Krugman's Harshest Post Yet

[cthulu2016]

This is exceptionally harsh stuff...

But hey, why should the Fed be any different? Not doing the right thing out of concern with what Republicans might say has been a pan-institutional American motif for a while now. It's our defining national personality disorder.

The intimidated Fed: The minimal action — extending Operation Twist — wasn’t just inadequate, it was shameful. The Fed has a dual mandate, employment and price stability. Its own projections show high unemployment persisting for years and years, inflation running below its target — and realistically its inflation projections are too high while its unemployment projections are too low. There is no rational argument I can see for not going all out with monetary stimulus.

But what we actually got was action that was pretty obviously calculated to be the absolute least the Fed could do without generating headlines saying “Fed ignores weak economy”.

I’m sorry, but this looks like pure concession to political intimidation — a Fed refusing to do anything that would let Republicans accuse it of helping Obama. And for the sake of its own political comfort, the Fed is essentially betraying the unemployed.

http://krugman.blogs.nytimes.com/2012/06/21/brief-notes-from-hiding/

[Mcubed1945]

1. Could it be that Ben doesn't want to lose his job if Mitten wins?

[Egalitarian Thug]

2. Perhaps the harshest, but he still stopped short of calling it what it is.

I admire Dr. Krugman, I've followed him for years and have yet to find any position of recommendation of his that I can argue with within the context of the reality that exists. But he has rarely ventured into the world of "what if".

This is an example of his stopping short of declaring what has been plainly clear for all of our lives. The Fed is and has been an organization with one and only one loyalty and one agenda, that being to preserve the system that it largely created and under which we are all nothing but resources to be extracted, leveraged, and maximized regardless of the consequences to the individuals that comprise it. It is pretty easy to take much of his work and use it to make the asinine arguments of Dr. Friedman.

In this matter I give an advantage to Dr. Stiglitz

[MannyGoldstein]

3. Paul Krugman is unserious, a Firebagger and increasingly irrelevant.

Krugman's a punk wannabe who couldn't make the cut into the most Liberal White House ever, so he's pathetically lashing out By savaging its occupant.

Sick!

True Democrats recognize that we must do whatever the Republicans want in order to get re-elected. Otherwise, Republicans will be elected instead, and they'll do whatever they want. Simple logic, but it eludes Ivory-Tower Boy.

Austerity now! Austerity forever!

Regards,

Third-Way Manny

[PufPuf23]

5. You are so wise.

I was about to agree with Dr. Krugman.

Silly me.

[HooptieWagon]

6. LOL Third way Manny is a hoot.

It'll still manage to go over some people's heads.

[siligut]

9. A few Bwa-ha-has and more :ROTFLMAO:s would add gravitas to your post

But maybe you are trying to be subtle?

[clang1]

13. I hate to guess where the third-way might lead. Sheesh. Out there. n/t

[Romulox]

14. Third Way Manny **undoubtedly** loved Paul Krugman's book "Pop Internationalism"

in which Krugman mounts a spirited defense of NAFTA and "free trade".

After all, CATO loved it!

This book includes 13 articles written by Krugman for various audiences, all but one of which were previously published. The one exception is a generally favorable review Krugman had prepared on Who's Bashing Whom? by Laura Tyson. The editor of the New York Review of Books rejected the review on the basis that "you're criticizing some very prestigious people." (So much for open political debate on the left.)

As with any collection of articles, this set is somewhat redundant, but there are four primary themes: (1) competitiveness is a mindless and dangerous obsession; (2) the decline in manufacturing employment and the real wages of production workers is primarily a consequence of domestic conditions, not increased international trade; (3) NAFTA will have minimal economic effects; ( ) and (4) the high growth rates of the "Asian tigers" is primarily due to a rapid increase in inputs and cannot be sustained.

http://www.cato.org/pubs/journal/cj16n1-12.html

( and emphasis mine)

[MannyGoldstein]

22. Krugman was right: NAFTA

NAFTA caused a modest drop in the incomes low-skilled-workers, but increased mean income because the rich folks made a lot of money. I'm not sure what your issue is with this - the rich did great, the poor got hurt.

