01 Oct 2015

Contra Krugman Is Here

Contra Krugman 82 Comments

With the first three episodes. Subscribe on Stitcher or whatever you crazy kids do…

82 Responses to “Contra Krugman Is Here”

  1. guest says:

    Great first episode.

    I like how you established, for the new comers, how relevant Paul Krugman’s work is to American economic policy.

    The brief intro of Austrian Economics and the resource for learning more about it was helpful.

    And it was short, so it’s like a handy beginners resource, or a business card.

    Good catch at the end regarding unemployed listeners.

  2. Anonymous says:

    Another benefit is that it will be a great make-work project for LK

  3. LK says:

    And in episode 2 I see the same embarrassing discredited myth about the 1870-1914 period you libertarians constantly peddle:

    http://socialdemocracy21stcentury.blogspot.com/2015/10/debunking-murphys-contra-krugman-ep-2.html

    • guest says:

      Contra Contra Krugman?

      😛

    • guest says:

      “As we see here, in terms of average real per capita GDP, the 1871–1914 and 1873–1896 (the great deflation of the 19th century) periods were the worst in our list, and real per capita GDP is a better measure of the per capita wealth in an economy.”

      In the following Tom Woods video, he addresses the belief in the Long Depression by citing an article in the New York Times by Charles Morris:

      [Time stamped]
      Smashing Myths and Restoring Sound Money | Thomas E. Woods, Jr.
      https://www.youtube.com/watch?v=HAzExlEsIKk#t=33m58s

      Here’s Morris’ article:

      Freakoutonomics
      [www]http://www.nytimes.com/2006/06/02/opinion/02morris.html
      June 2, 2006

      “Historians long attributed the turmoil to a “great depression of the 1870’s.” But recent detailed reconstructions of 19th-century data by economic historians show that there was no 1870’s depression: aside from a short recession in 1873, in fact, the decade saw possibly the fastest sustained growth in American history.

      “Employment grew strongly, faster than the rate of immigration; consumption of food and other goods rose across the board. On a per capita basis, almost all output measures were up spectacularly. By the end of the decade, people were better housed, better clothed and lived on bigger farms. Department stores were popping up even in medium-sized cities. America was transforming into the world’s first mass consumer society.

      “But why did people feel so miserable? Partly they were confused by prices, which were dropping sharply. Farmers thought falling grain prices meant they were getting poorer, without noticing that the price of everything else was falling too. Farmers’ terms of trade — the price differences between what they sold and what they bought — actually racked up solid gains in the 1870’s.”

      • LK says:

        First, I do not claim that the 1870s was a depression in way older economists thought it was, e.g., that there was severe GDP contraction in every or most years. Nevertheless, Woods’ view is wrong. The 1870s had severe economic problems, even if growth rates weren’t as bad as previous historians thought.

        “in fact, the decade saw possibly the fastest sustained growth in American history. …. Employment grew strongly,”

        This is utter B.S. Maddison estimates that real average US GDP growth from 1870–1880 was 3.98% — a figure lower than many historically significant periods in the 20th century, say 1950-1973 or even the roaring ’20s. Even worse, unemployment soared in the 1870s and industrial production fell and then stagnated:

        http://socialdemocracy21stcentury.blogspot.com/2013/02/us-unemployment-graph-18691899.html

        • Tyler Kubik says:

          You do realize by now that you’re not going to convince any Austrian who has read Bob Higgs that they’re making a “serious historical error” when you use statistics that point to the late 30’s and World War II as the greatest periods of growth in American history, right?

          And, you do realize that Woods was obviously not implying that there were no economic problems, as anyone with common sense would realize when they’re looking at a span of 40 years; and that the claim of sustained growth is not an absolute claim, refuted by any single year of downturn, but one relative to other similar periods of time?

          • LK says:

            “…when you use statistics that point to the late 30’s and World War II as the greatest periods of growth in American history, right?

            In terms of *real output growth*, those periods do rank as the highest on a list according to Maddison’s data. Next comes the following:

            (3) Roaring ’20s 1922–1929: 4.856%
            (4) Average annual real GDP rate 1983–1989 (Reagan boom): 4.282%
            (5) Average annual real GDP rate 1950–1973: 4.160%

            That people like you refuse accept facts is utterly pathetic.

            And note well: nobody is claiming here that WWII was some period of the greatest prosperity in terms of consumption or that in the 1933-1937 period there weren’t serious problems too. And I’m well aware that in WWII GDP growth mainly represents wartime materiel production. But, even if throw out WWII and the 1933-1940 period, the facts remain the same: the period between 1870-1913/14 was beaten out by:

            (3) Roaring ’20s 1922–1929: 4.856%
            (4) Average annual real GDP rate 1983–1989 (Reagan boom): 4.282%
            (5) Average annual real GDP rate 1950–1973: 4.160%

            More seriously, when we turn to average real per capita GDP growth Woods claims totally fail apart.

            • Anonymous says:

              Obviously, no one can challenge LK’s statistics. Everyone knows that perfect and meticulous statistics were kept during that period proving that the appearance of moving from the primitive 1870s to the modern world of 1915 was just an illusion only believed in by the ignorant.

              http://www.shorpy.com/node/12884?size=_original#caption

            • Tyler Kubik says:

              LK,

              Well you assume that the critique that undermines the statistics on those two periods is specific to those periods and does not apply to the theory and method behind these (kinds of) statistics.

              I think the use of highest and longest can never be taken literally like you seem to want to do; in the first place, 4.0% over 40 years is an average, so essentially by definition we could take a shorter period within those years and say it is the “real” highest period. Similarly, I would expect to find the sorts of things you pointed out, taking the statistics at face value. If the time period is drastically reduced to short periods of time where growth is more volatile, of course the numbers can be higher. It seems to me that “highest and longest” is a function of the magnitude and length; that is, the weight of individual years within a time period lessens as the time period lengthens (like dminishing marginal utility!). Perhaps I’m being charitable, but the point is that otherwise, we could shorten the time period to a single year to find the highest sustainable growth; after all, it was “sustained” for a year!

