Posts tagged ‘Krugman’

Friday’s Things

You could start your morning with one of the best summaries of the collapse of the Republican Party and Paul Ryan with Will Wilkerson’s NYT article. His description of how establishment politics, and Ryan’s economic politics in general, were totally ineffectual for the heartland, and that led to the rise of Trump.

Mr. Trump spotted opportunity in the injured dignity of the Republican base and the feckless irrelevance of the establishment’s agenda. He told Republicans shaken by the reality and risk of downward mobility that they were the only Americans who counted, and that they had been cheated and betrayed.

He promised never to cut their Social Security or Medicare, and expressed admiration for single-payer health care. He took their side against immigrant rapists, murderous jihadis, plundering trade deals, dangerous city people and disloyal, condescending elites of all parties and persuasions. He promised to use his billionaire superpowers to rig the economy to their advantage. It didn’t matter that he is a transparently corrupt, bigoted, sexually abusive, compulsive liar. He offered the dignity of recognition, promised to fight, and won.

Or you could flick over to Paul Krugman, who described the reality of who and what Paul Ryan represented (flimflam man) and how we got there, as with so many disasters we have encountered in recent times, false equivalency:

Even now, in this age of Trump, there are a substantial number of opinion leaders — especially, but not only, in the news media — whose careers, whose professional brands, rest on the notion that they stand above the political fray. For such people, asserting that both sides have a point, that there are serious, honest people on both left and right, practically defines their identity.

…And let me say that the same bothsidesism that turned Ryan into a fiscal hero played a crucial role in the election of Donald Trump. How did the most corrupt presidential candidate in American history eke out an Electoral College victory? There were many factors, any one of which could have turned the tide in a close election. But it wouldn’t have been close if much of the news media hadn’t engaged in an orgy of false equivalence.

Or you could read about Jim Comey’s new book about what a lying sack of sh*t President DFF is, but we already knew that especially from his comeback, “untruthful slime ball.” Or you could look at his attack and new panel to investigate the Post Office. Or you could ponder Syria the the non-attack to teach them a lesson. Or you could ponder our new foray into the TPP when the reality of a trade war dawns on President DFF. Or you could read about the investigation of Cohen’s office and what and where the investigation might go. Timothy Egan has a great fun piece on the wasted money our taxes are paying for under the drain the swampy DFF’s administration. Roger Cohen gives another great piece about the parallels of Hitler and President DFF (I wrote the other day of Madeleine Albright’s article on the same topic).

But in all this noise and cacophony, what is getting done? Where is the great discussion about the real problems that face us and rational approaches to our future? It is all getting lost in the chaos of Trump and the nation has slid to a stop. That is the real damage as we wait on the debate for the way forward. Take Syria. So we strike, after that what? Withdraw? What is the end game and what is the strategy? Take economic inequality. How do we create better jobs and more equitably share the profits so we all prosper? Bring back coal jobs that aren’t coming back? Take the TPP, again what is our strategy? The TPP did many fine things, but also lowered environmental standards and made economic inequality grow. Think President DFF has a plan? Think he cares about those things? Take global warming. Oh, why do I bother.

We are now living in a global economy and there is no going back. Our problems are large and looming and we are lost in the chaos of the china broken in the china shop by the bull called Trump. Republicans are in disarray because their ideology has failed and the guy who promised win-lose and white nationalism is just making things worse. Democrats under Hillary (the establishment), while better, did not really face the problems we have realistically with the same old patches to a failing economic system (if you live in fly over country). Move to the coast and code was not realistic. So where is out discussion of the way forward?

No we are chasing smoke and mirrors right now thrown up by the chaos that is President DFF and his defenders, but sooner or later, we really do have to face our problems like burgeoning debt. Oh, dare I say it, we need smart programs and pay for them. No more party of free rides from flow down. Where is the discussion of that? I have offered my vision, but we have to transition and that begins when we actually debate these things with real facts and data, not ideological objections. That is what we are missing and as much as I enjoy watching the noose tighten around President DFF and the Republican’s necks, just putting Democrats back in power, while reinstating the rule of law, does not answer the big questions that we need to debate. Until then I will be waiting.

