I had no more than published the QOTW yesterday, and this one popped up. I’m of the opinion now that NYT economist and columnist Paul Krugman has gone insane, because nobody with any intact cognition would make a statement like this. Even Al Gore hasn’t gone this far, this is in nucking futz territory.
The scene is set on HBO’s Real Time Friday. Krugman is a guest, pitching his book, but at the same time pitching an idea that he’s totally serious about. It involves aliens and scientists and lies to the public on a grand scale, plus a shout out to California’s high-speed rail boondoggle. Here’s the transcript, brace yourself.
PAUL KRUGMAN, NEW YORK TIMES: This is hard to get people to do, much better, obviously, to build bridges and roads and healthcare clinics and schools. But my proposed, I actually have a serious proposal which is that we have to get a bunch of scientists to tell us that we’re facing a threatened alien invasion, and in order to be prepared for that alien invasion we have to do things like build high-speed rail. And the, once we’ve recovered, we can say, “Look, there were no aliens.”
But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.
Watch the video here: http://newsbusters.org/blogs/noel-sheppard/2012/05/26/krugman-scientists-should-falsely-predict-alien-invasion-so-governmen#ixzz1w5zk6aAO
UPDATE: one commenter thinks he’s being sarcastic or tongue in cheek, here’s my response –
If he had left the comment at that, I’d agree with you, but he added this without saying “I’m joking” or “That’s silly but…”
But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.
He’s a big boy, he knows the ropes of these interviews, and he didn’t insert an appropriate caveat. – Anthony
UPDATE2: This is now a theme with Krugman. Obviously he stands by his words or he would not have repeated it. See 1:01 in this Aug 14th, 2011 video.
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The signs have been there. In Feb 2011, Krugman pulled another whopper. Paul Krugman’s opinion in the NY Times blamed climate change for the unrest in Egypt.
Dr. Ryan N. Maue wrote then:
Based upon this quote from Krugman:
But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.
There is no other way to interpret this than “I told you so” from Krugman directly linking climate change and the disparate weather events of the past year or two to food prices and the crises in the Arab world. To various commenters who are defending Krugman religiously, do you doubt that Krugman is linking the events implicitly or explicitly? Remind you, this is the same Nobel prize winner that less than a few hours after Congresswoman Giffords was shot blamed conservatives for the so-called “Climate of Hate“. How does he have ANY credibility at all — especially with anything related to physical sciences?
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Indeed.
h/t to WUWT reader “good business”
Related articles
- Krugman: scientists should falsely predict alien invasion (motls.blogspot.com)
- Krugman: Scientists Should Falsely Predict Alien Invasion So Government Will Spend More Money (newsbusters.org)
- Krugman : Scientists Should Lie – To Force The Country Further Into Debt (stevengoddard.wordpress.com)
Randle Dewees says:
May 27, 2012 at 12:06 pm
“The Dire Menace that requires Marshalling all of society’s resources. Pretty tired device. A better menace, and one that could actually happen, is a large comet on a high certainty collision orbit with the Earth. What if “The Consenous” determines that it is technically feasible to mitigate this hazard, but at the cost of all the productive capacity of the world, what happens? The world is saved but now enslaved?”
Randle,
Look for a smaller scale ‘scare’ this fall, to ‘wag the dog’ and rally the nation around Our Dear Leader just before the Nov elections. War with Iran is the most likely possibility, ostensibly to stop the development of nuclear weapons by Imadoinjihad and the Mad Mohammed Mullahs. Leon Panetta is ‘sabre rattling’ even now.
The anemic economy, concern for our irrational public spending and almost insurmountable public debts, and public opinion are all turning against Obama and the democrats. This leaves them with little leverage to sway voters, except a cause celeb to create national unity. If it isn’t Iran, it will be something else.
MtK
conradg (May 27, 2012 at 4:33 pm):
And let’s be clear: every economist agrees that it was the massive government spending on WWII that ended the depression.
That may be the belief of every Keynesian economist, it’s not true of any economist who has read and understood Bastiat.
