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View Diary: My Favorite Authors: Paul Krugman, a prize for Cassandra and a clarity of economics (50 comments)

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  •  He doesn't have to be right to be valuable. (2+ / 0-)
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    MichiganChet, Limelite

    I have had an interest in economics for awhile (I subscribe to Economist as well as several economics related podcasts and have purchased just about every Teaching Company course there is) but don't have a degree in it. Although, economists agree on quite a bit, I am struck by how much they seem  to disagree on particulars, such as whether bank creditors should have been forced to take at least a moderate haircut during the bailouts to minimize the moral hazard problem. While my sense is Dr. Krugman is widely respected among his peers, he does not seem to speak for the field in general simply because there is so much that there does not seem to be a consensus on. That said, I would much rather read an Op Ed about economics from a professional economist than from a columnist with a journalism degree. My personal favorite economist is the late Milton Friedman whose influence in the field has been far greater.

    •  Give Krugman time (8+ / 0-)

      There is much that economists do disagree on, but as I have said, I take the idea that whoever comes closest to describing reality - and making predictions about the same reality - should be listened to the most closely. Krugman for example predicted the stimulus would be too small and that while unemployment would fall, it would not fall enough. He agrees that the big financial institutions should have been bailed out, but I think would regard the question of whether they needed to take a bigger haircut of secondary importance; your comment, btw, all the more relevant as the news breaks that the government is selling its stake in AIG - one of the worst corporate offenders - for a profit.
         Instead I would argue that Krugman would advocate for a bailout of ordinary people in the concrete sense of extended unemployment benefits, emergency aid to states, and real home mortgage relief to avoid crashing the housing market. That such a bailout was given in only desultary form, as opposed to the vigorous financial bailout is the real burning and I think anger inducing issue.
          My guess is that as the years go on, Paul Krugman will have more and more of a profound influence on his field; I sort of think of him as the John Maynard Keynes of his day

      An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

      by MichiganChet on Tue Sep 11, 2012 at 06:49:27 AM PDT

      [ Parent ]

      •  The problem with economics is (0+ / 0-)

        that it is impossible to test the counter factual. You can't turn back the clock, reset the initial conditions and test your hypothesis. As a result it is easy for economists to predict that stimulus is counter productive or that the economy won't recover no matter how much you stimulate it and that it will heal itself with time and they can all claim to have been right. Lots of economists make predictions and there are enough of them to cover every base. Krugman may have predicted the stimulus would be inadequate but Muriel Roubini predicted the housing market collapse we ended up trying to stimulate ourselves out of (he has also been called a 'Cassandra').

        We have had economic heros in the past, like Alan Geenspan, only to see history largely discredit them with time. The nature of being a Cassandra is that NOBODY knows you are telling the truth. If you know Krugman is right then by definition he isn't a true Cassandra.

        In the mean time I for one will not entirely hitch my wagon to any one of them but will continue to listen to all of them and see where the common ground is because it will be the safest ground.

    •  Friedman is way deader (2+ / 0-)
      Recommended by:
      MichiganChet, a2nite
    •  The Washington Consensus (6+ / 0-)

      is Friedmanite in character, and is entirely discredited. Rather than waste your time with my synopisis, I urge you to read Naomi Klein's 'Disaster Capitalism'.  

      The only question in my mind is whether the various economic levers that led to the Great Recession are the inevitable result of bad economic policy, or the intended result of applying principles of economics to achieve political goals.  

      •  The answer is both (2+ / 0-)
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        ozsea1, mrkvica

        And I have read Naomi Klein. The seeds of the great recession were laid thirty years ago with the whole 'trickle down ' thing and the encouragement of private debt

        An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

        by MichiganChet on Tue Sep 11, 2012 at 08:38:40 AM PDT

        [ Parent ]

      •  I should read a noneconomist's book (0+ / 0-)

        about economics because...her ideas resonate with you? Within economist circles across the spectrum her book seems to be almost universally panned. It would be like considering watching a Steven Segal movie based on a stranger's recommendation in spite of it getting dismal ratings on Rotten Tomatoes. Sorry, life is too short.

    •  Lordy Uncle Milton? (3+ / 0-)
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      SW, ozsea1, salmo

      Sad to say his influence at this point is greater. His apostles, under Ruban and co. are still running this failed extreme ideological free market deregulated bankster economy. This failed free market disaster capitalism has been adopted by the Democrat's and reeked havoc on democracies around the world. Look at SA.  He was the father of this neoliberal viscous new world order. You must be happy with the inevitable 'world as we find it' , as Axelrod calls this freaking nightmare.    

      •  You don't seem to all that familiar (0+ / 0-)

        with Friedman. He was always critical of the very props that shielded businesses from competition and that protected them from their mistakes. He saw these as impediments to a free market.

        •  Free markets? (2+ / 0-)
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          tommymet, shaharazade

          Boiled down to the essence of their theories, Friedman and his acolytes think free markets can never fail, they can only be failed.  Leaving aside the idea that such a thing as a free market exists, the academic brilliance of all those freshwater school economic models simply obscures their real world consequences - an outcome the beneficiaries of those ideas among the economic elite find very much to their liking.  Friedmanite ideas have dramatically adversely affected the vast majority of Americans (and people in the rest of the world), but not so our Masters of the Universe.  Was that entirely predictable outcome a bug or a feature?  In a massively corrupt political system, Friedman's ideas fail upward.  That is not a good thing.

          •  Friedman believed nothing of the sort. (0+ / 0-)

            You are obviously confusing Friedman with someone like Mises. Everything I have ever read or heard about Friedman was that he acknowledged that the need for some intervention was inevitable; it was only a question of degree. That others have oversimplified, distorted and perverted his beliefs for their own agendas reflects on those doing the simplification, distorting and perverting (you included) not on Friedman himself.


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