I have tried to stay away from Krugman's posts, mostly because they're just so routinely dishonest that there is no point in engaging with them. He is a liar, pure and simple; its like being the ombudsman at Pravda. So, I will no longer respond to Krugman's columns, preferring instead to try and write things that I think are interesting and valuable, not merely responses to lies. But, here's one for the road:
http://www.nytimes.com/2011/05/20/opinion/20krugman.html?_r=1&partner=rssnyt&emc=rss
"By the middle years of the last decade, I used to joke that Americans made a living by selling each other houses, which they paid for with money borrowed from China. Manufacturing, once America’s greatest strength, seemed to be in terminal decline."
Ha, ha, hilarious joke. Except, it is an out and out lie. America was, and is, the world's largest manufacturer, or maybe a slight #2 by some metrics behind China, a country with a population four times larger. So, the joke has literally no basis in reality, as the United States is the world leader in manufacturing, and has been for the last century:
http://www.ft.com/intl/cms/s/0/af2219cc-7c86-11df-8b74-00144feabdc0.html#axzz1Mu2FHmzl
But, facts won't get in the way of PK's jokes, so I'm looking forward to some solutions he has to this non-existent problem. I'm guessing that he's going to advocate some state action.
"First, what’s driving the turnaround in our manufacturing trade? The main answer is that the U.S. dollar has fallen against other currencies, helping give U.S.-based manufacturing a cost advantage. A weaker dollar, it turns out, was just what U.S. industry needed."
A weak dollar doesn't help "U.S. industry." It drives up the cost of imports, leading to price surges in imports, including minor items like food and fuel. In a county that runs a trade deficit, that is a net loss. So, again Krugman just does not even discuss relevant issues, totally ignoring counterarguments.
And then there’s the matter of the auto industry, which probably would have imploded if President Obama hadn’t stepped in to rescue General Motors and Chrysler. For those companies would almost surely have gone into liquidation, closing all their factories. And this liquidation would have undermined the rest of America’s auto industry, as essential suppliers went under, too. Hundreds of thousands of jobs were at stake.
Here, Krugman just abandons economics. He never once discusses costs. Obama may have "saved" the auto industry, but at what cost? How much did each job saved cost? How much capital is misallocated? Is it a good idea to prop up failing businesses? Krugman literally never discusses these issues. Its just a waste of time to respond to this thoughtless tripe.
Yet Mr. Obama was fiercely denounced for taking action. One Republican congressman declared the auto rescue part of the administration’s “war on capitalism.” Another insisted that when government gets involved in a company, “the disaster that follows is predictable.” Not so much, it turns out.
Well, the "disaster" that Krugman is ignoring is the massive deficit and misallocation of capital that results. There is no doubt that if it wants, the government can prop up the auto industry. The question is, is it wise to do so?
So while we still have a deeply troubled economy, one piece of good news is that Americans are, once again, starting to actually make things. And we’re doing that thanks, in large part, to the fact that the Fed and the Obama administration ignored very bad advice from right-wingers — ideologues who still, in the face of all the evidence, claim to know something about creating prosperity.
Krugman, for good measure, restates his totally inaccurate premise that America is finally making things again, leaving aside the fact that America has been the world's largest manufacturer of goods for over a century.
Krugman repeats this lie in order to make it seem as if Obama's policies led to the resurrection of American manufacturing. In fact, as the government's own numbers show, manufacturing increased during the Bush administration, when America was the largest manufacturer in the world:
http://www.federalreserve.gov/releases/g17/ipdisk/ip_sa.txt
I certainly don't credit Bush for this growth. But the fact is that America became, and remained for a century, the world's largest industrial power without government bail-outs, massive deficits, or an intentionally loose monetary policy that drives the cost of living up.
Krugman totally ignores this indisputable truth, starting from the false premise that America didn't manufacture anything until 2008, and then arguing that Obama's policies somehow saved American manufacturing. This simply isn't true -- American history has shown that, deficits, bail-outs, and inflation are not a necessary price of a robust manufacturing sector.
None of these conclusions are contoversial or ideologically driven. It is simple to determine that America is the world's leading manufacturer, and has been so for over century. Certainly, a Nobel Prize winner working for America's foremost newspaper has the resources to verify this simple fact. The fact that Krugman contends otherwise isn't merely an oversight, its a lie.
Fin.
Tuesday, July 19, 2011
Friday, May 20, 2011
Inflation, deflation, and wages
I wonder if inflation in certain goods can cause deflation in complementary goods. Take Las Vegas for example. Fuel prices have surged, causing airline fares to spike, killing tourist destinations like Las Vegas. If a person has x dollars to spend on a Las Vegas trip, and the airfare goes up 50%, it means he has less to spend on a hotel room. It seems likely that owners of certain assets will just have to accept deflation.
Interestingly, I would put homeowners in this category. Commodities are traded internationally, whereas homes are not. So, if Americans are forced by international markets to pay more for commodities, it seems to me that disposable income, and hence housing prices, would have to drop.
On a related note, several pundits like to pretend that inflation isn't a huge problem, citing stagnant wage growth as proof that inflation isn't a risk. See this example:
http://gregmankiw.blogspot.com/2011/05/i-agree-with-paul-krugman.html
Leaving aside the stupidity of looking at a single determinant of the price level (i.e. wages) instead of the actual, existing price level to determine inflation, this seems to me to be a pretty catastrophic situation, stangant wages and surging commodity costs. This sort of scenario, which is what policymakers and economic elite bizarrely want, would seem to inevitably push down the price of existing, non-internationally traded assets, most notably homes.
At a minimum, printing dollar bills, leading to inflation in commodities, and then offsetting inflation in raw materials by holding down American wages is mathematically certain to lead to a diminished standard of living for Americans. The fact that policymakers cite this as a positive outcome is deeply troubling.
On a related note, the inflation doves are often from the academy. University tuition has gone up at more than double the rate of inflation over the past 30 years. So, inflation doesn't hurt the professors at all. I would have far more respect for the professors downplaying inflation if they'd agree to keep their wage growth in line with the average workers' wages. They'd never agree to it, and will keep protecting themselves from inflation by raising tuition (which is largely subsidized by taxpayers) while telling other people to grin and bear it, underscoring that much of the academic economic analysis has a "let them eat cake" feel to it.
Interestingly, I would put homeowners in this category. Commodities are traded internationally, whereas homes are not. So, if Americans are forced by international markets to pay more for commodities, it seems to me that disposable income, and hence housing prices, would have to drop.