James Sexton says:
May 27, 2012 at 12:07 pm
“So, what is to be done? It’s simple. We go back to the form of economics which worked. Have government get out of the way and create an environment which spurs economic growth from the private sector. Drilling, mining, industrialization. Of course, you’ll never get a leftists to understand this, much less advocate it.”
Prime Minister Harper of Canada has, so far, steered through the global economic minefield that has been blowing up countries large and small. He did give out cash for infrastructural construction – everything was about to fall down anyway- so it was a good way to give stimulus. But he did that for a measured stretch and then began clamping down on expenditure. To keep things going, he has pulled out all stops on resource development – oil, gas, pipelines, mines… and he has particularly pulled out one particular stop: limiting the endless, overlappingd environmental challenges that hold developments up for years to decades that are raised by unabashedly leftist, anti-industry development activists.
You know, its a funny thing. The lelftists need a conservative government to be in power long enough to straighten out the economy – legislate strikers back to work, move people off perpetual dole into jobs (the pogey its affectionately called by generations of those who live off the largess of the taxpayers), balance budgets, shrink government and create a favorable climate for business. This is the only way that leftists can have the wherewithall to throw money away, bleed business and put the same folks back on the pogey again.
In Europe, they don’t have this luxury. They are all leftists and they have created an untenable (or to use their phrase an “unsustainable”) economic structure. Keynes’s stimulus was for a black-hole economy between two world wars. Even he realized (if his modern day clones like Krugman don’t) that it wasn’t something that could go on forever. When asked (paraphrase) “Yeah but what about the future?” He said, “In the future we will all be dead!” Pretty much all of European economic sense emigrated long ago and they have since been going in circles seeking to work the majic of Keynes. Margaret Thatcher breezed in, cleaned house, sold off coal mines and railways, chopped the fat off the civil service, deregulated and disenfranchised the industry killers and the UK enjoyed an economic boom. Now the so-called conservatives are about as left as Thatcher’s opposition was. The rest of the continent, except for Germany, was already economically moribund in Thatcher’s time.
I’m more than a little concerned about US Keynesian economists. The Nobel guys are using the prize to encourage this kind of self immolation in the US.
Please, when is this ‘WW2 ended the depression’ junk going to die?
You cannot, cannot, grow an economy by sending it’s youth and output off to the other side of the world to be destroyed.
If growing an economy was as simple as inventing a threat, and then blowing up perfectly good equipment and having your young men murdered, why hasn’t Iraq and Afghanistan created a booming economy?
People think that the economy improved during WW2 – which is utter tripe. While some notional gdp growth figures may have improved, in every single way, the living conditions of just about every single person were worse during and immediately after the war than they were prior to the USA entering the war.
Rationing, dramatically increased workforce participation – all these increased production, but in no way did the actual living standards of the people improve.
The reason the US prospered after the war is that it shunned socialism for a couple of decades, kept intact it’s capital stock, and prospered greatly from the Bretton Woods agreement which handed it most of the world’s gold supply and the advantage of having the reserve currency, a position with which it continues to abuse all other nations to this day.
Anyone who thinks you can instantly get prosperity by making tanks and bombs and destroying things needs to get a grip. Iraq/Afghanistan have already gone on much longer than WW2 and have only caused further impoverishment of the US economy. If it’s as simple as blowing things up, then why hasn’t it worked this time? Why didn’t it work in the 1960s and 70s with Vietnam?
As for the Egyptian food riots that led to the toppling of the regime – you can lay the blame squarely at two places :1) biofuels and biofuel subsidies, which made it more profitable to burn food rather than sell it to people to eat and 2) money printing by the Federal reserve, which caused massive inflation, and crushes countries like Egypt that keep a US dollar peg, and which subsidise the cost of wheat and other staples to their population. Revolutions happen when people go hungry and see that they can’t feed their family. What other option do they have?
There has never been a famine or food shortage in a country with a democratic government and a free press. And there never will be. Every single country in the world has comparative advantage in something, and can easily exchange that for food with countries that can produce large surpluses of food.
