Paul Krugman’s recent posts have been most peculiar. Several have looked uncomfortably like special pleading for political figures he likes, notably Hillary Clinton. He has, in my judgement, stooped rather far down in attacking people well below him in the public relations food chain, violating one of the unwritten rules of discourse: if you are going to kick someone, you kick up or at least sideways.
Perhaps the most egregious and clearest cut case is his refusal to address the substance of a completely legitimate, well-documented article by David Dayen outing Krugman, and to a lesser degree, his fellow traveler Mike Konczal, in abjectly misrepresenting Sanders’ financial reform proposals and attacking that straw man. Dayen pointed out that the proposal that both criticized, Sanders’ plan to break up big banks, was Elizabeth Warren’s so-called 21st Century Glass Steagall bill. That also meant they misrepresented Sanders as not addressing shadow banking and undermined Warren’s reform program. Similarly, as Dayen stressed, both tried to depict Sanders as a naive hair-on-fire idealist for wanting to break up the banks when both the FCIC and foreign bank regulators back the idea.
Now there are elements of Sanders’ reform plan not to like. For instance, while reinstituting a usury ceiling is a stellar idea, the specific way Sanders has formulated it needs rethinking. Similarly, he wants to stop paying interest on bank reserves and instead impose charges on them, which is misguided. The interest payments on reserves are an artifact of QE, since it has resulted in excess reserves piling up in the banking system, and the payment of interest rates becomes necessary to allow the Fed to maintain an interest rate floor. But rather than do their own homework, which would have included reading the Warren bill, these self-styled wonks simply amplified Clinton’s anti-Sanders talking points with a bit of extra hand-waving.
What so irritated Krugman, and led him to issue not one but two posts going after Dayen on a bizarre no-name, no-link basis? It’s doubtful that it was Dayen describing at length how Krugman’s attacks on Warren’s bill (had he even understood that that was what he was attacking) were at odds with his past position, or that Mike Konczal’s recent skepticism of Glass Steagall-type reforms, was a flip-flop from a long document he co-wrote in 2010. This is what appears to have set Krugman on tilt:
The radicals in this debate, in other words, are those protecting the deregulatory status quo….
But denying this consensus, and delegitimizing structural reform as silly and shortsighted, only does the work of banks and their lobbyists, who want to preserve the current system and cut off any avenues for a more far-reaching redesign.
Why in the world are people who call themselves liberals helping them do it? Those wondering why Warren hasn’t endorsed Hillary Clinton yet should consider whether it’s because Clinton and her minions are delivering a mortal wound to the cause of Warren’s life.
Krugman’s first post, Wonks and Minions, went full bore ad hominem. Members of his audience who would not know that Krugman was settling a particular score would mistakenly see this as an effort to depict many of Sanders’ backers as hysterics and unsound, clearly less trustworthy that established fauxgressive brand names like Ezra Klein, Jonathan Cohn, and Jonathan Chait. Treating this list as if it were a pantheon of intellectual accomplishment is a big tell as to where Krugman is coming from. Established readers will recognize Klein as a shallow apologist for neoliberalism; we’ve referred to him as Baghdad Bob (see Ezra Klein Should Stick to Being Wrong About Health Care, New Propaganda Coinage: “To Klein”, and Mark Ames: Ezra Klein’s Shine Job on the Kochs for examples of what Krumgan apparently regards as praiseworthy output). If you think we are being unfair, or that our criticisms are dated, please see this fresh Jacobin article eviscerating Klein’s apparently Sanders-induced volte face on his health care views in Meet the New Harry and Louise.
And here’s the priceless part in Krugman’s faux high ground post: he acts as if he’s riding in to defend Konczal when Dayen’s article was almost entirely about Krugman. And Krugman’s failure to offer a substantive response means he’s resorting to old trick of trial lawyers at the end of their rope: “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on you side, pound the table.” The post is full of cheap slurs:
And the response of some — only some — Sanders supporters is disappointing, although I guess predictable given that somewhat similar things happened during the 2008 primary. There will, I guess, always be some people who, having made an emotional commitment to a candidate, can’t accept the proposition that someone might share their values but honestly disagree with the candidate’s approach.
Right now I’m getting the kind of correspondence I usually get from Rush Limbaugh listeners, although this time it’s from the left — I’m a crook, I’m a Hillary crony, etc., etc.. OK, been there before — back in 2008 I was even the subject of tales about my son working for the Clintons, which was surprising because I don’t have a son.
But I’m used to this stuff. It’s a bit more shocking to see Mike Konczal — one of our most powerful advocates of financial reform, heroic critic of austerity, and a huge resource for progressives — attacked as one of Hillary’s minions and an ally of the financial industry.
What’s really funny is that neither Mike nor I, nor, I think, any of the other wonks-turned-evil-minions have changed positions.
This is remarkable, and in a very bad way. Krugman conflates the content of his inbox with Dayen’s post via the “minions” in the headline and text, tarring Dayen with being emotional and accusing his of depicting Krugman and Konczal as evil. Moreover he simply chooses to deny the evidence presented by Dayen in his post, (as well as mine) that Krugman and his allies, in fact, reversed positions on specific policy proposals with the only apparent reason being that Sanders is now the architect. If there’s some other rationale, I’m sure Krugman’s supporters would very much like to hear it, but the lack of a rejoinder means the charges stand.
In addition, Krugman considerably exaggerates both Konczal’s fidelity to “progressive” causes and his courage. Konczal is not heroic, nor is he the expert that Krugman holds him out to be. As a financial services industry expert with a strong history of crisis-related scholarly work said via e-mail:
(1) There’s a lot of important technical stuff that neither weighs in on, especially Krugman.
(2) Konczal is always a second (or third) mover on issues.
Nor has Konczal been a stalwart on austerity. He defended his Roosevelt Institute when it decided to accept to take Peterson Institute funding. See these posts for details on what Peterson got for its money:
Bribes Work: How Peterson, the Enemy of Social Security, Bought the Roosevelt Name
Jon Walker: Roosevelt Institute Abandons Traditional Liberal Health Care Policies For Pete Peterson
Konczal was public in his support for this sellout, calling this Judas kiss a “sweet gig.“. An assessment from one of his readers::
Dollared says:
June 6, 2011 at 12:14 am
Mike, as a long time fan, your post is deeply disappointing. Especially on the health care stuff and the naivete about Pete Peterson’s goals.You don’t think a public option is a possiblity? I love you man, but you just need to move over to OFA. Franklin Roosevelt needs his legacy advanced by someone who sees the possiblity that we could have a health system as rational and cost-effective for all Americans as the #$%%$&& Dutch. And someone who sees how not having single payer is destroying both Social Security and Medicare.
You don’t seem to be advancing Franklin Roosevelt’s legacy, just ensuring that the retreat is a bit more orderly. Too bad. Really.
Konczal made more of an effort to respond to Dayen, in Why I (Still) Think Shadow Banking is Key to Financial Reform, without linking to his post until Dayen chided him on it. Dayen replied on Tumblr in detail (scroll down to the key section, which begins, “There seems to be a lot of effort put into deliberately misconstruing my point…”)
Remember, we are now into an argument that Dayen is continuing on Tumblr, meaning it is far less visible than his original Fiscal Times article. Rather than choose to ignore it, Krugman doubles down on the personal attack. From his post Bernie, Hillary, Barack, and Change:
He could be wrong, of course. But if you’re a progressive who not only supports Sanders but is furious with anyone skeptical about his insurgency, someone who considers Mike Konczal a minion and me a corrupt crook, you might want to ask why Barack Obama is saying essentially the same things as the progressive Bernie skeptics. And you might want to think hard about why you’re not just sure that you’re right, but sure that anyone who disagrees must be evil.
Is Krugman off his meds? Where does this paranoid “those who challenge my positions and those of my allies are calling me evil and a corrupt crook” lunacy come from? Straw manning isn’t an adequate depiction of what is going on here, since “straw man” is a misrepresentation of the content of a position. Krugman goes well beyond that to accuse Dayen of personal enmity and moral absolutism.
