Tuesday, August 23, 2011

Paul Krugman Makes Some Sense

The fresh air must have done Krugman some good. He has a post up that makes some sense, or at least enough of the post makes sense so that I can cut and paste from it to make it sound coherent:
Matt Yglesias is mildly upset over a report that Obama is turning to Warren Buffet and Alan Mulally for economic advice. It’s not clear how much to make of the report. But it’s always good to remember that businessmen — even great businessmen — don’t necessarily know much about how to make the macroeconomy work.

How can that be? Don’t they know all about creating jobs? No, they don’t. They know all about expanding individual businesses...

That’s an important and very lucrative skill, but it has very little to with the problem of expanding a whole economy...

Long ago I plowed through many issues of Fortune from the 1930s, hoping to get some sense of what businessmen thought the problem was. All I found was incoherence. Sorry, but captains of industry don’t have some common-sense wisdom about what makes recessions and recoveries happen.

12 comments:

  1. His last line could describe 95% of all economists alive today. What is also clear and not understood by Krugman is that most economists that have spent a life time in academia, like himself, have no clue how a business works or what motivates them to make the decisions they do. Remember this is a guy that supports a theory that all workers are interchangeable. Maybe Obama is on to something ditching the hacks like Krugman for people that actually have to function in the real world.

    ReplyDelete
  2. I would apply that last sentence just as equally to Krugman as I would the captains of industry.

    ReplyDelete
  3. And the irony is that Paul Krugman has adopted the typical businessman's explanation for why business is bad (not enough demand for his products) and then, through the fallacy of composition, transposed that belief onto the macroeconomy as a whole, such that he believes the economy as a whole requires an external entity that prints and spends money to ensure that everything produced in the economy has an adequate demand.

    ReplyDelete
  4. Let's start a betting pool: how long will it takes this commie to out himself as such?

    ReplyDelete
  5. Surely, you can't be serious. While it is true that successful businessmen can have decidedly bad ideas about policy, and that Buffet is exhibit #1 in that regard, an economist who draws a distinction between "expanding a whole economy" and "expanding individual businesses" reveals only the intellectual bankruptcy of his profession and his own delusional detachment from reality. What, pray tell, is the "whole economy" comprised of if not "individual businesses"? You cannot grow the whole without the individual anymore that you can grow a flower without the stem. And he's a Nobel Prize winner . . .

    ReplyDelete
  6. Most of these people are MBAs and are really just memorizing automatons. They memorize methods of failed MBAs in Universities. They really don't know how to integrate physical reality and float around like fish out of water sometimes getting lucky at business.

    ReplyDelete
  7. Just try to find a business man who can give a decent explanation of fractional reserve banking. Ask him what is the economic impact of minimum wage, government tariffs, government subsidies, and tax deductions on mortgage interest. The average business man has no clue about these things. Neither does the average voter, or Paul Krugman for that matter. It's a broken system.

    ReplyDelete
  8. That's what I say to the people who think Romney or Cain would make good presidents because they ran businesses. Knowing how to run a business does not make one an economist. Furthermore, a president is not supposed to "run" the country. He should, like Grover Cleveland, put the kabosh on other people's bad ideas with his veto pen. The requisite qualities ought to be wisdom, restraint and integrity.

    ReplyDelete
  9. Well whadya know 'bout that!

    ReplyDelete
  10. @Anon 5:24

    That's the magic of Keynesianism. What's idiotic for an individual, like spending oneself into bankruptcy, becomes genius when done for you and millions of people like you. It's sort of like killing one person is murder, but killing hundreds of thousands of people is "policy." The former is evil and will get you life in prison, or execution. The later is... well...., policy.

    ReplyDelete
  11. if economists really had any clue about economy, they would all be rich.

    ReplyDelete
  12. I know several Austrian economists that are "rich".

    Hell, I've done very well, in dollars, based on Austrian economics.

    ReplyDelete