            • Bob Roddis says:

              No one can challenge LK’s statistics. Everyone knows that perfect, uniform and meticulous statistics were kept from 1870 to 1915. They refute the apparent metamorphosis of a primitive society into a modern society in only 45 years. These pictures from 1915 are obviously fake.

              http://www.shorpy.com/node/12884?size=_original#caption

            • E. Harding says:

              Ah, LK, so you’re contra Krugman, too. Just in his latest NYT op-ed, Krugman says:
              “Some readers may remember the forecasts of economic doom back in 1993, when Bill Clinton raised the top tax rate. What happened instead was a sustained boom, surpassing the Reagan years by every measure.”
              -Is Krugman lying? Yes, he is, my friends. Yes, he is.

            • Major.Freedom says:

              “In terms of *real output growth*,”

              Real output growth that includes government weapons, missiles, bridges to nowhere, wasteful pork projects, and unsustainable inflation financed booms is NOT a measure of material well-being.

              You keep repeating the same aggregated “GDP” statistics as if it did.

    • guest says:

      “The ABCT says that new unsustainable capital projects initiated in the boom are liquidated and that this drives the bust. …”

      “… This is what often characterises and drives the fall in investment – not liquidation of new projects (on these points …”

      Just a hunch based on the phrasing, so I don’t know if this will matter, but the Austrian position is that the malinvestments *are* the false boom, rather than that they take place *within* a boom.

      • Major.Freedom says:

        “Just a hunch based on the phrasing, so I don’t know if this will matter, but the Austrian position is that the malinvestments *are* the false boom, rather than that they take place *within* a boom.”

        You are correct.

      • LK says:

        A laughable quibbling with words. And the empirical evidence says most recessions are driven by changes in capacity utilisation at mature firms and businesses, often connected with the need to liquidate inventory. This contradicts and refutes the ABCT.

        • guest says:

          Wouldn’t a liquidation of malinvestments look like a change in capacity utilisation?

          Regarding the phrasing issue related to false booms, the distinction is significant for Austrians because we see the boom – that is, the malinvestments – in higher order production processes as unsustainable, given that the boom was not the result of consumer demand, as evidenced by the injection of printed liquidity into those sectors.

          I.e., if consumers wanted the goods that those production processes produced, and in the capacity produced, then there wouldn’t be a need for stimulus.

          The stimulus is evidence that consumer demand has not justified further investment in those processes, which is why the further investments are unsustainable.

          • guest says:

            “Wouldn’t a liquidation of malinvestments look like a change in capacity utilisation?”

            I’m sorry. Correction: Wouldn’t changes in consumer spending look like a change in capacity utilisation?

            Investments are malinvestments when they aren’t justified by consumer demand.

            • Phil says:

              “Wouldn’t changes in consumer spending look like a change in capacity utilisation? Investments are malinvestments when they aren’t justified by consumer demand”

              So you mean investments only become malinvestments when consumer spending falls, i.e. in a recession?

              • guest says:

                No. Consumer spending could increase with injections of printed money, but since the new money doesn’t directly represent new goods, the increased demand will result in higher prices and/or an unsustainable increased consumption.

              • Phil says:

                First you said that investments are malinvestments, or ‘unsustainable’ investments, if there is no consumer demand for the products of those investments:

                “the malinvestments – in higher order production processes as unsustainable, given that the boom was not the result of consumer demand”

                “I.e., if consumers wanted the goods that those production processes produced, and in the capacity produced, then there wouldn’t be a need for stimulus.”

                So you’re saying that consumers don’t want the products produced, which is why the investments are malinvestments.

                Now you’ve changed to arguing that consumers do want the products during a boom (consumer spending is high during a boom), but this consumer demand is itself unsustainable for some reason.

                You’re contradicting yourself.

              • Scott D says:

                If consumers are demanding more smartphones, but you are building more tractors, this is a malinvestment. Those extra tractors (which to a Keynsian are just “excess capacity”) would then need to be liquidated in favor of goods that are actually demanded.

              • Phil says:

                Scott D,

                but in a recession, there is a fall in consumer spending on products for which there was previously strong consumer demand. That doesn’t fit with what you’re saying, or with what guest was originally saying.

              • Levi Russell says:

                “but in a recession, there is a fall in consumer spending on products for which there was previously strong consumer demand.”

                The question is whether the strength of that demand was based on increased productivity or just an increase in the supply of money.

              • guest says:

                “Now you’ve changed to arguing that consumers do want the products during a boom (consumer spending is high during a boom), but this consumer demand is itself unsustainable for some reason.

                “You’re contradicting yourself.”

                I’m talking about fraudulent purchasing power such as that which counterfeiting creates.

                The supply doesn’t exist to support the fraudulent demand (i.e., the paper isn’t worth what people think it is).

              • guest says:

                “… there is a fall in consumer spending on products for which there was previously strong consumer demand.”

                People can’t demand, in the economic sense, that which they can’t afford.

                Fraudulent increases in the money supply make people think they can afford more than they can.

              • Phil says:

                “The question is whether the strength of that demand was based on increased productivity or just an increase in the supply of money.”

                so you’re saying there was something wrong with the consumer demand.

                Although consumers wanted to buy the products with their money, that was wrong for some undefined reason.

                Obviously that’s not the same as guest’s original argument, which was that consumers didn’t want the products.

              • Phil says:

                “I’m talking about fraudulent purchasing power such as that which counterfeiting creates.”

                ah so you’ve switched to a moralistic or legalistic argument rather than an economic argument.

                Note that this argument of yours is completely different to your original argument, which was that consumers don’t want what is produced.

                How does your supposed “fraudulent purchasing power” create a recession? You’ve provided no coherent or logical argument so far.

              • Phil says:

                “The supply doesn’t exist to support the fraudulent demand”

                “People can’t demand, in the economic sense, that which they can’t afford.”

                That’s fascinating. So you think that a recession is somehow simultaneously caused by: (a) supply being unable to keep up with demand, and (b) people being unable to demand that which is supplied.

                So basically you believe two completely contradictory things at the exactly same time. Amazing.

              • guest says:

                “Although consumers wanted to buy the products with their money, that was wrong for some undefined reason.”

                No. Their demand wasn’t wrong.

                The inflated paper notes mislead them into thinking their preferred lifestyle was more sustainable than it was.

              • guest says:

                “ah so you’ve switched to a moralistic or legalistic argument rather than an economic argument.

                “Note that this argument of yours is completely different to your original argument, which was that consumers don’t want what is produced.”

