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  • Were Our Enemies Right?

    an interesting article.

    ----

    Were Our Enemies Right? | FrumForum

    In February 1982, Susan Sontag made a fierce challenge to a left-wing audience gathered at New York’s Town Hall:

    Imagine, if you will, someone who read only the Reader’s Digest between 1950 and 1970, and someone in the same period who read only The Nation or The New Statesman. Which reader would have been better informed about the realities of Communism? The answer, I think, should give us pause. Can it be that our enemies were right?
    Posing that question won Sontag only boos from an audience that the New York Times described as “startled.” Yet the question has only gained power over the intervening years. It contributed to the rise of a healthier, more realistic left much less tempted to make excuses for “progressive” dictatorships than the left of the last generation. If Hugo Chavez has any defenders on the contemporary American left, I haven’t heard of them.

    Think of Susan Sontag as you absorb the horrifying revised estimates of the collapse of 2008 from the Commerce Department. Two years ago, Commerce estimated the decline of the US economy at -0.5% in the third quarter of 2008 and -3.8% in the fourth quarter. It now puts the damage at -3.7% and -8.9%: Great Depression territory.

    Those estimates make intuitive sense as we assess the real-world effect of the crisis: the jobs lost, the homes foreclosed, the retirements shattered. When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty.

    If I can’t follow where most of my friends have gone, it is because I keep hearing Susan Sontag’s question in my ears. Or rather, a revised and updated version of that question:

    Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

    ----------

    and the accompanying krugman post.

    Wrong And Right - NYTimes.com

    Bruce Bartlett and others send me to this eloquent David Frum piece, which concludes:

    Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

    The knee-jerk response of commenters is “But the Obama stimulus failed, deficits, yada yada. Also, Krugman has a beard.” Or something like that. But let’s talk for a second about Frum’s proposition, focusing just on the past few years.

    It’s kind of annoying when people claim that I said the stimulus would work; how much noisier could I have been in warning both that it was grossly inadequate, and that by claiming that a far-too-small stimulus was just right, Obama would discredit the whole idea?

    Of course, the WSJ also said that the stimulus wouldn’t work. The difference was in how it was supposed to fail.

    The WSJ view was that federal borrowing would crowd out private spending by driving interest rates sky-high, that the bond vigilantes would destroy the economy. Note that when the linked editorial was published, the 10-year rate was at 3.7%, with the Journal in effect predicting that it would go much higher.

    My view was that government borrowing in a liquidity trap does not drive up rates, and indeed that rates would stay low as long as the economy stayed depressed.

    How it turned out.

    That’s a pretty clear test; among other things, you would have lost a lot of money if you believed the WSJ view.

    Inflation is another issue; the WSJ kept telling readers that a big inflationary surge was coming. Commodity prices have muddied this issue to some extent, but even so actual developments on the inflation front have been a lot closer to what Keynesians were predicting than to the right-wing line.

    Of course, I would much rather have actually had adequate policy than be vindicated by the form of our economic failure.
    Last edited by astralis; 04 Aug 11,, 14:19.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  • #2
    People still read Krugman? I understand why a lefty would read Frum - a conservative that agrees with liberals on things is "okay" to respect for awhile. But Krugman? He's just Andrew Sullivan with a few more degrees.

    And Frum's logic, and Krugman's, is silly. The WSJ position was that there should be no stimulus because it was throwing money down a hole, a hole made up of liberal-Democrat wishes and pet projects. While the details of the effects of giving a near-trillion dollars to drunken bums outside the liquor store may have been slightly mispredicted (although I think it's been argued well here that the inflation of consumer prices has indeed happened), the basics are still correct: The money is spent and accomplished absolutely nothing positive.

    When you engage in economic trephanning and it unsurprisingly doesn't work, it's not because you didn't drill enough holes in your head to let the money spill out. Unless you're Krugman, and maybe now Frum.

    -dale
    Last edited by dalem; 04 Aug 11,, 19:18.

    Comment


    • #3
      Krugman is a hack.
      "Only Nixon can go to China." -- Old Vulcan proverb.

      Comment


      • #4
        The safe Keynesian position is always "it should have been bigger". Mainly because no matter how much you spend it's still not going to work, and when it doesn't work you have to find a reason.

        The American Recovery and Reinvestment Act: Public Sector Jobs
        Saved, Private Sector Jobs Forestalled


        This paper uses variation across states to estimate the number of jobs created/saved as a result of the spending component of the American Recovery and Reinvestment Act (ARRA). The key sources of identifcation are ARRA highway funding and the intensity of state sales tax usage. Our benchmark point estimates suggest the Act created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private sector jobs.

        The large majority of destroyed/forestalled jobs are in a subset of the private service sector comprised of health, (private) education, professional and business services, which we term HELP services. There is appreciable estimation uncertainty associated with these point estimates. Specifcally, a 90% confdence interval for government jobs gained is between approximately zero and 900 thousand and the counterpart for private HELP services jobs lost is 160 to 1378 thousand.

        In the goods- producing sector and the services not in our HELP subset, our point estimate jobs efects are, respectively, negligible and negative, and not statistically different from zero. However, our estimates are precise enough to state that we find no evidence of large positive private-sector job efects. Searching across alternative model specifcations, the best-case scenario for an
        effectual ARRA has the Act creating/saving a (point estimate) net 659 thousand jobs, mainly in government.

