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KRUGMAN_UNRAVELING
September 6-10, 2006
"The Great Unraveling"
by Paul Krugman (2004)
Norton Trade Paperback Edition.
This book is a selection of Krugman's regular
columns for the New York Times; largely these
are in chronological order, but they're gathered
together according to topic. The time period
covered is 1997-2004.
Some of his prominent themes:
The Enron debacle, with suggestions that
Enron is not likely to be the only hollow
shell of a company out there.
The conversion of Alan Greenspan from
a responsible Chairman of the Fed to
a Republican shill, towing the line on
"tax cuts" irrespective of economic
conditions.
The return of growing class differences
to American society.
The patently bogus math the Bush
administration has repeatedly used to
try to push it's programs through.
The exploitation of the "War on Terror"
by the Bush regime... the emergence of
what looks an awful lot like an actual
"right wing conspiracy".
Liberal readers may balk at his
defense of Globalization... Like most economists
who like the idea of
globalization, I think
he's excessively
theoretical...
ADVANTAGE
Myself, I worry a bit
about what looks like
a religious belief in
Keynesian economics.
Government stimulus when
times are bad; pay it
back when times are good.
Sounds good. But:
(1) How do you know when (Sept 14, 2013)
times are good or bad? I think Krugman would answer that
What if you always keep it's not difficult to know when
accelerating after you to take your foot off the gas:
don't need to? you'll see inflation start going up.
And "runaway" inflation actually
isn't that big a worry: the Fed
knows what to do control inflation,
but it has few tools to control
the economy when in a "liquidity
trap", which inflation pegged near
zero.
(2) No regime ever
wants to pay it back. (Sept 14, 2013)
If the government Krugman typically answers:
*always* lacks the will historically the Clinton regime
to hit the brakes, did indeed balance the budget and
maybe we shouldn't reduce the deficit when times were
allow it to drive. good. (If you want fiscal responsib-
ility, elect Democrats.).
He also points out that the US appears
to be nowhere near the upper limit of
debt that economies have dealt with
without trouble.
Krugman also points out that when
the interest rate is down at zero,
it's a great time to borrow money
for infrastructure improvements,
even if you don't think of it as
a matter of economic stimulus.
Yup, I'm a born
again Keynsian.
Some disjointed notes and quotes:
"But one thing we have learned about this
administration is that it never responds
to altered circumstances by changing its
plans; all it does is change the sales
pitch. So the tax cut was relabeled as a
recession-fighting measure, a task for
which it is peculiarly ill-suited. For
that matter, the administration hasn't
given up on Social Security
privatization, either. Now that it can
no longer entice people with visions of
stock-market sugarplums, it has decided All page numbers,
to scare them with imaginary crises Norton Trade
instead." -- p. 51, "Damaged By the paperback
Dow", September 2, 2001 edition.
"Carlyle specializes in buying
down-and-out defense contractors, then
reselling them when their fortunes
miraculously improve after they receive
new government business. Among the
company's employees is former President
George H. W. Bush. Among the group's
investors, until late October, was the bin
Laden Family of Saudi Arabia.
"Another administration would have
regarded the elder Bush's role at Carlyle
as unseemly; this administration
apparently does not." -- p. 103, "Crony
Capitalism, U.S.A.", January 15, 2002
"... Officials say there are investigations they
should pursue but can't for lack of resources. And the
new law expands the S.E.C.'s responsibilities.
"So what's going on? Here's a parallel. Since 1995
Congress has systematically forced the Internal Revenue
Service to shrink it's operations; the number of
auditors has fallen by 28 percent. Yet it's clear that
giving the I.R.S. more money would actually reduce the
federal budget deficit; the agency estimates that it
loses at least $30 billion a year in uncollected taxes,
mainly because high-income taxpayers believe they can
get away with tax evasion. So starving the
I.R.S. isn't about saving money, it's about protecting
affluent tax cheats.
"Similarly, top officials don't really believe that
the S.E.C. can do its job with less money; the whole
point is to prevent the agency from doing its job."