                The inflation of the money supply only accomplishes the Fed’s purposes if people think it means a certain level of purchasing power in terms of real goods and services.

                The policy depends on fraud.

                The economic argument has already been made, at any rate: New paper claims to goods the supply of which has not commensurately risen misrepresents the marginal utility of the paper claims.

                And so economic calculation is diminished.

              • guest says:

                “That’s fascinating. So you think that a recession is somehow simultaneously caused by: (a) supply being unable to keep up with demand, and (b) people being unable to demand that which is supplied.”

                No.

                On the one hand, printed money increases investments in higher-order production processes that have not been justified by consumer demand.

                On the other hand, where consumer consumption has increased due to an increase in the money supply, the supply of the final goods that are bought with it have not commensurately increased, and so you have more money chasing after an unchanged (ceteris paribus) pool of final goods.

                Both are unsustainable and can happen at the same time.

              • Phil says:

                “No. Their demand wasn’t wrong. The inflated paper notes mislead them into thinking their preferred lifestyle was more sustainable than it was.”

                So in other words, their demand was wrong.

                This is in complete contradiction to your previous assertion that a recession is the result of investments in the production of goods that consumers don’t want.

                What you’re now saying is that recessions are the result of consumers wanting and buying products in a way which is supposedly unsustainable, for some reason you have yet to coherently explain.

              • guest says:

                “So in other words, their demand was wrong.”

                No, consumer wishes are practically limitless.

                If you think you can afford something you want, you’ll generally go for it.

                If the money upon which you base your assessment of your own wealth is not as valuable as you think it is, then your phony wealth will mislead you into unsustainable spending.

              • Phil says:

                “If the money upon which you base your assessment of your own wealth is not as valuable as you think it is, then your phony wealth will mislead you into unsustainable spending.”

                So If I own a $10 note, for example (I have $10 wealth), and I buy goods which are sold for $10, how exactly is my spending ‘unsustainable’?

              • E. Harding says:

                Sorry, Phil, guest is not contradicting himself. Both supply and demand shocks are capable of occurring simultaneously.

              • guest says:

                “What you’re now saying is that recessions are the result of consumers wanting and buying products in a way which is supposedly unsustainable …”

                Maybe this will help.

                The false boom is the malinvestments in the higher-order production processes.

                The bust (different from a recession) occurs when efforts to keep the malinvestments going fail as a result of consumer preferences going in a different direction than investments.

                The recession (different from a bust) occurs due to government price controls and regulations that prevent the reallocation of resources to uses which conform to consumer preferences.

                Austrians say that production, not spending, grows an economy.

                This is because you can’t demand something, in an economic sense, without having something to trade.

                So, consumer preferences plus supply equals consumer demand.

                If the supply doesn’t exist in sufficient quantity to satisfy consumer preferences, then consumer demand will fall.

                This is what happens with price inflation. Prices rise, and people substitute.

                In fact, price inflation ends up helping to reveal malinvestments, in that the artificially higher prices make it seem that more production processes would be sustainable for more producers.

                So now more producers using printed money to enter the market for producer goods cause those prices to rise, making that market increasingly less profitable for those who are in the middle of producing capital.

              • guest says:

                “So If I own a $10 note, for example (I have $10 wealth), and I buy goods which are sold for $10, how exactly is my spending ‘unsustainable’?”

                It’s unsustainable in terms of real goods and services, not the paper, itself.

                I can write down any number you want on a piece of paper and hand it to you, but that doesn’t make you richer.

                Your lifestyle of spending $10 on a particular good is unsustainable when the price for that good rises because of an increase in unbacked printed money.

              • Phil says:

                guest, I can’t respond to the multiple falsehoods you seem to have a knack for writing in each of your comments, so I’ll only bother to deal with a few of them from now on.

                Otherwise we’ll probably end up in a situation where the number of falsehoods you post and my responses will end up growing exponentially.

                “The false boom is the malinvestments in the higher-order production processes.”

                but according to you these investments are not malinvestments, as during the boom there is a high level of consumer demand for the products of investment.

                “The bust (different from a recession) occurs when efforts to keep the malinvestments going fail as a result of consumer preferences going in a different direction than investments.”

                So what were previously good investments suddenly become malinvestments, according to you, as consumer preferences supposedly change and the economy goes into its ‘bust’ phase.

                “the recession (different from a bust) occurs due to government price controls and regulations that prevent the reallocation of resources to uses which conform to consumer preferences.”

                But of course the model of perfect competition, constantly clearing markets, and a singular optimal equlibrium is nothing but a theoretical fantasy, so the idea that deviations from that unreal model are only the result of some government actions is of course demonstrably and obviously false.

              • guest says:

                “but according to you these investments are not malinvestments, as during the boom there is a high level of consumer demand for the products of investment.”

                The increased demand is due to the Cantillon Effect.

                It’s basically counterfeiting, so the new purchasing power comes at the expense of later users of printed money in the form of higher prices.

                Theft is unsustainable.

                “So what were previously good investments suddenly become malinvestments, according to you, as consumer preferences supposedly change and the economy goes into its ‘bust’ phase.”

                No, they were always malinvestments.

                Since printing money doesn’t directly create resources, the goods that are being bought with it are actually being syphoned off from those who had real wealth (or, at least, “more real” prior to the next unbacked paper note being printed).

                That is unsustainable demand because the paper prices misrepresent the marginal utility of the goods that are bought with it.

                “But of course the model of perfect competition, constantly clearing markets, and a singular optimal equlibrium is nothing but a theoretical fantasy …”

                We don’t believe in a singular optimal equilibrium. Rather, we speak that way for convenience.

                You’ll notice that we try to get people to add an “s” to the word “rate”. So, we believe in equilibrium rates, plural.

                The optimal equilibrium of which Austrians speak occurs when the individual successfully employs means to achieve his ends.

                That means there are as many optimal equilibrium states as there are people.

                It also means that, with changes in preferences comes changes in optimal equilibrium states.

                We never get there because they’re always moving, and we only have direct access to the thoughts and motivations in our own minds.

              • guest says:

                We also reject the model of perfect competition on the grounds that varous factors – such as the location of suppliers and opportunity costs of acquiring the same good from one supplier versus another – force the consumer to treat otherwise identical goods as different.

                If markets were perfectly competitive, no trades would take place.

