Paul Krugman et al: Now for a Look at Et Al

(Note to Blog Followers:  I suggest you click the Gravitar at the upper left of your email to go to my web site so as to easily link to the Blogrollers I mention below).

I devoted my previous post to introducing Paul Krugman’s blog because there was a lot to introduce.  He is a relentless one man campaign for the importance of more government stimulus now, both here and in other countries, to get the world economy growing faster (or as with several countries in Europe, for example, growing at all).

Over the past year I have kept an eye out for a conservative blogger to match Krugman in both economic stature and frequent postings, but the best I could come up with is Greg Mankiw.   Nothing wrong with him as an economist.  He’s got the chops there, but he is not an obsessive political advocate like Krugman.   He seems moderately conservative and his blog is that of a genteel professor, not a crusader.   He is a friend and colleague of Rogoff and Reinhart at Harvard, so a number of his recent posts defend them in the debate over their study.  Also, if you google Krugman and Mankiw together you will find several articles about their disagreements.

To provide reinforcements for Mankiw I provide a link to the American Enterprise Institute blog (AEI), which is generally considered the best of the conservative think tanks, meaning that while having a conservative (often neo-con) point of view, they have high research standards and, according to Wikipedia, take “no institutional positions on policy issues”.   As also noted in Wikipedia, they are looked upon as the right leaning counterpart to the left leaning Brookings Institute, which is arguably the most respected U. S. think tank (though, of course, not if you are on the far right).

AEI  has a Money & Politicscolumnist-blogger James Pethokoukis who often challenges Krugman’s economic arguments as you can see if you google their names together.  However, unlike with Mankiw, I can find no responses from Krugman to Pethokoukis.   He doesn’t mention the man and here is my theory why.   Krugman doesn’t respect him enough to respond.  Pethokoukis has made a career of being a political and economic columnist, but his formal education came in the liberal arts and journalism, not economics.   He does provide a frequent counter point to Krugman, though.

David Frum is another conservative voice, though a moderate conservative who believes the Republican Party is badly in need of reform, which to those on the far right makes him a RINO.  Well,  I just noticed Frum is taking a break from blogging, but I imagine his posts will stay up for awhile, so you can still get a taste of his thoughts.   In time I will replace him with another right-leaning blogger.

I used to label Wonkblog as Ezra Klein because he wrote most often, but these days there are many contributors.   While liberal leaning the quality of analysis is good and the posts come often so it provides regularly solid information about the poli-econ scene.   The blog has several posts today related to today’s jobs report for those interested.

Finally, there is Nate Silver’s 538 Blog which I referred to often in the last election as he had Obama as a big favorite for months, while most of the media was playing up the race as a close contest.   My guess is Silver has liberal leanings, but being more a researcher than an advocate, he is not busy promoting a cause but in developing data from which to make accurate predictions.   He often includes analyses on sports outcomes as well as politics.

So, those are my Blogrollers, at least for now.

Advertisements

The Great Macroeconomic Divide: Austerity vs. Stimulus

(NOTE:  Those who follow this blog and receive posts automatically need to go to the web site in order to see topic pages listed horizontally across the top.  Clicking the red/white box to the upper left on posts will get you to the web site.)

My last post was mostly a pointer to the topic of Governomics listed above and (if you hover over that) the sub-topic of Dealing with Debt, meaning our national “debt”.  The core issue I wanted to bring up was the sharp divide between academics/researchers on the issue of what helps and hinders the growth of an economy (made all the more complicated by globalization).

National-Debt-GDP

National-Debt-GDP (Photo credit: Wikipedia)

That split underlies and informs the split in congress over budget issues and plans to stimulate the economy thereby cementing gridlock.    Some believe our growing debt is our biggest fiscal problem and must be dealt with right now.  Others believe that our biggest fiscal problem is a weak economy with high unemployment that would benefit from more government stimulus money.  They believe we should wait to tackle the debt issue until the economy is stronger.  Paul Krugman is the best known advocate for the latter view.   