There was a great ‘Outer Limits’ episode from the early 1960’s
where a group of ‘concerned scientists’ morphed a volunteer
to look weird and put him on some craft which was supposed to
come into DC but instead crashed in a Florida swamp. Krugman
needs to see that episode of Outer Limits.
Government implementation of Keynesian economics (save money in good times, spend the surplus in bad) is flawed anyway. The politicians heard “bzz bzzz bzzz bzzz, spend money bzzz bzzz bzzz “, so they said to themselves “we can spend money, bewdy, everything will be OK and we’ll get re-elected”.
Just why the government should get involved in the business cycle is another matter and it seems to me, given the response lags, to be very easy or nearly impossible not to make things worse. In aircraft piloting it is known as “Pilot induced Oscillation”.
heh- tsk tsk-
you probably know that keynes talked the adam smith line until he found he could get no employment preaching laissez-faire. so, just as did milton friedman and alan greenspan.
(btw- adam smith wrote wealth.of.nations in an attempt to refute the goals of the constitution which was not about liberty at all, but about enforcing collection of gold from the states into central coffers for a lot of fops to play royalty)
here’s a quote from alan the g: ‘there is only one kind of inflation – the printing of currency- and not one man in a million can tell how his pockets were picked’ (maybe not exact, but close enough)
whenever you hear someone talk about ‘price inflation’ or ‘wage inflation’ or especially ‘stagflation’, you can be sure that person has no clue about economics and is repeating something he has heard but is not capable of deciphering. such people require a gang to provide the security of consensus because reason has been rejected for catechism.
keynes ‘contribution’ as witchdoctor to attila was advising that because the nature of manufactured goods is that, once the tooling is amortized and supply has increased, prices fall.
similarly, gold value increases as it trades against a greater supply of values.
keynes proved that you can steal the difference by inflation and call it ‘stabilization of prices’ and pass it off as beneficial to the victims if they happen to notice.
of course, inflation is a game of musical chairs and when the music stops, everybody is left standing with a wheelbarrow full of pulp.
but a nobel prize was awarded for the guy who suggested speeding up the music.
i’ve been hearing npr programming about the evils of ‘hoarding’, lately. this is a bellweather i’ve noticed that has, in the past, signalled that the way was being prepared for nationalization and resource confiscation.
and now they’ve armed the domestic drones.
so even if the cagw schtick loses its audience – it has done fine work neutralizing any effective opposition by distraction. troll power is meant to disrupt rational discourse.
Freddy says:
May 27, 2012 at 12:39 pm
tomjtx is right. Krugman is trying to emphasize his idea that in a liquidity trap (the current US economy)…. Krugman’s ideas are within normative capitalist economics.
He’s serious, knowledgeable and has a Noble Prize in Economics. None of this guarantees he is right, of course….
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First, the current USA (and world) economic system is not Capitalism. Capitalism is based on the recognition of individual rights, including property rights, where property is privately owned. Wealth is invested to produce more wealth from labor and raw materials. An ever increasing supply of fiat currency has no place in real capitalism.
The system today is a system of fiat currency where banks trade monopoly money created out of pixie dust for our labor and goods. It is systematic theft and fraud, legalized by the governments because they get to borrow “cheap” fiat money and raise the tax rate via inflation.
In other words when you go to a bank for a loan you sign a contract for X years of servitude to the bank in exchange for money printed out of nothing. There is no WEALTH involved on the part of the bank. But that is not the only theft involved. Mises & Gary North explains the rest of it. Mises most distinguished follower, F.A. Hayek, was awarded the Nobel Prize in economics for his work in elaborating Mises’s business cycle theory during the later 1920s and 1930s.
I love high-speed rail (I’m a rail fan), but unfortunately it is just not cost-effective. Infrastructure and ongoing operations in every country require large government (taxpayer) subsidies. I have argued that, since in the USA the Federal Government subsidizes interstate highway construction, airports and the air-traffic control system, conceivably an high-speed rail system might work in some heavily-traveled corridors if government were responsible for the infrastructure and private companies took care of the rolling stock and passenger services, as the airlines do now. But I don’t have any numbers to back up this speculation.