              • Phil says:

                “It’s basically counterfeiting, so the new purchasing power comes at the expense of later users of printed money”

                So I guess if someone gives you a $10 note a year after you first spent that note, that makes you worse off. No, of course it doesn’t.

                “Theft is unsustainable.”

                You don’/t have any real economic arguments, so instead you have to make these empty moralistic arguments.

                Anyway, I can’t be bothered anymore. I can’t waste all my time arguing with every irrational, illogical and delusional guy in the insane asylum.

              • Major.Freedom says:

                Phil,

                “So I guess if someone gives you a $10 note a year after you first spent that note, that makes you worse off. No, of course it doesn’t.”

                Earning money, and voluntary delaying of spending earned money, is not even in the same ballpark as coercion backed credit expansion and inflation, where there is not earned money that is spent, which means the losses have to call on someone.

                No analogies between central banking and the market are tenable.

              • guest says:

                “So I guess if someone gives you a $10 note a year after you first spent that note, that makes you worse off. No, of course it doesn’t.”

                If that $10 note buys less than it did a year ago due to price inflation, then I’m worse off than if the price inflation never happened.

                “Anyway, I can’t be bothered anymore. I can’t waste all my time arguing with every irrational, illogical and delusional guy in the insane asylum.”

                It’s worse than you think, since I’m also anonymous.

                😛

              • guest says:

                “We don’t believe in a singular optimal equilibrium. Rather, we speak that way for convenience.”

                Elaborating a bit for whoever:

                As I understand it (from what little I’ve read), Hayek was arguing with a guy named Saffra (?) or Walras on what the interest rate “should” be, if Fed-set rates were a distortion.

                Because a distortion implies some kind of equilibrium absent the distortions.

                So, if the Fed has set the wrong rate, then what “should” it be in equilibrium?

                The question contains the faulty premise that only one rate was distorted, and Hayek responded from this perspective.

                Hayek’s response was useful, that you can’t know what the rate should be unless the market sets it.

                The onlly problem with his response was that it granted the faulty premise; A minor issue.

        • R says:

          I’m with you, LK – these lowly pedants also frustrate me. But let’s refocus and get back to the thread where you were telling everyone about how Ricardo’s exceptions to his own writings on the labor theory of value completely invalidate the characterization of 18th and 19th century economists “embracing variants” of it.

          • Major.Freedom says:

            You’re a lowly pedant if you side with LK’s fallacious claims.

        • Major.Freedom says:

          “And the empirical evidence says most recessions are driven by changes in capacity utilisation at mature firms and businesses”

          No, that is what the empirical evidence LOOKS like when you use your (flawed) theory of economics to understand (in your case misunderstand) the data.

          Your theory cannot be used to correctly understand historical data.

  4. Daniel Kuehn says:

    You used Elmo for evil!!!

    Caroline will not be happy.

    • Tyler Kubik says:

      The Count is next

    • Z says:

      Elmo has always been evil. It’s only Elmo cultists like yourself who continually refuse to accept the obvious.

  5. Bob Roddis says:

    I continuously submit that it is mistake to take on Keynesians (and other anti-Austrians) without setting out the NAP with voluntary exchange and economic calculation as the default position while demanding that the statists show where it fails. . They have the burden of proof as to why the extraordinary policy of violent intervention is required. As we’ve seen in these comments for years, they cannot and will not make that case. If you start your argument or let them start their argument in the middle, you will be stuck forever in their flypaper of deceit and obfuscation. TGT starts in the middle with no mention of the problems of economic calculation.

    You have Krugman celebrating Daniel Kuehn’s paper on the 1920 depression:

    http://krugman.blogs.nytimes.com/2012/01/23/more-than-you-want-to-know-about-warren-harding/

    If you actually read the paper, you will see what is essentially the Rothbardian monetary explanation of WWI and its aftermath. The Fed’s loose money policy was essential in facilitating the government’s funding of its entrance into the war. The depression resulted from the slashing of spending following the war. The Keynesians cannot and do not ever point specifically to where “market failure” caused the 1920 depression and they misrepresent the Austrian response that despite the ensuing government-caused calamity, the market was still able to quickly readjust prices and wages without a long-term slump.

    Similarly, the 1929 depression was also caused by central bank shenanigans that went back to WWI. No matter what the problem is that central banks cause, the Keynesians will always find a way to blame it on “laissez faire” or “deregulation”. However, they will be unwilling to locate that specific state of affairs in the historical periods upon which they base their anecdotes.

    Since the market does not fail, what problem exactly is funny money and government debt supposed to be solving?

    • Major.Freedom says:

      It all boils down to irrational philosophy that has left them fearful of reality.

    • guest says:

      “Since the market does not fail, what problem exactly is funny money and government debt supposed to be solving?”

      I think Keynesians think of consumers, producers, and workers in terms of classes, rather than as part of the same production structure.

      Such that when producers and workers suffer, there just has to be a way to intervene to help them in a way that doesn’t hurt consumers.

      But since producers produce for consumers, and workers work for producers, this is logically impossible.

      The whole point of an economy is to arrange scarce goods for consumption, either now or on a rainy day.

      This all goes back to the Action Axiom, which is that all deliberate action occurs because a specific individual is attempting to consume in order to alieviate a felt unease.

      Consumers just have to worry about what’s available to consume.

      Producers have to worry about consumer demand.

      And workers have to worry about the capacity of producers to profitably satisfy their customers demands.

      Producers and workers are at the mercy of consumer demand. This is why there can be no such thing as a lack of aggregate demand.

      Producers and workers revolve around what consumers actually want, or will want – not what producers and workers *wish* that consumers wanted.

      Demand is what it is. All economic activity chases consumer demand, even when coersion is involved to distort the otherwise voluntary nature of that process (to Tel’s point regarding the offer to trade one’s life for submission).

  6. Tel says:

    Hey, I thought I would do my bit for the team and take a poke at the latest Krugman stuff. Won’t post too many links because it triggers the spam blocker, but there’s been a few where Krugman makes the case that it was “Dem Dar Greeeedy Bankers, Wot Lobbied for Higher Rates but Yellen Saved Us!!”. OK, that’s not exactly what he said, but it’s a very close summary. Check out “The Rage of the Bankers (2015-09-21)” for the longer version.

    In specific though, the question is whether Yellen raising the Fed interest rates would be good for the banks, or not?

