been beat into me!
Interesting. So you’re admitting that you don’t mind presidents spending so much on military goods. Do you like war or something? I mean it boosts GDP to around 2-3% like the almighty Krugman advocates. I guess I’m giving you the benefit of the doubt here Daniel, but you’re digging yourself in a ditch by suggesting you came to this “independently.” It’s better if you just agree with me, and say it was beaten over your head and you don’t question it because you don’t want to prove your degree wrong.
“He also mentions social safety net stuff, but nobody’s perfect.”
I noticed that bit too. It stopped me from using that video in a presentation I was making.
Professor Murphy, it seems the Krugman speech was fully booked. I will make sue that I get there for the stand by seats before it begins on that day. I will also be holding a sign, similar to the one Tom Woods mentioned that will read “debate Robert p Murphy.” Or something of that nature. I will make sure I get there for the stand by for sure. This is on my to-do list for this year.
From Krugman’s post: “But we’re talking about the financial crisis aftermath, not the crisis itself. What role does inequality play?”
Quote this to John a thousand times and he’ll still tell you Keynesians think low consumption caused the recession.
Also from Krugman: “So am I saying that you can have full employment based on purchases of yachts, luxury cars, and the services of personal trainers and celebrity chefs? Well, yes. You don’t have to like it, but economics is not a morality play, and I’ve yet to see a macroeconomic argument about why it isn’t possible.”
All he has said – contra your and John’s interpretation – is that there’s no necessary relationship between inequality and consumption levels. I think that’s a little strong, actually. I think Stiglitz is right on the fundamental relation (just wrong on its importance for this crisis). But one thing this is definitely not is Krugman making an underconsumptionist point.
John is a troll of epic proportions and when you provide arguments to him he calls you dishonest and an ideologue. He needs to apologize for that at least, but presenting a better picture of the issues at hand would be nice too.
What’s incredible to me too is that he actually tries to promote the idea that he is on Scott Sumner’s side of things – and yet he makes videos ridiculing the idea that there is a demand problem and endorsing supply-side issues!
btw – I like how you keep the “grad student in mind” anonymous and then tag me in the post 🙂