There is a private firm in Italy launching HSR. Let’s see how that works.
/Mr Lynn
“Sure a lot of government spending went into Apollo but in no way was it dependent upon deficit spending.”
The US ran a budget deficit almost every year of the 1960s. So the space program was definitely financed at least in part by deficit spending. The economic boom of the 1960s didn’t arise purely from private sector business growth. Nor did NASA get financing from private industry. It was purely a function of big government centralized planning. Socialism, in other words. Heavens, it must be evil therefore.
REPLY: Reality check Conrad. Explain how you’ll personally be paying back the ~ $138,000 you owe squandered by the US government on deficit spending
byz says:
May 27, 2012 at 3:03 pm
Europe is in trouble as no-one enforced the rules of being in a single currency and why is this…
Because Germany broke them first!!
Considering that Germany is about the only thing productive in the EU (and France, but that may change shortly), that statement is either asinine or a sarcasm barb with out the /sarc tag.
http://i48.tinypic.com/1zlby2b.png
Guys, there’s no form of economics that ever worked. Every single one had massive flaws and problems. There is no utopia, even of the conservative libertarian variety. If they had worked, we would have kept them in place. They didn’t. What we have now is just a continuation of the trial and error method of harnessing human greed. Of course it sucks. Stop dreaming that there’s some Eden in our past, or some Utopia in our future, where economics will just “work”. Try to make the best of what we have, and improve it somehow, without imagining some perfect world exists out there but for the people we don’t like.
“REPLY: Reality check Conrad. Explain how you’ll personally be paying back the $138,000 you owe squandered by the US government on deficit spending”
First, I don’t owe that money, the government does, and so the creditors can’t come after me for it. And frankly, most of the people who are owed that money are not my concern. The debt is a fiction of currency swaps.
And second, the government has no plan to ever pay that money back, as far as I can tell. And yet creditors keep lending it to us. What does that tell you about how real it is? They continue to believe we are good for it, whatever that means. I think it’s fine to encourage that fiction. People lend the government money, they spend it, pay a little bit in interest, and everyone seems happy about it. If they stop lending the money, where are they going to put it? It’s just pieces of paper and electronic blips. It’s not like human labor or material goods.
Nucking Futz, Indeed!
Unfortunately, neither Obama nor Krugmann embrace the Chicago School of Economics and The
Theory of Rational Expectations. Its basic tenets are that (1) markets allocate resources more efficiently than any government, (2) monopolies are created by government’s attempt to regulate an economy (3) governments should avoid trying to manage aggregate demand and, instead, (4) should focus on maintaining a steady and low rate of growth of money supply.
Milton Friedman, a principal contributor to the Chicago School of Economics, passed away in 2006 at age 94. He is quoted as saying “There is no such thing as different schools of economics; There is only good economics or bad economics.” We are paying the price for really bad economics, of which AGW is just one expression. While AGW is not, by any standard, an economic priority, trillions of dollars globally are misdirected by governments into a myriad of AGW money drains as areas of real need and high investment potential go begging.
MtK
The future is here:
http://www.zerohedge.com/news/if-greece-was-california
byz says: @ur momisugly May 27, 2012 at 12:47 pm
…..The trouble with this is that the banks then horde this money and it never goes into the economy, whereas Keynes said that it was better to pay someone to dig a hole and fill it in again than for them to be unemployed, as if they had money in their pockets they would spend some thus starting a spiral of positive feedback…..
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Keynes was wrong. Most people want to work and want to make money called it greed/self-interest if you want. The 1933 economic crash and the recent economic crash didn’t just happen they were CAUSED, but that is an entire book. see link and link.
USA Today had a very good article that shows why the US economy is stalled.
Jimbo says: May 27, 2012 at 1:13 pm
Jimbo has nailed it here!
