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Paul Krugman: The austerity delusion

theguardian.com

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Re: Paul Krugman: The austerity delusion

#91

Post by thoward »

Amezarak wrote: post #90
thoward wrote: post #89

Earlier quoted context omitted.

Here's an interesting meta-study about the effects of a high debt to gdp ratio. http://www.nber.org/papers/w16827 I admire the candor of your second point ("we just inflated it away.") I think this is ultimately what will happen here in the USA. I think that most people would choose austerity now over higher inflation down the road, but maybe I'm delusional. Our consumer savings rates continue to trend down so maybe…

> Here's an interesting meta-study about the effects of a high debt to gdp ratio. I know you're sincere, but I kind of had to laugh. Reinhart and Rogoff have been through the ringer for publishing that paper, which is almost entirely bunk. There was a huge storm that made it even to the mainstream media about how truly flawed that paper was (with errors getting as basic as "they can't use Excel.") It's even mentioned…

I'll concede the point on the R&R paper. Didn't know there was so much controversy about it, and the accusations that some of their findings were due to a technology glitch are pretty damning.

But still, the median age of the US population in 1950 was 30 years old. Today it's over 37 and climbing. And (not to beat a dead horse) the savings rate is half what it was then.

To me that indicates that a far larger percentage of our population is going to be living on (paltry) fixed incomes than at any other time. Inflation would be crushing to our aging population.

I just don't think you can compare our situation to the 1950's.

Re: Paul Krugman: The austerity delusion

#92

Post by youngtaff »

tankenmate wrote: post #88
mdemare wrote: post #48

Earlier quoted context omitted.

QE is definitely not the opposite of austerity. Fiscal stimulus is. QE means that the central bank buy up bonds. The hope is that this lowers interest rates on bonds, making it less attractive for banks to hoard bonds instead of lending money to companies wanting to invest.

And one of the reasons that this isn't having the desired effect is that companies are holding on to far more cash than normal and aren't investing it on future growth. Australia had a much better idea at the beginning of the GFC, they paid $1000 directly to anyone who had paid at least $1 in taxes the previous year; poor people aren't afraid to spend money...

That's one of the key issues with the current QE process - essentially all the money has gone to the banks / funds etc. in he hope they'd lend it to other producers but the reality is they've used it to make their own profits at others expense.

A better approach might have been to give it to the people to spend, save, pay off debt as they wished.

I'd have given it to people on welfare as well as tax payers.

I'm always suspicious of people like Krugman who claim to know the answer but didn't see the crisis coming.

Re: Paul Krugman: The austerity delusion

#93

Post by youngtaff »

nawitus wrote: post #7

Related article: "A jobs miracle is happening in Britain, thanks to tax cuts. Why don't the Tories say so?" http://www.spectator.co.uk/features/9475222/the-coalitions-j...

Unfortunately that article doesn't really explore how much these people who are part of the jobs miracle are being paid!

Re: Paul Krugman: The austerity delusion

#94

Post by tankenmate »

youngtaff wrote: post #92
tankenmate wrote: post #88

Earlier quoted context omitted.

And one of the reasons that this isn't having the desired effect is that companies are holding on to far more cash than normal and aren't investing it on future growth. Australia had a much better idea at the beginning of the GFC, they paid $1000 directly to anyone who had paid at least $1 in taxes the previous year; poor people aren't afraid to spend money...

That's one of the key issues with the current QE process - essentially all the money has gone to the banks / funds etc. in he hope they'd lend it to other producers but the reality is they've used it to make their own profits at others expense. A better approach might have been to give it to the people to spend, save, pay off debt as they wished. I'd have given it to people on welfare as well as tax payers. I'm alway…

You might want to check this curated list of people who "predicted" the GFC. Some of the names on the list(s) were a surprise to me. The one person I respect greatly on this list is Steven Keen (he featured highly in both lists).

http://www.investorhome.com/predicted.htm

EDIT: fixed spelling mistake

Re: Paul Krugman: The austerity delusion

#95

Post by Nimitz14 »

ancap wrote: post #85
Nimitz14 wrote: post #79

Earlier quoted context omitted.

your sources are bad and you should stop reading them, I've read both of the links you posted before when they were ripped apart by mainstream economists

And yet you provide no sources for this alleged ripping apart. EDIT: Furthermore your response demonstrates you do not even understand my point. The purpose of the sources I have referenced are not to show support for economic plan A over economic plan B, rather they demonstrate the inconsistent and politically motivated arguments behind Krugman's anti-austerity stance. He states Europe is dangerously pursuing misgui…

To quote what another poster in this thread said:

> I've noticed there's a bizarre phenomenon surrounding Krugman where people just refuse to read what he says and instead put all kinds of nonsense into his mouth. It happens to all public figures to some extent, but it just seems really next-level with Krugman (and these particular claims are pretty tame compared with the wild accusations you often see.)

