Krugman Gets the Vapors

Taking to his divan, NYT Opinion Columnist and Nobel Price Economist (got to say that!) Paul Krugman is suffering from a case of post-deal vapors.  Poor fellow.  

It's kind of fun watching the Times' two best female opinion columnists (Krugman and Maureen Dowd) vie for the title of who is more let down by men.

Krugman v. Brooks

I read the New York Times only rarely; mostly I go to its website to read the opinion columnists, and occasionally I scan the rest of the site on Sundays.  But two days ago, I happened across an abandoned copy of the Friday's NYT on paper, left behind by some thoughtful soul at the Pentagon.  When I got to the editorial page, I found these two articles there--one by David Brooks and one by Paul Krugman.  Interestingly enough, they were arranged as if mirrored images of each other down the left and right sides of the page respectively--but the messages contained in each could not have been more different.

Both columns speak to the current economic doldrums besetting the US economy--but that's where the similarities end.  Krugman's column focuses on what can be done to get the economy moving (by government, naturally) because of the failure of the Obama economic stimulus.  Why did the stimulus fail?  Why, because it was too small (of course).  Here is Krugman on that point.  "In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly."  How does one know that this is true--that the failure of the stimulus was in its modesty?  Why, because Krugman says so--and he's a Nobel Prize Winner. And by the way, who are you to question Professor Krugman?

David Brooks on the other hand, handicapped of course without a white tie and tails moment of his own, instead puts forward some data--or more correctly, a case study.  In it, he contrasts the German economy (humming along at 9% growth rate) to ours.  The point Brooks makes is that Germany chose NOT to engage in stimulative government spending (as a percentage of GDP, Germany's stimulus was 1/4 the size of ours); rather, Germany decided to act like an adult and impose spending restraint.  Here's Brooks:  "Over the past few years, the Germans have built on their advantages. They effectively support basic research and worker training. They have also taken brave measures to minimize their disadvantages. As an editorial from the superb online think tank e21 reminds us, the Germans have recently reduced labor market regulation, increased wage flexibility and taken strong measures to balance budgets."  

Brooks takes this one, hands down.  Krugman's economic analysis continues to be heavily influenced by his political biases.  While he may be considered an effective political columnist, his insights on the macro-economy are simply derivative of the latest liberal talking points.  

Hennessey Takes Krugman to School

Keith Hennessey remains the most articulate spokesman for conservative economic principles on the scene today.  In this blog post, he (civilly and respectfully) performs a double leg take-down on Paul Krugman (love how he calls him "Dr. Krugman" throughout), he of the Nobel Prize.

Krugman is increasingly becoming a shrill voice of nonsense--but it's a good thing he's protected by tenure....

Spending Our Way To Solvency

President Obama continues to beat the Keynesian drum of spending our way to solvency, with Paul Krugman no doubt cheering from the sidelines.  At the G-2- conference this weekend, The One apparently hectored the Europeans to spend more while they seem more interested in reining in spending.  Apparently our current economic torpor is the result of insufficient spending, at least according to the President and his buddy Dr. Krugman.  Tis a sad day indeed when one looks to the other side of the Atlantic for wise and restrained fiscal discipline. 

Krugman Is Answered, Again

Paul Krugman took to his perch on the NYT Editorial page yesterday to make yet another statement on macroeconomics that struck me as misguided when I first read it. But since Krugman won the NOBEL PRIZE, I generally feel I ought to defer to him. Unless of course, real economists also say he's crazy.

Which brings me to this post from our friends at Cato. Krugman states in his column today that "Both textbook economics and experience say that slashing spending when you’re still suffering from high unemployment is a really bad idea — not only does it deepen the slump, but it does little to improve the budget outlook, because much of what governments save by spending less they lose as a weaker economy depresses tax receipts."

Cato's answer concentrates on the "slashing spending" part--pointing to the post-WWII US experience in which spending was cut dramatically in one year. In Krugman's defense (or is it contra-Cato), the US was hardly suffering from "high unemployment" at war's end--though the return and discharge of millions of servicemen did raise that specter.

Hell Hath Frozen Over--In Which I Agree With Paul Krugman

I wrote last week about the role of the credit ratings agencies in the fiscal crisis from which we are only now furtively beginning to recover. I cited them as a prime candidate for the kind of government regulation I am in favor of--the kind that makes markets more free--not less.

No fan of free markets, Mr. Krugman has a column out this morning in which he aims his bile at the credit ratings agencies and details their decline from honest broker to co-conspirator.

Even a blind squirrel finds an acorn now and then.

Chinese Beginning To Feel Their Oats

News here of some interesting talk from the Chinese Premier, and some facts about China's rapacious conduct both home and abroad. China is a rising power, and many analysts predict they'll replace the US as the world's leading economic power within 30 years. A few thoughts.

First, while China is a ridiculously hyperactive economic power, it has some basic systemic problems. The population is aging at the same time it is prospering--a new sense of entitlement WILL create a demand for growth slowing social investment. Some say "China will get old before it gets rich".

Second, the selective abortion of girls throughout the years (a consequence of the "one child" policy) has resulted in a nifty little imbalance in numbers between the sexes. Restive, horny, lonely males are almost never a good thing for a stable country, and tens of millions of them will be a double plus bad thing.

Third, the competition we are in with China (or to put it more appropriately, the competition THEY are in) has the potential to someday turn into conflict--either armed, direct conflict or through surrogates as much of the Cold War was fought. THINKING about fighting the Chinese someday does not mean that we will fight the Chinese someday. Planning a fight with the Chinese does not make such a fight any more likely. We can and must seek ways to work with the Chinese around the world to try and urge them to apply their might and power to the ends of the global system from which they benefit very handsomely. But while we seek avenues of cooperation--we should not be hamstrung by a Western sense of mono-modality, one that restricts us from thinking through ways to limit their power, ways to slow their rise, ways to create problems for them around the world, on their borders and within China itself.

China is thinking through these problems every day, and they are actively engaged in exactly this competition with us. They ARE preparing to fight us. They don't say so publicly--but then again, we wouldn't have to (or want to--yet) either.

I don't see much evidence in this administration of ANY interest in really thinking through "The China Problem", mostly because they want to wish the problem away. But it isn't going away. Like the boiling frog metaphor, if we wait until China begins to act in obvious hegemonic ways, it will have been too late.

UPDATE: STOP THE PRESSES--HELL HAS FROZEN OVER!!!! I agree with Paul Krugman on something.