Krugman is just the first to admit the main reason for the ‘global warming scare’ is the perceived need for a ‘whole new economy’.
I agree entirely with your summary, except that the recovery of the U.S. economy from the 1929 to 1933 “great contraction” is pretty complex. The economy did manage a sustained recovery from 1933 to 1935 (I don’t know if it was a continuous recovery during this period), but coming off such a low level as it had hit in 1933, one is hard pressed to say whether FDR programs were effective or not (I lean toward not). However, after 1936 the U.S. economy fell into the “depression within a depression”.
Even Morgenthau, FDR’s treasury secretary, admitted the spending was not effective. When the Federal Reserve bank increased reserve requirements in 1936 the economy sputtered, and it didn’t help that FDR was running a war of rhetoric against business and industry and anyone who opposed him. In 1940 FDR realized that he had to cooperate with business and industry, because he needed their cooperation to begin rearmament. The war itself was massive deficit spending; but you are correct, Tsk Tsk, that war destroys assets, and people who view it as economic progress suffer a massive case of “broken window fallacy”.
Perhaps we gained intellectual assets during the war, but by war’s end the consumer/domestic economy was all but worn out, and people spent a lot of money to make the switch from munitions to domestic goods. That I think is how we finally caught up quickly to where we were in 1929. In any case, the story is so complex that one can hardly point to government spending as having done any particular thing.
Krugman may be struggling with the realization he is becoming irrelevant, and his intellectual legacy is evaporating.
His so called “Economic Nobel Prize” was for advances in Free-Trade theory.
However, even by 2007 he had started to realize it didn’t all work quite as simply as he thought it should:
http://www.nytimes.com/2007/12/28/opinion/28krugman.html?_r=1&ex=1356584400&en=502cb187aec80250&ei=5090&partner=rssuserland&emc=rss&oref=slogin
Just a comment about the appropriate role of Government in managing the economy. This is from our experience here in Australia which has performed better than any other country through the crisis, due to over 2 decades of economic reform prior to that from both sides of politics.
Government, working well, acts as an automatic stabiliser for the economic cycle. During the good times, when the economy is booming, governments must run surpluses. They pay down government debt and actually salt money away in things like sovereign wealth funds.
Then during the down times, governments start spending. Some of this is automatic with increased payments to the unemployed, stimulus schemes etc. Some of it happens automatically since government tax revenues drop. They even allow themselves to go substantially into debt during the down time. But they payback the debt during the next boom. Cutting government spending often means sacking government workers. So more unemployed, more people needing unemployment support, and reduced demand in the private sector since all those unemplyed people aren’t spending as much.
The reason often given for cutting government spending during downturns is ‘to get out of the way so business will invest’. But this makes no sense. If you were in business, you wouldn’t invest during a recession when demand is low. You won’t get the return on your investment. You would keep your powder dry and invest when the recovery has happened and demand is growing again. So maintaining and enhancing demand during downtimes is a major role government takes, almost without trying. And private sector activity maintains and enhances demand during the boomtimes.
Running an economy is a partnership between government and the private sector, each balancing the other.
But the key aspect of this, is that governments (and this means every single member of the legislature, not just the Treasury Secretary) must understand their role. And enforce the discipline that says that in the good times, they run surpluses, pay down debt and salt some cash away.
The problems around the world are due to governments not doing their jobs over the past several decades. So when the crash happens, they aren’t cashed up and ready to shoulder their burden during the bad times. It has been lazy government in the US and elsewhere that is a biig part of this mess. Lazy government in letting deficits run during boom times. Lazy government in not putting in place enough controls to ensure that things like sub-prime crises can’t happen. The private sector wont do that. The private sector caused the sub-prime crises for example.
So now we have a full blown crisis because past governments haven’t done their job well and their is nothing in the wallet when we need it most.
But the argument that government should get out of the way and let the private sector just go is also wrong. Then you don’t have the automatic stabiliser. Without governments taking their role, the crashes would be worse. The best economic outcomes come from a creative tension/conflict between government and the private sector. Government lets the private sector run free to a fair extent, but with enough restraint to limit the ‘animal spirits’ of the private sector to try and minimise the booms and busts. Steady as she goes is what a good economy looks like.
