TheAgitator.com
200 Dishonest Flacks
Wednesday, January 28th, 2009Paul Krugman wrote in a recent New York Times columnist that any economist opposing the pending stimulus package is a “dishonest flack.” Cato found 200 economists–three of them Nobel laureates–who disagree.
Let me guess, more tax cuts for the wealthy will solve all of our problems. WHEEEEEE
Paul Krugman sinks to ad hominems.
Not only does an ad hominem show how shallow one’s character is, it exposes the complete lack of a valid argument.
Be sure to thank those that signed. Lets give encouragement to those willing to stand up and fight.
Both Paul Krugman and Brad DeLong. They are quite the pair.
Recently Krugman made a very basic error in arguing about the deficit, national debt, etc.: that it is money that we owe ourselves so why worry about it?
That claim would be true if we lived in either a closed economy or in a world where just the U.S. existed (in effect a closed economy). We don’t and we don’t and foreign borrowing funds a very significant chunk of our federal governments borrowing. If we start racking up massive deficits without concern to things like debt to gdp ratio, burden on taxpayers present and future…foreigners might stop lending or even worse dumping the bonds they currently hold.
Also, it is looking more and more like the spending on things like work/infrastructure projects wont really get rolling until 2010 and 2011. By then the recession will likely be over. Why are we stimulating a growing economy? Traditional Keynesian theory suggests that we want to keep growth from getting too out of hand. We want to damp down expansions and limit the depth and duration of recessions and provide a nice stable growth path.
Who’d have thought that so many nobel laureates would be dishonest flacks? What is a flack anyway?
Steve, the nonsense ‘debt doesn’t matter’ argument you highlight wouldn’t even be true if we lived in a closed economy. The idea that debt ‘we’ owe to ‘ourselves’ doesn’t matter is based on an entirely collectivist viewpoint (no surprise that Krugman was the man to say it).
In reality if the government in a closed economy borrowed to the point where noone trusted that their bonds were worth anything then either the government or the value of money would collapse (neither of which ‘don’t matter’, although the former option frequently feels attractive).
I don’t understand how the economy works.
“I don’t understand how the economy works.”
Neither does anyone in DC.
Not sure why anyone would give me negative feedback for that.
Krugman doesn’t quite say that any economist who opposes the pork plan is a flack, but he is being sneaky in how he defines the opposition.
For instance, he characterizes the pro-tax cut people as holding the position “that a dollar of tax cuts is always better than a dollar of public spending” and makes an example of the silly thought that, since air traffic control is currently government run, then the tax cutters are in favor of shutting it down, even if that means “lots of midair collisions.” But, whether or not that would be the impact (and it wouldn’t), Krugman is putting up a straw man because that isn’t the argument the tax cutters are making. The more common pro-tax cut argument is actually closer to “Right now, the government already spends a huge amount of money and tax-cuts will stimulate the economy more than additional government spending.” Krugman knows that, so there is some humor in his calling others’ characterizations “dishonest”.
Moreover, Krugman is himself flacking when he says, “it’s clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts [...] because a large fraction of any tax cut will simply be saved.” That is an old argument and a poor one because it assumes that money put into savings isn’t useful to the economy, almost as if putting money in a bank is the same as burying it in the back yard. But, of course that is nonsense. Money put in a bank is available for lending to people looking to expand their businesses, make home improvements, and so on down the line.
In addition, Krugman knows full well that long-term tax cuts aren’t simply put in the bank, though that may be true of one-time tax rebate checks.
And, he pulls the most favored trick of the let’s-spend-our-way-to-prosperity crowd when he ignores where the spent money comes from. That extra spending comes mostly from bond borrowing (or printing the money, which is even worse). But, people with some extra money who decide to buy bonds are doing that instead of investing the money elsewhere, such as in businesses. In other words, the government is competing for investment dollars and the question becomes whether money invested in the private economy is more productive than money spent by the government. I am of the opinion that the market, though far from perfect, is more efficient than politicians.