And the invocation of Obama as a policy expert on banking is absurd. Obama has depended on the support of the FIRE sector from the outset of his life in politics. From a 2012 post, Exclusive: How Obama’s Early Career Success Was Built on Fronting for Chicago Real Estate and Finance:
[Robert] Fitch gave his eye-opening speech before an unlikely audience at an unlikely time: the Harlem Tenants Association in November 2008, hard on the heels of Obama’s electrifying presidential win. The first part contains his prescient prediction: that Obama’s Third Way stance, that we all need to put our differences aside and get along, was tantamount to advocating the interests of the wealthy, since they seldom give anything to the have-nots without a fight.
That discussion alone is reason to read the piece. But the important part is his description of the role that Obama played in the redevelopment of the near South Side of Chicago, and how he and other middle class blacks, including Valerie Jarrett and his wife Michelle, advanced at the expense of poor blacks by aligning themselves with what Fitch calls “friendly FIRE”: powerful real estate players like the Pritzkers and the Crown family, major banks, the University of Chicago, as well as non-profit community developers and real estate reverends.
And lest we forget that this same Obama appointed Timothy Geithner as Treasury Secretary, showed no interest in bringing the banks to heel, when Krugman had helped clear the way for that by depicting nationalization as the best option for Citigroup and Bank of America, and instead told banking industry executives he was the only thing standing between them and the pitchforks? This was the same Obama that failed to press for principal modifications, failed even to use the $75 billion in TARP funds that the Bush Administration had courteously left them for that purpose, failed to clean up mortgage servicing and instead gave the banks a second bailout by covering up for their massive mortgage chain of title issues via the 2012 National Mortgage Settlement?
Krugman, who is more and more a political economist as the year go by, peculiarly chooses to fall back on wonkery as the justification for pooh-poohing Sanders, when as we and others have stressed, he and others were eager to push for the main chance when they had politicians more to their liking fronting for them. As Georgetown professor Adam Levitin said via e-mail:
What Krugman and all the wonks miss are the politics. The real importance of both Glass-Steagall and single-payer is as political economy reforms. Bust up the big banks and you bust up their political power, which enables other reforms. Single-payer changes the bargaining leverage in health care monumentally and that enables price reform outside of the political process, so political power of pharma and insurance is reduced. Krugman, Klein, etc. are oblivious to this because they’re wonks who think policy, not politics, and don’t recognize that the space for policy is determined by politics. If we want whole scale reform, we need to address the politics first.
And Robert Reich similarly underscored the paramount importance of creating an impetus for root and branch reform:
I’ve known Hillary Clinton since she was 19 years old, and have nothing but respect for her. In my view, she’s the most qualified candidate for president of the political system we now have.
But Bernie Sanders is the most qualified candidate to create the political system we should have, because he’s leading a political movement for change.
The upcoming election isn’t about detailed policy proposals. It’s about power – whether those who have it will keep it, or whether average Americans will get some as well.
The Krugman that was early to stand up to the Iraq War, who was incisive before and during the crisis has been very much in absence since Obama took office. It’s hard to understand the loss of intellectual independence. That may not make Krugman any worse than other Democratic party apparatchiks, but he continues to believe he is other than that, and the lashing out at Dayen looks like a wounded denial of his role.
In other words, as much as Krugman’s tantrum is so transparently off beam as to warrant ridicule, and as much it might seem fair minded to give Krugman and Konczal the benefit of the doubt and depict them as hostages of their own self-styled wonkery, that’s just falling for their protective coloring. Their whole argument is political, Hillary is pragmatic and polls better, etc (check out the extreme passive aggressive way Krugman traffics in Clinton talking points about how Bernie is unelectable). They really believe in political corruption as long as Democrats and technocrats are in charge, which is why Hillary’s speaking fees from Wall Street aren’t even worth a mention. They believe in Scalia’s logic on Citizens United. That’s why Konczal defends the Peterson donations to Roosevelt; he really has a right-wing dystopian understanding of corruption and power, that might makes right. In their case, that ‘might’ is the professionalism of technocracy, and choosing who to ignore is their divine right.
The fundamental issue here is that there is deep disagreement within the Democratic Party over values, not over methods. The argument that Hillary and Bernie represent different methods for the same goal is the essential lie of the Krugman/Konczal/Klein world. Krugman and his merry band really want a world shaped by technocrats without accountability or responsibility. This is a world where people in power can ignore who they want (like Dayen) and take money from whoever they want (like Peterson and Enron) and support who they want (like Clinton and Obama) without being held responsible for the policy outcomes that emerge. All opposition is cynically chalked up to racism, as opposed to the inherent evil of a world run by elitist corrupt professionals.
Those who want a more just world aren’t unprofessional children or racists; Sheila Bair, Simon Johnson, Elizabeth Warren, Robert Reich, and so on and so forth believe in a more equitable world where credentialism and access to capital isn’t the dominant element of power. They believe in democracy, where voters can be persuaded to support good ideas and honest politicians that stand up to big money. These are deep disagreements and they aren’t going away.
In reality, it’s not that Konczal and Krugman are stupid, or off their meds. It’s that they are the marketing arm of Wall Street in charge of corralling liberals. They are well-paid for it. But it’s their technocratic and corrupt policy outcomes that have created Trump, and if they aren’t defeated, Trump or a variant like Trump will one day take power.
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Many people will remember that Paul Krugman supported the Wall Street candidate, Hillary Clinton, in the future. Any columns he has about inequality or related issues will or certainly should be met with skepticism in the future.
Let’s face it, Krugman is a long time member of the Group of Thirty, he’s nothing more than a lobbyist for the central banksters.
Krugman’s sang-froid is slipping.
Thanks for this post.
which is a typical behaviour of someone who is in denial (or a similar face-losing situation), and sort of knows it…
I think he’s running neck n neck with James Kunstler !!
bit harsh on Kunstler.
Kudos, Yves. It’s time to fight back against these plutocratic enablers.
As for Krugman, he doth protest too much and that is telling. I tuned him out long ago. He grovels before powerful Democrats and then they walk on him like he’s a doormat. He is a tool and a fool.
Yup, and that Roosevelt Institute, the vanden Heuvels and Richard Kirsch?
Yup, thought so . . .
I like to refer to Katrina as vanden Drivel.
The Nation magazine is endorsing Bernie Sanders. Not that it matters much.
Doesn’t matter much to me. I stopped reading The Nation when they started publishing Russian propaganda during the media height of the crisis in Ukraine.
Thank you for the great comments and the most excellent post. How to get this message out? Please keep writing and exposing the “marketing arm of Wall Street”, that has not only aided WS’s capture of Congress, Executive Branch, SEC, CFTC—but is making incredible progress with the Judicial Branch through FINRA’s control of $7 trillion in IRA money and now the shocking moves to limit Discovery in Class actions.
Worth remembering that Krugman has gone out of his way to say there is no evidence linking income inequality with our current demand deficit/sluggish economy.
I mean, really? A college freshman with a minimum understanding of marginal propensities to consume can figure that one out.
Ignore evidence against your postition, argue not on the basis of facts but what some “authority” says, and then claim your opponent is seeing everything in black-and-white…I have a friend who used to argue like this. It’s the most frustrating thing in the world. I’m not going to waste my time reading Krugman, but I’m guessing that at some point he says”when you point your finger at someone you have three pointing back at yourself,” which was the non sequitur that my buddy would always end our debates with.
I don’t think that Krugman is evil, but I do wish ever so much that people would stop taking him seriously!
It’s amazing to see Krugman employ the very appeal-to-authority fallacy that he, himself, has criticized so effectively when it has been employed by austerity apologists to back up baseless contentions.
I guess he’s learned from the masters.
Many like to be cryptic and just drop names of people deemed authoritative.
I probably hang out on NC too much, but most progressives I know consider Obama the #1 health care and finance reform sellout. Quite a bit of the opposition to Obamacare comes from people who believe it doesn’t go far enough. For Krugman to refer to Obama as any kind of authority reeks of careerism. I guess Krugman is speaking to Hillary supporters and not to people like me. Hillary supporters already agree with him, so he’s not trying to persuade, he’s just emitting Hillary-pleasing babble-fog.
I know it’s not an original thought, but it’s looking more and more like Krugman is seriously angling for a position in a Clinton administration. It seems to get more sycophantic by the day.
I noticed a significant change in tone to his columns when he was leaving Princeton for NYC. It started roughly a year prior. In hindsight, I wouled say his thinking changed to match those he was spending his time with. So he went from an environment of curious students to close minded professionals. And I think it shows.