Almost-free-trade with China was much more destructive than NAFTA. If you look through years of my previous posts, you'll see that I've been saying the same thing for a long, long time.

[Romulox]

23. Um, Third Way? Krugman doesn't limit his argument to NAFTA. The whole book is a paean to "free

trade".

Seems like your commitment to character is either fairly weak, or extremely strong.

[MannyGoldstein]

34. Please show me where Krugman says that NAFTA or

almost "free" trade with China will help lower-income Americans.

He might have. I haven't read the book. But I haven't seen a quote that indicates he claimed "free" trade was good for lower-income folks.

Thanks in advance.

[cthulu2016]

39. It would not surprise me if he had

In fact, he probably did. Krugman was a major free trade advocate in the 90s because the economics is so compelling that it will benefit both economies.

(Ironically, his Nobel prize is for his international-trade work)

He has, however, acknowledged in the last few years that there are deleterious effects that should theoretically be self-diminishing, but are not. So he is now kind of a free-trade agnostic... case-specific.

Speaking for itself here... do we know that America hasn't gained from free trade? Americans have lost out but I don't know that the American economy in aggregate hasn't gained. Rich people are a lot richer than they used to be, right?

If inequality increased while the pie was growing who (except the very rich) would know the pie wasn't shrinking?

Any inequality in America is as much a political problem as an economic problem. I can't blame Chinese workers for our tax rates, for instance.

I honestly don't know the net answers there.

[joshcryer]

45. He actually viewed NAFTA as a political move, not economic.

The problem is that he and many others underestimated just how horrific it would be to American wage earners. They thought, oh, the minimum wage would be continually lifted, the American public would continue to prosper, etc, etc. Krugman actually believed NAFTA's effect was "trivial" on the scheme of things and the foreign policy aspects were worth it.

While NAFTA's labor and environmental costs will be minimal, the U.S. public believes otherwise. At the same time, NAFTA's economic benefit to the United States, while real, will be small. One might then ask: Why should the Clinton administration expend a great deal of its depleted political capital in pursuit of an unpopular and economically trivial agreement? The answer is that Mexico's government needs NAFTA, and the United States has a strong interest in helping that government.

That (edit: the trivial economic impact) didn't happen, but the converse did, so the effects were far worse than anyone could've imagined. Thus the calls to renegotiate NAFTA. Krugman was wrong and he admits as much these days.

He doesn't call the effects of NAFTA on wages "modest" as some other Third Wayers might.

[Romulox]

24. PS: Is it "Third Way Manny" or just "Manny" who is speaking in favor of NAFTA, here?

[MannyGoldstein]

35. Only Third-Way Manny would be pro-NAFTA

When did I say I was in favor? All I said is that it only sucked a little, particularly in comparison with almost-"free" trade with China.

[joshcryer]

29. 22-77% less wages is not "modest."

The trade deficit with states we have agreements with is less than those that we don't (compare, say, Canada with China). But "modest" is a joke here.

Obama should've renegotiated NAFTA when he could.

[MannyGoldstein]

33. 22-77% from NAFTA?

Do you have a reference?

Thanks.

[joshcryer]

42. Yes.

http://www.citizen.org/documents/NAFTA_10_jobs.pdf

[upi402]

48. There is still a ton of spin coming from NAFTA boosters

from your link:

"According to the Congressional Research Service, U.S.
imports from Mexico increased 229 percent between 1993
and 2001 — while U.S. exports to Mexico rose only 144
percent over this period.

As grim as these numbers are, they
only tell half the story: a large proportion of what is
counted as U.S. “exports” to Mexico have been parts and
components that are shipped to Mexico for assembly,never
enter the Mexican domestic economy, but rather are
returned to the U.S. for sale as finished goods. By 1999,
these “industrial tourist” exports accounted for more than
60 percent of all U.S. exports to Mexico.7

When corporate and government NAFTA boosters try
to defend NAFTA now, they not only count these industrial
tourists as exports, but they only focus on the increase in
U.S. exports to Mexico and Canada under NAFTA — and
never mention the much bigger increase in imports.Yet,we
all know what happens if you only count the deposits but
not the withdrawals to your checking account!"

