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View Diary: Krugman Spins It A Bit In: “The Stimulus Tragedy” (134 comments)

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  •  While I agree with your valid points that the (21+ / 0-)

    enormous U.S. consumer debt imbalance is problematic, especially with regard to the depressive affect we can expect on home ownership of the next generations of young people with excess school loan debt, and agree that Krugman seems recently to have taken a wrong turn in this regard, but he may deserve more credit for strongly advocating a greater stimulus in 2010, when few others had that much courage.

    The aggressiveness of your post seems to blame this debt-crisis on Krugman and leave out the 98% of other economists who were in on this speculative bubble whole hog.

    Would you not agree that on the average, Paul Krugman has been one of the most consistent voices, if not the most consistent voice in advocating greater stimulus right from the first moment of the 2008 crisis?

    When the Obama stimulus plans were being formulated he consistently, loudly, and repeatedly expressed the opinion that the stimulus was not strong enough, and I believe history vindicates that opinion.

    I don't know exactly, what you wish he had done instead? Perhaps, a much more radical plan of debt forgiveness, or redistribution of debt would have been fairer, and a more effective economic stimulus in the long-term. I agree with you completely that the wealthy 1% made off like bandits, were made whole on their speculative gambling, and exploitation, while the debt was balanced on the backs of the average American homeowner.

    What is it we can do now? Within the realm of political feasibility with a Republican controlled House, and a possibility of losing the Senate in 9 months?

    The travesty is not over, as the magnitude of derivatives, and other debt imbalances is sufficient to bring down the world economy.

    In 2010, Krugman was already considered too radical in asking for a " mere"  doubling or so of the  percent of GDP of stimulus.  (I don't remember the exact percentage, but he wanted a substantially bigger program.)  How in the world do you expect that he would have been listened if he adopted a even more radical plan, after the one he advocated was rejected by the majority of Republicans and Democrats alike?

    Another area I disagree with Krugman is that he has bailed out on the theories of Joseph Stiglitz that one of the driving forces of the Great Recession has been an unprecedented spikes in income and asset inequality depressing consumer demand, due to the higher savings ratio of the scandalously rich.

    It's my belief that unless we come up with a major intervention to correct his we have little hope of avoiding a global economic disaster.  Perhaps, this is what you are saying and I've just lost continuity with your thinking. You alternative is not clear to me in this post. I've been doing other things for most of the last year, and only have dropped in briefly to help galvanize the upcoming 2014 Democratic election efforts.

    Although, not completely conclusive, I agree with Stiglitz and have not been able to figure out what Krugman's objection is. I've not studied this carefully in the last few years, so I'm just speaking as the average man on the street.

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Thu Feb 20, 2014 at 10:31:04 PM PST

    •  Well, you've made quite "the stretch" here... (28+ / 0-)

      ...when you stated...

      ...The aggressiveness of your post seems to blame this debt-crisis on Krugman and leave out the 98% of other economists who were in on this speculative bubble whole hog....
      That's pretty ridiculous, especially considering the fact that I've probably praised Krugman in somewhere around 75-100 posts in this community over the past 6-7 years.

      But, over the past year, give or take, there have been times when he's done some spinning; other times, however, he's been spot-on.

      The bottom line is: I'm referencing his post, today, in Friday's NY Times. And, again, there's absolutely NO VALIDITY, at all to your preconceived notions (some of which you're just making up out of thin air) about my general sentiments concerning Krugman.

      In fact, I've regularly caught crap in this community--ESPECIALLY from 2008-2011--from many with regard to how often I highlighted, supported and wrote about his commentary here! With many Kossacks--some to this day, still trolling my posts--back then stating that Krugman didn't know what he was talking about!

      LOL!

      Meanwhile, make no mistake about this: Tim Geithner and Larry Summers (whose now talking out of the other side of his mouth), really didn't give two shits about mortgage modifications or helping homeowners. (Geithner was dressed down and rebuked, MANY TIMES--including many times by none other than Elizabeth Warren--and by quite a few Democrats for his ADMITTED failure with regard to properly bailing out U.S. homeowners. Compared to how he coddled the banks, he all but totally ignored helping homeowners, and that's NOT a stretch. In fact, I'd go as far as to say it was one of the biggest failures of the Obama administration.) And, this almost entirely occurred in the first couple of years of the Obama administration, when Democrats controlled both the House and the Senate.

      I have SCORES, if not hundreds, of diaries indicating "what I wished the Obama Administration"--primarily Geithner and Summers, who were leading economic policy at the time--had done back then. And, I caught a hell of a lot of sh*t for it in this community, too.

      Generally speaking, I've almost ALWAYS praised Krugman. But, tonight, he's somewhat off the mark.