*Just a note. I will not be waiting. I will be discussing them here and all three readers can get a glimpse of what we must face. There is a new book out there that I think is an important read if you want to get ahead of me, Can Democracy Survive Global Capitalism by Robert Kuttner. Really the question is how do we change capitalism so democracy can survive and flourish not just for a few, but for all of us.

Two Comments This Morning

Both are about columns I read this morning, Brooks and Krugman.  Actually what is more fun is reading the comments.  There are some very insightful/angry people out there.  Let’s start with Brooks.  David sees that he needs to get out more,  that he lives in a bubble of his own creation and he wants to see Trump coming before he is squashed by him:

That means first it’s necessary to go out into the pain. I was surprised by Trump’s success because I’ve slipped into a bad pattern, spending large chunks of my life in the bourgeois strata — in professional circles with people with similar status and demographics to my own. It takes an act of will to rip yourself out of that and go where you feel least comfortable. But this column is going to try to do that over the next months and years. We all have some responsibility to do one activity that leaps across the chasms of segmentation that afflict this country.

David wants to keep his conservative ideology and just see the world with different lenses, but with the same bad correction.  As one writer responded:

Mr. Brooks, you are welcome to venture into the heart of the heart of the country and write a couple of articles about it, but be ready. If you’re seeking those small places where kids participate in art classes, where young men are trained gently to consider women as equally human and so redefine their own masculinity, where people pay high taxes to insure the safety and comfort of their struggling neighbors, than you’re going to have to move to a Leftie college town. Welcome to Ithaca. 

The Republican Party for decades has profited by cultivating racism and pandering to the Religious Right, which advocates tight control of women (that’s Old Masculinity, and your party is deeply grounded in it. See: Indiana, North Carolina, Ted Cruz, playboy Donald Trump). 

You get what you pay for.  Pay up or shut up.

It is another form of denial.  Sooner or later a conservative has to face up to the fact that conservatism and its failure has led to this giant catastrophe called Trump.  It is not a level playing field and hard work doesn’t guarantee success.  Oh, and we really are in this together and are responsible for our fellow-man.  Then there are the details like, government is not bad, taxes are not ransom paid to the devil, wealth is not a sign of moral superiority, flow down doesn’t work, and regulations are necessary to ensure the greedy stay in their lane.  And I almost forgot!  Science is not an opinion poll!  I could mention that Keynesian macroeconomics really do work and spending and reasonable debt are not bad, but that may be too much to take in right now.

Okay, let’s get on to the Krugman thing.  Paul is making the point that the two outcomes in the two parties represent the giant void between them.  His argument is that Democrats settled on an establishment candidate because at least in some sense, establishment Democrats did try to deliver for their base, while in the Republican Party, Conservatives don’t give a crap about the base, but service the 1%.  So the base bailed on them.  I think that is true, but glosses over the real divide even in the Democratic party that will have to be addressed.

As several readers commented, the Democratic outcome was heavily influenced by media coverage and while the media loved to run every negative story they could find on Hillary, they always either did not cover Bernie or treated him as some Don Quixote  character as opposed to someone raising real issues about the ineffectiveness and lack of strong values in the Democratic Party. As one writer pointed out the establishment Republicans represented the 1%, while the establishment Democrats represented the top 10% and the rest were left flailing.

But generally Paul’s point is correct.  But it glosses over the anger out there, and the distrust of Hillary.  But as with all anger, it is usually wasted energy that does more damage than good.  While many Bernie supporters distrust Hillary, it is not the same choice that Republicans have between Trump or not voting.  And note, they are starting to try to legitimize him which speaks volumes to their depravity.  But on the Democratic side, here is a sampling of that Democratic anger:

To all of a sudden hear Hillary call herself a progressive who gets things done is a bit much. To hear her detail her platform in terms of leaving things like wages and funding for programs up to the states, rather than pushing for what voters want, one just knows that we are getting closer to a pivot back to the center right. Most Democrats want healthcare for all. Clinton is willing to leave 30 million out. Then, to top it all off, she pushed away all of Sanders’ voters when Rachel Maddow asked her if she would do as Senator Sanders said and earn his followers’ votes. As for post-mortems, at least the Republicans pretended to have one. Where is the Democrats’ following Election 2014?

