Thursday Reads

Posted: July 25, 2013 | Author: bostonboomer | Filed under: Barack Obama, Foreign Affairs, morning reads, Russia, Spain, U.S. Economy, U.S. Politics | Tags: ACLU, Amash NSA amendment, anti-abortion legislation, Boston Bombings, Dzhokhar Tsarnaev, FBI informants, fetus dolls, fetus fetishists, Gitmo, Glenn Greenwald, Guantanamo Bay prison, Ibragim Todashev, James "Whitey" Bulger, Justin Amash, Keith Alexander, macroeconomics, Madrid train bombing, metadata, North Dakota State Fair, NSA, Paul Krugman, Spanish train crash, Tamerlan Tsarnaev | 16 Comments

Good Morning!!

Yesterday the House narrowly defeated (217-205) an amendment to the defense spending bill (proposed by Michigan Republican Justin Amash) that would have prohibited NSA from collecting metadata on phone calls unless there is evidence that a specific person involved in the call is involved in criminal activity. From Bloomberg:

Implementation of the amendment could have created a new burden on telephone and Internet companies to retain bulk data, in addition to ending the NSA’s blanket collection of phone records. Those possibilities led the White House, Republicans leaders and many congressional Democrats to oppose the proposals, pitting them against lawmakers from both parties who champion civil liberties and privacy….

The provision would have had the potential to cause headaches for information technology companies.

“It could be a significant burden depending on how the government wants us to keep this data and store it,” Trey Hodgkins, a senior vice president for TechAmerica, a Washington-based trade group that represents Verizon Communications Inc. (VZ), AT&T Inc. (T) andCenturyLink Inc. (CTL), said in a phone interview. “You’re talking about potentially extremely huge data sets.”

It’s important to note that the bill as passed also includes a provision that prevents the closing of Guantanamo and prohibits the President from transferring any of the detainees who are being held there. So a vote for the Amash amendment would also mean voting to keep Gitmo open indefinitely.

Another amendment to limit NSA data collection did pass:

The House also adopted an amendment written by Republican Richard Nugent of Florida that sought to prohibit the NSA from using funds in the almost $600 billion Pentagon spending measure to “acquire, monitor or store the content” of electronic communications by “a United States person.”

The Nugent amendment was viewed by some lawmakers as providing political cover for those who didn’t want to vote for Amash’s amendment. While lawmakers voting for the Nugent amendment might appear to be curbing the NSA’s powers, in actuality the amendment wouldn’t change anything, simply restates current law and is “a fig leaf”, said Representative Zoe Lofgren, a California Democrat.

The bill now goes to the Senate; who knows what will happen next. I hope there will be an open debate on regulating possible abuses that could arise from NSA data collection. If a serious debate takes place, perhaps something positive will eventually come from the Snowden debacle. I’m skeptical, but still hopeful.

USA Today presents arguments from Keith Alexander against completely “blowing up” the NSA’s data collection program.

Gen. Keith Alexander, head of the NSA, has said the collection of data has helped disrupt dozens of terrorist plots. Investigators are not allowed to comb through the data, but can use it when they have identified a foreign suspect through other intelligence collection.

The data allows investigators to then detect networks the suspect may have been tied into, which could lead to other suspects and the uncovering of secret cells.

“The court restricts what we can do with that data,” Alexander said in a recent speech. “We have to show some reasonable, articulable suspicion that the phone number that we’re going to look at is associated with al-Qaeda or another terrorist group.”

Personally, I’d rather see more carefully defined limits on when and how NSA can use the metadata to target specific American citizens and regulations to prevent lower level employees like Edward Snowden from getting access to personal information rather than an overall prohibition on having the data available when needed for an investigation. Whenever there is a “terrorist” event–as in the Boston Marathon bombings, people demand to know why the government didn’t prevent it. The fact is there are already regulations in place that limit NSA from targeting Americans. IMHO, we should improve those rules if necessary, based on a serious and thorough debate.

Here are Glenn Greenwald’s reactions to the vote in case you want to read another of his inaccurate, rabid screeds. Basically, Greenwald says it’s all the Democrats’ fault–especially that horrible, dreadful war criminal Barack Obama, who is roughly equivalent to Peter King and Michele Bachmann.

Further down in the article, poor Glenn has to admit that a majority of House Democrats supported the Amash amendment in the face of nasty mean old Obama saying he would like to have a nuanced discussion of the issues rather than simply shutting down the counterterrorism program entirely. Greenwald also continues to claim, falsely, that NSA collects and analyzes the phone calls of every American, in the face of calmer, more knowledgeable people who have tried to explain to him that the data isn’t examined without a warrant and clear suspicion of criminal activity (famous example of how these allowed a criminal to slip through the cracks: Tamerlan Tsarnaev). But we’re not Russia, so we do have some limits on surveillance of American citizens and legal residents like Dzhokhar and Tamerlan Tsarnaev.