On a related note, several pundits like to pretend that inflation isn't a huge problem, citing stagnant wage growth as proof that inflation isn't a risk. See this example:
http://gregmankiw.blogspot.com/2011/05/i-agree-with-paul-krugman.html
Leaving aside the stupidity of looking at a single determinant of the price level (i.e. wages) instead of the actual, existing price level to determine inflation, this seems to me to be a pretty catastrophic situation, stangant wages and surging commodity costs. This sort of scenario, which is what policymakers and economic elite bizarrely want, would seem to inevitably push down the price of existing, non-internationally traded assets, most notably homes.
At a minimum, printing dollar bills, leading to inflation in commodities, and then offsetting inflation in raw materials by holding down American wages is mathematically certain to lead to a diminished standard of living for Americans. The fact that policymakers cite this as a positive outcome is deeply troubling.
On a related note, the inflation doves are often from the academy. University tuition has gone up at more than double the rate of inflation over the past 30 years. So, inflation doesn't hurt the professors at all. I would have far more respect for the professors downplaying inflation if they'd agree to keep their wage growth in line with the average workers' wages. They'd never agree to it, and will keep protecting themselves from inflation by raising tuition (which is largely subsidized by taxpayers) while telling other people to grin and bear it, underscoring that much of the academic economic analysis has a "let them eat cake" feel to it.
Thursday, April 14, 2011
Paul Krugman is Correct
It may be time to change this blog's name.
I did a little searching around, and it turns out that Krugman and I are in near total agreement on the MV=PY issue. Its amazing. He and I both believe that MV=PY is nothing more than a tautology, implying no causal relationship, Y is real (i.e. tangible) thing that can't be manipulated, and that monetary policy can't in a "liquidity trap" (a meaningless phrase) increase Y. I don't know if I'm happy or terrified by this development, but its interesting.
http://krugman.blogs.nytimes.com/2009/11/06/nominally-misguided-wonkish/
We unfortunately disagree on how "sticky" P is. Krugman bizarrely ignores the surge in the prices of commodities and food as not "core" inflation. His argument is that these items are volatile, so they should be excluded from measures on inflation. I would argue that excluding essential items like food and gas from a measure of inflation renders it meaningless. I would further argue that volatile, heavily traded goods are the best measures of inflation, as they are traded in the most sensitive markets.
I did a little searching around, and it turns out that Krugman and I are in near total agreement on the MV=PY issue. Its amazing. He and I both believe that MV=PY is nothing more than a tautology, implying no causal relationship, Y is real (i.e. tangible) thing that can't be manipulated, and that monetary policy can't in a "liquidity trap" (a meaningless phrase) increase Y. I don't know if I'm happy or terrified by this development, but its interesting.
http://krugman.blogs.nytimes.com/2009/11/06/nominally-misguided-wonkish/
We unfortunately disagree on how "sticky" P is. Krugman bizarrely ignores the surge in the prices of commodities and food as not "core" inflation. His argument is that these items are volatile, so they should be excluded from measures on inflation. I would argue that excluding essential items like food and gas from a measure of inflation renders it meaningless. I would further argue that volatile, heavily traded goods are the best measures of inflation, as they are traded in the most sensitive markets.
Tuesday, April 12, 2011
Et Tu Ramesh
http://www.nationalreview.com/articles/263668/not-enough-money-ramesh-ponnuru?page=1
My daughter was born last week, and as I sat holding her, staring at her perfect little nose, hands, and toes, I immediately began thinking of how angry quantitative easing makes me. In this post, I turn my attention to the sophistry of the right. In this case, its The National Review's Ramesh Ponnuru ("RP"), a writer and man I generally respect, but who erroneously argues in favor of monetary expansion. Unlike Krugman, he's not dishonest. Unfortunately, like Krugman, he doesn't understand the production of real wealth very well. Surprisingly, he downplays the ways in which inflation is eroding Americans' lives. Most disappointingly, like Krugman, he seems to share the belief that somehow countries can get wealthier buy doing painless things like borrowing and/or printing money. Alas, it is not that easy. As always, real wealth can only come from productive work and savings.
Like all mainstream economists, RP wrongfully conceives of the economy in terms of equations. This is a mistake for a lot of reasons, most notably because he makes the mistake of confusing a purely mathematical equation and an equation that purports to describe an external (i.e. non-mathematical) reality. For example, the equation x+7=12 is a purely mathematical equation. As this equation has no relationship to the real world (i.e. it does not purport to describe a reality), this equation is neither true nor false -- its simply a self-contained piece of logic. In fact, its equally valid to sax 2x+7=12.
In contrast, other equations are not creatures of logic, but rather describe a physical reality. The simplest physical equation is F=MA. While mathematical, this equation describes a physical reality. If I throw a baseball, the force I impart is F=MA, not F=2MA. Unlike X+7=12, F=MA is not a purely mathematical statement; it describes real-world, physical activity. This is a crucial distinction to keep in mind as you read RP's piece.
The core of RP's argument is his belief that printing money can lead to real wealth:
MV=PY. What that means is that the money supply (M) times the speed with which money changes hands (V, for velocity) must equal the price level (P) times the size of the real economy (Y). If velocity holds constant and the money supply goes up, either prices must go up or the economy must expand or both. If, on the other hand, velocity drops — if people have an increased desire to hold money balances — then either prices must drop or the economy must shrink or both.
This equation on its face is wrong. If it were true, the economy could grow infinitely large if people committed to constantly spending money and the Fed printed unlimited amounts of money, something that is demonstrably false.
Even assuming, arguendo, that this equation is correct, RP's conclusion is still wrong. He makes the erroneous assumption that the equation MV=PY is purely mathematical, and not constrained by extrinsic cause and effect. However, the equation MV=PY is not a logical equation, but an equation that purports to describe real-world phenomena, namely economic activity. As a consequence, this equation is constrained by real-world cause and effect.
The baseball example is illuminating. Imagine that I throw the baseball as hard as I can, and I impart 30 Newtons of force. In other words M x A = 30. It is beyond dispute that if instead of a baseball, I threw a ball made of concrete, which had 2x the mass of a baseball, I wouldn't impart 2x the force -- I still only have 30 Newtons of force in my arm. When F is a fixed physical reality (i.e. how hard I physically can throw the ball), simply doubling M doesn't make me stronger. The equation doesn't change reality, it can only reflect it.
By citing the equation MV=PY for the proposition that an increase in M will lead to an increase in Y, RP implicitly assumes that Y is a dependent variable that can be increased by increasing M or V. But, as the baseball example shows, equations that describe real-world phenomena can't be manipulated; they are always tethered to a physical reality.
RP's implicit assumption that Y is a dependent variable that M can dictate is thoughtless, and RP does not try to defend it. In the same way that F isn't dependent on M, but rather on how strong the muscles in my arm are, Y is determined by the efficiency with which real goods are produced. Of course, it is possible that Y is a dependent variable, and is dependent on M, but this is not a mathematical truth or axiomatic -- it must be demonstrated.