        It appears that state and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases (Fig. A) rather than directly boost private sector employment (e.g. Fig. B).

        http://web.econ.ohio-state.edu/dupor/arra10_may11.pdf
        Greenspan detailed the squeezing out in his white paper, you have to look beyond AAA.
        "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

        Comment


        • #5
          Originally posted by gunnut View Post
          Krugman is a hack.
          Careful, astralis will get upset with you for invective like that.

          -dale

          Comment


          • #6
            dale,

            But Krugman? He's just Andrew Sullivan with a few more degrees.
            only sullivan doesn't backs up his assertion with economic arguments and evidence that can be debated.

            The money is spent and accomplished absolutely nothing positive.
            dude, even freshwater economists don't think that. they just think the effects are muted, not there there aren't ANY positive effects.
            There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

            Comment


            • #7
              highsea,

              The safe Keynesian position is always "it should have been bigger". Mainly because no matter how much you spend it's still not going to work, and when it doesn't work you have to find a reason.
              that would have been a fairer attack if the administration had followed a purely keynesian solution, and things failed. krugman is perfectly correct in saying that he advocated for a stimulus twice the size even before the administration first bandied about its initial figures.

              he didn't make the figure AFTERWARDS, he made it beforehand.
              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

              Comment


              • #8
                by the way, the conley-dupor paper is well-known to anyone tracking the issue; krugman eviscerated it here.

                Stupid Stimulus Tricks - NYTimes.com
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • #9
                  Originally posted by astralis View Post
                  highsea,



                  that would have been a fairer attack if the administration had followed a purely keynesian solution, and things failed. krugman is perfectly correct in saying that he advocated for a stimulus twice the size even before the administration first bandied about its initial figures.

                  he didn't make the figure AFTERWARDS, he made it beforehand.
                  It doesn't matter if you make the argument before or after- it's not going to have any effect on whether or not it works.

                  The administration set a $1 Trillion upper limit. That's the number they thought they could get away with. The final amount was determined by economic models run by Christina Romer, Larry Summers, and co. You know- all the ex-advisors.

                  Those models use all the normal keynesian "multipliers"- $1 in unemployment returns $1.70 to the economy, etc. They came up with $787 Billion because that's what the models said it would take to keep unemployment below 8%. By now it was to be below 6%, and GDP was to be growing at 6.8%.

                  So it doesn't work. It didn't work in 1932, it didn't work for Japan, and it didn't work for us. Each time it's tried, it's tried at a larger scale, and fails in a more spectacular manner. Had the administration followed Krugman's advice, it only means we would have dug a deeper hole.

                  It has the same fundamental flaw as the climate models- that is, it attempts to make a linear projection on a non-linear system.
                  "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                  Comment


                  • #10
                    Originally posted by astralis View Post
                    by the way, the conley-dupor paper is well-known to anyone tracking the issue; krugman eviscerated it here.

                    Stupid Stimulus Tricks - NYTimes.com
                    I don't pay attention to Krugman- as has already been noted, he's a hack.

                    Althought the title would be appropriate if it were applied to the administration's claims.
                    "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                    Comment


                    • #11
                      Originally posted by astralis View Post
                      highsea,



                      that would have been a fairer attack if the administration had followed a purely keynesian solution, and things failed. krugman is perfectly correct in saying that he advocated for a stimulus twice the size even before the administration first bandied about its initial figures.

                      he didn't make the figure AFTERWARDS, he made it beforehand.
                      We said the porkulus would fail beforehand. We were right also.
                      "Only Nixon can go to China." -- Old Vulcan proverb.

                      Comment


                      • #12
                        highsea,

                        The administration set a $1 Trillion upper limit. That's the number they thought they could get away with. The final amount was determined by economic models run by Christina Romer, Larry Summers, and co. You know- all the ex-advisors.
                        and krugman points out that this was a -political- limit, not an economic one. a rather rectally extracted limit, too. krugman at least pointed out the academic models and calculations used to come to his conclusion.

                        I don't pay attention to Krugman- as has already been noted, he's a hack.
                        ah yes, when someone has evidence that goes contrary to mine, i too shall pretend it does not exist by calling them a "hack".
                        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                        Comment


                        • #13
                          gunnut,

                          We said the porkulus would fail beforehand. We were right also.
                          yes, wherein krugman notes the irony that both sides said the stimulus would fail, just for different reasons.
                          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                          Comment


                          • #14
                            Originally posted by astralis View Post
                            ...ah yes, someone has evidence that goes contrary to mine, i too shall pretend it does not exist by calling them a "hack".
                            Krugman doesn't present an empirical study- he pushes his socialist agenda, and frankly I don't have the stomach for him.

                            If you want to attack the Conley-Dupor paper, you should use the NBER study. If any conclusions are to be drawn by the comparison, it's that a state-level comparison is probably not going to tell the whole story when other national policies like QE are simultaneously in place.
                            "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                            Comment


                            • #15
                              highsea,

                              that post by krugman brings up several errors with the Conley-Dupor paper that has nothing to do with political position.

                              but i suppose if i were to treat the Conley-Dupor paper the same way, i could just call them "hacks" pushing their freshwater school agenda, frankly i don't have the stomach for them either...
                              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                              Comment

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