16 May 2017


Krugman, Potpourri 15 Comments

==> Gene Epstein liked the most recent Contra Krugman, but pointed out that I missed this even more ironic–vis-a-vis his current stance–Krugman column (detailing the flaws of French regulations on labor) from 1997. An excerpt:

To an Anglo-Saxon economist, France’s current problems do not seem particularly mysterious. Jobs in France are like apartments in New York City: Those who provide them are subject to detailed regulation by a government that is very solicitous of their occupants. A French employer must pay his workers well and provide generous benefits, and it is almost as hard to fire those workers as it is to evict a New York tenant. New York’s pro-tenant policies have produced very good deals for some people, but they have also made it very hard for newcomers to find a place to live. France’s policies have produced nice work if you can get it. But many people, especially the young, can’t get it. And, given the generosity of unemployment benefits, many don’t even try.

France’s problem is unemployment (currently almost 13 percent). Nothing else is even remotely as important. And whatever a unified market and a common currency may or may not achieve, they will do almost nothing to create jobs.

Think of it this way: Imagine that several cities, all suffering housing shortages because of rent control, agree to make it easier for landlords in one city to own buildings in another. This is not a bad idea. It might even slightly increase the supply of apartments. But it is not going to get at the heart of the problem. Yet all the grand schemes for European integration amount to no more than that.

==> I liked that one so much, Gene then reminded me of this 1997 Krugman column praising cheap labor and globalization (which I had read before). Here’s a good excerpt:

The occasion was an op-ed piece I had written for the New York Times, in which I had pointed out that while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the “previous, less visible rural poverty.” I guess I should have expected that this comment would generate letters along the lines of, “Well, if you lose your comfortable position as an American professor you can always find another job–as long as you are 12 years old and willing to work for 40 cents an hour.”

Such moral outrage is common among the opponents of globalization–of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

I am being dead serious, when Krugman post-2007 (or so) casts derision on orthodox economists and how they conveniently assume away the heart-wrenching problems faced by the disadvantaged, he is usually describing the way he himself treated a topic either in his pop stuff from the 1990s or in the latest edition of his textbook. The only thing I’m not certain about is if he is consciously or subconsciously doing that.

==> You know how the Marvel universe features a plot line where the US government after World War II brought in a bunch of Nazi scientists in weapons development? (Dr. Strangelove fits this too.) Well that was real; the CIA even says so, and you know they tell the truth.

15 Responses to “Potpourri”

  1. Andrew_FL says:

    Is the fact that the US-and the Soviets-took in Nazi scientists to work for them even really a secret? I thought that was common knowledge. What ought they have done, summarily execute them?

    • Harold says:

      I thoght it was common knowledge, but I suppose this publucation goes into more detail about the extent of it.

      Not the most important aspect, but can somone explain this snippet?

      “Sarin was produced at Dyhernfurth (Dyhernfurth later fell into Russian hands). Its name derives from the initials of its developers: Gerhard Schrader and Otto Ambros” ?

      • Harold says:

        Just checked it out – they missed of a crucial two other people Gerhard Ritter, and von der Linde

  2. Tel says:

    Off topic, but it’s a pretty good story. Tom Woods has interviewed a few cops who woke up one day and couldn’t do it anymore.


  3. Bob Roddis says:

    He is consciously doing that.

    Keynesians always lie.

  4. Jim says:

    Operation paperclip was from the post-WW2 effort to recruit Germany’s brightest scientists. My father worked with one in the 60s at Avco Lycoming in Bridgeport CT. My dad would occasionally quote him when this scientist got tired of whathe viewed as the incompetence around him. “I can’t believe you von de var!”

    • Tel says:

      Nazi Germany made a lot of very good decisions at the micro scale:
      * Vampyr night vision scope
      * Sturmgewehr the original assault rifle
      * Liquid fuel rockets
      * Converting coal into various fuels
      * Excellent tank design

      They made a small number of appallingly bad decisions at the macro scale:
      * Fighting a war on two fronts
      * Fighting a war without reliable supply of food and fuel
      * Not listening to Chamberlain when he explained what was possible

      Turns out macro really does matter. Well, now we know.

      • guest says:

        “* Fighting a war without reliable supply of food and fuel”

        Turns out the Confederates had the same problem due to bad economics:

        The Economics of the Civil War
        5. Confederate Blockade of the South

        (While Mark Thornton is speaking, distracting music plays at the beginning of the audio for several minutes, but does go away. The lecture is interesting, though.)

        • Andrew_FL says:

          The Confederate Government was in many ways at least as bad and often worse, than the Union government, when it came to intervention in the economy.

      • Jim says:

        So, I poke around a little bit and I find this: https://en.wikipedia.org/wiki/Anselm_Franz … guess my dad didn’t make up the story. 🙂

        • Jim says:

          I should mention, he gave my dad his start in industry and my dad had a lot of respect for him.

          The story I was told the most was that, while my dad was working on the factory floor, he posted for a job using early computer equipment under Anselm. He got the job because Anselm appreciated the fact that he cared enough to leave the factory floor, go home, put on a suit, and come back for the interview. Then changed back into his work clothes to go back to work.

  5. John Dougan says:

    It is columns like those that make me reconsider the rumours that Paul Krugman is no longer writing his own columns. I still think it is him, but it is like he was hit on the head or was subject to the plot of a Disney movie where the personalities get swapped.

  6. Tel says:

    Off topic a bit, but you guys are sick of me carrying on about trade surplus theory and measuring everything in dollars. Here’s yet another example.


    So Trump is signing off on big arms shipments to Saudi Arabia. From a libertarian perspective, this is free trade right? We measure the size of the trade in dollar signs, calculate the total profit and there you go. The US manufacturers are voluntarily selling their equipment, and the Saudis are voluntarily buying the equipment. Must be a Pareto improvement right?

    But there’s a catch. We just know that the Saudis won’t be using those for self defense purposes. Thus, this “voluntary” agreement involves third parties who are going to be made much worse off, and no transaction is going to show that.

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