1. Lecture by David Stockman, the end of sound money and the triumph of crony capitalism. I disagree with much of it, but a bracing perspective.
2. Facing death, Philip Gould looks back.
3. What Karl Smith is optimistic about.
4. Printed weapons.
5. New law and economics blog for hedge funds, credit risk etc.
Gould is impressively open and insightful in that interview.
So about telling us exactly how you disagree with Stockman, instead of making vague allusions to “much of it” and then opining that his views are “bracing.” The TARP was one of the most important economic policy measures of the last 25 years. It’s really irritating to economic non-experts when almost all economists give their colleagues a “pass” and simply set down their own views without showing how the differences MAKE A DIFFERENCE for specific situations. You may disagree with Krugman, but at least he actually engages the arguments of his opponents. I suppose what you are doing is OK if your purpose in running this website is to sell books.
Can you post a link or two of the best examples of Professor Krugman doing that? I am sincerely curious, but if you don’t have the time, that’s fine, but “see all of them” doesn’t count in my mind either.
Hey Andrew’,
Why don’t you go read Krugman yourself. He’s a brilliant nobel prize winner. You might learn something! But maybe not!
Also “see all of them” is not in the post you are responding to. So, you were right: it “doesn’t count in my mind either.”
Like Paul Johnson, I am curious what Tyler Cowen finds bracing in this article and what he disagrees with. The triumph of crony capitalism, for me, has the ring of truth to it.
Unlike Paul Johnson, I disagree that this blog “is to sell books.” If so, it’s a dismal failure. But if it’s purpose is to be a great read, day after day, then it succeeds grandly!
“Why don’t you go read Krugman yourself. He’s a brilliant nobel prize winner. You might learn something! ”
Maybe you do get to learn how to be condescending if you read enough Krugman.
So, try him out. Learn to be condescending. It’s a lot better than learning nothing!
His economic work is brilliant. His columns are mostly invective and dreck.
“but “see all of them” doesn’t count in my mind either.”
Krugman argues with his opponents in practically every single column or blog post he writes and points out specifically what he disagrees with. Cowen on the other hand has a tendency to vaguely mention he disagrees with parts of something (what parts? No one knows).
Hardly. This example is a link followed by a disclaimer. If he just left the link someone would complain about him “agreeing with Stockman.”
Yes, every Krugman article appears to be him jumping on someone. The recent example of where Krugman disagreed with Barro Krugman said “???” It appears to me Krugman specializes in pointing out non-arguments to argue with.
Basically, Tyler links to someone he disagrees with without feeling the need to attack the person, and that makes Krugman’s style better. Does Krugman every link to someone he disagrees with without attacking the weakest part of their argument?
He doesn’t need to attack the guy just be a bit less vague about what parts he disagrees with.
He might. Did you even know about the talk or Stockman’s views before the link?
Here is a recent Krugman post in full. It’s pretty special.
Remember, back in 2009 there was a big debate between people like me, who said that we were in a liquidity trap and that interest rates would stay low as long as the economy was depressed, and people like the WSJ editorial page and Niall Ferguson, who said that government borrowing would bring on the bond vigilantes and send rates soaring.
How’s it going?
And just to be clear: this isn’t just about I-told-you-so. We’re talking about different models, different visions of how the economy works. Their vision led to calls for austerity now now now; mine said that the overwhelming danger was that we wouldn’t provide enough stimulus, and that we would pull back too soon. Sure enough, we didn’t and we did. And now catastrophe looms.
Here is how Slate characterized it back in the day
“Turn on CNBC, and you’re likely to hear talk about bond-market vigilantes, the mass of traders who sell bonds and push interest rates up in order to warn governments not to spend freely.
Related in Slate
Krugman and his fellow travelers couldn’t disagree more. Far from being a sign of failure and impending disaster, they say, the rising bond yields actually signal success and impending improvement. ”
Impending improvement, eh? As PK might say, “how’s that working out?” You can say that Krugman has since changed his story to fit the facts. That’s part of my point. Notice how he frames the debate in his blog post.
“..people like me, who said that we were in a liquidity trap and that interest rates would stay low as long as the economy was depressed, and people…who said that government borrowing would bring on the bond vigilantes and send rates soaring.”
The thing is, interest rates stay low while they are low until they aren’t low anymore. The way he has re-framed the debate makes Krugman right by definition until he is wrong. People like John Hussman expect the inflation to come in the second half of the decade. I don’t read Ferguson, but I don’t see Krugman going into the woods hunting Hussmans.
I loved it
“Soon, the GOP transformed the Reagan policy idea of lower marginal income tax rates into a faith-based religion of tax cutting — anywhere, anytime, for any reason.”