Those who emphasize the danger of debt also tend to warn of the danger of the Federal Reserve bolstering the financial system by injecting money at low interest rates, rates that austerites argue will eventually go up to more standard levels of five or six per cent….which will force much bigger interest payments on our burgeoning debt.   Altogether a debt time bomb.

As mentioned on my Governomics page above, until very recently, austerity preachers often suggested the tipping point of debt to GDP would be around 90%, basing it largely on a study by two Harvard professors Weinhard and Rogoff (a per cent that seems extra scary as we are now at about 75% and climbing).   But now that study is under fire because other researchers have found errors or questionable judgements in it, initiating quite a pie fight among economists.

All that is really a preamble to this.   Swedish economist Anders Aslund, a defender of austerity, has written a defense of Weinhard-Rogoff in which he calls those who critiqued his study “vicious”, an accusation that Paul Krugman takes issue with in his April 22 blog post;  Very Sensitive People.   Reading Aslund’s piece and Krugman’s response will  provide insight into the nature of this stimulus vs. austerity debate, which is raging in Europe as well.

Actually, if you click the Krugman link above, you’ll see at least three posts more recent than “Very Sensitive People” in which he also battles with his foes, shedding more light on the arguments between them.  In one of them, Krugman lashes out at Robert Samuelson for his suggesting in his The End of Macro Magic that current macroeconomics is a mess, pointing out that Samuelson’s sources were those who have proven themselves regularly wrong.  Needless to say, Krugman wasn’t one of them.

While Krugman has well respected allies who share many of his opinions, such as fellow Noble prize winner Joesph Stiglitz, he is the most incessant in making his p0ints and spares no feelings when challenging those who preach austerity and tight money as the combined path out of these hard times.

In short, he remains in the center of the action, which is why I often refer to him in my posts.   That and, from what I can tell, he makes a good case for his positions.

Deconstructing Stephanopoulos: Part I

Will's Billboard

Will’s Billboard (Photo credit: teresia)

Not the man.  The panel discussion he moderated on This Week last Sunday.   I watched because I heard its topic would be:  Is this economy built to last?    And Paul Krugman, my favorite economist at the moment, was to be on along with George Will, the conservative columnist who usually has something interesting to say and four other folks who might contribute as well.  I’ll get to the others later.  Krugman and Will sat immediately to the left and right of G. S. respectively, which reflects their political inclinations as it did with the other four participants as well.

Afterwards George summed it up as “a fantastic discussion.”  Well, maybe in a teeny-weeny TV sort of way, but not really.   Thirty minutes was barely enough time to scratch the surface,  given the breadth of the topic and the diversity of the group.   People offered their particular agendas, often only tangential to the THE QUESTION, with relatively little agreement.  To call that “fantastic” reminds me of that psychotically chipper “ambassador” to the ever punished districts in the Hunger Games, the one who made the contests to the death seem like fun.

The panel lacked sufficient areas of agreement to do anything but politely squabble.  The question which shaped this discussion was not the one stated but instead:  How many viewers can we reel in?  It is the kind of pseudo seriousness that rules these media shaped political discussions.  The question was chosen not to be answered but to attract viewers sort of like the news promo:  “Does walking your dog cause cancer?  Tune in at 11.”

Always intent on turning a frown upside down, I will try to illuminate a few things worth remembering, and a number of them deal with the sub-text, not the faux discussion.  What’s that baseball saying? You can’t tell the players without a program?  Well, allow me to say a little something about these players, which might help in understanding what was really going on, and what might be useful to take away from it.

As to the question of keeping the economic recovery going, Krugman really was the “main man” here as he is a Nobel winning economist who has just published another book End this Depression Now.  He has a column in the NY Times and a bunch of other books and can back his case with a slew of economic facts quicker than I can type “economic facts.”   He also posts very often on a blog titled:  “The Consciousness of a Liberal.”  So, the far right can’t stand him, especially because he is both very smart and very combative verbally. President Obama has complimented him for his smarts, which only makes the far right hate him even more.