[joshcryer]

51. I have to admit my ignorance and possibly being misled on this issue.

I've seen the trade deficit stats and compared them to the countries we have an FTA with and this really shakes things up. I really need to research this further before commenting on it in depth. I do feel that trade agreements can be useful but I do not consider NAFTA particularly beneficial to the workers in America (including the working poor). At least on that count I've been consistent. It just bothers me that I actually didn't consider how the deficits were being calculated and just took the numbers at face value. In that vein the boosters got me.

[MannyGoldstein]

55. Your referenced document

Points to a reference that I cannot find on the Internet.

I could believe that all "free" trade agreements together have dropped the wages of unskilled US workers by the amount your claiming. But not NAFTA alone.

[joshcryer]

59. The reference may be broken since that's a handout, here's the proper cite:

Globalization has reduced the wages of “unskilled” workers for at least three reasons. First, the steady growth in U.S. trade deficits over the past two decades has eliminated millions of manufacturing jobs and job opportunities in this country. Most displaced workers find jobs in other sectors where wages are much lower, which in turn leads to lower average wages for all U.S. workers. Recent surveys have shown that, even when displaced workers are able to find new jobs in the U.S., they face a reduction in wages, with earnings declining by an average of over 13% (Mishel et al. 2001, 24). These displaced workers’ new jobs are likely to be in the service industry, the source of 99% of net new jobs created in the United States since 1989, and a sector in which average compensation is only 77% of the manufacturing sector’s average (Mishel et al. 2001, 169). This competition also extends to export sectors, where pressures to cut product prices are often intense.

From here: http://www.ratical.org/co-globalize/NAFTA@7/nafta-at-7.pdf

This is also of note: http://www.epi.org/publication/briefingpapers_bp147/

Hardly fucking "modest." Even if I have a shit grasp of the English language I know what "modest" means.

[MannyGoldstein]

60. Your quote seems to agree with what I said

They claim (sort of) that wages for affected workers dropped by over 13% from ALL globalization. That's just the displaced workers, which are some percentage of all low-wage workers. Let's say they're 25% of workers - that means the affect on workers taken as a whole is 3%. That totally sucks - but it's not 22%-77% as you claimed earlier.

We're in agreement that NAFTA hurts workers - I have no idea of what I've written that could be understood as a defense of it. We only disagree on the magnitude of its affect. All of this "free" trade crap is awful, a full-on assault on the 99%.

[joshcryer]

63. I don't think it's a "modest" effect, you do.

That's the difference.

[bvar22]

30. You are quoting statements made in 1996, the NeoLiberal Hayday,

before the facts on "Free Trade" were in.
Can't you dredge up anything a little more current with which to attack Paul Krugman?
Hasn't Krugman softened in his support for "Free Trade" since 1996?


Until the USA has a Publicly Owned, Government Administered National Health Insurance Program,
AND our trade partners have government protected labor Unions, Worker Protections & Benefits, and solid Environmental protections,
Unregulated International Trade will always produce a Race-to-the-Bottom.
Thats a Fact, Jack!

[SunSeeker]

32. Ironically, Ross Perot was the one warning about the "giant sucking sound"

of US jobs heading out across our borders.

[bvar22]

38. And Ross was 100% correct!

Ross was RIGHT!!!

&feature=player_embedded

...AND, everybody on that stage KNEW he was right.

[joshcryer]

46. "NAFTA caused a modest drop in the incomes low-skilled-workers" - Manny, 2012

There's a highly misinformed and horribly apologetic statement about NAFTA for you.

[MannyGoldstein]

53. One of us has challenges with thr english language

It's not a defense. NAFTA was awful. Just much less awful than almost-"free" trade with China.

I'm not sure which part of that you're having trouble understanding.

[joshcryer]

58. One of us doesn't consider a massive reduction in wages "modest."

[MannyGoldstein]

61. Any reduction is terrible. nt

[joshcryer]

64. But not "modest." I hope we can agree on that.

I'm happy for retractions. I do them often when I feel I've said something I didn't intend or that stemmed from ignorance.

[clang1]

40. Point taken

It is Krugman's warnings that are concerning. Krugman is no MF either peeps.

[rhett o rick]

20. Right! That dang Krugman aims to destroy our carefully crafted stupor of denial.

Pass the vodka plez.