Unfortunately, RP doesn't ever support his implicit contention that Y is a dependent variable, or discuss the mechanics of how his proposal would actually increase real wealth. His argument is based on the totally baseless assumption that Y is a dependent variable of M, and on the basis of this assumption, argues that increases in M will increase Y. It is in fact totally circular.
Of course, supporters of RP's position will contend that, even though he did not in any way support it in the article, RP's assumption is correct, and an increase in M will increase Y. This contention is wrong, and will be discussed in my next post.
My daughter was born last week, and as I sat holding her, staring at her perfect little nose, hands, and toes, I immediately began thinking of how angry quantitative easing makes me. In this post, I turn my attention to the sophistry of the right. In this case, its The National Review's Ramesh Ponnuru ("RP"), a writer and man I generally respect, but who erroneously argues in favor of monetary expansion. Unlike Krugman, he's not dishonest. Unfortunately, like Krugman, he doesn't understand the production of real wealth very well. Surprisingly, he downplays the ways in which inflation is eroding Americans' lives. Most disappointingly, like Krugman, he seems to share the belief that somehow countries can get wealthier buy doing painless things like borrowing and/or printing money. Alas, it is not that easy. As always, real wealth can only come from productive work and savings.
Like all mainstream economists, RP wrongfully conceives of the economy in terms of equations. This is a mistake for a lot of reasons, most notably because he makes the mistake of confusing a purely mathematical equation and an equation that purports to describe an external (i.e. non-mathematical) reality. For example, the equation x+7=12 is a purely mathematical equation. As this equation has no relationship to the real world (i.e. it does not purport to describe a reality), this equation is neither true nor false -- its simply a self-contained piece of logic. In fact, its equally valid to sax 2x+7=12.
In contrast, other equations are not creatures of logic, but rather describe a physical reality. The simplest physical equation is F=MA. While mathematical, this equation describes a physical reality. If I throw a baseball, the force I impart is F=MA, not F=2MA. Unlike X+7=12, F=MA is not a purely mathematical statement; it describes real-world, physical activity. This is a crucial distinction to keep in mind as you read RP's piece.
The core of RP's argument is his belief that printing money can lead to real wealth:
MV=PY. What that means is that the money supply (M) times the speed with which money changes hands (V, for velocity) must equal the price level (P) times the size of the real economy (Y). If velocity holds constant and the money supply goes up, either prices must go up or the economy must expand or both. If, on the other hand, velocity drops — if people have an increased desire to hold money balances — then either prices must drop or the economy must shrink or both.
This equation on its face is wrong. If it were true, the economy could grow infinitely large if people committed to constantly spending money and the Fed printed unlimited amounts of money, something that is demonstrably false.
Even assuming, arguendo, that this equation is correct, RP's conclusion is still wrong. He makes the erroneous assumption that the equation MV=PY is purely mathematical, and not constrained by extrinsic cause and effect. However, the equation MV=PY is not a logical equation, but an equation that purports to describe real-world phenomena, namely economic activity. As a consequence, this equation is constrained by real-world cause and effect.
The baseball example is illuminating. Imagine that I throw the baseball as hard as I can, and I impart 30 Newtons of force. In other words M x A = 30. It is beyond dispute that if instead of a baseball, I threw a ball made of concrete, which had 2x the mass of a baseball, I wouldn't impart 2x the force -- I still only have 30 Newtons of force in my arm. When F is a fixed physical reality (i.e. how hard I physically can throw the ball), simply doubling M doesn't make me stronger. The equation doesn't change reality, it can only reflect it.
By citing the equation MV=PY for the proposition that an increase in M will lead to an increase in Y, RP implicitly assumes that Y is a dependent variable that can be increased by increasing M or V. But, as the baseball example shows, equations that describe real-world phenomena can't be manipulated; they are always tethered to a physical reality.
RP's implicit assumption that Y is a dependent variable that M can dictate is thoughtless, and RP does not try to defend it. In the same way that F isn't dependent on M, but rather on how strong the muscles in my arm are, Y is determined by the efficiency with which real goods are produced. Of course, it is possible that Y is a dependent variable, and is dependent on M, but this is not a mathematical truth or axiomatic -- it must be demonstrated.
Unfortunately, RP doesn't ever support his implicit contention that Y is a dependent variable, or discuss the mechanics of how his proposal would actually increase real wealth. His argument is based on the totally baseless assumption that Y is a dependent variable of M, and on the basis of this assumption, argues that increases in M will increase Y. It is in fact totally circular.
Of course, supporters of RP's position will contend that, even though he did not in any way support it in the article, RP's assumption is correct, and an increase in M will increase Y. This contention is wrong, and will be discussed in my next post.
Monday, March 28, 2011
Child Pornography Yes, Incadescent Lightbulbs No.
As you likely know, soon incadescent lightbulbs will be illegal in the United States. When contextualizing this fact, consider that the Supreme Court has held that the 1st Amendment protects computer generated child pornography:
http://en.wikipedia.org/wiki/Ashcroft_v._Free_Speech_Coalition
This is a perfect example of liberals' insidious combination of economic tyranny and moral anarchy. This should not be surpising, as liberals consistenly seek to make the lives of decent people worse, while assauging the deviant and criminal. See e.g. http://paulkrugmaniswrong.blogspot.com/2011/01/i-think-that-may-be-backwards.html.
We live in a country where incadescent lightbulbs will soon be illegal, but computer images of child pornography are Constitutionally protected. In other words, people who prefer incadescent lightbulbs have less legal protection than child pornographers. It makes one weep.
http://en.wikipedia.org/wiki/Ashcroft_v._Free_Speech_Coalition
This is a perfect example of liberals' insidious combination of economic tyranny and moral anarchy. This should not be surpising, as liberals consistenly seek to make the lives of decent people worse, while assauging the deviant and criminal. See e.g. http://paulkrugmaniswrong.blogspot.com/2011/01/i-think-that-may-be-backwards.html.
We live in a country where incadescent lightbulbs will soon be illegal, but computer images of child pornography are Constitutionally protected. In other words, people who prefer incadescent lightbulbs have less legal protection than child pornographers. It makes one weep.
Friday, March 25, 2011
Imperfect Information and Markets
In mainstream economics, perfect information is assumed, and from this the desirability of free markets follow. I think this insight, while true, is conceptually virtually useless and politically dangerous.