All that said, in my opinion, since the government is running a deficit anyway, the best long-term economic impact comes from cutting spending, even if the reduced outlays aren’t all sent home in lower tax rates. The drain on the economy comes from government spending. Whether it is funded through taxes or borrowing, government spending diverts money from elsewhere in the private economy. That’s why this whole notion that one can “boost” the economy by taking money that people would spend in the (somewhat free) market and giving it to politicians to spend is flawed at the outset. It’s essentially saying that the government will find more economically productive use for the money than the private sector will. One doesn’t have to be a “flack” to think that is nonsense.
“Government: Too big to do anything but fail.”
With Krugman, you just have to consider the source before immediately dismissing most of what he says. You should still read because ignoring things you disagree with for any reason is foolish and intellectually lazy. Throw in the fact the he resorts to name calling, and it’s quite easy to dismiss him as a whole.
Freedomfan (#10): I don’t think Krugman or the new Keynesians are arguing that “government will find more economically productive use for the money than the private sector will.” What they have been saying for about four months now is that the problem is that the private sector has decided to take its money and sit on the sidelines. From the perspective of the individual, that’s a rational decision; from the perspective of the economy, it’s been a disaster. What government spending does in this setting is convert the caution of the individual decisionmaker (who will buy bonds, thinking they are a safe investment in troubled times) into certain economic activity (government spending on goods and services).
Overall, I find the Cato piece to be disingenuous, if not dishonest. Obama’s quote in the piece comes from his response in a press conference to a question regarding his relations with Congress. He did not say that there is no disagreement with anyone, he just expressed a sense (before his Inauguration) that there was consensus:
You could argue that he was wrong insofar as he was suggesting that there was consensus for a big stimulus program; I don’t know if every single Congressperson is on board with that, but it seems that even the Keynes-skeptics would argue that “action” by the government in the form of a “recovery plan” is needed, they would just argue that it should be based on tax cuts.
Paul Krugman wrote in a recent New York Times columnist that any economist opposing the pending stimulus package is a “dishonest flack.”
That is not correct. What Krugman actually said was:
Any time you hear someone reciting one of these arguments [i.e., the three arguments discussed in the following three paragraphs], write him or her off as a dishonest flack.
(Those arguments are: (i) a talking point that the Obama plan will cost $275K per job created, because it rests on a misleading calculation; (ii) the contention that it is always better to cut taxes than for the government to spend money, which is at a minimum an overstatement because some government spending is necessary, and which ignores the context that this is a stimulus package; and (iii) the talking point that Obama adviser Christina Romer has stated that she prefers lowering interest rates to government spending as a response to recessions, which ignores that interest rates cannot be lowered any further at this point.)
That’s funny. I remember reading that column, and I don’t recall Krugman saying anything quite so silly.
So, unlike many of your commenters here, I followed the link and took a peek. Let’s see how accurately you’ve quoted Krugman:
Balko quoting Krugman: any economist opposing the pending stimulus package is a “dishonest flack.”
Actual Krugman: “let me try to debunk some of the major antistimulus arguments that have already surfaced. Any time you hear someone reciting one of these arguments, write him or her off as a dishonest flack” [several such talking points follow]
I’m sorry, Mr. Balko. I’m a great admirer of yours, and a regular reader of the site, but this falls far short of your usual standard of honesty.
I saw that too, Laertes. I took Radley’s word and posted without reading because I find Krugman to be a hack and a wonk based on his past writings. But I understand your point. I suppose the fair thing to do would be to give Krugman a chance to evaluate Austrian economics arguments and respond.
My guess is that he would be similarly dismissive, but you never know.
#14 Laertes–Well he did include this as one of those flack arguments,
“Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.” Then he goes on to say that “nobody really believes that a dollar of tax cuts is always worth more than a dollar of public spending”. Yeah, ok, nobody believes that.
Of course the view he is ascribing his economist is crazy dogma. He conveniently doesn’t mention the emphasis on cutting government spending in conjunction with reduced taxes, that this hypothetical economist would probably have if he’s worth a damn, and any other complexities and specifics that might amend the above principle if he was talking to an actual person. I think that it’s pretty flacky to write an article in which you easily debunk a series of straw man arguments.
On a separate note, as he puts it “government stimulus is the only option left”, and perhaps it is, other than having the government do next to nothing–an option, that for I guess Krugman and a lot of other people, even when responding to libertarians, can’t escape some sort of crazy blind. It’s interesting that the title of his article is Bad Faith Economics, though he might of meant it in a legal sense, at least for Sartre “bad faith” is precisely what Krugman has, in believing that there are no other choices available, failing to recognize that even inaction is a choice that has effects in the world.