You know what I’d like to see targeted for more regulation? The FBI’s use of informants and FBI agents’ apparent ability to get away with murder. From Adrian Walker at The Boston Globe: Ibragim Todashev’s shooting needs explanation.

Ibragim Todashev was mysterious in life, but he has fallen into a void in death.

Todashev was fatally shot during an interrogation by Boston-based FBI agents in Orlando on May 22. The Russia native was being asked about his friendship with Tamerlan Tsarnaev, the presumed mastermind of the Boston Marathon bombing. Unusual as it is for someone to be shot to death during questioning, silence has reigned in its aftermath. The FBI’s few statements have been more confusing than illuminating.

The American Civil Liberties Union of Massachusetts made an attempt Tuesday to spur somebody, anybody, into providing clarity. It called on state authorities in Florida and Massachusetts to conduct their own investigations. The questioning was being done by the FBI and Massachusetts State Police, though some reports have indicated a lone FBI officer was in the room when Todashev was shot.

In response, Attorney General Martha Coakley made it clear her office has no intention of getting involved, pleading lack of jurisdiction. Florida officials have maintained all along that they have no standing to investigate. There doesn’t seem to be any reason to think they are about to change their minds.

Walker notes that we have a stunning example of the FBI’s misbehavior with informants in the James “Whitey” Bulger trial, which is going on in Boston right now.

…we should know better than to rush to absolve the FBI, no questions asked. After all, another of Boston’s great villains, James “Whitey” Bulger, is being tried for decades of terrorizing the city while an FBI informant.

And while the verdict on Whitey is still weeks away, the evidence is clear that the FBI aided and abetted his activities for ages. Not just a rogue agent or two, either; much of the agency’s Boston office was involved.

It’s not comforting, either, to examine the FBI’s record on examining its own shootings. According to a New York Times investigation, the FBI has cleared itself in nearly every agency-involved shooting of the past 20 years.

There was a terrible train crash in Spain yesterday, with at least 78 killed and 130-140 injured. A Spanish official described the scene as “Dante-esque.”

Bodies covered in blankets lay next to the overturned carriages as smoke billowed from the wreckage. Firefighters clambered over the twisted metal trying to get survivors out of the windows, while ambulances and fire engines surrounded the scene.

The government said it was working on the hypothesis the derailment was an accident – although the scene will stir memories of 2004’s Madrid train bombing, carried out by Islamist extremists, that killed 191 people. Sabotage or attack was unlikely to be involved, an official source said….

“It was going so quickly. … It seems that on a curve the train started to twist, and the wagons piled up one on top of the other,” passenger Ricardo Montesco told Cadena Ser radio station.

“A lot of people were squashed on the bottom. We tried to squeeze out of the bottom of the wagons to get out and we realised the train was burning. … I was in the second wagon and there was fire,” he added.

This brief video shows the moment the train derailed and crashed.

According to Railway Gazette, the accident may have been caused by excessive speed.

SPAIN: At 20.41 on July 24 a Madrid – Ferrol Alvia service derailed on a curve on the approach to Santiago de Compostela. Formed of a Class 730 gauge-convertible electro-diesel Talgo trainset, the 15.00 from Madrid was carrying 218 passengers, according to a joint statement from Spanish train operator RENFE and infrastructure manager ADIF.

The train had 12 vehicles, with an electric and a diesel power car at the ends. The rear power cars appear to have caught fire after the impact, and one of the intermediate coaches was thrown up on to an adjacent road; other cars rolled over or struck a retaining wall. Reports on July 25 indicated that 79 people had died in the accident with many more injured.

The train had left the high speed alignment and should have been slowing in preparation for the stop at Santiago station, about 3 to 4 km from the site of the accident. The speed limit on the curve is understood to be 80 km/h, but Spanish media reported that the train driver had said over the train radio that the train had been travelling at 190 km/h. A video taken from a lineside security camera appeared to show coaches behind the front power cars derailing first, pulling the heavier leading vehicles over as the train rounded the curve.

Here’s the crazy Republican story of the day–so far. I suppose the crazy could still get worse as the day goes on. As you know I was born in Fargo, ND, and I still have a soft spot for my home state; but I’m horrified by what’s happening there right now. Check this out: Pro-life group promotes cannibalism, hands out ‘fleshy’ fetus toys in candy bags to kids at State Fair, according to Freak-Out Nation. Yes, you read that right. They put “realistic” fetus dolls into candy bags for children!

