Thursday, March 12, 2020

Paul Krugman Is Selling Snake Oil

Arguing with Zombies is the title of a new book by New York Times columnist Paul Krugman. Although the “book” is actually a collection of his newspaper columns, the title gives us real insight into the thinking behind those columns.

Who are the Zombies? And why argue with them?

Zombies are economists who believe that every tax cut pays for itself with increased revenue. They believe that social insurance has created an army of welfare addicts who would rather live off the dole than support themselves. They hate the poor. They are closet racists. They do the bidding of billionaire puppet masters who pay their salaries and fund their research. Their goal in life is to make the rich richer and the poor poorer.

Where do you find these zombies? You can’t. They don’t exist. Like the creatures of fiction, they are the product of a vivid imagination. Krugman delights in creating straw men. He verbally beats them about the head and shoulders and then walks away thinking he has won the Golden Gloves.

But wait a minute. Aren’t there serious public policy issues over which economists disagree? Isn’t Krugman outside the mainstream on many of them? And on some issues, hasn’t Krugman’s been embarrassingly wrong?

The answers are: yes, yes and yes. But you won’t learn about any of that by reading Krugman’s columns. Or by reading his book.

What you will learn is that Krugman hates Republicans and hates economists who advise them. His specialty in trade is the argument ad hominem. He doesn’t just disagree with people; he psychoanalyses them. He attacks their character, their motives, their honesty and their morality.

But why attack Republicans? If we accept Krugman at his word, he cares about income inequality, racism and the lack of progress for people at the bottom of the income ladder. Republican politicians have very little control over any of that.

In virtually every large city in the country, minority families are all too often forced to send their children to the worst schools. They live in the worst housing. They endure the worst environmental hazards. And in virtually every case, these cities are being run by Democrats!

Of the two parties, Democrats are far more hostile to the science of economics than Republicans. The fact that so many Democrats are socialists shows how little regard they have for anything economists think.

The typical delegate to the Democratic National Convention thinks that if a price is too low, government should raise it and nothing bad will happen. If a price is too high, government should lower it and nothing bad will happen. With the right minimum wage, everyone would be upper-middle class. With the right rent control, everyone would be living in luxury housing.

As the saying goes, if you want to save souls, you need to go where the sinners are. But Krugman isn’t into saving souls. Like a fire and brimstone preacher, he’s into consigning the righteous to eternal damnation for minor peccadillos.

Although the Times bills Krugman as a Nobel Prize winner, what you get from a typical Krugman column is not economics. It’s propaganda. All too often, he highlights some facts and suppresses others – arriving at an analysis that no real economist would consider fair-minded. For example:

Reading Krugman on the Republican tax reform, you would never know that the Obama administration also favored a large cut in the corporate income tax; or that the purpose was to encourage capital to stay in this country rather than go abroad; or that since the tax bill was passed $1 trillion has been repatriated back to this country by U.S. firms.

Reading Krugman on corporate taxation, you would never know that both theory and evidence suggest that workers, rather than rich people, bear the burden of the income tax and that corporate taxes actually suppress worker wages both in this country and abroad.

Reading Krugman on Social Security and Medicare reform, you would never know that the U.S. government has an unfunded liability of $239 trillion – a figure that is more than ten times the size of our economy – or that 19 Nobel Prize winners have signed a petition asking the federal government to accurately account for this debt.

 Reading Krugman on income inequality, you would never know that OECD statistics show that the United States has the most progressive tax system in the world or that tax reform made the tax code even more progressive than it was.

 Reading Krugman on the minimum wage you would never know that the original purpose of this Progressive Era reform was to keep white Aryan males from having to compete with blacks, women and immigrants in the labor market.

Withholding material facts that readers have every right to know about is intellectual dishonesty. lf we were in a court of law it would be called fraud.

Here are a few more things you won’t learn from Krugman’s new book.

Paul Krugman is an unreconstructed Keynesian. He believes that federal government deficits have a strong impact on the economy but that monetary policy is weak and ineffective. In 2013, Krugman announced that Keynesianism and monetarism were being put to the test. If Keynesianism was correct, an increase in the payroll tax and restrained federal spending should have slowed the economy down that year. But if monetarism was correct, monetary expansion should have kept the economy right on humming.

The monetarists (especially the market monetarists) won that contest in spades.

Also, in 2013, we had another disastrous test of Krugman’s view of the world. That’s when North Carolina reduced benefits for the unemployed. Although Krugman’s  textbook says that unemployment (UI) benefits reduce employment by giving people incentives not to work, in the New York Times he advanced a weird Keynesian argument that UI benefits actually increase employment. When the unemployed spend their benefits they stimulate the economy, he wrote. Based on that analysis, he claimed that North Carolina was conducting a “war on the unemployed.”