Krugman often argues that the way to really build a recovery is for the government to spend more money, hire back the teachers, rebuild the bridges, put more money into new energy etc., which is what his latest book is about.   He points to Europe’s stagnant economy and the austerity measures they employed as an indication budget cutting right now would be a terrible idea.   The right calls the stimulus a dud, but Krugman argues it helped us stay afloat and it would have helped more if we had spent more  (see my Stimulus page for more).

Not that he is unconcerned about the debt problem.  He says it’s a matter of priorities.  First build the economy to last and then tackle the debt hard and fast (I shaped the rhyme, just for fun).  Not that Krugman spilled this all out immediately, but this is where he is coming from and, if he’s right, a key to economic recovery.

On the right side of G. S. was the conservative George Will, who was given first shot at commenting and immediately dissed THE QUESTION replacing it with his own: “The threshold question is not is the recovery built to last, but does it exist?”.  He emphasized how weak the recovery was and later compared it to 11 other post WWII recoveries which appeared to puzzle him.  He is now 71, I mean exactly now – it’s his birthday today – so he may actually be bewildered like I am at times.  But I suspect he was just playing dumb, leaving us to fill in the blanks. Why is this recovery so slow?  Hmm….what’s so different now?  (Can you spell O-B-A-M-A?).

Krugman immediately challenged Will’s assertions, and those of others later, giving several reasons why the recovery is stronger than Will portrayed it, chomping away at his points like a pit bull.  Will is not an economist, so he wisely did not respond.

Now meet Carlie Fiorina, sitting to the right of Will and less wise.  If the name doesn’t ring a bell, she was the CEO of Hewlett- Packard for three years before she was fired.  Then she ran unsuccessfully against Barbara Boxer for senator in California and now co-chairs the Mitt Romney election team in California, which makes her, unlike the others on the panel, a clear cut political operative.  That means she sticks to the party line.

Over the course of the “discussion” she emphasized a number of key points, as if no one had thought of them before, greater support for small business – “fewer are starting and more are failing than any time in the past 40 years” – the need to improve education and the need to reform our tax code, most importantly to reduce our corporate tax rate which is the highest in the world.

Foul!

Have you seen those Southwest commercials emphasizing the additional fees other airlines charge, the ones where a referee jumps in from nowhere and calls “foul”? Think of Krugman as that referee who, trying to be civil, restrained himself from jumping in and instead sat quietly appearing to need an emergency  bathroom break.  However, as soon as a second of silence arrived he said:  “Nothing you just said about business taxes is true.”

Part of what he meant, if not exactly stated, is corporations don’t actually pay that high of a rate once their phalanx of tax lawyers begin chomping away like rats at a picnic, with a little three card monty thrown in.   The NY Times has examined Apple’s world wide tax rate and it’s about 9.8%, one more reflection of how good they are at everything.  Even less resourceful companies, like Walmart, average only around 24% a year, not the 39.2% that’s official.   Republicans know that.  They just prefer to maintain the half-truth, implying Democrats don’t understand business needs like they do.

Later Fiorina tangled with Jennifer Granholm, her female counterpart on the left side, and former governor of Michigan when the auto bailout occurred.  Sounding just like the Romney surrogate she is, Fiorina doubled down on Mitt’s original assertion that bailing out GM was a mistake.   As Fiorina spoke, Granholm seemed warming up to an epileptic fit:  “We tried everything,” she eventually spat out, waving her arms about to further make the point.  But Fiorina had a rejoinder:  The government should have just called the big bankers together and insisted they loan the money to the car companies, as if that would have been as simple as pie.  Remember the last time the bankers were called together by the treasury secretary?   Few loans resulted as the banks preferred to take that money and invest it.

OH, MY!  I JUST NOTICED HOW LONG THIS POST IS GETTING.

Blog Posts are not meant to be book length, so I’ll introduce the other two panel members and continue my deconstruction Tuesday.  I hope I’ve prompted some interest in this “discussion” and in the meantime, some of you will want to see it for yourself at this ABC web page, which provides a written synopsis along with videos.

Of course, the slackers among you can just wait for more of my slant Tuesday which I’ll be happy to provide.   Despite its shortcomings as a discussion, I think the show offered several points worth noting and building upon later.