So maybe governments are broken. But getting rid of them isn’t the answer. They are an essential part of how the economy works. So the right answer is ‘fix government’. How? Don’t elect those who are ideologically driven. Elect educated people. Elect people from a wide range of backgrounds. Don’t elect people who will give us too much when the shouldn’t. Get changes to the system made so that individual legislators can’t derail the fiscal discipline of the federal budget.; allowing totally unrelated spending items to be tacked onto a bill is a really bad idea. Think about how many different centres of power in the legislature and executive control total spending. Focus on the efficiency of how government does things and the broader impact of how government works on efficiency throughout the economy.
More broadly, start thinking about an ongoing agenda of economic reform throughout the economy, spanning decades, looking at what really makes economies work well, rather than ideological positions about it.
In fact that is the best answer to most problems in life. Take ideology out of it. Completely! Because the central fallacy in ‘ideology thinking’ is that the right answer to something can be found in something as simplistic as an ideology. It can’t. Reality is a lot messier than that and the best answer, those that give the best outcomes for prosperity, human wellbeing, dignity and civility come from finding often equally messy answers that draw a little bit from many sources. Under the simple mantra – what works best.
If America wants to find the answer to its problems, it needs to start with understanding that many of America’s problems are caused directly by the very polarised, ideological nature of American thinking about itself. Left vs Right and all that. And which is RIGHT. Answer. None of them. They all have a little bit of truth in them. If you want to sort out the mess you are in, throw all that in the trash can. All 300+ million of you move towards the Centre and start dealing with the messy business of living in a messy world.
Maybe America is in so much trouble because your ideas about yourselves and what America is are just too simplistic. Noble ideas are usually wrong because they just don’t accept the reality of how messy reality actually is.
A little more on failures of “Krugman’s baby” – re some of the failures of the more extreme of “Free Trade” policies:
http://www.enn.com/agriculture/article/38551
Krugman may be struggling with the realization he is becoming irrelevant, and his intellectual legacy is evaporating. (His so called “Economic Nobel Prize” was for advances in Free-Trade theory. )
Please point to the experiment in which we tried Libertarian, Laissez Faire, open markets, for long enough time to consider the results definitive, found them wanting, and then tried something else. Please point to exactly what didn’t work and how what we tried next improved upon it.
Moreover, you may not think that you’re on the hook for the U.S. National debt, but your children and grandchildren most likely are. Please have a good look at Argentina and Greece for a more complete explanation, but Argentina stiffed the bond holders (2000) and now “she” has trouble borrowing money at favorable rates. So, the Kirchner government is playing at the end game of nationalizing industry. Unless Argentina can finance internally the needed investment to make the economy grow (i.e. provide capital for business and industry) then “she” is on the slow growth path for a long while. In other words not on what you characterize as “…People lend the government money, they spend it, pay a little bit in interest, and everyone seems happy about it….”
Roy says: @ur momisugly May 27, 2012 at 2:16 pm
…Keynes also had a major say in the Bretton Woods agreement in 1944…..
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ERRRrrr I am not sure that is such a great feather in his cap.
Harry Dexter White was a long time US Treasury official and as assistant secretary of the Treasury (1945–46), along with John Maynard Keynes, was the principal architect of the Bretton Woods agreement. Confessed spies and FBI informants Whitaker Chambers and Elizabeth Bentley accused White of having been a Soviet “agent of influence” while in government. The declassified VENONA decrypts of Soviet diplomatic traffic during the 1940s appear to confirm the charges.
Krugman is only suggesting that scientists do what he has been doing for years.
The “Nobel” in Economics is given by Sweden’s central bank Sveriges Riksbank.
So, a privately owned central bank gave Krugman his prize and when he repays them by spouting Bankster nonsense, it should not be a surprise. That we should still take him seriously is the real surprise.