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Pay no attention to that debt behind the curtain — 21 Comments

  1. I was banned from The Moderate Voice … for immoderately spotlighting historic fact. They treasured their fantasies, and did not wish them disturbed. SteveinCH, if you read this: come and visit neoneocon’s comment section. It is a fun place. They tolerate me. So far.

  2. As noted, Krugman routinely misrepresents facts and statistics and then hurriedly erects straw men when confronted by his betters. Here is a link to an excellent (and short) critique of PK that discusses his nobel and other issues:

    http://tinyurl.com/852mhq8

    “Ah, but are there Nobel prizes for polemicists?”

    Those were awarded in 2007 and 2009.

  3. “”Then again, maybe Dr. K believes public and private assets are the same and money paid to US corporations is actually paid to the government.””

    Liberals reflexively believe all private sector assets belong to the govt and are simply on loan to the citizens. They can’t fathom that not being the case.

  4. Wooohhh! Now this is a first class slime job. Bring up anti-semitism, which isn’t supported by the article, and then go off and cite – wait for it – a commenter at another blog. And, if you read the commenter closely, completely misreads Krugman’s argument (and I’m being generous here, I’m assuming a misreading not a deliberate lie). Then you go on to “a professor” at George Mason, who also misrepresents Krugman’s argument. I’ll leave it to others to go back and read Krugman and see why these objections don’t work. But the main point is that if Krugman is so far off course, why do you have to go first to anti-semitism and then only find such really weak support as to his economic arguments? This is just pathetic. If Krugman is really wrong in his column I guarantee you the Chicago School guys would be all over him.

  5. That Krugman has abandoned economics for polemics is a regular refrain in my corner of the econoshpere.

    The debt being argued about is a financial concept much more than an economic one. Note that everything is stated in terms of dollars, itself an abstract value that floats against other abstract values. Try converting all those debt obligations into tons of corn, millions of BTUs and man-hours of engineering and you might begin to see how the financial economy is impossible.

    $1T is about 8,000,000 man-years of engineering services ($60/hr). That’s eight million years of services over and above paying the engineers the $1T owed for the current year. Even if you could enslave those bright minds and keep them at peak output while in shackles, they still need to eat.

    Our $15T national debt represents ninety million man-years of engineering services. And the median wage is less than what an engineer earns. If you look behind the curtain, the theater collapses.

  6. Dave: I believe you may have a problem with reading comprehension. And that’s putting it very, very kindly.

    I said I lack the economics chops to evaluate the pros and cons of the Krugman argument, so I didn’t try, but explained why I don’t trust him because he has been proven to be highly unreliable and self-servingly disengenous in other areas that are within my knowledge base, and which I’ve researched heavily. That is the context in which his columns on Mathahir’s anti-Semitic remarks were brought up.

    And despite your scare quotes, Donald J. Boudreaux, the George Mason ecnomics professor who wrote that letter I quoted, is in fact an ecomics professor and not “professor” at George Mason University. As for George Mason itself:

    …[T]he university was founded as a branch of the University of Virginia in 1957 and became an independent institution in 1972. Today, Mason is recognized for its strong programs in economics, law, creative writing, and computer science. In recent years, George Mason faculty have twice won the Nobel Prize in Economics. The university enrolls over 32,500 students, making it the largest university by head count in the Commonwealth of Virginia.

  7. How can Krugman compare debt owed by government to debt owed to private US companies abroad (which is what he appears to be doing)?

    He’s comparing claims on the United States by the rest of the world, with claims by the rest of the world on the United States. Both sides include both claims on government and claims on private companies; both claims owed to government and claims owed to private companies; both debt and equity.

    When government spends money, resources that would otherwise have been used to produce valuable private-sector outputs are instead used to produce public-sector outputs.

    In conditions of underful employment, resources that would otherwise have lain idle can be used to produce public-sector output, without foregoing private sector output.

  8. Prof. Boudreaux’s statement is clear and conclusive. It is simply Bastiat’s Parable of the Broken Window once again. None of this is difficult “economics”. It’s simply about choices, roads not taken. Economics-like verbiage can lead to chuckleheaded statements like rmd’s
    “In conditions of underful (sic) employment, resources that would otherwise have lain idle can be used to produce public-sector output, without foregoing private sector output.” That sounds so economics, but it ignores Bastiat.

