Sunday, June 3, 2012

A Bunch of Keynesian Talking Heads Talk

ABC's This Week was a Keynesian talk fest this morning. Paul Krugman was on the show, so was George Will, as were talking heads representing the Obama campaign and the Romney Campaign. They all talked Keynesian nonsense about this kind of government spending or that type, but never addressing the drain in the economy as a result of money being pulled out of some other sector to conduct the spending.

I did get a kick out of Krugman smashing Eric Ferhnstrom, a senior campaign advisor to the Romney campaign, who called for the U.S. to label China as a currency manipulator. Krugman correctly pointed out that China's economy is now in decline. He then stated that Ferhnstrom's comment was thus two years out of date. Pow!

Actually, these government to government macro-currency policies are always absurd, but it is fun to see Krugman smack down the notion, even if he doesn't do so with a closed fist and it is more of just a bitch slap.

In the clip, Krugman also calls out the Reagan budget and spending policies as Keynesian. He is correct here, also. Murray Rothbard pointed this out decades ago, when he wrote:
In the history of ideological movements, there have always been people willing to sell their souls and their principles. But never in history have so many sold out for so pitifully little. Hordes of libertarian and free-market intellectuals and activists rushed to Washington to whore after lousy little jobs, crummy little grants, and sporadic little conferences. It is bad enough to sell out; it is far worse to be a two-bit whore. And worst of all in this sickening spectacle were those who went into the tank without so much as a clear offer: betraying the values and principles of a lifetime in order to position themselves in hopes of being propositioned. And so they wriggled around the seats of power in Washington. The intellectual corruption spread rapidly, in proportion to the height and length of jobs in the Reagan Administration. Lifelong opponents of budget deficits remarkably began to weave sophisticated and absurd apologias, now that the great Reagan was piling them up, claiming, very much like the hated left-wing Keynesians of yore, that "deficits don’t matter."

Shorn of intellectual support, the half-formed libertarian instincts of the American masses remained content with Reaganite rhetoric, and the actual diametrically opposite policies got lost in the shuffle.

Given Krugman's outing of Reagan, in this clip and, the fact that in his new book, he outs Milton Friedman as a Keynesian, Krugman has become somewhat useful as a doppelagent.


  1. From what I have read, the yuan has risen by 30% against the dollar in the past decade. The Chinese may be manipulating the yuan downward, but not as fast as we are manipulating the dollar. So this Romney claim is absolute non-sense. But it's not only nonsense factually, but it's also nonsense theoretically. After all, our manipulation of the dollar downward should have closed the trade gap with China, but it hasn't.

    Nor has our trade gap with Japan closed significantly in spite of the fact that the yen has risen dramatically against the dollar since their economic upsurge in the '70's. So Krugman and Romney are both wrong on this. Neither understands that the point of foreign trade is finance imports not to promote exports. Indeed, the weak dollar is probably the cause of our persistent trade deficits.

  2. The Simpson- Bowles report should be the basis for our federal budget. Anything less is cowardly nonsense.

  3. It's really hard for me to enjoy a Krugman moment of lucidity when there's so much utter BS flying around this table of "experts".