Great point! I always read posts/comments here late so rarely reply but Krugman’s metamorphisis has bothered me for about a decade. I am a professor in the field and admit to learning more through interacting with students than I could have otherwise. It’s impossible to prove, but that’s the way it seems…
…and the people who have real experience dealing with medical emergency and medical insurance companies. Every person who goes through a medical emergency for the first time is a sacrificial lamb to the Hospital and Insurance scam. Your days will be filled with a dizzy array of documents and your bank account will be drained. (Not to mention the emotional toll.)
Yes, I too have an O-bot friend who is equally frustrating to discuss politics with. It’s not the disagreements that are frustrating. It’s the facile, cliche’ ridden style of discourse and illogical, non cogent point-making that leave you feeling as though your’e holding a handful of air. I have had running arguments with many people and with most, I can at least understand the point they are making and they understand me. The gears engage. But with Obots, that doesn’t happen. It is always Through the Looking Glass.
The banality of evil.
I know I’m late to this, but I think you have hit the nail on the head. Krugman earned his stripes calling out this exact same BS. It’s a shame to see him fall like this.
Krugman anguishes because he fears Sanders cannot win in a general election. That remains to be seen. First Sanders needs to win the nomination. Sanders himself has said that will “require a revolution.” Krugman seems to be saying, along with Jim Webb at the time, that there isn’t going to be any revolution.
On the other hand: Here in New Hampshire, I have heard self-avowed life-long Republicans say that they are voting for Sanders because he is the only candidate who is talking substantively about the issues that concern ordinary people. Deep down, this election is about two things: accountability and balance.
Personally, I think it’s about who can be bought off and who can’t. That’s the ONLY thing I can think of that Sanders and Trump have it common. Two old guys who give ZERO f-s about what “serious” people say.
Yup, but strangely enough, they are also the only two candidates discussing the welfare of the American worker.
And we know that it was forbidden in the Clinton Administration to use the phrase:
Corporate welfare
so, they aren’t talking about anyone’s welfare????
The idea that playing defensive small-ball is practical is the most ridiculous thing about the establishment apologists. The establishment Democrats think leadership means responding to the Republican agenda and limiting the scope of their victories, not moving the ball the other way and making them respond to the Democrats’ plays. As I see it, the biggest thing Bernie wants to do is set the agenda, rather than responding to the Republican agenda. That’s far more practical than the Obama, Hillary, Wasserman-Schultz approach and that’s what they hate about him.
I’d go further… the Democrats have not so much “responded” to the GOP agenda as adopted the GOP agenda. Clinton’s neoliberal “Third Way” or Rubinomics (a better sobriquet imho and essentially the rubber-stamping of “Reaganomics”), bankruptcy “reform,” welfare “reform,” Clinton’s Crime bill, death penalty, Obamacare, charter schools and TFA, extra-judicial assassination, torture (on-going if outsourced), and the most recent wars of choice and aggression…
did I mention the most recent wars of choice and aggression? (yes, I understand that the Democratic establishment has long been bellicose)
and as much as it pains me to remember (because of his genuinely good post-presidential activism), union busting started with Carter, the first Democratic neo-liberal president…
These are more than responses, they are enthusiastic embraces.
It’s why I don’t buy the “Overton Window” nonsense. The Democrats were not pushed right, the Democrats actively pushed the GOP further right – all the way to insanity – by adopting much of its core agenda. The Overton Window is an excuse party “liberals” use to get themselves off the hook for their complicity. And it’s been going on for decades.
Well said, and completely agree. When people say that Obama or the D-Team have been “hampered” by rightwing obstructionism, I just want to puke. Where oh where have we seen the D-Team – at least on the fed level – offer up ANY resistance whatsoever; where are they pointing out the “sins” of the GOP and offering up other solutions?
Shorter A: it doesn’t happen.
These 2 branches of the Uniparty work hand in glove and hide behind each other’s skirts.
One example: where, really, is the D-Team backlash against this current big R-Team-led witch-hunt over Planned Parenthood? Do you see any politician on the federal level really speaking out against this rightwing bullshit, which has been proven endlessly to be false? Unless I’m really missing something, I don’t see any federal level D pols really speaking out about this travesty, which affects the HEALTH and welfare of many women in this nation. It’s appalling.
A pox on all of their houses.
I beg to differ. The Dem establishment has not “responded” to the GOP agenda. It has embraced much of it. That ain’t compromise, that’s misappropriation.
Your football metaphor highlights that the Dems have been only half a team, their offense is almost nonexistent and defense stays constantly on the field (though it’s the supporters that are exhausted).
Back when I was into football I heard a joke about a team like like (can’t remember – may have been about 1990 Broncos who lost that year’s super bowl badly):
Q: how are the Broncos like a tampon?
A: they have one string and are only good for one period.
I think Krugman and others are afraid Bernie CAN win the general.
Nothing to fear, we should tell them and let these people calm down, lulling them to sleep.
“Krug, don’t worry. Everything will be just fine. Go back to the tower.”
I have read and enjoyed Krugman’s work over the years. He’s still married to that old macroeconomic model, but he did recommend nationalizing BAC during the crisis which was well outside the box. However, I believe his long disregard for “freshwater” economists (referring to the Chicago School and Milton Friedman) and their gory experiments in SA has led to firm entrenchment of his long-held positions. Further, I believe he suffers from loyalty to both Obama and Clinton, well past their “use by” dates. This has made him far less of a thoughtful intellectual than he believes himself to be. In short, were Paul a starving grad student rather than a well-connected yuppie, he’d be four-square behind Bernie and would be offering tweaks to Bernie’s policy positions, rather than tossing them in the fire.
If there isn’t going to be a revolution, stick a fork in this country.
Agree!
LINOs: Liberal In Name Only. With emphasis on the 1st syllable, pronounced “Lie”.
I don’t read Krugman, and I confess to having no idea who Mike Konczal is, but Krugman’s response to readers’ letters reminds me of stage three in Glenn Greenwald’s excellent article on the seven stages of establishment backlash:
Speaking of Glenn Greenwald he had a great piece this am about Krugman. A must read if you liked this one by Yves.
Krugman attacking a straw man? I’m shocked, shocked that they taught straw man bashing at M.I.T.!
While it doesn’t exonerate Krugman, the fact is that his style of argument is de rigueur in mainstream economics. A smidgen of wonkery is all that is needed to support a barrage of innuendo, decontextualized half-truths, axiomatic ideology, appeals to authority and sheer repetition, repetition, repetition — what Frederic Harrison described back in 1872 as “this magazine of untruth”:
Thank You
Decidedly uncivil! Thank you.
It was extra credit.
Only because he also tilts at windmills.
Well he got his academic nose bloodies when he tried to take on Steve Keen. Maybe he is trying to stay relevant.
Steve Keen has exactly covered himself in glory these past two years
“Has”? Or “hasn’t”?
DD, you should be very proud for yanking hillabillie pets chain;) Thanks YS for the put down of crazy pk
Very good article and I thank you for it.
Krugman’s ‘liberalism’ is contingent to his personal politics and ambitions.
There is no progressive ‘establishment’ in the Democratic Party any more. The Clintons showed them how to sell themselves, and that has become the fashion.
I like the way Paul Ochs used to put it. Liberals: 10 degrees left of center in good times, 10 degrees to the right when it affects them personally.
But if you ask me to bus my children
I hope the cops take down your name
So love me, love me
Love me, I’m a liberal
It was Phil Ochs.
This discussion today reminds me of the wonderful political history brief Ted Rall provides in his outstanding book, Bernie.
Highly recommended!
http://krugman.blogs.nytimes.com/2016/01/25/bernie-hillary-barack-and-change/?_r=0
Look at those comments! Keep the heat on these apparatchiks!
Thanks for that link. Here’s just one comment of many like it.
“And you, Professor Krugman, might want to think hard as to why we should take seriously the notion that someone who has taken literally tens of millions of dollars from the Big Money interests that are strangling the 99% will be on our side when the chips are down.
Here’s my theory of change: Change comes when millions of people organize, agitate, and make clear in a distinctly obstreperous way that they are not going to take it anymore. The Sanders campaign agrees with that theory of change and that’s why I support them. The Clinton campaign says real change isn’t possible so the best we can hope for is to keep things from getting worse.
