It's as though they look at public choice theory and see a blueprint not a critique.

And here I was worried from the headline that I might have to call out Uncle Paul.

"The point is that these are pure fantasies on the part of the right. The true age of spectacular growth in the United States and other advanced economies was the generation after World War II, with post-Reagan growth nowhere near comparable. So why do these people imagine otherwise?

And the answer, once you think about it, is obvious: growth for whom? There’s only one way in which the post-deregulation boom was exceptional, and that’s in terms of the growth in incomes at the top of the scale.

Here’s a comparison of the postwar boom with the deregulation alleged boom, using real average family income from the Census and real average income for the top 1 percent from Piketty and Saez:

[graph omitted]

If you’re looking at the average, the last generation is a poor shadow of the postwar boom. But if you’re talking about the 1 percent, wonderful things have happened."

"The big gains have gone to the top 0.1 percent. So income inequality in America really is about oligarchs versus everyone else. When the Occupy Wall Street people talk about the 99 percent, they’re actually aiming too low."

Is this the first time Kalecki got mentioned on the Times editorial page?

While I don't _think_ this is actually Krugman, it's a little disturbing that I can't be sure. --- ETA: It's not (http://krugman.blogs.nytimes.com/2011/10/26/onion/).

"And as you’ll notice, in both cases the imaginary history just happened to be one more comfortable to status quo interests. I don’t want to go all Chomsky here, but this sort of thing really can radicalize you."

Oldie but goodie from Uncle Paul.

"What happened after 9/11 — and I think even people on the right know this, whether they admit it or not — was deeply shameful. The atrocity should have been a unifying event, but instead it became a wedge issue. Fake heroes like Bernie Kerik, Rudy Giuliani, and, yes, George W. Bush raced to cash in on the horror. And then the attack was used to justify an unrelated war the neocons wanted to fight, for all the wrong reasons.
A lot of other people behaved badly. How many of our professional pundits — people who should have understood very well what was happening — took the easy way out, turning a blind eye to the corruption and lending their support to the hijacking of the atrocity?
The memory of 9/11 has been irrevocably poisoned; it has become an occasion for shame. And in its heart, the nation knows it."

"So we’re having an economic crisis. I say “having,” not “had,” because we have by no means recovered. Financial panic may have subsided, stocks may be up, but employment remains far below pre-crisis levels, and unemployment — especially long-term unemployment — remains disastrously high. And while you can make the case that the economy is slowly on the mend, slowly is the operative word. We have already been through two years of economic purgatory, and there's no end in sight.
There is a real sense in which times like these are what economists are for, just as wars are what career military officers are for. OK, maybe I can let microeconomists off the hook. But macroeconomics is, above all, about understanding and preventing or at least mitigating economic downturns. This crisis was the time for the economics profession to justify its existence, for us academic scribblers to show what all our models and analysis are good for.
We have not, to put it mildly, delivered."

"You can’t make any sense of American political discourse if you give everyone credit for really wanting what they claim to want. My sense is that there are very few true deficit hawks; the vast majority of those who claim that title are really just using the deficit to pursue the goal of a more unequal society."  Well, yes.

Observation: the longer Krugman keeps writing about political economy, the more he sounds like an angrier John Kenneth Galbraith.  Here he's calling for counterveiling power.

"By 1988, it was already obvious that equilibrium business cycle theory had failed. Shiller had already circulated his devastating demonstration that asset prices were much too volatile to be explained by fundamentals, and the 1987 market crash had provided an object lesson in panic. ... And nothing happened. Real business cycle theory continued to prosper, developing an increasing stranglehold over the professional journals. Behavioral finance stayed on the margins. The equilibrium guys had learned nothing and forgotten nothing; and by the time 2008 came around, the ravages of time had left people who actually understood demand-side shocks much thinner on the ground than they had been 20 years earlier. Our problem, in short, isn’t lack of nifty new ideas; it’s the refusal of too many economists to face up to the fact that some of their preferred theories don’t work, a fact that has been obvious for decades."

"While the other side was making these predictions, people like me were saying that classical economics was all wrong in a liquidity trap. Government borrowing did not confront a fixed supply of funds: we were in a paradox of thrift world, where desired savings (at full employment) exceeded desired investment, and hence savings would expand to meet the demand, and interest rates need not rise. As for inflation, increases in the monetary base would have no effect in a liquidity trap; deflation, not inflation, was the risk. ... The 10-year bond rate is about 2.5 percent, lower than it was when Ferguson made that prediction. Inflation keeps falling. The attacks on Keynesianism now come down to “but unemployment has stayed high!” [but] if you took a Keynesian view seriously,... given what we knew in early 2009 ... the stimulus was much too small to restore full employment."

But surely the _scientific_ answer is that we all continue to have a much higher preference for leisure than we did in 2007!

"Wouldn’t it be awesome if the Fed and other government agencies took advantage of domestic Nobel Prize winning economists? For christ sake- someone google “Krugman+lost+decade” and tell me how many hits you come up with. He’s done just about everything except tattoo it on his chest and back and then do a pay-per-view boxing match with Tonya Harding." --- Would that work, I wonder?