      But, if you had been following my posts, you would have known this.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Thu Feb 20, 2014 at 10:59:25 PM PST

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      •  Thank you for you reponse, bobswern, but you (15+ / 0-)

        apparently didn't read my comment any more carefully than I read your post.

        I told you in the end I hardly read any of your posts for over a year.  Nor anyone's I didn't single you out, but burnt out after the 2012 election and decided to take up the advice of "get a life" that someone suggested.

        I remember your many posts from years ago, which I mostly agreed with as well, praising Krugman to a whole lot of folks who paid no attention.  

        Which is why your post tonight stood out. And, I specifically mentioned this in my comment. Look back at your post in total isolation, and tell me if it does not seem overly critical of Krugman compared to the other 98%, or even 99% of economists who appear to know squat about how seriously out of balance our national and global economies are.

        In fact, I've regularly caught crap in this community--ESPECIALLY from 2008-2011--from many with regard to how often I highlighted, supported and wrote about his commentary here! With many Kossacks--some to this day, still trolling my posts--back then stating that Krugman didn't know what he was talking about!
        '
        Yes, I agree these anti-Krugman posters can be a pain in the ass.  Especially, the ones who don't know crap about the economy, but were just bugged that he was critical of Obama, and acting like PR thugs to opposed economic theory they didn't understand.  

        I have SCORES, if not hundreds, of diaries indicating "what I wished the Obama Administration"--primarily Geithner and Summers, who were leading economic policy at the time--had done back then. And, I caught a hell of a lot of sh*t for it in this community, too.

        Yes, but what do you want to do, coast on your laurels? Each post should either stand on its own, or contain a little preface that indicates it is part of some series that require reading hundreds of posts for the sentiments to be correctly understood.

        Sheesh, you seem to be a little overly sensitive for someone who has posted 100s of posts here, not fully praising our President, when I hardly gave you a slight kick to the tires. Partially, out of boredom as no one else seems to be awake.

        I just challenged our President to stop diddling around and work harder to remove marijuana from Schedule 1 and support making medical marijuana available to those with seizure disorders.

        And, before you blast for not supporting legalization please go back and read the dozens of posts I've done supporting that.  

        But I find you passion heartening, especially your apparent LOL, sense of humor about it.

        I'm actually amused that I finally managed to get response from you as I've commented frequently on your post since you arrived here, with nary a peep. Since I don't know how long I'll be hanging around here this cycle, I thought I'd say hello, and see if you were alive an still kicking.

        If it helps you become this passionate, I could give you an even greater whollup, if you like.

        I'm pretty good at "making stuff up out of thin air," to keep our better writers on their toes.

        If the rest of your posts were as entertaining as this comment, I might read more of them all the way through. Your average posts are almost as long as mine.

        Cheers, fellow traveler.

        The means is the ends in the process of becoming. - Mahatma Gandhi

        by HoundDog on Thu Feb 20, 2014 at 11:24:44 PM PST

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        •  Bigtime pro-legalization sentiments here... (15+ / 0-)

          ...as far as pot's concerned! And, thanks for taking the time to comment. Very much appreciated! (I AM, and have been for quite awhile, a fan of your posts, as well!)

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Thu Feb 20, 2014 at 11:30:02 PM PST

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          •  Thanks bobswern. That's what I would have expected (8+ / 0-)

            based on how much we agree on in economics, how could I have expected this though, since I don't remember you ever reccing many of my posts, while I've rec'd nearly every one of your posts I've ever seen.

            Except, for maybe one or two where you were up to your ears, fighting with some of those anti-Krugman extremists, and I saw no reason to jump in and jeopardize my own potential rec pool. lol

            I enjoy a good conversation as well. Particularly spicy ones like this. I used to be on a tightly knit research team at MIT where "we" would sometimes spend 8 hours a day non-stop tearing into our best friends equations to make sure their were robust and would work under all conceivable conditions in our simulation models.  Like engineers, testing a bridge design to make sure there were no flaws.

            I was the youngest and mostly listened as the founder of our field, who I worked for, would duke it out with our top professors. It sometimes got so heated I would be distressed, and think a fist fight was going to break out. But, then at lunchtime, or the end of the day, suddenly, everyone changed demeanor and were the best of friends.

            And, when any of our "enemies" in the rational expectations group would attack our work, we'd band together like a wolf pack. (We were one of the early "bounded rationality" groups trying to add theory from cognitive decision theory and others to represent decision making in complicated economic situations.)

            Since most people here are so mild mannered and polite, I sometimes miss the old days of fighting like wild dogs for the betterment of science.  

            Sorry if I poked you too hard, or with an unfair representation of your thoughts.  