No thanks. Really, no thanks.”
Lovely find. Thank you. Extra points just for the use of obstreperous.
I guess that was some powerful roast beef.
We will see much more of this kind of attack. Each of the defenders of status quid pro quo have data that the end is nearer that we plebians know. The market whined when it didn’t hear more money coming from the Feudal Reserve today.
I like to think that Paul has had an investing boo boo and has to advertise for SQPQ in hopes of one more rally. If you attack a reporter, hasn’t everything else failed?
What’s SQPQ? (One article said it’s a license plate record of a border crossing–probably not what you had in mind.)
Initial letters [except the Q] of the Latin phrase “Senātus Populusque Rōmānus,” meaning “the Senate and People of Rome.”
The letters used to appear on placards carried by Roman legionnaires — at least in the old movies of them that I saw.
You’re thinking of SPQR.
SPQR can still be seen on old Mussolini era manhole covers today throughout Rome.
Each of the defenders of status quid pro quo have data that the end is nearer that we plebians know.
sorry, Status Quid Pro Quo, SQPQ I remembered the roman banners of yore and adapted the name
I’m not really keen on celebrity gossip. Could someone explain who this Krugman fellow is?
Columnist at the New York Times, Nobel prize for Economics, taught Economics at Princeton. Was a vocal opponent of the Iraq War when it was not cool to do so which ebrought him a much larger audience than might otherwise have been expected of an economics columnist.
fukk this is complicated. Even the title is complicated. There’s 3 people in 1 title, along with the words Cowardly, Dishonest and Misrepresentation! All in one title!
That is a complicated title, let’s be honest. It rendered me unconscious for a few brief moments, after the initial impact. I was dizzy for the first few paragraphs and I don’t think my reading comprehension ever recovered. Frankly, I was lost from the beginning.
What happened to Professor Kelton? Can’t she unload some economic photon torpedos in an Op-Ed in the New Yawk Times? Isn’t she Bernie’s economic advisor? Why is Paul Krugman still writing columns anyway? Isn’t he bored by now.
What we need is a Rhonda Rousey type who can throw an economic punch. It’s not like Yves can’t throw a punch, but when you’re a professional wrestler you need to go to your corner, tag your partner, and have them come out in the ring and do a hammer head lock that ends up in a reverse flip. Is that something Professor Kelton can do? It should be easy in economics, since anything in economics is what you say it is no matter what it is even if it isn’t.
Don’t make us open up a can of Randy Wray on you.
this is ladies wrestling. Opening that up would be like bringing an NFL right tackle into a girls touch football game. Even somebody’s fiercest critic would be appalled, embarrassed and angry if that were to happen. Professor Kelton should make a play, maybe run a corner route and at least get a first down with a 800 word Op Ed on something relating to money making and debt. Move the ball. That’s the point. Move the ball downfield and keep possession.
well I missed my chance for an edit. I was watching Joe Montana NFL game highights on Youtube today. Wow. That was a while ago. 1990 in fact! Wow. He was one smooth dude in the pocket, that’s for sure. I bet he could be just as successful in today’s league. I bet he could be. He was 6 feet 2 inches and about 195 pounds. He could play today and stil win. It hasn’t changed all that much actually. Except now a lot of players have natty dreads and long long hair..
Until he met Jim Bert in 1986.
Frankly, I think Bernie’s got her laying low and cooking up strategies to shove necessary spending past the bozos on the budget committee.
Don’t want to scare ’em any more than necessary until he’s a done deal.
Can’t be as powerful as ABCT micro dot….
Enjoy your time in the ivory tower Paul. I hope it was worth it. Your selling single payer health care down the river ended any respect I had for you. Good Luck!
Same here. I had been a fan. Then his coverage of Obama’s health insurance bailout didn’t pass the smell test.
I was quite surprised, disappointed. Now I’m amazed he’s sunk so low.
Krugman defending a stake in the ground – ????
“Heterodox economists have traditionally rejected the IS-LM approach for many such reasons; but, even if one were to hold one’s nose, in an uncertain world in which investment is governed by animal spirits (and therefore I being interest inelastic unless inclusive of household spending) and in a world of endogenous money, at best, the IS curve can be represented by a vertical line (or a more elastic relation when including household spending, an IS’ curve). In much the same way, the LM curve can be represented by a horizontal line at any level of interest rates set by the central bank (as shown in the figure below). What insights can such a tool of analysis really offer economists? It suggests that an increase in autonomous spending will generate increases in output without any “crowding out” effect arising through higher interest rates. But one hardly needs an IS-LM framework whose truly central feature is the role played by interest rates to infer that! In our humble opinion, Hicksian IS-LM analysis cannot offer us very much and this is why even Sir John Hicks himself eventually abandoned it almost 35 years ago. And so should Paul Krugman! ”
http://ineteconomics.org/ideas-papers/blog/sir-john-and-maynard-would-have-rejected-the-is-lm-framework-for-conducting-macroeconomic-analysis
Skippy…. sadly for quite a few economists it seems path dependency, quasi-religious devotion, dressing up ideology as a social science, internalizing, and enviably becoming a Upton Sinclare poster child is the order of the day…. regardless of – any – evidence…
Proximity to the New York Times editorial board heightens the circumspection.
Krugman and his ilk may be viewed as extensions of the Journolisters/Cabalists that manipulate what is allowed to show up, and how it is presented, in our Lügenpresse
Nice post Yves, thanks.
Frankly I’m surprised anyone reads Krugman anymore. He’s just Thomas Friedman with 10 more points on his IQ. Both should be writing children’s books.
Having a higher IQ, as it happens too often, makes things worse.
Having a high IQ is like having 4WD, it just means so often that you are further out in the boonies when you finally get stuck in the mud.
But…but…but…Krugman says banks don’t create credit (no comprehension of the fractional reserve system???)
Krugman says that the price hikes in oil in 2008 were all simple supply and demand (even though the Baltic Dry Index collapsed, but Krugman has no idea what that is).
Krugman says that household debt caused the global economic meltdown, credit derivatives had absolutely nothing to do with it — especially since his group, the Group of 30, originally OK’d the widespread adoption of credit derivatives with zero oversight, only they wanted all “legal risk” removed, and hence that Private Securities Litigation Reform Act, don’t ya know?
The comments on the NYTimes page are certainly heartening… he’s getting an earful.
He would be getting an earful … if he doesn’t just dismiss the critics among his readers as Bernie Bros.
Maybe an occupational hazzard of staring at Very Serious People for too long is that he turned into one.
Some in that thread are dismissing Bernie supporters as paid shills… they can’t believe (or can’t stomach) that Sanders popularity is real.
That’s a great shredding of Krugman Yves. He badly needed to get called out on this. It’s amazing how often, as individuals like Krugman rise up in society, something happens to their clear thinking and they start to create and believe their own reality which quickly turns into a pile utter bullsh*t. And, as in Krugman’s case, their new BS is often diametrically opposite to their previous positions on a topic. The rarified air must affecting be affecting their minds as they climb.
Well done on exposing the agendas at work here. It’s very clear where Krugman’s priorities lie. The worst thing is all the Libertarian and right wingers hate Krugman as they see him as a left winger and he is nothing of the sort. He’s turning into a 5th columnist with every word he says.
Dayen didn’t accuse Krugman and Konczal of being evil; he accused them of being dishonest and, worse yet, inconsistent for partisan reasons.
Made an excellent case, too. No wonder Krugman’s ballistic.
Bernie has exposed the supposedly inside the beltway progressive pundits as complete frauds. They were all for single payer, so long as it had no chance of being enacted. Now it is just a “happy dream” (Krugman’s words) that should be discarded. We figured out Medicare–providing care to the elderly and sickest population–but there is no way on God’s green earth anyone could expand it to the healthier young folk. 29 million uninsured and tens of millions of underinsured–who cares. The serious pundits command that we focus on more pressing issues like . . . who knows what.
And to think many wanted Krugman in Obama’s cabinet.
Bernie has taken the clothes off of these faux progressives. Thank you. Game on.
Medicare is being Advantage-Plan-ned, high-deductibled, and co-payed to death.