The problem with Clinton’s candidacy is not antipathy that was engineered by her old foe, now collaborator David Brock, but the disbelief of voters who’ve always known the Clinton’s as center right Democrats. Her favorability is at its lowest ever. 

Here is another and one I think is the crux of the issue:

PK was alarmed that Bernie was too “tough” on Hillary at the end – but the opposite is true. The economy is issue #1 with voters, and they want *change*.

The most devastating attack Bernie could have made against Hillary, would have been to start painting an accurate picture of the President Hillary Clinton economic team – whose members will obviously be picked from the ranks of those who crafted and believe in the economic policies that got us exactly where we are – as does Hillary.

Bernie’s mistake, was to focus *only* on inequality, and not on economic competence – and not focusing closely on Hillary’s likely picks for key economic posts.

These are real concerns and not as Hillary groupies who are blinded by the light protest, not understanding Hillary.  But Hillary is the candidate and a Trump would be a nightmare for the country.  So my advice to Bernie supporters who are thinking of walking away from politics because they dislike and distrust Hillary so much, get even.  Box her in.  Put her in office with a more Progressive Democratic Party.  Push her left.  Make her life hell every time she leans right.  It would be good for her and good for the country.  And maybe, just maybe it will end our nightmare of right wing politics for good.

Free Trade, Maybe

Trade agreements are under attack from both Bernie and the Donald.  While they have opened up markets to us and certainly lowered prices of goods in the United States, they have also shifted jobs, good paying jobs, overseas.  So it is a mixed bag sort of.  Paul Krugman admitted that today but he pointed out:

Yet what the models of international trade used by real experts say is that, in general, agreements that lead to more trade neither create nor destroy jobs; that they usually make countries more efficient and richer, but that the numbers aren’t huge; and that they can easily produce losers as well as winners.

…Why, then, did we ever pursue these agreements? A large part of the answer is foreign policy: Global trade agreements from the 1940s to the 1980s were used to bind democratic nations together during the Cold War, Nafta was used to reward and encourage Mexican reformers, and so on.

Now that is all true, but I have questions.  Say we (California) require more organically grown fruits and vegetables and prohibit cancer causing pesticides that can be freely used in say Mexico.  Our products will be more expensive, but then would a trade agreement force us to compete in our market with Mexican products?  Oh don’t worry they tell us.  That will be all be taken care of in the fine print.

And here is what we know about many of these agreements:  They make the accumulation of wealth easier for corporations, but they rarely protect the little guy.  We are living in a world where economic inequality is growing at never before seen rates and sooner or later that is going to crimp the demand side of supply and demand.

So for the first time we are looking at these agreements in a different way than Paul is used to.  While they may increase trade and is good for the corporate bottom line and GDP, what do they do for middle class wages.  The answer is nothing if our past history has anything to say.  In fact in many cases they have killed good jobs.

If you start looking at these agreements in how they permanently ensure continuous wealth accumulation (strengthening patents and intellectual property laws instead of limiting them) and trade laws that protect off shoring of jobs and manufacturing, then you might have a different answer about what these agreements have wrought.

In particular the TPP (Trans-Pacific Partnership), the latest agreement that President Obama wants Congress to approve, was negotiated in secret by these very corporate interests, so whose bottom line do you think they are protecting?  Bernie, who Professor Krugman berates, is raising these issues.  There are important foreign policy issues, but we have to look at the whole picture and at least in my mind, these agreements in some part have facilitated the race to the bottom at the benefit of corporate profits. So the numbers may look good, but the reality is something else if working people’s standard of living accounts for anything.

But as I always say, the devil is in the details and I have yet to hear a reasoned argument about the specifics of the TPP.  Professor Krugman argues that “Striking poses is easy; figuring out what we can and should do is a lot harder.”  So true Professor, but you have seen the electorate right?  Do you really think policy wonk speeches are going to get you elected.  First you have to identify the problem and get elected to fix it.  And on economic inequality, that should be the standard that we measure these agreements against and so far you are ignoring it and Bernie has it front and center and it is resonating.

Your Preferred Narrative

My hero, Professor Krugman, had an interesting and insightful blog about how the Press sets the narrative for the election in its need for a plot to its soap operas and in doing so, changes the whole nature of the campaign.  It is the news creating the news instead of just reporting it.  It is a very dangerous thing when operators know how to play their game to create news and buzz around nothing.