First, perfect information is virtually never available. More importantly, if you have perfect information, its actually largely irrelevant whether you have free markets or government deciding. When information is perfect, all parties will make equally good decisions (assuming away the government's incentive problems). Take the issue of rat poison in bottled water. There exists perfect information on this issue -- its a terrible idea. Accordingly, there is a law that says that you can't put rat poison in bottled water. But, even if no such law existed, it is impossible to imagine any producer of bottled water putting rat poison in their water -- it would destroy their business instantly. In this context of perfect information, not surprisingly, government, via laws and regulations, and private industry, via their practices, have reached the same conclusion -- no rat poison in water. In the context of perfect information, in terms of outcomes, it does not matter who makes the decision.
Of course, the rat poison example isn't very illuminating. In the real world, with imperfect information, there is no clear right answer that is ascertainable ex ante. Businesses decisions are routinely based on nothing more than informed speculation about future costs, consumer demand, etc. In instances of imperfect information -- which is essentially every scenario -- a free market is essential to the proper allocation of resources. It is only through constant trial and error of businesses that information can be ascertained. We know now that New Coke, the Edsel, the McLean, and a whole host of other products are failures and a waste of resources, but there was no way to know that until they were subjected to the marketplace's judgment.
In the context of imperfect information, who makes the decisions is vital. Everybody knows not to put rat poison in the bottled water. But, not every company is capabale of flourishing in an environment where imperfect informtion requires decisions to be made when only a fraction of the relevant information is available. It bears repeating that companies that don't do this well squander resources; New Coke, the Edsel, and the McLean made America poorer. The only way to ensure that companies make decisions well, and hence allocate resources efficiently, is through market processes, which will drive poor decisionmakers out of business.
The insight that markets are more important, not less, in the context of imperfect information is vital. Advocates of government intervention will often concede the point that when perfect markets exist, there is no need for government intervention, but argue that whenever there is imperfect information -- which is virtually every instance -- government intervention is necessary; the exception swallows the rule. This is why the argument for free markets should not be predicated on the existence of perfect information.
Advocates of government intervention point to the existence of imperfect information as creating the possibility for government intervention increasing efficiency. In some trivial sense this is true. A law banning the production of New Coke would have made America a wealthier country. However, there is simply no way that Congress could have known that New Coke was a bad idea until it actually failed (i.e. was subjected to market forces). The intractable problem is that the imperfect information that allegedly creates the need for government intervention also makes successful government intervention impossible. Imperfect knowledge is not an artifact of free markets, or indeed any economic institution or phenomenon; it is rather a product of tremendous limitations of human knowledge and foresight. These limitations of human knowledge apply to both the public and private sector; the same problems that plague industry also plague government.
Proponents of government intervention virtually always engage in a thoughtless contrast between real-world market imperfections and the blithe assumption of an omniscient, disinterested government. Not surprisingly, in a competition between real-world markets, with all their imperfections, and idealized, flawless government, government is an attractive option. But, an intellectually honest argument for government intervention in situations of imperfect information would acknowledge that nobody -- public or private -- possesses perfect information, and articulate a basis for why the government has superior information with which it can correct market "failures". I've never heard of any real basis for the government's purported superior knowledge. Indeed, it is unlikely that government possesses superior information for several reasons:
1) Government workers do not work in industry, and are thus far less likely to have relevant knowledge about the industry they are regulating that its actual participants.
2) Government workers are virtually always less intelligent than private sector workers.
3) Government workers do not bear the consequences of their decisions to nearly the same extent that private sector workers do, necessarily degrading the quality of their decisions.
4) Government decisions are not subjected to market tests in the same way that private sector decisions are, meaning that government, unlike private industry, lacks an effective feedback mechanism by which decisions can be evaluated.
5) The same knowledge limitations that prevent perfect decisionmaking in the economic sphere exist in the political sphere, specifically elections, meaning that there is no particular reason to assume that elected officials are competent. In fact, I'd be willing to bet that the average person spends far more time researching decisions about what car to buy than what candidate to vote for (which, as an aside, is a totally rational decision), suggesting that the former is in fact a far more informed decision than the latter. The implication is of course that government officials are not particularly competent, having been chosen on criteria (e.g. charm, looks, charisma, "who I'd like to have a beer with") that are totally irrelevant to fitness for office. Its the political corrolary to the "Garbage In, Garbage Out" principle.
6) Any monolithic situation is likely to lead to poor outcomes. If GM produced every car in the United States, its virtually certain that cars would be of lower quality. The government, through antitrust law, acknowledges this reality, seeking competition in order to ensure that private industry meets consumers' needs. But, this commitment to competition goes out the window when it comes to regulation, and somehow depriving consumers of choice, so baleful when a purported monopolist does it, is salutary when the government does it.
Any criticism of any performance in any context has to answer the implicit question of "compared to what." The bare assertion that imperfect knowledge leads to inefficient market outcomes is true but useless. The relevant inquiry is, given the limits of human knowledge, is there a better method of allocating resources than through markets? Both theory and experience say no.
First, perfect information is virtually never available. More importantly, if you have perfect information, its actually largely irrelevant whether you have free markets or government deciding. When information is perfect, all parties will make equally good decisions (assuming away the government's incentive problems). Take the issue of rat poison in bottled water. There exists perfect information on this issue -- its a terrible idea. Accordingly, there is a law that says that you can't put rat poison in bottled water. But, even if no such law existed, it is impossible to imagine any producer of bottled water putting rat poison in their water -- it would destroy their business instantly. In this context of perfect information, not surprisingly, government, via laws and regulations, and private industry, via their practices, have reached the same conclusion -- no rat poison in water. In the context of perfect information, in terms of outcomes, it does not matter who makes the decision.
Of course, the rat poison example isn't very illuminating. In the real world, with imperfect information, there is no clear right answer that is ascertainable ex ante. Businesses decisions are routinely based on nothing more than informed speculation about future costs, consumer demand, etc. In instances of imperfect information -- which is essentially every scenario -- a free market is essential to the proper allocation of resources. It is only through constant trial and error of businesses that information can be ascertained. We know now that New Coke, the Edsel, the McLean, and a whole host of other products are failures and a waste of resources, but there was no way to know that until they were subjected to the marketplace's judgment.
In the context of imperfect information, who makes the decisions is vital. Everybody knows not to put rat poison in the bottled water. But, not every company is capabale of flourishing in an environment where imperfect informtion requires decisions to be made when only a fraction of the relevant information is available. It bears repeating that companies that don't do this well squander resources; New Coke, the Edsel, and the McLean made America poorer. The only way to ensure that companies make decisions well, and hence allocate resources efficiently, is through market processes, which will drive poor decisionmakers out of business.