"Bear in mind that what protectionism does, according to textbook economics, is to cause a misallocation of resources, reducing the economy’s efficiency. It does not cause mass unemployment of resources — which is what the Depression was about. ... But going back to Hayek: attributing the failure to recover to trade restrictions was, in a way, characteristic. Hayek, like his modern followers, never could get his mind wrapped around the fact that the key problem in depressions, and the key observation his theory needed to explain, wasn’t misallocation of labor and other resources — it was mass unemployment. It’s not surprising to see that in the depths of depression he was focused on removing what was, in the end, a minor source of allocative inefficiency. But it’s a stark reminder of the extent to which he really, truly, didn’t get it."

I am only surprised he doesn't end this "This has been another edition of Simple Answers to Easy Questions".

"Funny, isn’t it? The Ford-Carter years look no worse — in fact, somewhat better — than the Bush years, especially if you look from business cycle peak to business cycle peak. And that was in the face of two very severe oil shocks. So a question for all the people who say that the economic troubles under Jimmy Carter discredited postwar economic policies: why don’t the troubles under Bush similarly discredit post-Reagan policies? ... [I]nflation did have to be brought down — and Paul Volcker, not Reagan, did what was necessary. But the rest — slashing taxes on the rich, breaking the unions, letting inflation erode the minimum wage — wasn’t necessary at all... In the modern vision, the old US economy is seen as an absurd, unworkable thing. Where were the incentives to grow super-rich? How did you manage with all those well-paid, organized workers? ... Radical change happened because a powerful political movement wanted it, not out of economic necessity."

"In that sense, this time really is different: while the first great global financial crisis was followed by major reforms, it’s not clear that anything comparable will happen after the second. And history tells us what will happen if those reforms don’t take place. There will be a resurgence of financial folly, which always flourishes given a chance. And the consequence of that folly will be more and quite possibly worse crises in the years to come." --- I wonder, does Krugman read Ken MacLeod? If not, someone should send him a copy of The Fall Revolution.

Krugman elaborates on the idea of a naturally-occurring Ponzi process. I smell a model...

Krugman looks back on his _Geography and Trade_ after 20 years, before an audience of actual geographers. With how-I-model reflections.

Uncle Paul explains the economics of climate change policy.

PK: "[Even] if I do have some brilliant academic insight, what are they going to do, give me a Nobel Prize?"

Draft Krugman!

I am happy to see Krugman's synopsis of the crisis agrees with my half-assed speculations.

Krugman savages Kevin Kelly's "New Rules for a New Economy", back when those were new.

Shorter Krugman: the point of financial markets is not to make money. (However, I have enough residual Marxism left to suspect that framing the issue as one of "bad actors" is at least an _analytical_ mistake. The Marxist argument was that the problem with capitalism wasn't that capitalists were greedy swine; it was that the way capitalism organizes production and exchange forces capitalists to act like greedy swine, on pain of being replaced. Similarly here; put anyone in those positions and they'll act similarly. Fortunately Krugman calls for regulation rather than moral uplift.)

"Remember that the gilded Wall Street of 2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other industries, yet kept the economy’s wheels turning. So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes. Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks?"

"Has the risk of a US government default risen? Probably. Nonetheless, the people buying these contracts are crazy. A world in which the US government defaults would be a world in chaos; how likely is it that these contracts would be honored?"

The Keynesian explanation for why depressions don't last forever: "recovery comes because low investment eventually produces a backlog of desired capital stock, through use, delay, and obsolescence. And eventually this leads to an investment recovery, which is self-reinforcing." --- This suggests a "natural" time-scale for slumps, related to the rate at which the capital stock gets used up. Probably not enough data to try to to estimate this, though.

Ans.: No, unless you by 'ruining' you mean "making obvious to non-economists that the debate exists".

Clearly, McArdle hurts America by pretending her MBA lets her comment on economics, and always getting things wrong. But, as my father says, one must always consider the counterfactuals: perhaps she'd do _more_ harm to America by using her MBA to administer a business.

"One thing I've learned from the current episode is not to automatically trust that the most well-known economists in the field have done due diligence before speaking out on an issue, even when that issue is of great public importance, or even to trust that they've thought very hard about the problems they are speaking to. I used to think that, for the most part, the name brands in the field would live up to their reputations, that they would think hard about problems before speaking out in public, that they would provide clarity and insight, but they haven't. In fact, in many cases they have undermined their reputations and confused the issues. "

"Krugman! What is best in life?" "To crush your enemies, drive them before you, and hear the lamentations of their models."

Krugman's long-form take on what Obama should do, domestically, in year 1. Where do I sign up to help pressure Obama to do all this?

(And, in a "why oh why can't have a better press" moment, why does our leading public intellectual have to publish this in Rolling Stone, of all places?)

Raising the important historical question: _did_ Baal Mammon take human sacrifices?

Go read, if you haven't already.

Krugman on Krugman.

Answer: not "the Chinese", but from US taxpayers in the future (i.e., slowly).

Possibly the longest set-up for an groaningly awful punchline ever to appear in the New York Times.

Kuttner is making sense.

"Uh oh. we’ve got a downturn that can feed itself and, at the same time, dig trenches." Cool!

"a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics"

Hell freezes, pigs fly....

Krugman's book summarized in about 1500 words

Krugman summarized

"I think I said to Eric Alterman once that while people like you and me are having our disputes over trade policy, Sauron was gathering his forces in Mordor."