On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers. The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”
That’s harsh. But it’s harsh for a reason.
The claims the economists are talking about come from Mr. Friedman’s analysis of the Sanders economic program. The good news is that this isn’t the campaign’s official assessment; the bad news is that the Friedman analysis has been highly praised by campaign officials.
And the analysis is really something. The Republican candidates have been widely and rightly mocked for their escalating claims that they can achieve incredible economic growth, starting with Jeb Bush’s promise to double growth to 4 percent and heading up from there. But Mr. Friedman outdoes the G.O.P. by claiming that the Sanders plan would produce 5.3 percent growth a year over the next decade...
Sorry, but there’s just no way to justify this stuff. For wonks like me, it is, frankly, horrifying...
The point is that if you dismiss the likes of Mr. Krueger or Ms. Romer as Hillary shills or compromised members of the “establishment,” you’re excommunicating most of the policy experts who should be your allies.
So Mr. Sanders really needs to crack down on his campaign’s instinct to lash out. More than that, he needs to disassociate himself from voodoo of the left — not just because of the political risks, but because getting real is or ought to be a core progressive value.
Matthew Yglesias says that the Sanders campaign won’t care about the warnings from top Democratic economists that its numbers are nonsense, and that it doesn’t need to care. That may or may not be true — my guess is that making growth claims that are even more outlandish than those of the Republicans, and having made it impossible for progressive policy experts to offer a full-throated defense of your position, would do more harm in a general election than he imagines....
So I hope that the Sanders campaign doesn’t just brush off this criticism as the “establishment” doing its corrupt thing, and realizes that it really is in danger of losing not just an election but an important part of what it should be standing for.
Four former Democratic chairs of the Council of Economic Advisers have put out a letter warning that Bernie Sanders’s economic program contains a very worrisome amount of voodoo...What Krugman is saying is true, but truth has never been the guiding light of his commentary? Is this the first hint that Hillary has him penciled in for a serious post in the administration?
In Sanders’s case, I don’t think it’s ideology as much as being not ready for prime time — and also of not being willing to face up to the reality that the kind of drastic changes he’s proposing, no matter how desirable, would produce a lot of losers as well as winners.
-RWThe open letter to Sanders and Friedman by former CEA chairs didn’t get into specifics, and I’m already hearing from Bernie supporters accusing them of arrogance, or high-handedness, or something. But here’s what Friedman has said, in what the campaign’s policy director calls “outstanding work”:– Real growth at 5.3 percent a year, versus a baseline of around 2
– Labor force participation rate back to 1999 level
– 3.8 percent unemploymentOK, progressives have, rightly, mocked Jeb Bush for claiming that he could double growth to 4 percent. Now people close to Sanders say 5.3???...The point is not that all of this is impossible, but it’s very unlikely — and these are numbers we would describe as deep voodoo if they came from a tax-cutting Republican.Sanders needs to disassociate himself from this kind of fantasy economics right now.
This is entirely consistent with inflation-expectations anchored near 2%/year--or inflation so low that shifts in inflation expectations are not a thing...
[N]ot only does the right wing of the Federal Reserve expecting an imminent upswing of inflation because of MONEY PRINTING! have it wrong, it strongly looks as though the center of the Federal Reserve has it wrong too...My expectation is that there is a very high probability that price inflation in 2016 will climb far above 2% (as measured by government price indexes). First stop 3%, then 5%. And that's in my file!
I see that Paul Krugman is complaining again about an op-ed that Paul Ryan and I wrote in Decmber 2010. I responded to Krugman back in February of this year when his complaints first appeared on his blog and in his New York Times column. But rather than deal with the economics of the response, he now again resorts to the same old claim that the article was promoting “monetary conspiracy theories.” This is absurd. Our op-ed said nothing about a conspiracy, it had no discussion of individuals, and it made no mention of people conspiring or even talking with each other. Our op-ed raised concerns about the ineffectiveness of quantitative easing and about the departure from rules-based policy—concerns expressed by many people then and now. Our op-ed also said that an upcoming round of “QE2 will create more economic uncertainty” and that quantitative easing operations “involved the Fed in areas of fiscal policy, such as credit allocation,” which were the proper role of Congress. Of course, we now know that QE2 was followed by QE3 about which even more questions about ineffectiveness have been raised.-RW
One of the really great moments in the Democratic debate, at least for those of us who think America can learn from other countries, was the exchange over Denmark. Bernie Sanders said he wants America to become like Denmark; Hillary Clinton was a bit skeptical, but agreed that Denmark is a good role model. And it is! Denmark has combined high taxes and strong social benefits (free college, heavily subsidized child care, and more) with strong employment and high productivity. It shows that strong welfare states can work.Krugman knows better,
Despite its reputation as a showcase of political utopia, 40 percent of its adult population live on government transfer income, full-time, all-year.And that was in 2003. Things have gotten worse as even Krugman admits:
---
[T]hose with only 9 years of education, in Denmark it is 34 percent, whereas in the U.S. it is 14 percent. In Sweden the number is 26 percent and in Norway 18 percent. Again the numbers are much more favorable in the U.S.
----
In Denmark, many people are prevented from gaining the education they would like. All higher education is publicly run and free. Central planners decide how many doctors, architects, engineers, lawyers, economists, etc., that society needs. Students are rationed according to their grades in high school. If your grades are not high enough, you may not begin a degree program of your preference.
There are no objective tests of the quality levels in Denmark that I know of. However, one indication of the falling quality level in education could be the considerable shift in applicants for higher education away from the sciences and into the humanities. Everything involving mathematics, or other clearly demonstrable skills such as natural science or economics, is disliked by the applicants.