The insight that markets are more important, not less, in the context of imperfect information is vital. Advocates of government intervention will often concede the point that when perfect markets exist, there is no need for government intervention, but argue that whenever there is imperfect information -- which is virtually every instance -- government intervention is necessary; the exception swallows the rule. This is why the argument for free markets should not be predicated on the existence of perfect information.
Advocates of government intervention point to the existence of imperfect information as creating the possibility for government intervention increasing efficiency. In some trivial sense this is true. A law banning the production of New Coke would have made America a wealthier country. However, there is simply no way that Congress could have known that New Coke was a bad idea until it actually failed (i.e. was subjected to market forces). The intractable problem is that the imperfect information that allegedly creates the need for government intervention also makes successful government intervention impossible. Imperfect knowledge is not an artifact of free markets, or indeed any economic institution or phenomenon; it is rather a product of tremendous limitations of human knowledge and foresight. These limitations of human knowledge apply to both the public and private sector; the same problems that plague industry also plague government.
Proponents of government intervention virtually always engage in a thoughtless contrast between real-world market imperfections and the blithe assumption of an omniscient, disinterested government. Not surprisingly, in a competition between real-world markets, with all their imperfections, and idealized, flawless government, government is an attractive option. But, an intellectually honest argument for government intervention in situations of imperfect information would acknowledge that nobody -- public or private -- possesses perfect information, and articulate a basis for why the government has superior information with which it can correct market "failures". I've never heard of any real basis for the government's purported superior knowledge. Indeed, it is unlikely that government possesses superior information for several reasons:
1) Government workers do not work in industry, and are thus far less likely to have relevant knowledge about the industry they are regulating that its actual participants.
2) Government workers are virtually always less intelligent than private sector workers.
3) Government workers do not bear the consequences of their decisions to nearly the same extent that private sector workers do, necessarily degrading the quality of their decisions.
4) Government decisions are not subjected to market tests in the same way that private sector decisions are, meaning that government, unlike private industry, lacks an effective feedback mechanism by which decisions can be evaluated.
5) The same knowledge limitations that prevent perfect decisionmaking in the economic sphere exist in the political sphere, specifically elections, meaning that there is no particular reason to assume that elected officials are competent. In fact, I'd be willing to bet that the average person spends far more time researching decisions about what car to buy than what candidate to vote for (which, as an aside, is a totally rational decision), suggesting that the former is in fact a far more informed decision than the latter. The implication is of course that government officials are not particularly competent, having been chosen on criteria (e.g. charm, looks, charisma, "who I'd like to have a beer with") that are totally irrelevant to fitness for office. Its the political corrolary to the "Garbage In, Garbage Out" principle.
6) Any monolithic situation is likely to lead to poor outcomes. If GM produced every car in the United States, its virtually certain that cars would be of lower quality. The government, through antitrust law, acknowledges this reality, seeking competition in order to ensure that private industry meets consumers' needs. But, this commitment to competition goes out the window when it comes to regulation, and somehow depriving consumers of choice, so baleful when a purported monopolist does it, is salutary when the government does it.
Any criticism of any performance in any context has to answer the implicit question of "compared to what." The bare assertion that imperfect knowledge leads to inefficient market outcomes is true but useless. The relevant inquiry is, given the limits of human knowledge, is there a better method of allocating resources than through markets? Both theory and experience say no.
Thursday, February 10, 2011
Krugman to Opponents: Please Stop Thinking
Krugman's economic policies virtually always entail taking money from responsible, hard-working people to help spendthrifts. This obviously raises certain moral issues, most notably whether responsible people should suffer to help the irresponsible. I suppose that reasonable people could disagree on this issue, but Krugman doesn't even discuss it. Instead, when faced with thorny moral issues, Krugman has repeatedly said that "economics is not a morality play" (emphasis in original)
http://krugman.blogs.nytimes.com/2010/09/28/economics-is-not-a-morality-play/
Krugman's assertions that economics isn't a morality play always take place in the context of income redistribution. Opponents of Keynesian policies argue that aside from being economic suicide, its profoundly unethical to redistribute income from the responsible to the irresponsible. Krugman's response is fairly summarized as "distribution of income doesn't matter; all that matters is facilitating economic growth."
This statement is both wrong and massively dishonest. Krugman's position is that there is no moral dimension to economic growth, and that moral considerations are subordinate, indeed perhaps irrelevant to, economic questions. However, moral questions inhere in economics. Slavery is primarily an economic phenomenon. I cannot imagine Krugman, or anyone else, arguing that the morality of slavery is irrelevant because "economics is not a morality play." The same can be said for any number of other issues -- child labor, environmental issues, labor vs. capital, etc. To deny that there are any moral issues involved in the questions of economic policy is absurd on its face.
Krugman's position is also incredibly dishonest. Krugman, and the left generally, has long argued that economic growth is less important than equality, and, that growth should be sacrificed for equality. In other words, according to the left, there is a moral dimension to economics, specifically the distribution of income -- too much inequality is, as a moral matter, bad. After arguing that the distribution of income is of great moral significance, and something worth sacrificing growth for for decades, Krugman now wants to pretend that the morality of a given income distribution is irrelevant, and should not even be discussed.
The reason is obvious. The left has advocated redistributing wealth from the "rich" to the "poor" for decades. There is at least some moral sense to this position -- helping the less fortunate is a humane act. So, Krugman, et al could grandstand how their redistributionist polices were moral endeavors, and that they should be applauded for overcoming greed and helping the poor.
But, the redistribution that Krugman is now advocating isn't from the rich to the poor, its from the responsible to the irresponsible. Instead of helping a single mother, or a poor senior citizen, Krugman is advocating bailing out the UAW, banks that should have failed, and people who bought homes that they couldn't afford, destroying responsible peoples' wealth in the process.
The redistribution that Krugman advocates has been stripped of any moral basis. The narrative is no longer helping the helpless, but rather helping the reckless and the greedy. When confronted with policies' gross immorality, Krugman tries to pretend that such moral questions simply do not matter.
But, either income distribution has a moral dimension or it does not. If Krugman believes that there is no moral dimension to the trade-off between efficiency and equality, and the resulting distribution of income, then the entire rationale for the welfare state disappears, as there is nothing less moral about high levels of inequality than low levels of inequality. If however, as Krugman generally argues, certain distirbutions of income are more ethical than others, then Krugman has to defend the morality of the redistribution that he is advocating.
Instead of actually defending his position, Krugman, is as his wont, dodges the issue, simply relying on the glib, dishonest, hypocritical, and thoughless statement that "economics is not a morality play." Krugman is inviting his readers not to think. What's distressing is how many liberals have RSVPed yes.
http://krugman.blogs.nytimes.com/2010/09/28/economics-is-not-a-morality-play/
Krugman's assertions that economics isn't a morality play always take place in the context of income redistribution. Opponents of Keynesian policies argue that aside from being economic suicide, its profoundly unethical to redistribute income from the responsible to the irresponsible. Krugman's response is fairly summarized as "distribution of income doesn't matter; all that matters is facilitating economic growth."
