Monday, May 9, 2011

Krugman Blames the Elitists for the Currrent Crises

Whatever brand of coffee Paul Krugman started drinking this morning, get him some more. He writes that "Europe’s single currency is coming apart at the seams." And, he correctly blames the elitists for this and most other current day financial problems:
The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.

The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters.
There is a slight hint in these Krugman comments that a structure could be created to "cope" with the boom-bust cycle. There isn't, other than to stop manipulations of the money supply in the first place. But Krugman is correct that the euro was the creation of the elitists, in top down fashion.

On the deficit in the U.S., Krugman is also correct when he blames the elitists:
What happened to the budget surplus the federal government had in 2000?

The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
Of course, Krugman is hinting here that the Bush tax cuts should not have occurred. He's wrong about that. The cuts should have been more widespread, but accompanied by spending cuts. But, all and all, Krugman's focus that policy is set by the elites in very accurate.

And Krugman gets even better in his column, as the coffee really starts to fire his brain cells:
Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
He concludes by writing:
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there (sic), we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
Krugman again correctly puts the blame where it belongs, on the elite, but he seems to hint here that there is a place for the power structure that the elites control, when the real answer is to eliminate that power structure that allows the elite to distort the free market economy in the first place.


  1. Even a broken clock is correct twice a day.

  2. Why do people like Krugman ignore the fact that tax receipts were up 1988-2000 thanks to a stock market bubble and little else. I paid a but load of capital gains taxes back then on gains of stocks not worth spit today. Had the stock market bubble not occurred, there would have been no surplus. As for the 2008 collapse, I remember back in the recession of 2002 Krugman calling for the Fed to save everyone's wealth by creating a housing bubble. Krugman got his wish!

  3. I wonder about his selective reasoning. According to him, national debt is not a bad thing, and government spending (like on a war) can actually boost an economy.

    It's funny he's arguing against his own policies because the "other" party enacted them.

  4. Krugman has no integrity nor any fundamental logical basis for any of his positions. Opportunism in the essence of his "ideology". Perhaps he senses that the prevailing winds of public sentiment starting to shift against his elitist handlers and is preparing to position himself as a righteous campaigner against corruption.

  5. Clearly, in blaming the elites for the Euro crisis and the Iraq War, Krugman is a kooky conspiracy theorist who should be denounced and then ignored.

    Also, note that once again, the problem is that the government didn't do enough -- the elites "created a single currency, without creating the institutions that were needed to cope with booms and busts within the euro zone."

    It will never occur to Krugman that maybe creating a single currency for several nations is bad idea -- indeed, that government-run currency is a bad idea. In the Soviet Union, Krugman would have been arguing that Stalin wasn't doing enough to destroy capitalism.

    Krugman rightfully denounces the Eurozone and Bush for forcing their schemes upon reluctant voters, but Krugman also endlessly defends Obamacare and other Democrat schemes forced upon a public hostile to them.