[MrTwister]

25. You should start a column . . .

Third Way Manny.

Like Bob Boudelang, Angry American Patriot.

[MannyGoldstein]

36. There's a thought.

But I'd need significant compensation to pay my oil bills - I'd need to take a helluva lot of showers to wash off after.

[Dragonfli]

44. DLC Dragonli Agrees with Third-Way Manny. Austerity for prosperity!!!!

Republican policies passed by us will help to prevent Republican policy being passed by them!!
We must win via emulation. It is the only way, not just the Third-Way!!

[upi402]

50. Yes, lets beat them to the punch

and punch ourselves in the junk harder than the Republicans could ever hope to get away with!

Yay!








of course

[MannyGoldstein]

54. LOL!

Well done.

[RainDog]

4. k&r n/t

[CTyankee]

7. It's obvious that Krugman thinks we are going over a cliff. If so, I'm worried.

As far back as the early 2000s he has been right in every prediction about the economy. If he is worried and fed up, so am I...

[just1voice]

10. He sometimes includes things that can be done about it

such as stimulus programs that actually work, like increasing programs for lower-income people. Other things that are known to be effective: raising taxes on the rich, increasing pensions, increasing union memberships, increasing minimum wage.

Without those actions and more, the U.S. is indeed going to be much worse off economically.

[curlyred]

52. Yes, but we aren't going to take his advice

Without taking Krugman's recommendations, things are only getting worse-Hell, meet hand basket.

[chervilant]

19. Krugman isn't the only one...

Several of us have been warning about this catastrophic economic reordering, and those Corporate Megalomaniacs who insist we can keep hurtling down this same hedonistic path are well aware that all their desperate machinations are for naught.

(I am one of the multitude of unemployed, and I am certain the uber wealthy care not a whit...)

[Rosa Luxemburg]

27. Yes, we have been going off the cliff for some years

slid rapidly under Bush, slowing with Obama. If we get Romney we will be at the bottom of the cliff in a heap.

[clang1]

41. +1 n/t

[bossy22]

8. If we had listend to Krugman back in 2009

we probably would be close to fully employment by now.

[BlueCheese]

11. I'd run for president with Krugman as my running mate...

On the sole platform of immediately resigning once sworn in.

[harun]

16. You got my vote

[Romulox]

12. So what to do? Impeach Bernanke? Otherwise, he does what he wants... nt

[SunSeeker]

15. Yes, the Fed is and has been betraying the unemployed for some time.

What is so frustrating is Bernanke knows it too.

[harun]

17. I think they want higher unemployment to drive labor costs lower

And to increase productivity of those left employed.

At least that's what their actions say.

[FiveGoodMen]

18. If Bernanke knows it...

...do you suppose the guy who re-nominated him does?

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/25/AR2009082501115.html

[SunSeeker]

31. Yes, and I am sure he as as frustrated with him as I am.

As the article you cite points out, the President had many good reasons for re-nominating Bernanke in 2009. Bernanke did do well at first. Unfortunately, Bernanke has been unable or unwilling to do everything that is needed now. I doubt Obama will re-nominate him in 2013--if Bernanke is even interested in staying on.

Hopefully folks like you will stop bashing the President so the Dem vote is not suppressed more than it already is by Repuke voter ID laws. With some luck, Dem voters will come out in 2012 and give Obama a filibuster-proof majority in Congress to do what the Fed can't/won't do--and to let Obama nominate someone else for Fed Chairman.

[Dragonfli]

47. He is not likely frustrated with a guy he will not fire

He picks who he likes, he likes who he picks, he is a center right Democrat as he has proven time and again, but it appears to make you feel better to believe in some fantasy instead.

I hope he gets a filibuster proof majority as it will make his excuses harder to make when he proposes polices that are the opposite of his campaign speeches.

The BS will likely be funnier as well as it will continue to grow more absurd and contradict reality even more plainly.

[SunSeeker]

62. Obama won't get a filibuster-proof majority with folks like you doing Karl Rove's work for him.

Obama is a centrist Dem. I am aware of reality (which is well recounted in the article cited in the post I was replying to). That is why I understand why he re-nominated Bernanke in the first place. Obama is not a center right Dem. Not when he is pro-choice, pro-Dream Act, pro-marriage equality, pro-healthcare reform and pro-Wall Street reform. He is no Ben Nelson.

