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.