-- p. 129, "Business as Usual", October 22, 2002
"As a group, red states pay considerably less in taxes
than the federal government spends within their borders;
blue states pay considerably more. Over all, blue America
subsidizes red America to the tune of $90 billion
or so each year." -- p. 178, "True Blue Americans",
May 7, 2002
"In fact, half the Senate is elected by just 16 percent
of the population." -- p. 179, "True Blue Americans",
May 7, 2002
"After all, there's a lot of experience with privatization
by governments at all levels -- state, federal and local;
that record doesn't support extravagant claims about
improved efficiency. Sometimes there are significant cost
reductions, but all too often the promised savings turn
out to be a mirage. In particular, it's common for
private contractors to bid low to get the business, then
push their prices up once the government work force has
been disbanded. Projections of a 20 or 30 percent cost
savings across the board are silly -- and one suspects
that the officials making those projections know that.
-- p. 266, "Victors and Spoils", November 19, 2002
"For months both major U.S. cable news networks
have acted as if the decision to invade Iraq has
already been made, and have in effect seen it as
their job to prepare the American public for the
coming war." -- p.288, "Behind the Great
Divide", February 18, 2003
"There are two possible explanations for the great
trans-Atlantic media divide. One is that European
media have a pervasive anti-American bias ...
The other is that some U.S. media
outlets--operating in an environment in which
anyone who questions the administration's foreign
policy is accused of being unpatriotic -- have
taken it as their assignment to sell the war ..."
-- p. 289, "Behind the Great Divide", February 18, 2003
"... the whole point of a market system is
supposed to be that it serves consumers,
providing us with what we want and thereby
maximizing our collective welfare. But the
history of English food suggests that even on so
basic a matter as eating, a free-market economy
can get trapped for an extended period in a bad
equilibrium in which good things are not demanded
because they have never been supplied, and are
not supplied because not enough people demand
them." -- p. 393, "Supply, Demand, and the
English Food", _Fortune_, July 20, 1998.
"That leaves us facing exactly the dilemma war
skeptics feared. If we leave Iraq quickly it
may well turn into a bigger, more dangerous
version of Afghanistan. But if we stay for an
extended period we risk becoming, as one
commentator put it, 'an occupying power in a
bitterly hostile land' -- just the recruiting
tool Al Qaeda needs. Who said that?
President George H. W. Bush, explaining his
decision not to go on to Baghdad back in
1991." -- p. 427, "Paths of Glory", May 16, 2003
"After all, suppose that a politician -- or a
journalist -- admits to himself that Mr. Bush
bamboozled the nation into war. Well, launching a
war on false pretenses is, to say the least, a
breach of trust. So if you admit to yourself that
such a thing happened, you have a moral obligation
to demand accountability -- and to do so not only
in the face of a powerful, ruthless political
machine but in the face of a country not yet ready
to believe that its leaders have exploited 9/11 for
political gain. It's a scary prospect."
-- p. 433, "Denial and Deception", June 24, 2003
"And there are many other cases of apparent abuse of
power by the administration and its Congressional
allies. A few examples: according to The Hill,
Republican lawmakers threatened to cut off funds for
the General Accounting Office unless it dropped its
lawsuit against Dick Cheney. _The Washington Post_
says Representative Michael Oxley told lobbyists that
"a Congressional probe might ease if it replace its
Democratic lobbyist with a Republican." Tom DeLay us
the Homeland Security Department to track down
Democrats trying to prevent redistricting in Texas.
And Medicare is spending millions of dollars on
misleading ads for the new drug benefit -- ads that
look like news reports and also server as commercials
for the Bush campaign." -- p. 497, 498 "This isn't
America", March 30, 2004.
"Where will it end? In his new book, _Worse Than
Watergate_, John Dean, of Watergate fame, says, 'I've
been watching all the elements fall into place for two
possible political catastrophes, one that will take
the air out of the Bush-Cheney balloon and the other,
far more disquieting, that will take the air out of
democracy.' " -- p. 498, "This isn't America",
March 30, 2004
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