This statement is both wrong and massively dishonest. Krugman's position is that there is no moral dimension to economic growth, and that moral considerations are subordinate, indeed perhaps irrelevant to, economic questions. However, moral questions inhere in economics. Slavery is primarily an economic phenomenon. I cannot imagine Krugman, or anyone else, arguing that the morality of slavery is irrelevant because "economics is not a morality play." The same can be said for any number of other issues -- child labor, environmental issues, labor vs. capital, etc. To deny that there are any moral issues involved in the questions of economic policy is absurd on its face.
Krugman's position is also incredibly dishonest. Krugman, and the left generally, has long argued that economic growth is less important than equality, and, that growth should be sacrificed for equality. In other words, according to the left, there is a moral dimension to economics, specifically the distribution of income -- too much inequality is, as a moral matter, bad. After arguing that the distribution of income is of great moral significance, and something worth sacrificing growth for for decades, Krugman now wants to pretend that the morality of a given income distribution is irrelevant, and should not even be discussed.
The reason is obvious. The left has advocated redistributing wealth from the "rich" to the "poor" for decades. There is at least some moral sense to this position -- helping the less fortunate is a humane act. So, Krugman, et al could grandstand how their redistributionist polices were moral endeavors, and that they should be applauded for overcoming greed and helping the poor.
But, the redistribution that Krugman is now advocating isn't from the rich to the poor, its from the responsible to the irresponsible. Instead of helping a single mother, or a poor senior citizen, Krugman is advocating bailing out the UAW, banks that should have failed, and people who bought homes that they couldn't afford, destroying responsible peoples' wealth in the process.
The redistribution that Krugman advocates has been stripped of any moral basis. The narrative is no longer helping the helpless, but rather helping the reckless and the greedy. When confronted with policies' gross immorality, Krugman tries to pretend that such moral questions simply do not matter.
But, either income distribution has a moral dimension or it does not. If Krugman believes that there is no moral dimension to the trade-off between efficiency and equality, and the resulting distribution of income, then the entire rationale for the welfare state disappears, as there is nothing less moral about high levels of inequality than low levels of inequality. If however, as Krugman generally argues, certain distirbutions of income are more ethical than others, then Krugman has to defend the morality of the redistribution that he is advocating.
Instead of actually defending his position, Krugman, is as his wont, dodges the issue, simply relying on the glib, dishonest, hypocritical, and thoughless statement that "economics is not a morality play." Krugman is inviting his readers not to think. What's distressing is how many liberals have RSVPed yes.
Global Warming: Krugman's Escape Hatch
http://www.nytimes.com/2011/02/07/opinion/07krugman.html?partner=rssnyt&emc=rss
Advocates of tight money such as myself have long argued that loose monetary policy by the Fed would drive the price of international commodities much higher for Americans. I wish I could claim some brilliance for this insight, but it is as obvious as it is simple: if you print pieces of green paper with no intrinsic value, the value of each piece of paper goes down, raising prices for Americans.
And, this has occured. As much as Krugman likes to pretend that inflation is tame, the price of all commodities, including oil, gold, and most recently, food, has surged. Krugman's policies have again made Americans poorer. But, according to Krugman, he isn't to blame, because high commodity prices have been caused not by loose monetary policy but GLOBAL WARMING.
Krugman, desparately seeking to explain away yet another failure of Keynesian policies, is now blaming global warming for the economic fallout of his policies. I've said it before, and I'll say it again: with Krugman, whether its the Great Depression, Japan, or Obama, you get excuses, not results.
Advocates of tight money such as myself have long argued that loose monetary policy by the Fed would drive the price of international commodities much higher for Americans. I wish I could claim some brilliance for this insight, but it is as obvious as it is simple: if you print pieces of green paper with no intrinsic value, the value of each piece of paper goes down, raising prices for Americans.
And, this has occured. As much as Krugman likes to pretend that inflation is tame, the price of all commodities, including oil, gold, and most recently, food, has surged. Krugman's policies have again made Americans poorer. But, according to Krugman, he isn't to blame, because high commodity prices have been caused not by loose monetary policy but GLOBAL WARMING.
Krugman, desparately seeking to explain away yet another failure of Keynesian policies, is now blaming global warming for the economic fallout of his policies. I've said it before, and I'll say it again: with Krugman, whether its the Great Depression, Japan, or Obama, you get excuses, not results.
Thursday, January 27, 2011
The Connection Between the Guinness Book of World Records and Mein Kampf
I am just finishing up "When The Lights Went Out" by Andy Beckett, a book about Britain's economic and cultural malaise (my characterization, not the author's) in the 1970s. It is a very poor book for many reasons, only some of them ideological. While the book is rarely overtly political, the author is a left-winger, and its interesting to get a glimpse into the left-wing mindset.
This is the most telling quote. It pertains to some affluent, politically active right-wingers, the McWhirters, and how they made their money:
"[the McWhirters were] the co-editors of The Guinness Book of World Records and the cold but compelling stars of its television spin-off Record-Breakers -- both of which put an anti-egalitarian emphasis on ranking individual achievement..." (emphasis added).
This is a remarkable statement. The author is explicitly critical of celebrating individual achievement. Apparently, it is "anti-egalitarian" to acknowledge somebody's accomplishment. This is such a quintessentially left-wing statement, combining all the nihlism that the left embodies: disdain for the individual, denigration of achievement, and viewing excellence as a form of agression. Apparently, the author would be more comfortable with a show celebrating medicority and dependence.
This is the most telling quote. It pertains to some affluent, politically active right-wingers, the McWhirters, and how they made their money:
"[the McWhirters were] the co-editors of The Guinness Book of World Records and the cold but compelling stars of its television spin-off Record-Breakers -- both of which put an anti-egalitarian emphasis on ranking individual achievement..." (emphasis added).
This is a remarkable statement. The author is explicitly critical of celebrating individual achievement. Apparently, it is "anti-egalitarian" to acknowledge somebody's accomplishment. This is such a quintessentially left-wing statement, combining all the nihlism that the left embodies: disdain for the individual, denigration of achievement, and viewing excellence as a form of agression. Apparently, the author would be more comfortable with a show celebrating medicority and dependence.