[Dragonfli]

65. "centrists" are center right, have been since the nineties (at least), where have you been? Social

Issues are the ONLY place they differ from the Boehner's of the world.

It is a game they play to get us to vote against our own best interests. It is a game.
Unlike you, I don't want to play the game that ends up with center right to right policy EVERY TIME.

[SunSeeker]

66. So who are you going to vote for in November?

[Dragonfli]

67. I may not vote at all, I only will vote for right wing OPPOSITION (I will not vote FOR RW policy)

I will not vote for my own destruction via right wing policy.
I may have no candidates (other than a few local pols I have worked with) that will not just use my vote to install laws that harm me.
It is sad, my party used to be for working class people (among others), it is quickly becoming a polite annex to the Republican party at this point in history.

I wonder what party you would have voted for in 72, I know I voted Democrat the first time then (my first vote ever in fact) ----- I no longer recognize the party, you young Dems are too much like all the Republicans that ran prior to '96, I don't hold it against you, but I think because of the policy you appear to enjoy, back then you'd have voted Republican for sure.

[SunSeeker]

68. By not voting (and trashing Obama) you are serving the Repukes--and your own destruction.

Of course no politician is going to be everything you want them to be. But it is simply self-destructive and wrong for any progressive to claim Obama and Romney are the same. The issue of Supreme Court appointments alone should get you to a voting booth in November.

I may be wasting my time with you if you're just a troll. Certainly there are hints you are, such as the terms you use, like "I voted Democrat" rather than "I voted Democratic" (do you call it the "Democrat Party" like Rush does?) and the ridiculous suggestion that Dems are "a polite annex to the Republican party at this point in history." But if you truly are just disillusioned, you will be even more so if Romney becomes President. And he will if the left stays home.

If you want to pull the Democratic Party to the left, get involved in it. The right wing did that with the Republican party. Just shooting barbs from the sidelines doesn't fix anything, it just helps the other side.

[Dragonfli]

70. Nice straw man (Obama and Romney are the same?), nice call out as well

I can see you are doing your third way part to win back the base by attacking it.

It isn't working, I follow policy, if a pol enables and espouses right wing ideas contrary to his campaign speeches I would look there first for your troll rather than a man that simply observes it.

This may be the first year since '72 that I haven't voted straight Democratic ticket.
I am not to blame for that, watching what my politicians do is.

I once voted for the party, as they have moved further right I began in 2000 to vote lesser of two evils.
Now the evil is too much like text book '92 Republican for me to vote for it, I made fun of right wingers for doing that my whole life and I simply refuse to become a hypocrite that does exactly what they have done that I have criticized so long.

There is one more evil than the other yes, but the other side appears to get what they want no matter which of the evils is elected.
Hence the change from continuing the vote lesser of evils strategy as it appears to merely encourage the Republican appeasement.

If I consent to rape by any policy (by voting for it) it is no longer rape but something worse - a co-dependent masochistic relationship with a serial abuser. No one will get that from me. NO ONE!!!

....certainly not you.

I will follow voting records and deals made by individual pols, and will vote progressive and progressive only thank you very much.
I will not just do what you say, I suggest you vote for whatever reasons you choose but leave me to my own right to vote or not as I please.

Appeasement does not help by the way, it is a bad strategy you and the other blue dogs have chosen.
Stop playing patty cakes with Pukes if you want my loyalty again, votes are now to be earned on a pol by pol basis.

[DallasNE]

21. Krugman Needed To Wait One More Day

Bernanke has blasted Congress for not passing a short term stimulus. Together, these actions show the Fed to be telling Congress that they have done all they can do and now it is up to Congress to modify fiscal policy to augment monetary policy. Yes, it is about time the Bernanke step forward in this manner but about a month ago I actually said that Bernanke needed to step forward and tell Congress to get with the program. I give Bernanke high marks for his candor here. While he didn't say it was the Republican's fault the meaning is crystal clear.

http://www.democraticunderground.com/1002839255

[cthulu2016]

28. It is a two part argument...

I posted that post and this one, and generally believe both, despite their seeming internal conflict.