    Krugman puts forward the FRED series USNIM — “Net Interest Margin for all U.S. Banks”.

    This is a bit of a complex series, in the notes it says “the ratio of Tax-Adjusted Income to Average Earning Assets” and then there are many items going into both sides of the ratio, you can find it on FRED easily enough, but putting together what each of them means is a bigger task. Strangely to me, it seems RCFD0071 (Interest Bearing Balances) is listed as an asset, I would have thought from a bank perspective it’s a liability (after all, you can call on the money and the bank must pay) but probably there are a lot of details in the US banking system that I’m not familiar with.

    Ignoring those complexities for the moment, I checked the dual-trace comparing “Effective Federal Funds Rate” against the “Net Interest Margin” that Krugman is putting forward.

    https://research.stlouisfed.org/fred2/graph/?g=1TcY

    So I don’t see a strong correlation there, nor even a weak correlation. The “Net Interest Margin” seems remarkably stable in the face of radical swings in the “Effective Federal Funds Rate” and the only pattern I can pick out is that there’s typically an interest rate uptick before a recession, and then a “Net Interest Margin” uptick after a recession, but those are transient.

    Krugman would be effectively saying that “Dem Dar Greeeedy Bankers” (DDGB) would attempt to lobby up the Fed rate in order to start a recession, so they can increase their profit margin sometime after that recession… seems a long stretch. To be honest, I think Peter Schiff’s recent explanation has sounded a lot more plausible than Krugman’s.

    Might be worth running this one past Schiff, if he has time to look at it.

    • Tel says:

      Following up on Krugman’s “Big Baaaad Banker” theory.

      https://research.stlouisfed.org/fred2/graph/?g=21DF

      You can see I’ve put the 2Y auto loans (typical consumer loan rates) along with the certificate of deposit rates (typical mom & pop savings) you can see how the distance between them changes over time.

      Why Bankers Want Rate Hikes (2015-10-02)

      Right on cue, the BIS has a new paper documenting that relationship. The key argument:

      The “retail deposits endowment effect” derives from the fact that bank deposits are typically priced as a markdown on market rates, typically reflecting some form of oligopolistic power and transaction services. If the markdown becomes smaller as interest rates decline, then monetary policy tightening will increase net interest income. The endowment effect was a big source of profits at high inflation rates and when competition within the banking sector and between banks and non-banks was very limited, such as in many countries in the late 1970s. It has again become quite prominent, but operating in reverse, post-crisis, as interest rates have become extraordinarily low: as the deposit rate cannot fall below zero, at least to any significant extent, the markdown is compressed when the policy rate is reduced to very low levels.

      This is pretty much what I said in the linked piece.

      Gosh, that use of the word “if” probably means something, well when I take a look at the data above, overall I see the opposite effect. We could run some analysis of that in detail I suppose but I reckon those supposedly enraged bankers are doing OK out of the low rates.

  7. Tel says:

    This one is an outright contradiction with a “C”. I mean it just plain argues against itself, nothing up my sleeve here:

    http://krugman.blogs.nytimes.com/2015/10/02/the-investment-accelerator-and-the-woes-of-the-world/

    First, if weak demand leads to lower investment, which it does, and if fiscal austerity is contractionary, which it is, then in a depressed economy deficit spending doesn’t crowd investment out — it crowds investment in. Or to be more explicit, austerity policies don’t release resources for private investment — they lead to lower private investment, and reduce future capacity in addition to causing present pain.

    OK, that’s clearly 100% demand side argument. Leaving aside the fact that Krugman never provides any consistent definition of “austerity” (I should start a page on Mises Wiki with all the many definitions used), we know that Krugman relates “austerity” somehow to the demand generated by government spending, so all of this is “demand pull” economics.

    Besides, that’s always the core of Krugman’s theory, everything is “demand pull”, Krugman only laughs at supply side economics.

    But wait…

    Finally, an extreme case of this arises in China, where the exhaustion of the reserve of underemployed peasants plus, perhaps, a slowdown in the rate of technological catchup means that the very high investment rates of the past can’t be sustained. Look out below.

    Let’s go through these points then:
    * exhaustion of the reserve of underemployed peasants: supply of labour, obviously supply side factor.

    * slowdown in the rate of technological catchup: supply of imported know-how, another supply side factor.

    So there you have it. For Krugman, an example of an extreme case of Keynesian demand economics would be to list a bunch of supply side factors. Go figure!

    Any FWIW, yes those supply side factors in China are significant: the easy supply of cheap labour is drying up, and the easy importation and adoption of foreign technology is drying up too (i.e. technological catch up is almost complete)… but none of that has the slightest thing to do with government spending, nor with aggregate demand, nor will any amazing stimulus package be able to cause more peasants to appear.

    The Chinese could try NOT slaughtering their babies, which might eventually cause more peasants to appear, takes a while though and Krugman is unlikely to recommend this approach. Even then, how many babies you forcibly abort each year is also a supply side factor, and cannot in any way be controlled by government stimulation of aggregate demand.

    • LK says:

      “that’s always the core of Krugman’s theory, everything is “demand pull”,”

      That is just a straw man of your own devising. Are you really so delusional and and warped you think Paul Krugman never recognises any supply side factor in of any kind in economic life? lol

      • Major.Freedom says:

        Not when it counts.

        Meaning, he’ll pay lip service to it, but every time there is a choice in actions, he always always always advocates for more demand. That there is insufficient demand. That if there are any supply side problems anywhere, the demand insufficiency problems always outstrip them. That the biggest problem plaguing modern economies is insufficient demand.

        Tel said that the CORE of Krugman’s theory is demand pull. Tel never said Krugman never paid lip service to other things, or that he doesn’t recognize them as potential problems. He said the core. At that is correct, because the core of Krugman’s ideology is Keynesianism, and the core of Keynesianism is that “spending”, not saving and investment, is the fundamental driver of economic progress.

        • Tel says:

          MF, you would be lucky to get even a lip service. Here a quick rundown on how many times Krugman has ridiculed supply siders:

          Carter, Reagan, Revenue (2010-07-15)

          One common reaction of conservatives, when you point out that the experience of the last 20 years offers zero support for the idea that tax cuts pay for themselves, is to start shouting “Jimmy Carter! Reagan! Supply side roolz!”

