Sunday, February 2, 2014

Where Was Paul Krugman on Saturday Night?

Partying with Krugman apologist and Business Insider executive editor Joe Weisenthal:

Here's a sample Weisenthal gush over Krugman:
Krugman, funnily enough, counts as someone who people would feel compelled to read no matter what (you know, the Nobel Prize) yet he's tremendous at writing for clarity, in a timely manner, and at a regular enough clip so people are trained to come back.

It's a great lesson for everyone to take to heart.
And then we have this. Weisenthal rushing to back up Krugman and his crazy idea that it would be great if the government spent money as if it were preparing to go to war with space aliens:

Paul Krugman is getting flak over a comment he made this weekend on TV.
From HuffPo:
"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months," he said. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better--"
Eric Falkenstein voices the natural objection, which boils down to: Krazy Keynesians are so eager to spend your money on anything, that they argue a false Alien scare would somehow be a good thing.

Now here's the defense of Krugman.
The primary facing the economy is damaged private sector balance sheets. Due to the collapse of the housing bubble, people are still too deep in debt, and it's this high debt service/desire to pay down debt that's sapping cash from other areas (spending, investment, etc.).
If this fear of an alien invasion prompted the government to spend, say, $1 trillion on telescopes and lasers, then if nothing else, that would be $1 trillion more in private sector income, and thus $1 trillion spent towards private balance sheet repair. There's no exception to this. If the government spends money it becomes desperately needed private sector income.

Of course, in advancing their idiotic theory, both Weisenthal and Krugman ignore the fact that money spent to prepare to fight space aliens has to come from somewhere. That somewhere has to ultimately be taxation or money printing (which is a hidden tax). So, bottom line, money spent to prepare for fighting space aliens is money that would otherwise have been money spent elsewhere in the economy.  Further, it is production of goods and services that causes an economy to grow, not consumption.


  1. It is truly amazing how often you have to go back to fundamentals like 'opportunity costs' with these people. What will it take for them to get this? Somewhere along the chain of causation they get lost. Look, if you build a factory and hire workers, there are cost that go into it that could have gone into a myriad of other activities. Those are opportunity cost. When those workers are so productive that you have a return on your investment, the opportunity cost of that endeavor is solved for like an equation. Maybe, that will help you understand this, Krumanites. I know you believe yourselves to be the mathiest people on the planet. It's an equation. Invest in something, cost incur, there you go, your x, against which everything else accounted for, productive return canceling out that cost, equation solved for!

    Here is the key to your enlightenment. That does not occur with government expenditures.

    1. People with money are not building factories. They're buying paintings, luxury items, pumping up the stock market. The cost of luxury items is going through the roof. What's the opportunity cost of not taxing these wasted dollars and using the money to build infrastructure so that productive workers can get to work on time?

    2. Hahahaha, that's the funniest thing I've read today! You sure your real name's not DeBlasio?

    3. People are driving less than ever. JW, all you need to do is read "On the Overproduction and Underconsumption Fallacies", by James Mill. It's a short essay, even your tiny brain should be able to comprehend its simple message.

  2. Of course the money comes from somewhere. It comes from the excess reserves. Inflation leads to higher production. What part of upward sloping supply curve is not clear?

    A economy can't grow without consumption. Providing goods and services to yourself does not generate economic growth. You need consumers.

    1. You are an idiot.

    2. Now you think that all money used in anti-alien commerce would come from "excess reserves", which in any case come from, in part, manipulation of reserve requirements and manipulation of the definition of "excess". One wonders were the first bit of excess reserves came from in your fantasy world.

      Also, you forgot to mention that the demand curve for low wage workers, too, has a non-negative slope. And how could it not? Even you [ahem] know that raising their wages, even under duress, will lead to higher employment in terms of hours worked, number of workers employed, or both.

      Good grief, you're a kook, like a homeless believer in aliens. I really do know such a guy. He thinks that communism and Mao did good things for China. Funny that he's over 50 and been working at a fast food joint for years. (He's not a manager.)