We figured out Medicare, half-way at least, and then in the wake of Bill & Hillary’s managed care, followed by Dubya’s ridiculous Part D Prescription Drug plan, and then by Obamacare, we forgot everything we thought we knew.
I am kinda bothered by the chorus cry for “Medicare for All” — when we get it, I’m very afraid we might find it out that Medicare ain’t what it used to be. Somebody, please tell me I’m wrong.
Yes, neo-liberalism has defense in depth, and they’ve been chewing up Medicare like the termites they are; that’s why you hear all the HHS types talk about “consumers.”
That said, Medicare just has a better architecture and a much higher baseline for expectation than ObamaCare, and so it’s taking them awhile to really destroy it. The only solution is to smash their rice bowls, which is what single payer does.
Is Krugman truly missing the politics, or just lacking in self-awareness to the extent that he doesn’t realize that he’s engaging in mundane partisan politics? He and Klein have their partisan preference, and now argue for that preference using whatever tools are available to them, including appealing to their standing (overrated or not) as policy wonks. If defending that partisan preference demands intellectual inconsistency and attacking others, they seem to have accepted that. And, to be fair, Krugman is hardly the first human being to think everything he believes and wants is purely rational and reasonable and everyone that disagrees is, obviously, a lunatic. Oh, and the “minions” thing clearly hurt his feelings and appears to have been a direct hit on his self-image, so I don’t expect him to let this one go right away. But after arguing against Obama and for Clinton in 2008, he did fall in line once Obama was the voters’ choice, and I expect him to do the same if/when Sanders prevails in the primary.
I goofed and launched a version of the post with an ending that I thought I had replaced. Your comment made me go look. See the last few paras, I address that issue.
Doing way too much on way too little sleep. When it does not show up in typos, it seems to occur in other ways.
That’s quite a stemwinder. And it had to be said.
Well, yeah.
First he supported Clinton in 2008, citing Obama’s not having a track record that fleshed out what was, otherwise, empty rhetoric. Fine criticism of Obama, but the “better a known evil than an unknown good” argument is just the kind of high-minded reasoning that usually signals no skin in the game.
Then his truly inexplicable position on the ACA from a policy or political standpoint.
Then he comes out all “gosh and gee wiz” about Piketty’s b*llsh*t.
It’s hard to swallow because he really comes off as a mensch. But that’s the thing. These guys aren’t hacks. They really, really believe what they’re saying is true and what they’re doing is right. The rest of us rubes need to shut up and sit down. Same as Obama. And Clinton. Hillary.
It’s beyond tiresome. But try telling it to their class comrades…
I don’t seriously think so — no offense intended — Krugman comes out consistently with too much off the wall bullcrap. And his script just always happens to support the central banks?
It should be noted he does not support CBs, per say, but the prevailing methodology used by most of its inhabitants…
Good post, Yves. Well-researched, detailed, and gives no quarter. Still, I can’t say I’m surprised at Krugman’s response–only at the intensity of it. He’s been a more than capable macro-economist for years, tilting with glee at neo-liberal economics. But come any discussion of the political end of the equation, especially if Obama is involved, and it’s as though one door in his mind closes, and another opens: suddenly, he’s a lockstep Dem following whatever the guy in the White House insists is truth. I’m firmly convinced, like several others here, that he’s a victim of fear. The Evil!GOP! button gets a Pavlovian response from Krugman. He’d sooner trash a really good Dem candidate and see a really bad one in office, if it means lessening the chance of seeing a really bad GOP candidate in office. (No matter that polls are more favorable at this time to Sanders in a matchup with Trump than Queen Hillary. The Serious People don’t believe that.)
And that may just be the single biggest problem facing the Dem votership at this time. Because if you’ll jump to support and vote for any Dem on the basis that a GOP candidate will otherwise win, then the standard for candidate quality drops below the basement into some large subterranean area bearing the huge billboard, “Abandon Hope All Ye Who Enter Here.” Presumably Krugman would like the free, unlimited heat–and if it came to that, he might even growl that at least we’re just in the upper circles of hell, rather than the lower ones where the GOP would take us.
But not all of us feel that way about what candidates we’ll consider acceptable, or just how far compromises should go. Or, for that matter, how much compromise can be placed on expressing the truth when you have a very visible pulpit before readers who (at least, for a while) trust you to give out the facts.
Alas, Paul. It was grand knowing ye.
Back in 2012 there was a frequent commenter on Digby’s Hullabaloo who openly said he would not criticize Obama because doing so would only enable a Republican to be elected president. I think many who post on political blogs have a similar attitude. I suppose in this case it equates to supporting Clinton because any other Dem candidate would be weaker, and enable a GOP victory.
I find myself rapidly losing the ability to maintain any equilibrium in these exchanges. The “rules” of proper academic discourse completely fail when the person on the other side is disingenuous or self-serving. Fact is, liars keep on lying. This truth makes it impossible for me to think straight or even try to formulate coherent responses to the lies, half-truths, and utter distortions I see every day. At some point, the most eloquent response to such blackguards is a punch in the mouth, but that only discredits you and makes the liar look like the aggrieved party. My hat is off to Yves for sticking to this and trying to remain grounded and civil. If I thought it really made a difference, I think I might be able to suck it up and stay in the game. But the reasons why things are believed and adopted while another set of ideas and policies are dismissed out of hand rarely has much to do with the relative merits of the positions.
There’s been a shift in the wind, a change in the zeitgeist, that Krugman and others don’t see. They only sense that something isn’t quite the way it was, but they can’t identify what it is. They seem very uneasy about not understanding what is happening.
The neoliberals may win a while longer. But there’s real change underway.
why would you bother wasting your time suing a bank that can print to infinity?
Natural Economics
So, you had 7 years, the last credit cycle of cycles, to build your skills and develop your talent…
You now know that the professional associations have lobotomized themselves, operating an upside-down economy for the RE Neanderthals, as an exampled mirrored right down the brain stem, with psychologists as the experts. That global QE graph tells you that the nation/state is a myth, an artificial competition for artificially scarce resources, busy work. And with decelerating demographics, everything right up to RE is imploding, with legacy capital caught in its own trap, which is why Trump is running.
You vote with your work. If The Donald offers me $500/hr to fix one of those sunk cost elevators so he can collect his rent, I only do so if there is a small business around the corner with married people using it to raise independent children, the means of economic mobility. But as empire systematically replaced anonymous cash with credit, like it always does, small business has largely been expunged. Winter enters March as a lion.
Entering town, you look at family demographics, infrastructure maintenance and RE control, sustainability, which takes less than a day. If potentially viable, you pop into small businesses and drop those $100 bills I told you to collect, for merchants expecting credit, to determine the distribution. When you give that $100 to the married couple, ask them which neighborhood is the best place to look for a rental.
While you are talking to the landlords, ask them who the best employers in town are. They will know because they do nothing but cycle tenants, hearing all the sh-. In less than a week you are in a position to see if income 4X rent is viable, and whether you want to invest your time, your most valuable resource.
To start a family, begin at the mid-size town acting as a gateway between the MSA hub and the countryside and work toward the country, in a list of MSAs meeting your personal interests. Walk into town so you can see everything, and get community feedback, which is going to have stereotypes about people walking into town, your first clue. You’ll be out of most towns in less than 4 hours.
Get back in your car, on the bus, train or plane, and randomly complete the list. Somewhere in there, you will find your spouse, who probably has a family that sits on its ass, talks sh- about people, and want you to dig ditches or wash dishes for the local tyrant to pay their bills, while they collect a check from the RE ponzi, assuming it’s life. The dress is woven and split accordingly.
As in all things, update your priority algorithm with new information, that which does not match the rest. The error most young people make is getting comfortable and failing to update, and pretty soon they are running back down hill with the herd. That buck is watching progress in the field, including the approaching predators, and doing recon to find a path to the next field.
Only a moron depending on deer meat shoots the buck. But keep in mind that an upside-down empire does exactly that, consuming everything in its path. Fat, dumb and too stupid to see its upcoming fate, it collects the antlers as that which is rare and valuable.
Make that work for you, by having the empire chase you down a path to a cliff with a gap only you can jump, while the does and young bucks graze in the field. On every street corner, and in every government office, you will find others waiting to tell you that their god has a plan for you. Don’t waste more than 10% of your time, letting others assume it is 90.