          … and then …

          This is exactly what you would expect to see if supply-side economics were just plain wrong: revenues are permanently reduced relative to what they would otherwise have been.

          Getting to Crazy (2011-07-14)

          Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

          The Story of Our Time (2013-04-28)

          There are, after all, people who insist that the real problem is on the economy’s supply side: that workers lack the skills they need, or that unemployment insurance has destroyed the incentive to work, or that the looming menace of universal health care is preventing hiring, or whatever. How do we know that they’re wrong?

          Well, I could go on at length on this topic, but just look at the predictions the two sides in this debate have made. People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out.

          Charlatans, Cranks and Kansas (2014-06-29)

          Why, after all, should anyone believe at this late date in supply-side economics, which claims that tax cuts boost the economy so much that they largely if not entirely pay for themselves? The doctrine crashed and burned two decades ago, when just about everyone on the right — after claiming, speciously, that the economy’s performance under Ronald Reagan validated their doctrine — went on to predict that Bill Clinton’s tax hike on the wealthy would cause a recession if not an outright depression. What actually happened was a spectacular economic expansion.

          Voodoo Economics, the Next Generation (2014-10-05)

          During his failed bid for the 1980 Republican presidential nomination George H. W. Bush famously described Ronald Reagan’s “supply side” doctrine — the claim that cutting taxes on high incomes would lead to spectacular economic growth, so that tax cuts would pay for themselves — as “voodoo economic policy.” Bush was right.

          Trump Is Right on Economics (2015-09-07)

          Mr. Bush, in particular, may pose as a reasonable, thoughtful type — credulous reporters even describe him as a policy wonk — but his actual economic platform, which relies on the magic of tax cuts to deliver a doubling of America’s growth rate, is pure supply-side voodoo.

          So you have Krugman, repeatedly calling supply side economists “cranks”, “crazy”, “voodoo”, “charlatans”, etc. and then without a moment’s hesitation, reaching for examples on China that are 100% clearly supply side factors.

          Astounding that LK believes he can defend this by just saying “lol”, which seems to have been his main argument of late.

          • guest says:

            Ow! My scroll bar!

            😀

            • Tel says:

              Sorry, Bob please delete the broken post above.

        • Tel says:

          I really messed up the quotes above, here’s the fixed version, please delete the broken one…

          MF, you would be lucky to get even a lip service. Here a quick rundown on how many times Krugman has ridiculed supply siders:

          Carter, Reagan, Revenue (2010-07-15)

          One common reaction of conservatives, when you point out that the experience of the last 20 years offers zero support for the idea that tax cuts pay for themselves, is to start shouting “Jimmy Carter! Reagan! Supply side roolz!”

          … and then …

          This is exactly what you would expect to see if supply-side economics were just plain wrong: revenues are permanently reduced relative to what they would otherwise have been.

          Getting to Crazy (2011-07-14)

          Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

          The Story of Our Time (2013-04-28)

          There are, after all, people who insist that the real problem is on the economy’s supply side: that workers lack the skills they need, or that unemployment insurance has destroyed the incentive to work, or that the looming menace of universal health care is preventing hiring, or whatever. How do we know that they’re wrong?

          Well, I could go on at length on this topic, but just look at the predictions the two sides in this debate have made. People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out.

          Charlatans, Cranks and Kansas (2014-06-29)

          Why, after all, should anyone believe at this late date in supply-side economics, which claims that tax cuts boost the economy so much that they largely if not entirely pay for themselves? The doctrine crashed and burned two decades ago, when just about everyone on the right — after claiming, speciously, that the economy’s performance under Ronald Reagan validated their doctrine — went on to predict that Bill Clinton’s tax hike on the wealthy would cause a recession if not an outright depression. What actually happened was a spectacular economic expansion.

          Voodoo Economics, the Next Generation (2014-10-05)

          During his failed bid for the 1980 Republican presidential nomination George H. W. Bush famously described Ronald Reagan’s “supply side” doctrine — the claim that cutting taxes on high incomes would lead to spectacular economic growth, so that tax cuts would pay for themselves — as “voodoo economic policy.” Bush was right.

          Trump Is Right on Economics (2015-09-07)

          Mr. Bush, in particular, may pose as a reasonable, thoughtful type — credulous reporters even describe him as a policy wonk — but his actual economic platform, which relies on the magic of tax cuts to deliver a doubling of America’s growth rate, is pure supply-side voodoo.

          So you have Krugman, repeatedly calling supply side economists “cranks”, “crazy”, “voodoo”, “charlatans”, etc. and then without a moment’s hesitation, reaching for examples on China that are 100% clearly supply side factors.

          Astounding that LK believes he can defend this by just saying “lol”, which seems to have been his main argument of late.

          • guest says:

            Question for the Keynesians:

            Does the supply of a good have to exist before I can demand it in an economic sense?

            (Anticipating an objection, if the good hasn’t been produced yet, then I’m paying for the production, the capacity for which does exist.)

      • Tel says:

        Are you really so delusional and and warped you think Paul Krugman never recognises any supply side factor in of any kind in economic life? lol

        Krugman does recognize the supply side factors (if you were paying attention, I just listed two) but unfortunately he uses them as examples for a completely different (demand side) theory. To spell this out to you in very small steps: I don’t have any issue with Krugman’s choice of examples, only a problem with the theory that he attached them to.

        Now if you would like to link to some place where Krugman goes and explains the supply side economics with the proper theory, and then provides genuinely appropriate examples to support that, then be my guest.

    • guest says:

      “Even then, how many babies you forcibly abort each year is also a supply side factor, and cannot in any way be controlled by government stimulation of aggregate demand.”

      It *can*, however, be controlled by Powerthirst.

  8. guest says:

    Everyone thank Tel for breaking Contra Krugman by mouthing off ahead of the next scheduled podcast.

  9. Tel says:

    Sorry guest, but this one kind of annoys me:

    http://krugman.blogs.nytimes.com/2015/10/06/learning-nothing-in-europe/

    If there’s one thing we surely should have learned from the experience of the past seven years, it’s that adding up really matters. My spending is your income, your spending is my income, so if everyone slashes spending and tries to pay down debt at the same time, incomes fall and debt problems probably get worse.