Did Hillary win Iowa and schwoo, or was it a virtual tie?  Did Bernie lose or was it a strong comeback and a tie?  Did Trump get beat and are the establishment Republicans making a comeback, or did Marco come in 3rd to the boat rockers?  Was Iowa an indication of how the country will vote, or is it really just a reflection of the caucus system and who was most organized to take advantage of it?  People jump on the narrative they like and pretty soon it becomes the conventional wisdom whether it is right or not.

Political reporting is a product of this phenomenon and it is incestuous as Professor Krugman points out.  News people like to travel in herds.  It’s safe.  But note how wrong they have got most things so far.  And I believe as we have moved to 24/7 political reporting masquerading as news, people are turning it off.  And for good reason.  I watched an interview with Hillary Clinton yesterday by Chris Mathews, one of the worst in establishing his narrative and then crafting the interview to reinforce that narrative.  His narrative was Bernie Sanders is a pie in the sky idealist and idealistic kids are being used in this obviously misguided campaign.  

So he asked questions, or in his usual irritating manner, interrupted Hillary to illicit those kinds of answers that supported his narrative.  Of course that is also a narrative Hillary wants to plant in voters minds.  Is it true?  Neither were interested as they had their own agenda. Mathews thinks Bernie needs to get out of the way so practical Hillary can lead the nation.  A more penetrating analysis might have asked Hillary if Bernie is touching a nerve in Democrats that her campaign lacks.  Of course, in the narrative of all people running for office, they never are wrong. Even my hero, Krugman, is asking that question and he is a supporter of Hillary: “That said, Sanders is tapping into something that moves a lot of Democrats, and which Clinton needs to try for as well. Can she?”

Narratives that the press have pushed over the years that have resulted in the sorry state we live in now include both sides do it, Congress is to blame (instead of Republicans in Congress), partisanship when one side has gone totally nuts, and global warming, there are differing opinions.  And they have pushed this stuff when the facts are obvious, but because it suits their need for access, trying to appear unbiased when the position is loaded with bias.  Remember when Reagan said that government isn’t the solution, it is the problem (another unexamined lie, See The Entrepreneurial State: Debunking Public Versus Private Sector Myths), well in this case the news has become the problem.

News as a storyline is interesting.  Newscasters can convince themselves they are just showing the thread that makes sense of what is happening which is their job.  But whose thread?  It would more interesting if the news left the “threading” to the politicians and analysts and spent their time examining the veracity of that thread.  We would all be a lot better off if they did.

Some Musings on Past Blogs This Week

It is raining here, while the East Coast is having their big storm.  So it is a stay inside day when I would really like to get out into the vineyard to start retrying plants, since this year my knee has healed enough that I can do that.  In the garage my outdoor cat is up on my surf board on a rack near the roof meaning something was hunting her.  My golden retriever is asleep on her bed waiting for sunlight.  A perfect day to reflect.

My first thought goes to the Hilary/Bernie tango and especially Professor Krugman’s blog this morning.  He has cited Ezra Klein and others to say Bernie is not being realistic. Go with Hillary.  There was a rather spirited rebuttal from some of his readers, several of which I blogged about yesterday.  This morning he kind of wrote off all those critiques of his logic as left wing ranting, ignoring the numbers.  Well certainly there was some of that, but there also were some very insightful counter points and he wrote them all off without responding.  That, I think, lacked a bit of intellectual integrity.

The major argument against “settling for Hillary” was that Hillary was sounding like a, oh I hate to use it because Bernie got in big trouble for using it, but here goes, “establishment” Democrat.  Whether true or not, the argument is that the perception of her as better than a Republican, but not really advancing Progressive ideas, just holding the line, will not get the voters out who could change Congress and the whole equation on what is politically feasible.  Now you can argue that this is pie in the sky or not, but you need to make the argument, not write off your critics as ranting left wingers who are ignoring their pundit gurus.