Dad takes all the heat, while mom raises the children. That’s real life, and it’s been that way for thousands of years, long before life began with Adam, long before life began with Jesus, and long before life began with the US Constitution. And it will be that way long after the current crop of social scientists are dead and gone.
Linear thinking doesn’t work, has never worked and will never work, but that never stops the majority from falling into the trap, of History repeating itself. Trump is clearly the only candidate capable of dealing with Putin, but that doesn’t make him the buck, or give America a future. That latter is up to you.
Once you start thinking in terms of frequency instead of its derivative time, you know where the peers have shorted themselves as soon as the huckster opens his/her mouth. The brain is ac, but the psychologists only see dc, surprise. It’s about the DNA, not the money, for labor. Family Law is its own trap, always imploding on itself. The empire is at max credit expansion just as it is hitting the threshold of demographic deceleration, just short of WWIII (ion channels). Your income is growing and your rent is decreasing, so with the necessary skills you will always find someone waiting for you to show up, where and when you are needed.
Grace frightened those hospital workers right out of the womb, because she recognized them immediately and acted accordingly. Funny, I didn’t have that problem; she knew exactly who I was. You can only be trapped in History, behind the curve, if you measure an impulse with a linear rod, exactly backwards, and continue to repeat the error; so much for the latest and greatest technology – next.
For the majority, thinking is painful, relative to being paid in credit to follow the script. You have to go to where the work is to begin, not where you want it to be, and like most places in the world now, most of America is unfit to start a family. Working with an 800lb gorilla on your back, made up of 7 billion monkeys whispering in your ear, digital blocks and chains, is not the future, nor is the past.
Your future is up to you, until and unless you choose otherwise, to join the herd.
Gee, what an amazing coincidence that as soon as well-known mainstream progressives like Krugman start with the mildest, well-earned criticism of the dilettante Sanders, he’s suddenly outed and vilified as a 3rd-way plutocrat oligarch blah blah blah blah blah. Don’t say anything against the Holy Sanders, he who’s been in politics for 30 years and who’s chief accomplishments are getting two post offices named. He who’s plans are so reliant on magic asterisks that if this guy was on the right we’d be laughing at him the same way we laugh at Paul Ryan.
I mean really. So much bile on the so-called left at the barest whisper of fact-based criticism. What are you people going to do with yourselves on the staggeringly thin chance that Sanders makes it to the general? This guy is a Republican’s dream candidate. And you white, oh so white middle class persons who carry no risk go on and on defending this clown, when the people who are actually at risk, the ones that will suffer the most under a Republican, carry on like the goddamn children’s crusade.
Unlike Sanders, and unlike the rest of the white-bread milquetoasts on this board, I’m an actual, card-carrying Socialist, and a person of color. I live in a country that doesn’t elect Socialists, or socialist-lites, or whatever the hell Sanders is calling himself these days. Sanders being the nominee is my personal nightmare. He will lose. And he will lose to the worst candidates in Republican party history. And instead of electing an attack dog that eats these clowns for breakfast, you attack those who quite rightly point out what a goddamn fantasy based train wreck.
You people are goddamn nuts.
This would be comical except you actually believe what you are writing, which makes it instead pretty sad. And your comment makes clear you can’t be bothered to read an argument but instead project your prior beliefs on to it.
1. You misrepresent Krugman’s dishonest treatment of Dayen, slurring him with depicting him as “evil” and a “complete crook” when Dayen and other critics have said no such thing.
2. No one has ever called Krugman a plutocrat. He’s not remotely rich enough. Krugman has pointedly ignored issued of inequality until they’ve become such a prominent feature in economic discourse that he can’t ignore them.
3. There is no such thing as a “mainstream progressive”. “Vichy Left” more aptly describes where Krugman sits.
4. Hillary will not win the general election, so get over your fantasy. The Clintonbot “electabilty” mantra is a Big Lie. Her disapproval ratings keep rising the more the public sees of her. Her approval ratings among blacks in South Carolina, her supposed firewall, have fallen from 79% to just over 50%. And focus groups there didn’t buy the electability thesis:
http://www.usnews.com/news/blogs/run-2016/articles/2016-01-25/sanders-makes-headway-in-south-carolina
5. If you think Clinton is a friend of ordinary voters, you are smoking something very strong. She’s moved her rhetoric to the left only as a result of pressure from Sanders, and were she to cinch the nomination, you can expect her to move back to her pro-big-money stand with social liberalism window dressing. Look who she has enlisted to help her raise more dough: Warren Buffett. And she laughed off the idea of releasing the transcripts of her $250,000 a pop speeches to Goldman.
6. On one to one matchups, Sanders outpolls every Republican candidate by bigger margins than Clinton, in all cases more than a mere couple of points (save IIRC Rubio, where there is only a 1% difference between the two), and in the case of Trump, Sanders wins in a 20 point landslide. If you are really worried about the interests of the poor and out groups, you should be backing Sanders, not running tired pro-Hillary scaremongering.
Better trolls, please.
“electing an attack dog that eats these clowns for breakfast” That was one reason I thought Hillary was the better candidate in 2008, because I thought she’d take it those clowns on payback alone, never mind principle.*
So: Who did you believe would be the better attack dog in 2008? Did you vote for them?
NOTE On the children’s crusade: If you mean #BlackLivesMatter, there’s a checklist. Sanders, so far, is well ahead on policy (perhaps because he doesn’t take money from the prison-industrial complex) and no doubt Clinton wouldn’t be as far along as she is without Sanders pushing her. Now, it’s entirely like that Sanders wouldn’t be as far along as he is without BlackLivesMatter pushing him, but isn’t that how electoral politics is support to work?
Red-baiting, race-baiting, and hippie-punching all in one comment. Impressive.
I love the smell of Clinton-panic in the morning. It smells like victory … for Bernie Sanders.
isn’t the phrase “magic asterisks” the verbal tell of a right wing influenced meme against Sanders? Suddenly it’s all “magic asterisks”, mostly as far as I can tell because they don’t think the health care proposal was fully “paid for”.
Magic asterisks. Unicorns. Ponies. Purists. Professional Left. Fucking retards. It’s all of the same piece, drivel from the plutocrats and their Democratic enablers skulking behind the neoliberal shroud: there is no hope and there will be no change.
“Unlike Sanders, and unlike the rest of the white-bread milquetoasts on this board, I’m an actual, card-carrying Socialist, and a person of color”
If this is true then why specifically do you like HRC?
I am currently among some hillary supporters and one question is a lecture killer, and as you’ve decided to lecture us I’ll present it to you, jenny. Name one traditionally democrat, left wing policy that obama instituted
in his time as president. Up to now it just shuts people up, indeed lat night an exasperated HRC supporter said “trickle down works” but then they kind of realized that they had proved my point for me, care to take a stab at it?
oh, this is funny. I’m starting to sense the Clinton campaign is trying to re-run Nixon’s Southern strategy in reverse. But they really need to do more homework.
Yes. Wouldn’t you think a “card-carrying socialist” would know about Kshama Sawant being twice elected in Seattle?
If you’re a card-carrying socialist and a person of color I assume you read Black Agenda Report.
Maybe you missed this recent article:
http://blackagendareport.com/clinton_haiti_elections
If you are really a card carrying socialist, and not some goof ball made up for PR purposes dirty tricksters, how can you complain about living in a country that doesn’t elect socialists? Are you so stupid to join a political party that is hopelessly doomed to failure? Apparently, you seem to think Bernie Sanders will open the 7th Seal of The Fascist Apocalypse if the Dems nominate him. So would the party whose card you carry therefore force Amerika into a totalitarian garrison state on permanent martial law footing as a natural matter of defense? If Bernie threatens to unleash the hounds of right wing fury, imagine what you and your party are doing!!
Really, Bernie will cause the unelectable republicans into ready for prime time status with all of the middle of the roaders who regularly vote? I doubt you are a card carrying socialist who would then complain about Bernie Sanders for being a socialist because all of a sudden, you are now afraid of your chosen political path. Isn’t getting someone like Bernie, someone who is publicly forcing the discussion of single payer universal health care, among other socialist causes, isn’t that the whole point of joining up with the socialist party of your choice to elect socialist candidates? You are displaying the tactics of a liberal consultant in full analysis mode for the Sunday Op-Ed spotlight , not the strategy of a socialist.