    3. You are an idiot, and an automaton troll.

      The law of supply and demand as presented by mainstream economics doesn't originate from the facts of reality but rather from the imaginary construction of economists. In short, none of the figures that underpin the supply and demand curves have originated from the real world; they are purely conjectural.

      The framework of supply-demand curves rests on the assumptions of unchanged consumer preferences and income and unchanged prices of other goods. In reality, however, consumer preferences are not frozen, and other things do not remain constant. Obviously, then, no one could have possibly observed these curves. According to Mises, "it is important to realize that we do not have any knowledge or experience concerning the shape of such curves."[1]

      Yet, economists are heatedly debating the various properties of these unseen curves and their implications regarding government policies.

      The supply-demand graphic is contrary to the fact that human actions are conscious and purposeful. In the graphs, there are no entrepreneurs. Instead, the shift of curves is in response to various factors that set prices. For instance, it is held that a shift in the demand curve to the right for a given supply will lift the price of a good. The price will also increase if, for a given demand curve, the supply curve shifts to the left. In other words, the supply-demand framework doesn’t deal with human beings but with automatons that react to various factors.


    4. Jerry, debt does not come from excess reserves, its money extracted from the future and spent today. Stated simply, its money stolen from the future or put more bluntly, our future children.

      Inflation does not lead to higher production, it leads to higher nominal revenues and profits, but worst of all it leaves working class people decimated as their earnings and savings are fleeced from them through this stealth tax. These same people are also the ones that pay the debt as our Government ties to inflate it away.

      What is most ironic is that the average rich hating, middle class loving (a load of crap) left winger who doesn't have a pot to piss in actually supports Krugman's idiotic economic views that actually screws them over and benefits the rich. There is a good reason so many high earners on Wall Street are Democrats, and it isn't because they care about the poor, they like Democrats because they can actually convince the public to support ideas that overwhelmingly benefit them.

      In all honesty I should love you guys since I have probably made more money in the last 3 years under this administration than anytime in my life on my investments. But I have been in business long enough to know that any organization that has structural financial problems, as the US does, always fail. This isn't econ 101, its finance 101 and economic history 101. And if you don't think the left wing wealthy elite don't know this, you're a bigger fool than I even imagine.

    5. Hahahahaha, the second funniest thing. You're too much, keep 'em coming Jerry (Bill?).

  3. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better--".

    Except that there would be a depression during the period of time necessary to liquidate vast amounts of resources allocated to anti-alien weapons, infrastructure, and related technology. The depression would be complicated by the need to retrain BILLIONS of people whose training was slanted---almost certainly under duress---toward militarism. Conscription would have been restored without limitation, and anyone who dared to express doubt openly would have been imprisoned or killed. Given the vast militarization project, which would have been accompanied by widespread hysteria, the depression would be radical.

    During the depression, politicians would come under enormous pressure to make the depression go away. Keynesian economists would offer the usual, lazy-minded diagnosis of insufficient demand as an excuse for still more government meddling in commerce. So there'd be new, politically motivated misallocations of resources.

    Further, it's almost certain that anti-alien alliances, both domestic and international, would fracture throughout the world. They had been formed, of course, in a climate of fear and impatience. So, old rivalries would resurface, and there would be a struggle to control the machinery of despotism which had been expanded everywhere on the pretext of repelling aliens. Civil wars and international wars would be started and waged with a brutality and ferocity never before experienced during the thousands of years preceding the development of weapons systems designed to repel extraterrestrials.

    "...oops, we made a mistake..." -Paul Krugman

  4. Why did he tweet such a badly focused selfie? Are we supposed to think he was too toasted to take a good pic? Maybe he just tweeted away without looking? Is he trying not to be recognized? If so, why tweet your own selfie? I just dont get this?

  5. "A economy can't grow without consumption."

    You realize that this one of the longer running arguments in economics, right?

    The other side of the argument is in essence: "You can't consume something that isn't produced."

    Refer to "Say's law."

    You can pretend the debate doesn't exist, but that is not reality.