Switching topics, the failure of the EPA to step in and  resolve the Flint Michigan lead poisoning gets more convoluted.  It is apparent now that the EPA asked for data that was not forth coming from the state, and the state was arguing with the EPA about providing data behind the scenes.  It also turns out that the “data” like where are the lead pipes is a jumble of written records which could take years to unscramble.  So while we all would have like to have seen the EPA step in, the question may be if they could.  Apparently the state may be fighting the EPA right now in the courts based upon the EPA’s latest direction.  If all this is true, the picture gets even more muddled as the EPA may have been fighting behind the scenes to stay out of the courts while getting the state to take the appropriate action.  Of course if you are a parent of one of those kids who drank lead contaminated water, you don’t really give a damn. This is when you welcome big government.

One last thing that comes to mind before I find something useful to do.  I thank Global Warming for the storm hitting the East Coast and sparing us from 24/7 political news.  It lowers the blood pressure seeing people out in Central Park just enjoying the snow instead of the doom and gloom of the political horse race.  So for once (and only once) I am thankful we are pumping CO2 into the atmosphere.  Of course with the reduced coverage of political ranting, the CO2 levels will decrease and there will be sunny days ahead for Sarah Palin to butcher the English language once again.  Maybe she is speaking some cross of Eskimo and pig Latin.  

Countering Krugman and the Pundits

The good professor, who is my hero, is telling us that Bernie is just not practical and the single payer plan will just not be a good idea right now.  To wit:

The point is not that single-payer is a bad idea. It is that given where the U.S. is now, achieving the kind of low costs we see in other countries would involve imposing large losses on many stakeholders, including people with generous policies, health care providers, and more — which is the point I’ve been making. The gains would almost surely be bigger than the losses, but that’s not going to make the very hard politics go away.

And just assuming, as Bernie Sanders does, that you can achieve dramatic cost savings without considering how you’re going to deal with the stakeholders — and therefore lowballing the actual cost of the plan — isn’t helpful, and amounts to not really leveling with your supporters.

Now I had a lot of rebuttals to this line of thinking, but I was saved by the amazing number of smarter people who commented on his blog.  So I thought I would give you a taste:

A family doctor wrote in to point out that dealing with private insurance, the multiple types, their attempts to delay or shift costs to the patient, just wasn’t worth it anymore and he was feeling the Bern.

…There is an important political lesson to be derived of the Affordable Care Act, and it is this: The push for the ACA did not begin as such, but began as a push by Democrats to, at first, get universal healthcare through, and secondly as a push to get a plan through with a public option. What we ended up with is the ACA, which is a great piece of legislation, but is imperfect and can be improved upon. The point here is that, in litigation, what you start with is rarely what you end up with. What I like about Bernie is that he’s not conceding most of our demands at the beginning of the conversation. We will be much more likely to get a public option passed if we frame the conversation around universal healthcare, and if by some miracle we do get single-payer accomplished, all the better. But we do ourselves no favor by by doing our political rivals’ jobs for them.

What I think is really going on here is that Krugman and others in the establishment still think Sanders is unelectable (despite the polls suggesting otherwise), and they’re afraid a Sanders candidacy could help land a lunatic like Trump or Cruz in the White House. Their problem is they don’t spend time around people representative of the general populace, and they don’t know the extent to which everybody almost universally decries her blatant phoniness and political calculation. People are sick of being patronized this way, and they’re sick of settling. We’re ready for someone who is honest and will fight for us.

…I’ve read this blog daily for the past 8 years and I clearly remember all the criticism Professor Krugman threw at Obama for not pushing congress for a big enough stimulus package. Obama would flip between a) it wasn’t politically feasible and b) it was in fact big enough and it worked.

Professor Krugman’s fair criticism was a) it wasn’t big enough and b) who cares if it wasn’t politically feasible Obama never even tried so we’ll never know.

I don’t see how this is different. Whether single-payer is politically feasible or not at least Sanders is making the case for single-payer. Designing the system isn’t the job of the president. The president can make the case to the people, but it’s the job of stakeholders to implement.

Just a taste of the good thinking going on out there right now and why the pundits may be missing the trend here.  It is beyond me why we don’t shoot for the moon instead of starting at suboptimal solutions unless as one writer pointed out, they are terrified Bernie can’t win, and it blinds them to asking for what we deserve.  And nobody mentions that most businesses would love to dump their employer provided healthcare on the government like the rest of the world. It may not be near as impractical as people think.  Just like reforming the banks or expanding Social Security.  Who knows what is possible?