I lost respect for Krugman back in the 1990s with his ceaseless pandering for NAFTA and ‘free trade’. Remember his ‘economist creed’– “I believe in free trade.” Not that NAFTA even resembles a free trade act in any case. Krugman’s work on strategic trade is what made him famous in the late 1980s and 1990s, but he ignored his own work to push for NAFTA in the NYT and beat on anyone against it as ignorant of basic economics. Hypocrite of the first order!
Good job! This is why I come to this blog. When you speak, you speak clearly. May it always be so.
Krugman took some criticism for resigning his faculty appointment at Princeton and moving to CUNY, which is a public university. That he went from a private to public university is not the criticism, but that he negotiated a salary of 225k/year and will not teach courses. One article with some details is: http://nypost.com/2014/04/17/cuny-to-pay-economist-paul-krugman-225000/
A veritable aviary w/ Noah Smith’s perch included….
With respect to breaking up the banks being a reasonable position, here are some comments from hair-on-fire, clueless radical Ben Bernanke from 2010 (google: Toward a More Competitive, Efficient, and Innovative Financial System).
“Among the most serious and most insidious barriers to competition in financial services is the too-big-to-fail problem. … The costs to all of us of having firms deemed too big to fail were stunningly evident during the days in which the financial system teetered near collapse. But the existence of too-big-to-fail firms also imposes heavy costs on our financial system even in more placid times. Perhaps most important, if a firm is publicly perceived as too big, or interconnected, or systemically critical for the authorities to permit its failure, its creditors and counterparties have less incentive to evaluate the quality of the firm’s business model, its management, and its risk-taking behavior. As a result, such firms face limited market discipline, allowing them to obtain funding on better terms than the quality or riskiness of their business would merit and giving them incentives to take on excessive risks.
Having institutions that are too big to fail also creates competitive inequities that may prevent our most productive and innovative firms from prospering. In an environment of fair competition, smaller firms should have a chance to outperform larger companies. By the same token, firms that do not make the grade should exit, freeing up resources for other uses. Our economy is not static, and our banking system should not be static either.
In short, to have a competitive, vital, and innovative financial system in which market discipline encourages efficiency and controls risk, including risks to the system as a whole, we have to end the too-big-to-fail problem once and for all. But how can that be done? Some proposals have been made to limit the scope and activities of financial institutions, and I think a number of those ideas are worth careful consideration. Certainly, supervisors should be empowered to limit the involvement of firms in inappropriately risky activities.”
I am sorry Yves, but I just don’t get it. I’ve read your post (most of it), and I went back to reread the Krugman posts in question. And, in my opinion, it is you who is misrepresenting what Paul Krugman wrote. I say this with all due respect, since I am very favorably disposed to both of you (and to Senator Sanders). Let me give you just one example. You wrote, quoting Krugman:
He could be wrong, of course. But if you’re a progressive who not only supports Sanders but is furious with anyone skeptical about his insurgency, someone who considers Mike Konczal a minion and me a corrupt crook, you might want to ask why Barack Obama is saying essentially the same things as the progressive Bernie skeptics. And you might want to think hard about why you’re not just sure that you’re right, but sure that anyone who disagrees must be evil.
Is Krugman off his meds? Where does this paranoid “those who challenge my positions and those of my allies are calling me evil and a corrupt crook” lunacy come from? Straw manning isn’t an adequate depiction of what is going on here, since “straw man” is a misrepresentation of the content of a position. Krugman goes well beyond that to accuse Dayen of personal enmity and moral absolutism.
Please (please) reread that quote. He is not saying that everyone who disagrees with him is calling him evil. It just simply is not there. Please read and carefully parse what he actually wrote. What he is saying is that those people who do call him evil (and there are some) should reconsider.
Yves, I beg you to do this (reread that quote carefully). Because I hold you in high regard, the multiple obvious mistakes in this posting of yours are really painful to me!
You apparently have not read the full context of the argument, which starts with Krugman’s “Wonks and Minions” post. That is unquestionably about the Dayen post. Krugman launched into a defense of Konczal, and ONLY Konczal, from the “minion” label. That was a term Dayen used at the end of his post. As I stated in my post, Dayen’s piece was almost entirely about Krugman, and showed how Krugman and Konczal were misrepresenting Sanders, contradicting their past positions, and underminig reform by attacking Warren via Sanders. Konczal’s post, where he linked to Dayen only after being chided by Dayen, has a little graphic at the top of the word “minion”.
The “minion” reference above is all about Dayen. And it is a gross, deliberate misrepresentation. Krugman’s doing it in a this bizarre passive aggressive manner manner, I assume to have it both ways: so as not to enhance Dayen’s status by linking to him or by even mentioning his name, and to for those who have followed the exchanges only on a superficial basis, to smear Dayen by depicting him as emotional, biased, and extreme.
Everyone I have conferred with who has read all the relevant material (the Dayen article, the Konczal post, the two Krugman posts) reads the passage above the same way I do, as a smear on Dayen specifically, and other people who dare call out Sanders critics for hypocrisy and/or dishonest argumentation.
OK, I’m a Canadian, I have spent years watching U.S. politics impotently despite knowing how big an impact things down there have on my country, but certainly don’t consider myself an expert in U.S. federal politics. Can someone give me some solid reasons to believe that Hillary Clinton is more “electable” than Bernie Sanders? He’s been winning elections for ages, she’s won one which wasn’t too heavily contested. Bernie’s proven himself to be a very effective and pragmatic legislator, Hillary doesn’t seem to have done much of note in terms of passing legislation. Sanders opponents say his ideas will produce gridlock in Congress and the Senate but am I supposed to believe that ANY Democratic president won’t face exactly the same implacable opposition that Obama has from the GOP? Would the GOP be more pliable with Hillary Clinton as president? It seems to me that the right down there has an almost pathological hatred of her – the pundits right down to the base. Would Hillary attract some wavering Republican voters to the Democratic side if she were the candidate? Am I supposed to believe that Democratic voters would go over to the Republican side if Sanders got the nomination? None of these ideas make much sense to me.
The Democratic elite are largely products of Bill who oversaw an extinction level event in 1994 for Team Blue. Obama golfed and relied on whoever was around to run the government. The Democrats who remained were linked to the White House and Clinton Inc. George Stephanopoulos was a debate moderator. The guy owes his career to Clinton patronage.
Already, the Clinton elite have been voted out by Democratic voters, once when Dean took over the DC and obviously Obama. A Sanders win would be a third rejection in eleven years. If Sanders were to win, many employers are going to wonder why Clinton creature X is being paid especially if they can’t deliver an electorate, insider connections, or an audience. Couldn’t a computer program of mad libs fill the same role as the pros Hillary crowd?
As far as selling Hillary, what else can you real, you sell her on? She’s a woman so was Maggie Thatcher. The electability argument doesn’t sound design as shallow, and since Hillary is known far and wide, it seems like she might be electable. The GOP has helped by attacking her over insane issues, creating an illusion she is invincible and can handle attacks.
Hillary was reelected in 2006 from a safe seat in a wave year, but in 2000, she beat her loony GOP opponent, not Guiliani, by 12 points. Gore won NY by 25 points.
Good questions, IMO. A couple of incomplete thoughts:
Sanders is exposing a neo-lib agenda that’s been (poorly) hidden in the Democratic establishment. Some Dems are upset by that—who wants to find out they’ve been duped? Who wants to be exposed as complicit? So their guts are hanging out at the moment. And some will project rage onto whoever’s available, reason be damned.
Yeah, the Right has pathological hatred for the Clintons, as for Obama. Moreover they have successfully turned the word ‘socialism’ into Satan personified. That bunch hasn’t yet focused their ire onto Sanders. Whether Sanders can overcome his label enough for governmental action remains to be seen.
If Sanders is on the up&up, ability-for-action will depend on how ready USians are for change regardless of labels. Also depends on how well the populace will stay involved, including getting less-compromised people into governmental office. Substantial risk there. Most people are risk averse. We’ll see if the collective ‘we’ is desperate enough to commit.
Excellent questions. I am a Sanders supporter living in a particularly liberal part of Massachusetts. My parents are from the South, and I’ve seen them drift right over the years, more for demographic reasons than out of self interest.