             

            The means is the ends in the process of becoming. - Mahatma Gandhi

            by HoundDog on Thu Feb 20, 2014 at 11:53:41 PM PST

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    •  On Stiglitz vs. Krugman...the contention btwn... (19+ / 0-)

      ...the two of them has been on Stiglitz' emphasis on economic inequality being one of the primary factors adversely affecting our economy. Krugman's not so keen on that. (Believe it or not, sometime Krugman DOES tacitly argue on behalf of the trickle-down school, whether he's willing to admit that or not. At the very least, I've witnessed him "waffling" in this regard.)  Which IS quite surprising, IMHO. Here's a link to an example of this. But, generally speaking, the two of them are usually--not always, but usually--fairly aligned in their thinking. From my perspective, Krugman's a bit more into sucking up to the status quo than Stiglitz. But, again, generally speaking, I'm a huuuge, huge fan of Stiglitz, and can state almost--not quite, but almost--the same level of support for most of Krugman's sentiments.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Thu Feb 20, 2014 at 11:20:43 PM PST

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      •  Well, we agree then. I actually didn't believe (10+ / 0-)

        you had fallen as far from the fold, as your post tonight, in isolation, might imply, as few folks change their passionate, and fundamental intellectual frameworks so much this late in life.

        I've also got a pretty good memory, even for esoteric economic writing, which is why I chose Stiglitz to throw in to see if you were still awake.

        I'll have to check out this link tomorrow as I am way past my bedtime.

        I still don't understand why Krugman has a problem with the Stiglitz asset and income inequality theory of consumer demand suppression that I read in one of his articles about two or three years ago, since he seemed to agree with us on so many other issues, that I consider him to be a "progressive" economist.

        You might find it amusing that he walked out of one of my lectures during an MIT  intersession IAP program about 25 years ago. I had turned one of the academic computer simulation models of the Arms Race between the U.S. and then Soviet Union, into a computer game on one of the early PC for students and lay people.

        To make it more interesting for the festival like stand alone non-credit intersession workshops, I used the hypothetical scenario that the participants were advisers to the President and "she" asks you for advice with regard to the arms race, ...etc.

        Krugman had come across a divide of Sloan School buildings to see what was going on based on a poster or something, expecting a more hard core academic presentation, I guess.

        As, in the first two minutes, when I announced the scenario of a woman president, he threw up his hands in the back of the room, and walked right out. This was 25 years ago, and I was a iconoclastic young turk, back then.  

        The means is the ends in the process of becoming. - Mahatma Gandhi

        by HoundDog on Thu Feb 20, 2014 at 11:36:36 PM PST

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        •  Excellent story... (8+ / 0-)

          ...I've been toying around with the idea of referring/blogging here regarding my time as a student at Tufts (late 70's; just down the road from M.I.T., as I'm sure you know), and then shortly thereafter, living in the Boston area for a few years (in the very early 80's). It was an amazing period in my life.

          Cool story ya' got there (in your comment, above). LOL! (Pretty obnoxious of the guy, IMHO, throwing up his hands and such...)

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Thu Feb 20, 2014 at 11:44:20 PM PST

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          •  He was very self confident even then. (4+ / 0-)

            This intersession workshop was specifically intended to be a fun way for students in other majors, to check out other fields they might be interested in, but not wanting to risk damage to their GPA taking a credit course in other fields they are not majoring in.

            But, the many of the advanced research groups, and noble prize winners, consider the students to be annoying ants, that are best ignored, by the "picnicers of scholarly research."

            One common joke, you would only hear in the inner sanctums of the faculty club was "MIT is a great place, except for all these G-d d&^ students."

            I was temped to go see Krugman and show him the underlying mathematical models, but, never did.

            The means is the ends in the process of becoming. - Mahatma Gandhi

            by HoundDog on Fri Feb 21, 2014 at 12:00:48 AM PST

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            •  I wasn't part of the faculty, but just a research (4+ / 0-)

              associate. I did teach a few course, and in the executive education Masters, and summer sessions, with reviews I knocked out of the park, but I was never on the tenure track.

              I took the low road to pursue consulting opportunities and to set up a business so I never finished my PhD, after passing all the general exams.  But, I was one of what I believe were only a few on campus to hold a Research Associate position for 15 years without a PhD prior to entering the PhD program.

              Thanks for asking.  I've learned a great deal from your posts, including the introduction to Stiglitz' work. Which was part of the humor of challenging you with it. :-)

              The means is the ends in the process of becoming. - Mahatma Gandhi

              by HoundDog on Fri Feb 21, 2014 at 12:06:16 AM PST

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      •  Stiglitz and Krugman agree, not structural (9+ / 0-)

        They are both wrong. Krugman bemoans the lack of stimulus. Stiglitz talks passionately about income inequality as a cause and has a set of fixes. I just finished reading his book The Price of Inequality.