---
Denmark is one of the few OECD countries where the average life span has hardly increased since the early 1970s.
[I]t is worth noting that Denmark has had a fairly bad run since the global financial crisis, with a severe slump and a very weak recovery. In fact, real GDP per capita is about as far below pre-crisis levels as that of Portugal or Spain, although with much less suffering... just in case you wanted to think of Denmark as a role model across the board, this is a useful reminder.So where does he get the absurd idea that "strong welfare states can work" and mention Denmark in the same breath?
Paul Krugman routinely mocks Germany for wanting “everyone to run enormous trade surpluses at the same time.” As Martin Wolf has put it, this is impossible, as “the world cannot trade with Mars.”
What we find amazing is that Krugman does not see a similar problem with his latest call for the United States to run “a weak-dollar policy.” Against whom should the U.S. pursue a weak dollar?...
The U.S. pursuing a weak-dollar policy towards its G-7 partners, therefore, would appear deeply damaging and misguided...
In short, we suspect that Krugman’s call for a weak-dollar policy can only mean one thing: currency war with Mars.
Right now, Japan is struggling to escape from a deflationary trap...
.png)
Paul Krugman thinks Amazon is bad for America. He came out swinging in a recent column over Amazon's war with book publisher Hachette.Here's part of the Andreessen attack:
Super investor Marc Andreessen has jumped in with a little sarcasm aimed at Krugman...
Krugman is siding with book publisher Hachette in its battle with Amazon. The story goes: When Amazon wanted Hachette to give it a bigger percentage on the Hachette books Amazon sold, Hachette balked. So Amazon began doing things like delaying the delivery of Hachette titles, raising prices, and steering customers to other publishers.
Krugman says Amazon is acting like a robber baron and suggests it must be stopped, just like the Standard Oil-era robber barons were stopped.
Responding to Krugman is as productive as smacking a skunk with a tennis racket.... Let's not be fooled by chicanery (silly Paul, you are no Rabbit).... An honest Paul Krugman (we will use this term again below but this is something called a "counter-factual").... Also remember, much like when the Germans bombed Pearl Harbor, nothing is over yet. The Fed has not undone its extraordinary loose monetary policy and is just now stopping its direct QE purchases.... Paul, and others, should by now know the folly of declaring victory too early....
This isn't a screed where I claim to have invented my own consumption basket showing inflation is rising at 25% per annum - though some of those screeds are interesting.... We have indeed observed tremendous inflation in asset prices.... If one counts asset inflation it seems we've indeed had tremendous inflation.... Where effects did show up, it actually caused rather a lot of inflation....
Mostly Paul is wrong, and twisting the facts, and doing so as rudely and crassly as possible, yet again. The rest of the JV team of Keynesians who have also jumped on board are doing the same thing, just with more class and less entertainment value than the master.... Paul will continue to be mostly wrong, mostly dishonest about it, incredibly rude, and in a crass class by himself (admittedly I attempt these heights sometimes but sadly fall far short). That is a prediction I'm willing to make over any horizon, offering considerable odds, and with no sneaky forecasts of merely 'heightened risks'. Any takers?
Aha. Greg Mankiw tells us that when you apply the coefficients for his suggested simple Taylor rule (a rule for setting the Fed funds rate), it shows the desired rate closing in on zero from below, suggesting that the end of the liquidity trap may be near.. If nothing else, we’ve learned that the liquidity trap is neither a figment of our imaginations nor something that only happens in Japan; it’s a very real threat, and if and when it ends we should nonetheless be guarding against its return — which means that there’s a very strong case both for a higher inflation target, and for aggressive policy when unemployment is high at low inflation.Krugman is right that the Fed is not likely to raise interest raise anytime soon. However, he is dead wrong that this is a good thing. Price inflation is never a good thing, but especially at the early stages of a recovery, when prices are likely to start accelerating anyway.
The bottom line is that the Fed almost surely won’t, and very surely shouldn’t, start raising interest rates any time soon.
....under depression conditions — which is what we have now — inflation is very much a positive thing.The man has no clue as to influences on the economy.
A brief note while in transit, about today’s jobs report.Two things should be noted here. In his first post, he was calling for higher inflation because of "the depression". In the second post, he is pooh, poohing the speed of the recovery, not the recovery itself.
Obviously it’s better than we’ve been seeing. But we need much faster job growth; it says something about how beaten down we are that this is considered good news.
....under depression conditions — which is what we have now — inflation is very much a positive thing.As for his call for more inflation, Krugman's last word on that was that he was worried about deflation, he is going to get smacked around big time in early 2012 with price inflation that will rocket even the silly core inflation index he watches.
...reliable conservatives are assured of a safe landing even if they are defeated.I am also forced to give Krugman points for calling it, in the title to his post, "Wingnut Welfare"
Consider the case of Rick Santorum, rather humiliatingly beaten in 2006. What came next?
The Ethics and Public Policy Center is delighted to announce that the Honorable Rick Santorum is joining EPPC as a Senior Fellow. Mr. Santorum will establish and direct a program, titled America’s Enemies, that will focus on identifying, studying, and heightening awareness of the threats posed to America and the West from a growing array of anti-Western forces that are increasingly casting a shadow over our future and violating religious liberty around the world.And who funds the Ethics and Public Policy Center? Just who you’d expect: a couple of Richard Mellon Scaife foundations, the Koch brothers, etc..
Follow the money.