I think electability depends on the final GOP candidate. Clinton, despite her highly unfavorable polling, is seen by many as the safe, establishment choice. Up against a Cruz or Trump, she might win the votes of moderate Republicans in swing states, and attract favorable press and super PAC money from very wealthy supporters of the status quo.
Of course, this could also backfire. Trump, despite his narcissistic personality disorder, is canny enough to run as an economic populist. He seems to have no need for ideological consistency, and, despite a career of questionable business deals and serial bankruptcies, does have a remarkable gift for self promotion.
Meanwhile, Clinton has made numerous strategic blunders and errors of judgement. Neither this campaign or the last was as well run or as innovative as Bernie’s, Obama’s, or even Cruz’s. She’s oddly tone deaf – Google, for example, “yaaas Hillary”, or the criticism of her logo, which actually features a red arrow pointing right. The DNC, apparently in coordination with her campaign, scheduled debates when no one would see them when Sanders was raw and untested, giving him time to practice. Now she is attacking Sanders on gun control and
Planned Parenthood, which just makes him appear more moderate to swing voters without hurting him with his base, etc.
The FBI investigation of her emails actually has legs – it does seem she and her staff were sloppy about top secret information. The Clinton Foundation violated the memorandum of understanding with the Obama administration while she was Secretary, and accepted a large contribution from the Algerian government while it was lobbying the State Department.
I worry about her judgement, but I also worry that a Hilary Clinton administration would face impeachment proceedings soon after its inauguration. I don’t think Clinton is as safe a choice as we’d like to believe.
Supporting Sanders, meanwhile, is a risk. He is not only a self-described Socialist, but an elderly Jew with a strong Brooklyn accent who has promised to raise taxes, and embraced bigger government than any major candidate has dared in a generation. Lots of unknowns there – an not just this country’s lingering fear of Communism. The depth of racism towards Obama as “not really from here or one of us” has startled me. Could this same nativism, the last gasp of a declining majority, rear up against Sanders?
I think this is a question best answered by Democracy. If Bernie can win the nomination, he will have proven himself a viable candidate in red states. Meanwhile, the media establishment does Clinton no favors by being partisan – it only plays into Bernie’s narrative.
Truly informative piece. Thank you.
Let’s face it, Krugman is a big fan of the new upside down economics which never seems to work.
40 years ago most economists and almost everyone else believed the economy was demand driven and the system naturally trickled up.
Now most economists and almost everyone else believes the economy is supply driven and the system naturally trickles down.
Economics has been turned upside down in the last 40 years.
All the Central Bank stimulus programs have been Neo-Keynesian, in line with the new economics. The money is pushed into the top of the economic pyramid, the banks, and according to the new economics it should trickle down.
What we have seen is that the money stays at the top inflating asset bubbles in stocks, fine art, classic cars and top end property.
The old economics looks as though it was right all along.
Keynes and the old economics suggested spending on infra-structure projects to create jobs and wages which will be spent into the economy and trickle up.
When the Western consumer went on life support in 2008, China used Keynesian stimulus to keep its economy going through infra-structure spending and job creation. Unfortunately, it has reached max. debt before the Western consumer has recovered.
The West has done totally the wrong thing in the intervening eight years and just blown asset bubbles rather than helping its consumer base recover.
After Keynesian stimulus you have new infra-structure that you can hopefully use in the future.
After Neo-Keynesian stimulus the asset bubbles burst and you have a deflation problem on your hands.
If you are using upside-down economics, you have rendered yourself incapable of finding a solution that works.
What can we do to fix Greece?
Job cuts in the public sector; wage cuts in the public sector; reducing pensions and other austerity measures.
Put it though the lens of the old economics and you can see you are reducing demand in the economy.
The old economics would suggest raising taxes on those that can consume no more to balance the budget.
Upside-down economics at work:
When South America was in trouble the World Bank stepped in and offered loans as long as they reformed their economies with less public spending, austerity and privatising previously public companies.
It was a disaster.
In the Asian Crisis in 1998 the IMF stepped in and offered loans as long as they reformed their economies with less public spending, austerity and privatising previously public companies.
It was a disaster.
When Greece got into trouble recently the IMF stepped in and offered loans as long as they reformed their economies with less public spending, austerity and privatising previously public companies.
It was a disaster.
The EU has applied the same prescription to Spain, Italy and Portugal.
It didn’t work.
Upside-down economics gives all the wrong answers.
Thanks for the post. If DDay got under Krugman’s skin: GOOD!
I stopped paying any attention to Krugman a long time ago. I’m an economics dumbo, but I can smell sycophantic bullsh*t from miles away. Krugman’s irrelevant to we the people. He’s just another courtier at Versailles seeking to stick his nose up the bums of the very wealthy and very well connected. Hope he enjoys the smell.
Superb articulation of Krugman’s follies for those baffled by them. My Clinton, right or wrong…
I lost respect for Krugman long ago. Seeing how he treated James Gailbraith and heterodox economists in the 1990’s was telling. Does he still believe in that “loanable funds” stuff? Was nice to see Steve Keen clean his clock on that.
One of Krugman’s arguments is that Clinton can get more achieved through incremental compromise.
The Freedom Caucus hates Hillery. There is very little (no) compromise room for her. Compare that to this quote from a Bloomberg portrait of Sanders:
.http://www.bloomberg.com/features/2016-bernie-sanders-fundraising/
Who has a better chance for compromise?
Just amazing. That was Obama’s plan in 2008, and it was written into the Democratic platform. Bipartisanship, etc. So now Clinton wants to double down on it.
Fine work, Yves, and well-timed. Krugman’s main contribution to what we can loosely call progressive politics has been to repetitively state the case against austerity — in this he was helpful to the Greeks last June — and in the process educate people to very basic economic ideas, like a national economy should not be thought of as like a family economy etc. But his political commitments are thoroughly Demneoliberal, and manifest a self-indulgent sloppyness stemming from a TINA mindset. His latest stuff, which you nail, is getting Rovian in its dishonesty and dedication to simple partisan advantage, i.e. to making sure that TINA. He’s worried, and I’m glad to see it.
Thank you, Yves Smith, for documenting misrepresentations that harm public discourse we can’t afford.
Wow… great article and great comments! The best part was Yves’ last four paragraphs…
1. “… hostages of their own self-styled wonkery, that’s just falling for their protective coloring.”
2. “They really believe in political corruption…”
3. “They believe in Scalia’s logic on Citizens United.”
4. “… deep disagreement within the Democratic Party over values, not over methods.”
5. “Krugman and his merry band really want a world shaped by technocrats without accountability or responsibility.”
6. “… people in power can ignore who they want (like Dayen)… take money from whoever they want (like Peterson and Enron)… support who they want (like Clinton and Obama) without being held responsible for the policy outcomes that emerge.”
7. “… the inherent evil of a world run by elitist corrupt professionals. ”
8. “… they are the marketing arm of Wall Street in charge of corralling liberals.”
9. “their technocratic and corrupt policy outcomes that have created Trump, and if they aren’t defeated, Trump or a variant like Trump will one day take power.”
Yves’ next-to-last paragraph…
“Those who want a more just world aren’t unprofessional children or racists; Sheila Bair, Simon Johnson, Elizabeth Warren, Robert Reich, and so on and so forth believe in a more equitable world where credentialism and access to capital isn’t the dominant element of power. They believe in democracy, where voters can be persuaded to support good ideas and honest politicians that stand up to big money. These are deep disagreements and they aren’t going away.”
Wow… how absolutely true… there are GREAT “VALUES” LEADERS!!!
Obama surrounded himself with the worst… would Bernie surrounded himself with the best… e.g. Bair, Johnson, Warren, Reich, Yves Smith, William Black, Michael Hudson, Paul Craig Roberts, “and so on and so forth”???
Thank you, Ives Smith. Paul Krugman has been scandalous in personally attacking any person who does not favor Hillary Clinton.
http://baselinescenario.com/2016/01/26/the-future-of-the-democratic-party/#comment-327750
Baseline Scenario (James Kwak)
The Future of the Democratic Party
Posted on January 26, 2016 by James Kwak | 45 Comments
What liberals can learn from conservatives…(?) vanilla …chocolate…or straw dogs
Somewhere in there “principles” are implied!