Krugman to Opponents: Please Stop Thinking
Krugman's economic policies virtually always entail taking money from responsible, hard-working people to help spendthrifts. This obviously raises certain moral issues, most notably whether responsible people should suffer to help the irresponsible. I suppose that reasonable people could disagree on this issue, but Krugman doesn't even discuss it. Instead, when faced with thorny moral issues, Krugman has repeatedly said that "economics is not a morality play" (emphasis in original)
http://krugman.blogs.nytimes.com/2010/09/28/economics-is-not-a-morality-play/
Krugman's assertions that economics isn't a morality play always take place in the context of income redistribution. Opponents of Keynesian policies argue that aside from being economic suicide, its profoundly unethical to redistribute income from the responsible to the irresponsible. Krugman's response is fairly summarized as "distribution of income doesn't matter; all that matters is facilitating economic growth."
This statement is both wrong and massively dishonest. Krugman's position is that there is no moral dimension to economic growth, and that moral considerations are subordinate, indeed perhaps irrelevant to, economic questions. However, moral questions inhere in economics. Slavery is primarily an economic phenomenon. I cannot imagine Krugman, or anyone else, arguing that the morality of slavery is irrelevant because "economics is not a morality play." The same can be said for any number of other issues -- child labor, environmental issues, labor vs. capital, etc. To deny that there are any moral issues involved in the questions of economic policy is absurd on its face.
Krugman's position is also incredibly dishonest. Krugman, and the left generally, has long argued that economic growth is less important than equality, and, that growth should be sacrificed for equality. In other words, according to the left, there is a moral dimension to economics, specifically the distribution of income -- too much inequality is, as a moral matter, bad. After arguing that the distribution of income is of great moral significance, and something worth sacrificing growth for for decades, Krugman now wants to pretend that the morality of a given income distribution is irrelevant, and should not even be discussed.
The reason is obvious. The left has advocated redistributing wealth from the "rich" to the "poor" for decades. There is at least some moral sense to this position -- helping the less fortunate is a humane act. So, Krugman, et al could grandstand how their redistributionist polices were moral endeavors, and that they should be applauded for overcoming greed and helping the poor.
But, the redistribution that Krugman is now advocating isn't from the rich to the poor, its from the responsible to the irresponsible. Instead of helping a single mother, or a poor senior citizen, Krugman is advocating bailing out the UAW, banks that should have failed, and people who bought homes that they couldn't afford, destroying responsible peoples' wealth in the process.
The redistribution that Krugman advocates has been stripped of any moral basis. The narrative is no longer helping the helpless, but rather helping the reckless and the greedy. When confronted with policies' gross immorality, Krugman tries to pretend that such moral questions simply do not matter.
But, either income distribution has a moral dimension or it does not. If Krugman believes that there is no moral dimension to the trade-off between efficiency and equality, and the resulting distribution of income, then the entire rationale for the welfare state disappears, as there is nothing less moral about high levels of inequality than low levels of inequality. If however, as Krugman generally argues, certain distirbutions of income are more ethical than others, then Krugman has to defend the morality of the redistribution that he is advocating.
Instead of actually defending his position, Krugman, is as his wont, dodges the issue, simply relying on the glib, dishonest, hypocritical, and thoughless statement that "economics is not a morality play." Krugman is inviting his readers not to think. What's distressing is how many liberals have RSVPed yes.
http://krugman.blogs.nytimes.com/2010/09/28/economics-is-not-a-morality-play/
Krugman's assertions that economics isn't a morality play always take place in the context of income redistribution. Opponents of Keynesian policies argue that aside from being economic suicide, its profoundly unethical to redistribute income from the responsible to the irresponsible. Krugman's response is fairly summarized as "distribution of income doesn't matter; all that matters is facilitating economic growth."
This statement is both wrong and massively dishonest. Krugman's position is that there is no moral dimension to economic growth, and that moral considerations are subordinate, indeed perhaps irrelevant to, economic questions. However, moral questions inhere in economics. Slavery is primarily an economic phenomenon. I cannot imagine Krugman, or anyone else, arguing that the morality of slavery is irrelevant because "economics is not a morality play." The same can be said for any number of other issues -- child labor, environmental issues, labor vs. capital, etc. To deny that there are any moral issues involved in the questions of economic policy is absurd on its face.
Krugman's position is also incredibly dishonest. Krugman, and the left generally, has long argued that economic growth is less important than equality, and, that growth should be sacrificed for equality. In other words, according to the left, there is a moral dimension to economics, specifically the distribution of income -- too much inequality is, as a moral matter, bad. After arguing that the distribution of income is of great moral significance, and something worth sacrificing growth for for decades, Krugman now wants to pretend that the morality of a given income distribution is irrelevant, and should not even be discussed.
The reason is obvious. The left has advocated redistributing wealth from the "rich" to the "poor" for decades. There is at least some moral sense to this position -- helping the less fortunate is a humane act. So, Krugman, et al could grandstand how their redistributionist polices were moral endeavors, and that they should be applauded for overcoming greed and helping the poor.
But, the redistribution that Krugman is now advocating isn't from the rich to the poor, its from the responsible to the irresponsible. Instead of helping a single mother, or a poor senior citizen, Krugman is advocating bailing out the UAW, banks that should have failed, and people who bought homes that they couldn't afford, destroying responsible peoples' wealth in the process.
The redistribution that Krugman advocates has been stripped of any moral basis. The narrative is no longer helping the helpless, but rather helping the reckless and the greedy. When confronted with policies' gross immorality, Krugman tries to pretend that such moral questions simply do not matter.
But, either income distribution has a moral dimension or it does not. If Krugman believes that there is no moral dimension to the trade-off between efficiency and equality, and the resulting distribution of income, then the entire rationale for the welfare state disappears, as there is nothing less moral about high levels of inequality than low levels of inequality. If however, as Krugman generally argues, certain distirbutions of income are more ethical than others, then Krugman has to defend the morality of the redistribution that he is advocating.
Instead of actually defending his position, Krugman, is as his wont, dodges the issue, simply relying on the glib, dishonest, hypocritical, and thoughless statement that "economics is not a morality play." Krugman is inviting his readers not to think. What's distressing is how many liberals have RSVPed yes.
Krugman Is Too Short to Be a Good Economist
http://krugman.blogs.nytimes.com/2011/01/24/the-war-on-demand/
I would define intellectual honesty as engaging with your opponents' arguments, either showing why they are wrong, or conceding that they are correct, and changing your opinions accordingly.
Krugman, naturally, apparently feels differently. He doesn't deign to actually engage with his opponents' arguments. Instead, he asserts that their arguments are based strictly on morality. In other words, he engages in wild speculation as to his opponents' subjective state of mind, rather than actually discussing the objective merits of their position. In fact, by assumption, Krugman's opponents don't even think, just blindly lashing out in anger at the truth he bestows upon them.