    So Krugman is trying to claim here, that it is mathematically impossible to pay down aggregate debt… that is to say, you can slosh the debt around (one person goes into debt, while another makes a surplus and pays their way out of it) but there’s absolutely no way to bring the nett total debt down.

    OK, so how did we get into so much debt in the first place? How was that mathematically possible? If “adding up really matters” then we just reverse the same process and say “subtracting really matters” then go back and pay the reverse transactions until all the debt is gone. I mean, politically that might be difficult to achieve, but mathematically it must operate that way because every transaction is reversible.

    This is even more annoying because Krugman provides a diagram with a closed circle economy (actually not even really an economy, because every real economy has production and consumption, not just the same items being bought and sold, but anyway Krugman shows the financial half of an economy). The closed circle does not explain debt creation at all, it is completely assumed out of the picture! So given that debt creation simply does not exist (if you don’t believe me, check Krugman’s diagram) we don’t need to worry about paying that debt back, because there isn’t any. How about that?!? Party on bro.

    • guest says:

      “So Krugman is trying to claim here, that it is mathematically impossible to pay down aggregate debt… that is to say, you can slosh the debt around (one person goes into debt, while another makes a surplus and pays their way out of it) but there’s absolutely no way to bring the nett total debt down.”

      This is similar to the Greenbacker position on “debt money”, that lent out money doesn’t have the available money units to pay the principle and the interest back without ripping someone else off.

      And I think Krugman’s view suffers from the same flaw.

      (Aside: Your observation on “go back and pay the reverse transactions until all the debt is gone” is interesting and compelling. I had never thought of it that way before.)

      The problem with Krugman and the Greenbackers position (not that lending printed money doesn’t rip people off – it does) is that productivity innovations can result in lower marginal utility, and therefore lower prices, such that you can actually have money left over to pay back a loan.

      If the Fed stops printing money, the money will just gain value over time.

      (Well, the FRN would eventually be replaced by a commodity money, so it’s the commodity money that would gain value.)

  10. Tel says:

    OK, you guys better be careful, I think Krugman might be trying to write your material ahead of you.

    Did The Fed Save The World? (2015-10-07)

    Oh, and since 2010 officials everywhere, but especially in Europe, have been doing all they can to undo the favorable effects of automatic stabilizers. And the result is that in Europe economic performance is at this point considerably worse than it was at this point in the 1930s.

    So what was Europe doing “at this point in the 1930’s” ?
    * Spain was in the middle of a Civil War.
    * Germany had not long ago shifted to a Nazi government (something to do with trains running on time).
    * The Wermacht was busy testing this new concept “Blitzkrieg” to support the Fascists in Spain.
    * The Greeks had recently had a military coup resulting in that authoritarian Metaxas Regime (a combination of socialist economic policies with militant nationalism).
    * France was in the midst of several general strikes, under the “Front Populaire” (generally socialist government with hopeless economic policies that collapsed soon after).
    * Russia was under the grip of Stalin (killing a steady quota of about 2000 of his own citizens every week, as well as purging out the best and brightest amongst Russia’s military leadership).
    * Finland was kind of interesting: by 1937 they had gradually replaced the previous tenancy farming with owner-occupier small family farms… these newly independent yeomen proved dogged opponents to the Russians not long after in the Winter War.
    * Italy invented the idea of Fascism, wrote copious notes on how it worked (well worth reading) and had just invaded Ethiopia (using poison gas, because otherwise those Ethiopians put up too much resistance when confronted with just machine guns, to which the League of Nations said “Gosh! Seems legit.”)

    You have to wonder whether Krugman is deliberately leading with his chin here. Could it be a trap or something?

    • Bob Murphy says:

      You might be right Tel.

      • guest says:

        Were the three initial podcasts intended to tide us over for three weeks, or does the next one come out next week?

      • LK says:

        And don’t forget to explain how austerity for Austria in the 1930s failed horribly even though Mises strongly recommended it:

        http://socialdemocracy21stcentury.blogspot.com/2014/05/mises-and-great-depression-in-austria.html

        Austria had the worst depression in Europe and an unemployment rate of about 14-15% from 1932-1937.

        Let us see you explain that one.

        • guest says:

          I’m trying to find it, but it may be helpful to note – if I remember correctly – that Mises was trying to help unwind the bubble in the least painful way possible, and advised a relatively slow unwind, rather than the “rip the bandaid off” approach advised today.

          He knew the pain would be drawn out for longer with his approach, but, as your post alludes, perhaps Mises understood that the Austrians were receptive to annexation, and feared that the shock of an immediate ceasation (sp?) of government intervention and of the malinvestments in capital and labor would elicit an unwarranted acceptance of more collectivism.

          I could have read that information wrong. It’s been some time ago.

          I throw this out there in case someone else can find what I think I’ve read.

          • guest says:

            Aside: I found this great commentary in Mises: The Last Knight of Liberalism, for later:

            “Fractional-Reserve Banking and Business Cycles

            Mises’s careful distinction between money proper and money substitutes naturally led to the question of the role of money substitutes. In the second part of his book, Mises showed that bank-issued money substitutes could not affect the value and purchasing power of money, as well as the distribution and allocation of resources as long as they were true representatives of a corresponding amount of money deposited with the bank—that is, in Mises’s terminology, as long as they were money certificates. Only if they were issued without being backed 100 percent by a money deposit could they have an influence on prices, distribution, and allocation. These issuances of uncovered or partially covered money substitutes—fiduciary media—added to the quantity of money in the larger sense, increasing money prices and redistributing resources in favor of their first recipients and at the expense of their last recipients. It was therefore necessary to single them out for separate analysis, inquiring after the particular consequences of an expansion of fiduciary media rather than of money proper.”

            According to Guido Hulsmann’s analysis of Mises, Mises view was that bank notes were not money, but were, at best, substitutes *for* money.

            Haven’t found the source of my response to LK, yet. Still looking.

            Maybe it doesn’t exist how I remembered it.

        • guest says:

          LK, can you help me find a working link to the Ebeling article, please?

        • Tel says:

          Austria was already deeply in trouble in 1922 when inflation was gutting their economy. It could have gone a lot worse for them if they had continued with their failed government spending programs. In addition, the Social Democrats were consistently belligerent, militant, unwilling to compromise on anything, damaging the economy with strikes and protests, and generally being a complete PITA.

          https://archive.org/stream/restorationofaus00leagrich/restorationofaus00leagrich_djvu.txt

          THE FINANCIAL COMMITTEE’S REPORT.