The “stimulus” package will do much more to stimulate special interest groups and grow the government than it will do to stimulate the economy.
But hey, Obama wants it, and that’s all that really matters, right?
Save his article. Collapse of the US dollar coming. Buy gold or gold-backed currency. Yes, it is that dire.
Boyd Durkin | January 29th, 2009 at 2:15 am
Save his article. Collapse of the US dollar coming. Buy gold or gold-backed currency. Yes, it is that dire.
I read this a lot on message boards and blog comments, and wonder what the hell are you going to do with the gold? Sure, you could trade it for a product or service you want, but say I have a bunch of egg producing chickens that I use to feed my family, why would I trade any of those chickens or their eggs for a shiny piece of gold? I like chicken, I like eggs, I like to feed my family. What the hell good is a piece of gold going to do me?
You can convert that gold into currency when you need it. Odds are good that the gold will buy much more of said currency down the road.
People who tell you to buy gold aren’t necessarily telling you to opt out of fiat currencies.
Yes, Krugman didn’t say anyone opposing the stimulus is a flack. He did say that anyone who thought that tax cuts were better than govt. spending was a flack. And the Cato article specifically said declared that tax cuts were better.
I’d say Balko’s in the 80-90% accurate range on his assessment that Krugman called those 200 people dishonest flacks. It is possible that Krugman meant his statement in such a way that he is not “dissing” those 200 Cato signers, but it seems unlikely.
@19 Old
Thread jack alert (sorry).
You cannot do anything with gold (for sake of argument), but it is a limited commodity (the supply is not substantially increasing…without significant mining costs). Unlike US dollar (which the US government is increasing supply virutally at no expense). If you don’t want gold, convert your US dollars into gold-backed currencies.
Guess how much the Fed is printing? Just guess. And then check it out: http://research.stlouisfed.org/fred2/series/BASE
Zoinks. That’s devaluing the stuff a lot of your life depends on.
I understand the skepticism. It (dollar collapse) has NOT happened in the US before. I’d love if it never did happen, but what do you think China, Japan, and other countries will buy when/if they don’t want to further finance US debt? Gold. That’s it.
Don’t be snarky about shiny gold. I mean why would you want to pay $100K for a piece of paper saying BRK.A? It’s just a piece of paper!! Or, maybe you literally thought I meant go to Zales and buy gold rope chains. While that will CERTAINLY attract the ladies, it won’t help you financially.
@#22 Boyd Durkin
If the dollar collapses I just do not see how having a bunch of gold around is going to help me. I’ll have to defend the gold, or keep it hidden from potential thieves. I’ll have to learn how to press it into coins or something, or maybe it will come in coins when I buy it. I have no idea. Then I will have to learn to sell it to the Chinese, and I don’t speak Chinese, or maybe they will speak English, and what will I get from the Chinese? Will the Chinese come to me to buy the gold, or will I have to go to them? Seems like they will be buying from a position of power, and I will have to sell for less than the gold is worth. How much gold for feed for my chickens? As long as I have the chickens and their eggs, maybe I can make a deal with my neighbor who has a cow, and we can trade eggs for milk. Hopefully, either I or the neighbor has a distillery and has learned how to use it properly so neither of us goes blind from drinking the product.
Sure gold worked fine in a town like Deadwood in the 1880′s but I fear I would have turned out like the New York dude Brom Garret. Gold never did him any good.
Boyd Durkin | January 29th, 2009 at 10:21 am
Don’t be snarky about shiny gold. I mean why would you want to pay $100K for a piece of paper saying BRK.A? It’s just a piece of paper!! Or, maybe you literally thought I meant go to Zales and buy gold rope chains. While that will CERTAINLY attract the ladies, it won’t help you financially.
Not being sarcastic. I think I might like having a little acre or two of tranquil land somewhere with chickens and a still and my wife, rather than gold. I would not recommend this idea as a way of life to anyone else but it sounds good to me.
[...] look at what is said than who said it. Let’s do that with this piece by Krugman courtesy of the Agitator about opposition to Obama’s stimulus [...]