As you read this column, you'll learn nothing about economics, but plenty about Krugman's smug assumptions and failure to engage with his opponents' arguments.
"It’s becoming clear to me that a substantial number of writers on economics find the whole idea that the economy can suffer because people are too thrifty, insufficiently willing to spend, deeply repugnant."
This is a classic ad hominem attack. Instead of attacking the arguments of his opponents, he is calling them irrational. If Krugman's opponents are wrong, he should focuse on showing why they are wrong, not stating they're unduly emotional.
And, you'll note the implicit assumption here, namely that because his opponents' arguments coincide with their moral beliefs, they aren't to be taken seriously. But, an argument can be supported by both moral and factual bases, and the fact that an argument is being made by a person who also believes in its morality doesn't undermine its veracity. Imagine if a "scientist" said "I believe that global warming is a serious environmental risk." Would it undermine his conclusion if you knew that he was a committed environmentalist that cared deeply about preserving the Earth? Of course not.
(Note: the quotes around "scientist" are because science can not, by its very nature, resolve the global warming debate)
"I’m the sort of person who finds the notion that sometimes virtue is vice and prudence folly interesting"
Its great that Krugman is just the sort of guy who loves deep philosophical explorations. But, the relevant question isn't whether its "interesing" to reward bad behavior, its whether its either ethical or wealth-maximizing. This little self-congratulatory aside adds nothing to the debate.
"but it’s clear that a number of people find that notion just plain evil. The world shouldn’t be like that — and therefore it isn’t."
Krugman here engages in an obnoxious, self-serving characterization of his opponents' thought processes. In contrast to his Olympian willingness to consider all ideas, Krugman's opponents are portrayed as narrow-minded, irrational people who are too stupid to give complex or counterintutive ideas any thought.
In fact, there are hundreds of free-market economists who have thought deeply about the failures of Keynesian economics -- they just don't believe that the Keynesiam paradigm works. Krugman's dismissal of them as unthinking, ironically, makes him guilty of the very think he condemns, namely a refusal to actually think through an opponent's arguments.
Note: Krugman makes several other assertions in this column that I will discuss in a separate post.
I would define intellectual honesty as engaging with your opponents' arguments, either showing why they are wrong, or conceding that they are correct, and changing your opinions accordingly.
Krugman, naturally, apparently feels differently. He doesn't deign to actually engage with his opponents' arguments. Instead, he asserts that their arguments are based strictly on morality. In other words, he engages in wild speculation as to his opponents' subjective state of mind, rather than actually discussing the objective merits of their position. In fact, by assumption, Krugman's opponents don't even think, just blindly lashing out in anger at the truth he bestows upon them.
As you read this column, you'll learn nothing about economics, but plenty about Krugman's smug assumptions and failure to engage with his opponents' arguments.
"It’s becoming clear to me that a substantial number of writers on economics find the whole idea that the economy can suffer because people are too thrifty, insufficiently willing to spend, deeply repugnant."
This is a classic ad hominem attack. Instead of attacking the arguments of his opponents, he is calling them irrational. If Krugman's opponents are wrong, he should focuse on showing why they are wrong, not stating they're unduly emotional.
And, you'll note the implicit assumption here, namely that because his opponents' arguments coincide with their moral beliefs, they aren't to be taken seriously. But, an argument can be supported by both moral and factual bases, and the fact that an argument is being made by a person who also believes in its morality doesn't undermine its veracity. Imagine if a "scientist" said "I believe that global warming is a serious environmental risk." Would it undermine his conclusion if you knew that he was a committed environmentalist that cared deeply about preserving the Earth? Of course not.
(Note: the quotes around "scientist" are because science can not, by its very nature, resolve the global warming debate)
"I’m the sort of person who finds the notion that sometimes virtue is vice and prudence folly interesting"
Its great that Krugman is just the sort of guy who loves deep philosophical explorations. But, the relevant question isn't whether its "interesing" to reward bad behavior, its whether its either ethical or wealth-maximizing. This little self-congratulatory aside adds nothing to the debate.
"but it’s clear that a number of people find that notion just plain evil. The world shouldn’t be like that — and therefore it isn’t."
Krugman here engages in an obnoxious, self-serving characterization of his opponents' thought processes. In contrast to his Olympian willingness to consider all ideas, Krugman's opponents are portrayed as narrow-minded, irrational people who are too stupid to give complex or counterintutive ideas any thought.
In fact, there are hundreds of free-market economists who have thought deeply about the failures of Keynesian economics -- they just don't believe that the Keynesiam paradigm works. Krugman's dismissal of them as unthinking, ironically, makes him guilty of the very think he condemns, namely a refusal to actually think through an opponent's arguments.
Note: Krugman makes several other assertions in this column that I will discuss in a separate post.
Wednesday, January 12, 2011
I Think That May Be Backwards
Today, almost certainly, the Illinois Democrats will levy a 67% tax increase. Like all Democrats, the Illinois Democrats have framed Illinois' financial woes as a revenue problem, not a spending problem, so, remarkably, state spending will go up at the same time Illinois is crying poor.
The merits of tax increases aside, the tax bill was passed by blatantly deceitful means, being passed hours before a lame-duck legislature was replaced by a less Democratic legislature. More disgustingly, the governor, Pat Quinn, promised during his campaign to limit to veto any bill that increased the income tax rate beyond 4%. However, literally before he was sworn in, Quinn broke this promise, supporting a 5.25% income tax. In other words, he lied. No doubt, if he worked for Enron, Democrats would be howling that he should go to prison. But, because he's a public sector liar, he's supported by the left.
The most fascinating thing of all is that Illinois legislature outlawed the death penalty today as well. So, for followers of Illinois politics, here is the take-away: if you murder somebody, you can count on Illinois Democrats to show some mercy. If however, you work hard and are successful, the Illinois Democrats will come down on you hard.
The merits of tax increases aside, the tax bill was passed by blatantly deceitful means, being passed hours before a lame-duck legislature was replaced by a less Democratic legislature. More disgustingly, the governor, Pat Quinn, promised during his campaign to limit to veto any bill that increased the income tax rate beyond 4%. However, literally before he was sworn in, Quinn broke this promise, supporting a 5.25% income tax. In other words, he lied. No doubt, if he worked for Enron, Democrats would be howling that he should go to prison. But, because he's a public sector liar, he's supported by the left.
The most fascinating thing of all is that Illinois legislature outlawed the death penalty today as well. So, for followers of Illinois politics, here is the take-away: if you murder somebody, you can count on Illinois Democrats to show some mercy. If however, you work hard and are successful, the Illinois Democrats will come down on you hard.
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