Follow on to “Obama Is About To …”

Paul Krugman was opining about European failed economic policy and never ending austerity and said the following:

I’ll try to produce a more systematic analysis later today or tomorrow; but does anyone think that the Élysée Palace has a well-thought-out vision of how ever more austerity is going to produce a French renaissance? It’s just stumbling along day by day, waiting for something to turn up — when it’s much more likely that everything will turn down instead.

“It’s just stumbling along day by day, waiting for something to turn up” sums up what most of us think is going on in this country also.

Economics Versus History

I am an economics junky. I graduated from engineering school back in the Paleozoic Period (1968) and most of my education has been technical, how to make things work (I have a MS in Structural Engineering). I guess in a way, I have always been curious about how things work. My one economics course in undergraduate school was one of my favorites taught from what I thought was one of the few imminently readable textbooks by the famous economist Paul Samuelson. It made perfect sense.

When I graduated back in the Paleozoic Period, I went into the Air Force (you know, that Vietnam thing) and kind of floundered around looking for what made the world work. I did some study in psychology, but what finally dawned on me was that psychology and economics make the world go round. It really is all about the money and the psychology of money. But I have been dismayed by the current state of economics where they have all this complex mathematical modeling that leaves one on full empty on understanding what is really going on.

One of the things that caught my attention when reading Thomas Piketty’s book, Capital in the 21st Century, was Dr. Piketty’s statement that after he obtained an economics doctorate, and spent several years teaching at M.I.T:

“I was only too aware of the fact that I knew nothing about the world’s economic problems. To put it bluntly, the discipline of economics has to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.”

Now Paul Krugman, my main man who makes economics understandable once again (expect for those who advised the President to fear the debt or think we are going to be taken over by inflation at any moment), has argued for years that we forgot the lessons of Keynes and the history of the early 20th century and all the false arguments are being argued all over again. The history of economics, in other words, is critical to understanding economics today.

I have found that almost astounding because if you read papers by Keynes or Irving Fisher, they are describing the same arguments we are hearing today that they debunked back in the 1930’s. We have this whole history of how to deal with our economic problems and we see “learned” economists seemingly oblivious to this history of the arguments they are making today.

Well, not to despair. The New Yorker has a great article about the rebelling of economic students against this regime of mathematics over history and past experience:

Echoing complaints that have been mounting in the economics world for at least twenty years, and which became louder after the financial crisis of 2008, the student rebellion is calling for a more pluralistic and diverse approach, rejecting the textbook methodology that all too often reduces economics to a set of mathematical exercises. “The real world should be brought back into the classroom, as well as debate and a pluralism of theories and methods,” a group called the International Student Initiative for Pluralism in Economics said, in an open letter that was posted online last week.

… Particularly at the graduate level, economics students are obliged to spend so much time learning the relevant mathematical techniques and theories that they largely ignore economic history and economic organization.

What we need to know to solve our economic problems, we already know, but refuse to learn from history. We are ignoring the lessons of history and trying to apply economics that does not apply when we have reach the zero lower bound limit on interest rates. We learned this during the depression, but the new economics serves corporations and has conveniently forgotten our hard won lessons of history. So did our President, but maybe now is the time to reclaim that history.

Economic Inequality Part ?

It is nice to know someone else (Bill Moyers) connected the dots on economist Thomas Piketty’s findings on rising oligarchy with political scientists Gilens and Page’s study on who really controls our politics (the rising oligarchy). Piketty found “that capitalism, left unchecked, subverts democracy by always and everywhere concentrating wealth at the tippy-top. That creates a class with so much economic power that they begin wielding tremendous political power, too. And then they use that political power to further increase their wealth, and then they use that wealth to further increase their political power, and so on” (VOX.COM).

The Gilens and Page study that found that “economic elites and organized interest groups play a substantial part in affecting public policy, but the general public has little or no independent influence.” Further they noted that “…the system has a substantial status quo bias. Thus when popular majorities favor the status quo, opposing a given policy change, they are likely to get their way; but when a majority – even a very large majority – of the public favors change, it is not likely to get what it wants.