          The Financial Committee was first asked to consider, in consultation with the Austrian Representatives, what measures were required and were practicable to secure budget equilibrium ; after what period, with these measures, the result desired should be obtained ; and what deficit in terms of gold must be contemplated as inevitable during the intervening period.

          The Committee replied that the main economies should be secured by the reform of State industrial enterprises and the reduction in the number of officials. It pointed out that State enterprises at present involved a loss of 170 million gold crowns a year (£7,800,000). The railways alone involved a loss of 124 millions (£5,700,000), largely because, while wages follow the cost-of-living index, the railway tariffs were only one-fifth of what they would be on that basis. The loss should cease within two years and, in view of the important transit trade, the railways should ultimately become a source of profit. With regard to officials, the Committee pointed out that Vienna, as the capital of a country of six millions, has more State employees than when she was capital of an Empire of over 50 millions. It considered that within two years a third of the expense, amounting to 130 million gold crowns (£6,000,000) ought to be saved. With these measures, the “normal budget” should be reduced to about 237 million gold crowns (£10,900,000). Simultaneously, the yield of taxation must be increased and within two years should reach 237 million gold crowns — and so balance the budget — and thereafter exceed it. In the two years, however, while this process of reducing expenditure and increasing revenue is incomplete, a total deficit of
          520 million gold crowns (£24,000,000) is probable, or 650 million gold crowns (£30,000,000) including the sums required to repay the advances made this year and not covered by the postponement arranged for the credits given in earlier years.

          So the Austrian state was completely insolvent at the time the League of Nations investigated further loans (1922). They were financing everything by printing money and running a ridiculous huge and inefficient bureaucracy.

          When the scheme was presented at the public meeting of the Council on October 4th, it was thought well to quote with special emphasis the following grave statement of the Financial Committee :

          ” Austria has for three years been living largely upon public and private loans, which have voluntarily or involuntarily become gifts, upon private charity and upon losses of foreign speculators in the crown. Such resources cannot, in any event, continue and be so used. Austria has been consuming much more than she has produced. The large sums advanced, which should have been used for the re-establishment of her finances and for her economic reconstruction, have been used for current consumption. Any new advances must be used for the purposes of reform ; and within a short time Austria will only be able to consume as much as she produces. The period of reform itself, even if the new credits are forthcoming, will necessarily be a very painful one. The longer it is deferred the more painful it must be. At the best, the conditions of life in Austria must be worse next year, when she is painfully re-establishing her position, than last year, when she was devoting loans intended for that purpose to current consumption without reform.

          ” The alternative is not between continuing the conditions of life of last year or improving them. It is between enduring a period of perhaps greater hardship than she has known since 1919 (but with the prospect of real amelioration — thereafter the happier alternative), or collapsing into a chaos of destitution and starvation to which there is no modern analogy outside Russia.

          ” There is no hope for Austria unless she is prepared to endure and support an authority which must endorse reforms entailing harder conditions than those at present prevailing, knowing that in this way only can she avoid an even worse fate.”

          So the budget balancing was not some arbitrary invention of Mises, it was an outright condition of any further loans, as guaranteed by the League of Nations. Note that Austria always had the choice of refusing further loans, just like Greece could choose to do. Strangely though, self-restraint never ranks high with such governments.

          I would say Mises was well to achieve such a lot under the circumstances.

        • Tel says:

          This one is actually pretty interesting, looking at the whole breakup of the Habsburg Empire after defeat in WWI and how each of the five smaller nations handled debts and currency issue.

          https://www.academia.edu/11181273/Ghost_of_the_Habsburg_Empire

          Czechoslovakia followed the path of initial monetary deflation (implemented by a hefty tax on financial capital) which temporarily raised unemployment but ultimately stabilised their currency. The author calls this “austerity” but unfortunately, as usual, never defines the slippery term in any way. Once stability was obtained, and government relaxed their hefty tax, employment quickly came back; by 1923 they were doing OK, remained a sovereign democracy, with no requirement for outside assistance. Although the author does not say it, this is kind of similar to the Irish policy (not quite the same) which seems to have worked OK for Ireland.

          Austria and Hungary went the route of inflation, to print money and buy out their war debts. The money printing led to an initial temporary boom, followed by destabilising inflation, lack of confidence, capital flight and eventually required outside interference from the League of Nations to bring it under control. They paid the penalty later on, in the form of loss of internal sovereignty, a long drawn out weak recovery, and social unrest.

          Sadly, the author’s conclusions from this history are a bit tainted with Keynesian garbage, but I guess that happens to many people *sigh*:

          As recent research has illustrated, austerity simply does not work if every country in a region pursues it simultaneously, a roadblock EU countries are currently encountering, and in a disastrous way. If every state tries to reduce its debt and government expenditure at the same time demand will collapse and undermine the chances of economic recovery.

          In the early 1920s, Czechoslovakia’s diluted austerity succeeded because its neighbors—Germany, Austria, and Hungary—were running wild in the foreign debt markets and rapidly inflating their economies, which increased demand for Czechoslovakian exports and eventually made Czechoslovakia a safe haven for investors.

          That sounds a bit weird to me, the main exports from Czechoslovakia into Austria were food and coal, and those have fairly stiff demand curves. Austria was paying for them with printed money which rapidly devalued so in effect Czechoslovakia ended up just giving the stuff away.

  11. guest says:

    On the fourth episode:

    Yeah … “follow the money”:

    Matt Damon anti-fracking film Promised Land produced by Middle Eastern Oil government.
    https://www.youtube.com/watch?v=Aa1FQHywwp8

    • guest says:

      Also, even if we grant Krugman the premise that renewable resources would be economically sustainable if we used them more – which I don’t – the fact that so many people don’t want to use them is precisely what would make even so-called “renewable resources” *UNsustainable*.

      And since no one is entitled to others’ resources, the hold-outs are not stealing from anyone or preventing anyone from wealth that they’re entitled to. No one is obligated to make sure anyone else is well-off.

      Further, if renewables were sustainable for our current energy desires, *new desires* for such sustainable resources *would, over time, make them unsustainable*.

      Why? Because sustainability / scarcity is always a function of consumer demand – which is infinite.

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