One the one hand, Bernanke is a blessing. He has done an incredibly good job by the standards of anyone who could have ever been confirmed as Fed chair. That is damning with faint praise, but faint praise is better than none.

Bernanke is a smart economist who has had a relatively better understanding of the situation and the remedies than, say, Larry Summers. (Or the President.) Under Greenspan there is not telling what might have happened.

But, on the other side of the coin, Bernanke is a Fed chair, with the extreme caution and disproportionate attention to business interests that entails.

Krugman's exasperation is that (shortly before that testimony) the Fed decided to not do anything. There isn't that much the Fed can do, but Krugman's point is that if you've got anything in the bag of tricks then there is a moral obligation to do it. If there's a starving kid and all you have is a Tic Tac mint then give him the damn mint!

But since the Fed does not have more than a mint to give out, Bernanke was correct in saying that the only real solution lies in short-term fiscal stimulus.

So I applaud Bernanke for being a real economist who will not just make stuff up. But I criticize him (as Krugman does here) for not having the proper sense of urgency, and acting with the usual relative caution and deference to what Republicans think.

[Scootaloo]

26. This story needs an illustration

There we go.

[WcoastO]

37. Austerity has failed everywhere....

but the steady drumbeat continues from the "liberal" media and the very serious punditry about the need for austerity in the US. Austerity didn't end the Great Depression, a massive government spending program called WWII pulled us out of the Depression. The problem is not supply, it's the lack of demand and we need more money in the economy to get things going. People without jobs/money aren't willing/able to spend. Furthermore, the Wall Street crowd produces nothing except profit for itself.....they are not job creators. Krugman has been spot-on, but mostly ignored and marginalized.

[upi402]

43. Straw man excuse for government play-along

Republicans are the worst, but... Both parties are corrupt and it extends to our institutions after a time.

They pretend to be cowed and inept but are in it to their eyeballs.

[TrollBuster9090]

49. He's right, Grand Nagus Greenspan was a double agent for the dumbass Austrian Economics crackpots.

I remember when everybody was mystified by the fact that Alan Greenspan, an avowed OBJECTIVIST, and follower of the Ayn Rand Cult of gold-hoarding deregulators would volunteer to be Chairman of the Federal Reserve. An institution whose usefullness is rooted in Keynesian Economics. Easy! The shriveled old son of a bitch was a double agent!

Greenspan LOOSENED the supply of money when the economy was booming, and actually pumped air into the dot com bubble, AND the prime mortgage bubble. Then when both bubbles exploded, and the economy crashed, his successor Ben Bernanke was left with almost no room to maneuver. He lowered interest rates from 2% to 1%, and when nothing happened, everybody said "look, monetarism doesn't work, and Keynesianism is a failure! So let's all go back to the 'good old days' (as we imagine them to be) of 1850 when we didn't HAVE boom/bust business cycles. (Or so it says on Llew Rockwell's web blog.)"

Well, I have a headline for Ben Bernanke: You'd better get off your ass and DO something to help the Economy, because if Obama loses the election, his opponents are going to do one of two things. Either take political control of the Fed at best, or crush it under a pile of copies of 'Economics in One Lesson' by Henry Hazlitt at worst. And believe me, suffocating under a pile of garbage is not a pleasant way to die.



Former Fed Chairman Alan Greenspan (not exactly as shown)

[Fumesucker]

56. Grand Nagus Greenspan... !!!

[TrollBuster9090]

57. Shamelessly forcing Andrea Mitchell to wear clothing!

What an old pervert!

[ozone_man]

69. Krugman is trying to prop up a failed banking system.

He was much more on the mark in 2008 with his "Depression Economics", nationalizing the too big to fail banks.. Now he seems like a broken record, a punch drunk Keynesian. The Fed has proved to be a total failure at monetary policy.
We should start by reinstating Glass-Steagall as Elizabeth Warren wants, and reforming the Fed, perhaps placing it under jurisdiction of the U.S. Treasury as Dennis Kucinich had suggested. Though I think it will take another failure of our system, worse than 2008, to drive the message home, that it is not a (Krugman) band-aid solution what we need. We need a different system.