I've better things to do than argue with a misinformed hater, educate yourself and stop listening to austrian charlatans.

Re: Paul Krugman: The austerity delusion

#96

Post by andybak »

Mikeb85 wrote: post #27
JonFish85 wrote: post #18

Earlier quoted context omitted.

"Think about it from a business perspective. What makes you more money? Cutting costs, or increasing revenues? And what is a more sustainable practice to increase revenues: price gouging, or increasing volume?" That assumes you want to run the country/government like a business. I think that's a fairly large assumption.

> That assumes you want to run the country/government like a business. I think that's a fairly large assumption. The main difference between running a country and a business, is values and also means. Countries value certain qualitative indicators more than a typical business would (quality of life, crime, safety, etc...), and countries have more means to balance the books (things like printing money, ownership of re…

The main difference between running a country and a business is that quite possibly the common sense assumptions that work at one scale don't hold at the other.

Economics is often counter-intuitive - especially at a global scale. People extrapolate their intuitions from household economics to national level and beyond. There's no guarantee that any of our assumptions are still valid when you consider the entire world as one closed system.

Re: Paul Krugman: The austerity delusion

#97

Post by brucefancher »

mdemare wrote: post #75
seertaak wrote: post #42

The Paul Krugman delusion : thinking a little or a lot more of the policies that have produced little to no improvement will suddenly work if we do it just one more time .

Actually, The Paul Krugman delusion is the illusion that people have that they have much more insight in economics and economic policy than Paul Krugman, despite never having studied economics, or read a textbook or a journal in economics.

Paul Krugman is not correct or incorrect to the extent that he has studied economics and economic policy. He's correct or incorrect to the extent that he can back up his views with evidence, which he generally can't.

Re: Paul Krugman: The austerity delusion

#98

Post by ancap »

Nimitz14 wrote: post #95
ancap wrote: post #85

Earlier quoted context omitted.

And yet you provide no sources for this alleged ripping apart. EDIT: Furthermore your response demonstrates you do not even understand my point. The purpose of the sources I have referenced are not to show support for economic plan A over economic plan B, rather they demonstrate the inconsistent and politically motivated arguments behind Krugman's anti-austerity stance. He states Europe is dangerously pursuing misgui…

To quote what another poster in this thread said: > I've noticed there's a bizarre phenomenon surrounding Krugman where people just refuse to read what he says and instead put all kinds of nonsense into his mouth. It happens to all public figures to some extent, but it just seems really next-level with Krugman (and these particular claims are pretty tame compared with the wild accusations you often see.) I've better…

Translation: I cannot counter why Krugman compares apples and oranges in his political crusade against austerity so I will rely upon ad hominem attacks.

Yes, anyone who doesn't worship your god must be an austrian charlatan.

Re: Paul Krugman: The austerity delusion

#99

Post by AnimalMuppet »

JonFish85 wrote: post #18
Mikeb85 wrote: post #13

Earlier quoted context omitted.

Think about it from a business perspective. What makes you more money? Cutting costs, or increasing revenues? And what is a more sustainable practice to increase revenues: price gouging, or increasing volume/sales? Now replace these business terms with economic terms. Cutting costs = austerity. Price gouging = raising taxes. What you want is more people working, more people paying taxes, but keeping taxes at a low en…

"Think about it from a business perspective. What makes you more money? Cutting costs, or increasing revenues? And what is a more sustainable practice to increase revenues: price gouging, or increasing volume?" That assumes you want to run the country/government like a business. I think that's a fairly large assumption.

Well, you can go part way. In a business, there are investments, and there are expenses. Both involve spending money. What's the difference? Investments pay you back, and expenses don't.

There really isn't a problem with government making genuine investments. Needed infrastructure is a great example. They actually do pay even the government back, in the form of increased tax revenue.

The problem is that government often says that something is investment, but it's really just expenses. Bridges to nowhere, and a blizzard of other pork. But government decides where to spend via politics, not rational economic analysis, and so government spending is much less efficient than the label says.

Government should borrow to invest in the country. The problem is getting them not to borrow to throw the money away on political boondoggles.

Re: Paul Krugman: The austerity delusion

#100

Post by AnimalMuppet »

mikeash wrote: post #72
anm89 wrote: post #45

Earlier quoted context omitted.

These are after the fact justifications. He does indeed say that lowering rates to inflate asset prices would be our easiest way out of the situation. He goes back only to say that it is unlikely that we will cut rates enough so it porbably won't work (ie this will fail because our attempt to create bubbles will be too half assed to work.) He's pretty clearly serious that lowering rates to encourage investment is our…

I'm curious, why is my version an after the fact justification, but yours isn't?

I believe that amn89 was saying that Krugman's version was an after the fact justification.
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