So true. Of course, America is now cursed with a long list of faith-based religions. Education, Infrastructure, Immigration, Free trade, Globalization, Diversity,and Tolerance all come to mind.
For purposes of your post, is a “faith-based religion” simply a belief that you personally don’t hold?
TW,
I would define a faith-based religion as any belief system that is adamantly held to irrespective of the contrary evidence. For example, plenty of “supply-siders” still claim that tax cuts will literally pay for themselves. Not to be outdone, we now have some liberals claiming that incremental spending will generate tax revenues in excess of the spending.
There are plenty of ideas that I oppose, not because they are “faith-based”, but because they embody a different value system. My opposition is based on values, not someone else’s ignorance of the facts.
For example, I suggested that “I Have a Dream” might be the best (or close) speech in American history. Other disagreed. Our differences reflect alternative ideas, not rigid adherence to some faith-based ideology.
Infrastructure counts as faith-based. Interesting perspective. And by interesting I mean absurd.
t,
Infrastructure is a faith-based religion in the following respect(s). Much of the left and center appear to believe (as a matter of faith) that if only we could spend more on infrastructure, magically the economic storm clouds would lift and America would be led, one high speed rail line at a time, to the promised land.
That’s nonsense. The numbers aren’t there. Of course, the United Sates needs infrastructure, as does every developed prosperous country. However, the U.S. already has a lot. We have vast rail, waterway, pipeline, power line, air, and highway systems. Some of them (rail, water, pipeline) are clearly the best in the world. The others might or might not be.
However, precisely because America has so much infrastructure, the economics of incremental infrastructure are far less appealing. When we built the Eire Canal, it was highly profitable from the moment if opened. Indeed, in some years profits from the Eire Canal apparently financed half of the New York state budget. It cost $7 million in the dollars of the day.
By contrast, the State of New York is now contemplating replacing the Tappan Zee bridge at a cost of $16 billion. This project has very limited economic value because (apparently) it will replace an existing bridge and add little trans-Hudson capacity. Let us note that the new Tappan Zee will replace a bridge built at a cost of $80.8 million back in the 1950s. Even allowing for inflation, that’s a 25 fold increase in costs.
It should be axiomatic that returns decline (or go negative) when the cost of a project rises 25X in constant dollars. Given that the hyperinflation in U.S. infrastructure costs appears to be pervasive, the returns from infrastructure may not even be positive at this point.
By some claims, the U.S. has a $2 trillion backlog of infrastructure maintenance. Perhaps this is true. If it is true, eventually this money will have to be spent to keep our roads, highways, and airports working. However, do you (or anyone else) have any evidence that infrastructure repairs will materially impact U.S. productivity? Do you (or anyone else) have any evidence that incremental new infrastructure will make America more competitive?
You can always make the Keynesian argument that deficit spending on infrastructure will create jobs while the deficits last. However, that argument applies to every type of deficit spending with varying efficacy depending on your choice of multipliers. There’s nothing magical about using deficits to finance infrastructure unless the infrastructure is transformative (has high returns). Any evidence for that theory?
If you listen to the likes of Thomas Friedman or the president you would think that bridge repairs will cause the skies to open and the Chinese to suddenly develop a vast affinity for “Made in America” goods and services. Really? Fixing potholes in Ohio is going to close a $278 billion trade gap with China or a $600 billion trade deficit with the world?
Of course, I can think of one infrastructure project that would make a difference. Let’s fill in Los Angeles harbor. This would create a few jobs moving the dirt and far more when it was done. Just kidding of course.
Don’t worry most reasonable economist agree that a carbon tax will fix things.
1. The most important point is whether or not the commercial paper really was on the verge of collapse and/or whether it was mismanaged by being kept insolvent.
The beginning of Stockman’s piece looks good to me. It then drives off into wishful thinking, and some incoherence.
1. Amazing Stockman is still treated as a guru. I think of him every time I drive past the abandoned headquarters of Collins & Aikman.
TC,
What’s the connection to Collins & Aikman?
March 26 (Bloomberg) — David Stockman, President Ronald Reagan’s budget director, was indicted for defrauding investors and banks of $1.6 billion while chairman of Collins & Aikman Corp., an auto-parts maker that collapsed days after he quit.
TC,.
I won’t either defend or condemn Stockman with respect to Collins & Aikman. It is true that the charges were dropped and he and his partners lost vast amounts of money. However, that doesn’t prove that they were innocent of fraud in their attempts to raise more money. Based on the fragmentary evidence I have seen, all of the above appears to be true.
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