        Krugman takes exception to inequality as an economic factor:

        Krugman, responding to a column by Joseph Stiglitz arguing that inequality is slowing the economic recovery, wrote that he “can’t see how this works.” Though Krugman describes Stiglitz as “an insanely great economist,” he says, he’s not convinced “this particular morality tale is right.”
        I believe that neither respected professor has it right. I believe that if we listened to both these gentlemen we would improve the economy, but not fix it. We do have a structural problem and it's based around the fact that private capital gets to determine our large-scale economic decisions. Secondly, that the revenues from sales of goods and services must return to the workers or the economy is out of balance. How are they to buy those goods and services? There is no viable way to generate excess profits without harming the economy, and in this I am closer to Stiglitz than Krugman. The corollary to my hypothesis is that there should be no mechanism to accumulate large amounts of personal or corporate wealth, above that which is necessary for capital formation and a fair return on capital (~5%).

        Our economy now has a nasty positive feedback loop. The few take massive income while the many have to take debt to run their lives. That debt, is the wealth of the few. So not only have the few gotten fabulously wealthy, but the rest of us continue to pay them tribute from our measly incomes.

        It would be amusing if it were not so sick that Congress is hell-bent on protecting wealth. This is an expected psychological reaction. First you become wealthy beyond your wildest imagination and then you become paranoid about protecting that wealth. But now that you and your wealthy comrades have wealth and power you can turn to Congress to protect it. That's what the anti-bankruptcy laws are all about, that's what austerity is all about, that's why the banks got barely a slap on the wrist when they brought down the economy and put millions out of their houses. The facts that you can't get out of a student loan, a credit card loan and the bank can relatively easily kick you out of your primary residence is a moral catastrophe.

        •  I agree with everything you write here wizard. (2+ / 0-)
          Recommended by:
          The Wizard, RiveroftheWest

          And, would add that in additional to the problems you described if our economy was a closed system, it is not in a way that make extreme concentration of wealth even more damaging to our economy.

          Because the hyper wealthy are investing substantial fractions of their wealth in both hard assets and financial assets overseas.

          So, new factories built in China, and other SouthEast Asian countries are soaking up substantial amounts of wealth
          that might have been invested in the U.S.

          And, also notice the transfer of our latest manufacturing technology and support infrastructure overseas.

          How sad.

          Are you an economist, mathematician, or engineer, Wizard? I couldn't help but notice your correct use of the term "nasty positive feedback loop," while many mistakenly believe those are the "good ones," instead of those produce exponential growth, or decline via reinforcing feedback. Positive refers to the sign of the transfer function from the old days of control theory mathematics.  

          The means is the ends in the process of becoming. - Mahatma Gandhi

          by HoundDog on Fri Feb 21, 2014 at 12:04:13 PM PST

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          •  Engineer (3+ / 0-)
            Recommended by:
            RiveroftheWest, HoundDog, jadt65

            I'm an MIT grad. Although I didn't major in economics I took lots of courses including having Samuelson as a lecturer. My interest has always been driven by the obvious observation that Economics, especially Macro Economics, is poorly understood. I'm not surprised that we have run into a brick wall, this is typical of a non-linear feedback system which has discreet states. We go along and everything seems fine, but we are moving into a state in which we can't get out without a major change to the inputs or the internal functions or the internal state.

            My being critical of Krugman and Stiglitz has nothing to do with my respect for them,which is immense,  this is typical MIT culture.

            I also question GDP as a measure of economic health, as does Stiglitz. I believe that our economy is seriously sick and needs some major changes. Unfortunately we also have vested interests that are perfectly happy with the status-quot as they are filthy rich with big-time political power. So we will have to wait, but we should be forming some ideas for a twenty first century economy. We seem to have a perfect storm brewing, U.S. economy flat-lining, the rise of developing nations, especially China, and the Global Climate Crisis.

            •  Fascinating. I have become one of your followers. (2+ / 0-)
              Recommended by:
              jadt65, RiveroftheWest

              Our research at the time was to represent the actual stock and flows, (integration and derivatives) of an economic system and a realistic portrayal of economic decision-making based on non-linear feedback systems which we represented with difference equation, and then simulated the solutions using applied numerical methods and Runge-Kutta 2 and 4 methods to simulate the solution to what was about a 1,000 th order non-linear differential equation.

              We were trying to generate macro-economic behavior, from micro-economic representations of the decision-making processes of major sectors of the economy.  

              However, our director was such an iconoclast by nature, and much more of an engineer, rather than an academic economist, he managed to alienate nearly all the scholarly professional "real" economists. So most of our professors, and graduate students ended up going into corporate strategy or other fields.

              I miss those days a great deal.  What an electric thrill that campus was. Thanks for commenting.

              This was never accepted by mainstream economists but it was a wonderfully educational experience for me.

              The means is the ends in the process of becoming. - Mahatma Gandhi

              by HoundDog on Fri Feb 21, 2014 at 05:11:28 PM PST

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