It didn’t take long for these predictions to be completely discredited. Following the cut in UI benefits, more North Carolinians went back to work.

Although there are so many examples to choose from, I nominate the following candidate for Krugman economics at its worst.

Krugman has said over and over again, in column after column, that the Republican tax reform is a failure because companies are using their tax cut gains to buy back stock rather than to create jobs.

This error in reasoning would get an “F” in a freshman economics class and would probably get you kicked out of graduate school if you made it that far.

When companies buy back their own stock, the money doesn’t disappear. It goes out of one pocket and into another. In the new pocket it’s just as available to create jobs as it was before. When new funds enter the capital market they tend to find their way to the companies that have the best prospects for investment and job creation.

That’s the way it should be.

Finally, if you are thinking that Krugman has never met a Republican, you might be inclined to cut him some slack.

But it turns out Krugman actually worked in the White House during the Reagan administration. That means he knows the tax cuts weren’t devised by economists whose motivation was to make the rich richer. He knows his fellow economic advisors to the president weren’t puppets, doing the bidding of billionaires. He knows they weren’t closet racists. He knows they didn’t hate the poor. He knows . . . . well . . . he knows it all.



Three Reasons Joe Biden Will Never Be President

Joe Biden was sworn into the United States Senate on Jan. 3, 1973. He remained in the Senate until Jan. 15, 2009 -- a span of 36 years. If history is any guide, that alone is a disqualifier in Biden's quest for the White House.

What does 36 years in the Senate say about a politician? It says he is a senator -- not a president.

So the first reason Biden will not become president is that no one who served 36 years in the Senate has ever become president. No one who served 30 years in the Senate has ever become president. No one who served 25 years in the Senate has ever become president. No one who served 20 years in the Senate has ever become president. No one who served 15 years in the Senate has ever become president.

It's not for lack of trying. Bob Dole, who was sworn into the Senate on Jan. 3, 1969, ran for president 27 years later, in 1996. He quit the Senate during the campaign to show his determination to become president. But his long years in the chamber, plus his age -- he was 73 at the time and the subject of endless suggestions that he was too old to be president -- were a deal-killer for voters.

Others tried, too. In 2008, John McCain ran for president after 21 years in the Senate. It didn't work. In 2004, John Kerry ran for president after 19 years in the Senate. That didn't work, either.

A long career in the Senate is simply not a foundation for a successful run for the White House. The most recent political figure to realize that was Barack Obama, who was sworn into the Senate in 2005 and two years later was running for the presidency -- and to get out of the Senate.

OK, put aside the Senate, Biden's supporters would say. What about his eight years as vice president? Certainly that could be the basis for a successful presidential run. But the second reason Biden will not become president is that the record of vice presidents on that score is not encouraging.

Fourteen vice presidents have become president. Of those, eight became president upon the death of the president. Of that group, some were later elected to the White House, but they were running for the office as the sitting president.

Others, like George H.W. Bush, became president by succeeding the president they served. They won the presidency as the sitting vice president. When Bush did that, in 1988, it had not been done since 1836. It has not been done since.

In any event, that is not Biden's situation. He served eight years as vice president, but did not run to succeed President Obama. Now, he is running as a private citizen.

Only one president has gone from the vice presidency to private life and then to the presidency. Richard Nixon served as vice president in the 1950s, narrowly lost the 1960 presidential election, and then came back to win the presidency in 1968. That is Biden's hope -- that a vice president can leave office and then, after a period outside government, return to win the White House.

Perhaps. But Nixon, who spent less than three years in the Senate, became vice president a few days after turning 40, and was sworn in as president at 56 -- more than two decades younger than Biden, who will be 78 on Inauguration Day 2021.

Finally, the third reason Biden will not be president is the "14-Year Rule." The idea of former George W. Bush speechwriter John McConnell, and popularized by writer Jonathan Rauch, it basically says that politicians have a strict sell-by date. "No one gets elected president who needs longer than 14 years to get from his or her first gubernatorial or Senate victory to either the presidency or the vice presidency," Rauch wrote. That has been true for a century.

Biden didn't even get close. It took him 36 years to get from his first Senate victory to the vice presidency. If he wins the presidency now, it would be 47 years from that first Senate swearing-in until Inauguration Day.

Of course, it's possible the 14-Year Rule, the Too Long in the Senate Rule, and the How Vice Presidents Become President Rule might all be wrong in Biden's case. If so, he can frame this headline and hang it somewhere in the White House. But don't bet on it.



For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCHPOLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated), A Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

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