Here is Bill Moyers interview with Paul Krugman on the Piketty book, and his connecting the dots moment at the end when he raises the findings of Gilens and Page::

As hard as it is to effect change according to the Gilens and Page study, I, like Paul Krugman, have not given up hope that eventually rational minds will prevail (when conservatives are finally put out of power). So if we could effect a solution, what would that look like? Well Thomas Piketty recommends a wealth tax. See the conservatives go ballistic? Stealing money from the job creators to give to the slackers? Well here is a thought courtesy of Matt Yglesias:  Raising taxes does not necessarily mean more tax revenue, it means changed behavior.  The cigarette tax was not to raise revenue, but to discourage smoking.  The same could be said for the carbon tax.  As Matt explains:

If you believe systematically lower CEO compensation packages [because of a CEO extravagant pay tax] would mean a mass withdrawal of talent from the business world and a collapse of American industry, then those smaller pay packages could be an economic disaster. But the more plausible theory is that systematically lower CEO compensation packages would mean systematically higher compensation spending elsewhere in the corporate structure. Either more frontline workers or better-paid ones. The new tax code would redistribute value inside the corporate structure without anyone actually paying the new sky-high taxes.

So instead of taking money from CEOs to pad welfare checks, what if high taxes caused more money to be spread out in the economy, creating more spending and better paying jobs?  It is a whole different way to look at taxes, not as revenue the state will fritter away, but as ways to create a more prolific economy.  Food for thought*.

*In a separate post by Matt he looked at a study of higher tax rates, that argued that these higher rates “could push talented individuals to eschew lucrative-but-socially-useless jobs in favor of more broadly beneficial careers in teaching and research.” Just a study based on models, but again food for thought, unless you are a conservative, and then perish the thought.

Krugman on the Obama Budget

My hero, Paul Krugman, gave us some insight this morning (Imaginary Grownups) into the Obama strategy behind his budget which sadly includes cuts to entitlements. It is an appeal to the VSPs (Very Serious People, See Ed Rendell), mainstream (Beltway) media or “centrists”, to convince them the he, President Obama, is reasonable, and the Republicans are off the rails. As Paul describes it:

Since the beginning, the Obama administration has seemed eager to gain the approval of the grownups — the sensible people who will reward efforts to be Serious, and eventually turn on those nasty, intransigent Republicans as long as Obama and co. don’t cater too much to the hippies.This is the latest, biggest version of that strategy. Unfortunately, it will almost surely fail.

And Paul makes a valid Criticism of the strategy:

But the truth is that the “centrists” aren’t sincere. Calls for centrism and bipartisanship aren’t actual demands for specific policies — they’re an act, a posture these people take to make themselves seem noble and superior. And that posture requires blaming both parties equally, no matter what they do or propose. Obama’s budget will garner faint praise at best, quickly followed by denunciations of the president for not supplying the Leadership (TM) to make Republicans compromise — which means that he’s just as much at fault as they are, see?

But I think Paul misses the underlying failure in this approach, although he touches on it when he says, “Calls for centrism and bipartisanship aren’t actual demands for specific policies…“. What you have actually done is ceded your principles and moved the argument to just how far we will let conservative ideas reign.

The argument is really about transfer of wealth to the wealthy and who should pay for what we need to do. When you decide to sound “reasonable” on a playing field that has already move so far to the right, what you have to do is to give credence to some of their arguments. Obama and Co. did that when the pivoted from jobs to the debt after the 2010 election and we have gone nowhere since. He is now doing the same thing on entitlements. Either entitlements are a basic fundamental guarantee or they or not. When you say we will cut entitlements to help the deficit, you are agreeing that entitlements need to be cut, and further, we must have the poor and middle class bear the burden of fixing our economy. Now the only argument left is by how much should they pay.

One could argue, and I know a friend of mine who probably will, that Obama will only do that if the Republicans will give on revenue (which they won’t) so it is really just posturing. My answer to that is that once you put it on the table (cutting entitlements), you have legitimized their position and now the only question is by how much.

No, Virginia, not every argument has two sides. Entitlement costs can be fixed by reforming how they are delivered, how we pay for them, and the tax system that pays for them. But the entitlements themselves are basic to our functioning society and are minimal at best right now. That is the argument Democrats should be making just like they should have made the argument that jobs are the problem not debt. By ceding the playing field, you loose the game. Apparently the Obama Administration still has not learned what this battle is all about yet.