  9. rmd also writes, “He’s (Krugman) comparing claims on the United States by the rest of the world, with claims by the rest of the world on the United States.” Really? Wow. No wonder there’s no difference in the comparisom.

  10. Don Carlos:

    Thanks. Should of course read, “claims on the United States by the rest of the world, with claims on the rest of the world by the United States”.

  11. Don Carlos:

    Prof. Boudreaux’s statement is clear and conclusive.

    Clear, anyhow. It clearly makes an argument that assumes full employment, and applies it to a situation of underfull employment.

    It is simply Bastiat’s Parable of the Broken Window once again.

    And what here corresponds to the broken window?

    None of this is difficult “economics”.

    True. Boudreaux takes the easiest possible line against the Keynesian prescription against recession — assume away the recession. More cogent but more difficult anti-Keynesian arguments try to show that despite appearances, recessions don’t involve underfull employment; or that even if they do, fiscal policy isn’t effective against them.

  12. Full employment is Keynes inventing an unknowable quantity which Keynes proposes to optimize. “Full Leisure” is equally valid, but does not appear in the GDP equation, and is therefore irrelevant to Keynes, neo-Keyns and monetarists.

    Show me the real human who does not put a value on leisure.

  13. Krugman’s Nobel was supposedly for some thoughts on the economics of mass production which, although pretty thoroughly demonstrated by Henry Ford, are surely a verboten topic to most of the Kroopies because mass production has been known to cause something called Manufacturing which was icky and had to be stamped out through regulation, unionization, and government meddling.

    Krugman really got his Nobel for Annoying George W. Bush. That is rather a large category, including as it does Albert Gore, Barack Obama, and Jimmy Carter.

  14. Kurgan does not understand the broken window fallacy. He said that 9/11 would be good for the economy because it would create jobs.

  15. Really. If “economics” were the “science” everyone pretends it is, would there ever be economic problems? If any of these folks knew what they were talking about, why would there EVER be a depression or recession (since the “economists” could fix things up right away just by jiggering their “scientific” principles)? Why anybody listens to a Krugman at all is beyond me. “Economics” is people, and people are unpredictable and uncontrollable.

  16. It is truly disheartening that so many from the credentialed classes, especially among academia, take the likes of Paul Krugman and Thomas Friedman so seriously. They want to know what “other smart people are thinking”. Reminds me of William James’ quip that too many people mistake thinking for merely rearranging their prejudices.

    Anyway, Eric Falkenstein has a GREAT blog on finance and other issues. He’s a model of intellectual sanity and fairness. Here’s his post on the latest Krugman kerfluffle:

    http://falkenblog.blogspot.com/2012/01/macro-imploding.html

    Yesterday I read a really fun catfight between Krugman and everyone (e.g, Tabarrok, then Krugman, then Cowen, then Krugman, but this is typical). Now, losing one’s temper in an argument is usually symptomatic of losing the argument, and so I am quite pleased watching Krugman boil over. Yesterday’s Krugman post was precious, as he defending being peevish by noting that he only treats people like ‘mendacious idiots’ if they are so, and civility is irrelevant when the stakes are important!

    He doesn’t understand that civility is more important the greater the stakes, because they are helpful and takes discipline. It’s easy to lose it and just start calling someone names, questioning their motives, but this is just appealing to your base emotions, as highlighted by the behavior people with their frontal lobe activity reduced (i.e., drunk people). On the other hand, on issues that are not important, well, it’s easy to be gracious about things that don’t matter because it takes no effort, there’s nothing to restrain, there’s no cost of doing so because you don’t care if you ‘lose’. If you are trying to bring a crowd to your point of view, manners are very helpful, they are a better sign of good faith argumentation. If you are just being angry, this can help incite a predisposed mob, but little else because everyone knows that someone highly emotional is not reasoning at all, just rationalizing. Sure, we all do it, but if we don’t at least pretend not to, we clearly are not coming close to the rational objective we all aspire to in less heated environments.

  17. stumbley:

    If economists confined themselves to the scientific part of economist, we might have fewer and less-severe “problems”. The laws of supply and demand are as reliable as gravity.

    Keynes’s great innovation was to create an economic model that justified political interventions in economic activity. Those interventions blow natural adjustments in pricing up to become problems across national economies.

    Better to treat economic like science, which is only positive, not normative. Describe what is likely to happen, not suggest what *should* happen. Shoulds are for politicians.

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