Okay Sky Dancers! What stories are you focusing on today? Please post your links on any topic in the comment thread.

Glenn Greenwald’s Dishonest Attack on Paul Krugman

Posted: July 3, 2013 | Author: bostonboomer | Filed under: Barack Obama, Foreign Affairs, Republican politics, U.S. Politics | Tags: Benghazi, deliberately obtuse, fake scandals, Glenn Greenwald, hype, Jonathan Chait, Paul Krugman | 98 Comments

A few days ago Paul Krugman wrote a not-very-exciting post at his blog “The Conscience of a Liberal.” The point of the post was that right wingers have not been as successful in their efforts to hype fake scandals during the Obama administration as they were in the Clinton years. Krugman writes:

When Barack Obama was elected, I was sure that it would be the Clinton years all over — that he would be subjected to an endless series of claims of “scandal”, creating the sense of a tainted administration even though all the alleged scandals would turn out to be either trivial or nonexistent. Remember, after all those years of front-page headlines and $70 million in public funds, the Whitewater investigation came up dry.

In fact, however, none of that happened during Obama’s first term. But would the second term be different? For a little while it looked as if the old scandal machinery was finally springing back to life, with Benghazi, the IRS, and more. You could almost hear the sigh of contentment from a certain part of the press corps.

Krugman’s post had nothing to do with the NSA leaks, Edward Snowden, or Glenn Greenwald; but he made the mistake of just barely mentioning the NSA story.

But now it has all evaporated. Benghazi never made sense; it turns out that the IRS was targeting conservative as well as liberal groups. And as Chait says in the linked article, the NSA stuff is a policy dispute, not the kind of scandal the right wing wants.

And today, Greenwald chose to sic his permanently outraged ~~shock troops~~ fans on Krugman based on a deliberately obtuse reading of Krugman’s referencing Chait’s characterization of the NSA issue as a “policy dispute.” Here’s Greenwald’s take on it.

Defending the Obama administration, Paul Krugman pronounced that “the NSA stuff is a policy dispute, not the kind of scandal the right wing wants.” Really? In what conceivable sense is this not a serious scandal? If you, as an American citizen, let alone a journalist, don’t find it deeply objectionable when top national security officials systematically mislead your representatives in Congress about how the government is spying on you, and repeatedly lie publicly about resulting political controversies over that spying, what is objectionable? If having the NSA engage in secret, indiscriminate domestic spying that warps if not outright violates legal limits isn’t a “scandal”, then what is?

Of course it was really Jonathan Chait who made the distinction between “scandals” and “policy disputes.” Here’s what Chait wrote about it:

Obama’s prosecution of leaks, or use of the National Security Agency — is not a scandal at all. It’s a policy controversy. One can argue that Obama’s policy stance is wrong, or dangerous, or a threat to democracy. But when the president is carrying out duly passed laws and acting at every stage with judicial approval, then the issue is the laws themselves, not misconduct.

And of course it’s really Chait with whom Greenwald is enraged; because Chait had the temerity to write a somewhat humorous column in which he noted the similarities between Greenwald and Ralph Nader–one of which is that each of these men was apparently born without a sense of humor.

But instead of attacking Chait, Greenwald picks a fight with Krugman, who really doesn’t need that right now since he’s grieving the lost of his father. It’s probably a low blow for me to bring that up, but I can’t believe Greenwald didn’t know it, since he apparently reads Greenwald’s blog.

Greenwald has been running around to any media outlet who will have him announcing that he’s got an upcoming “bombshell” scoop that “will shock the world.” I wish he’d just get busy and publish it instead of spending so much time hyping his stories and lecturing everyone about how to interpret Edward Snowden’s behavior.

I think today I’ve finally had enough of St. Glenn to last me the rest of my life.

Friday Reads: the long and wonky road

Posted: May 24, 2013 | Author: dakinikat | Filed under: Austerity, morning reads, The Media SUCKS, U.S. Economy, Voter Ignorance, We are so F'd | Tags: austerity, Bruce Bartlett, Jim Grant, Mark Thoma, Micheal Kinsley, Paul Krugman, serious issues of fact avoidance | 28 Comments

Good Morning!

I am grading essays and papers on currency crises (circa 1999-2002) and financial crises (the last one) and basically all those kinds of crises the tend to come from out of control speculation and the government encouraging the wrong kinds of things. This mostly happens because rich people donate to the campaigns of politicians and own newspapers and media outlets. Politicians want to get reelected and get more powerful and more rich. Rich businesses and investors want to get more powerful and rich. It’s kind of the perfect alignment of shared interests based on lust and greed and all the baser instincts. Isn’t it terrible when the facts get in the way? So, they just ignore them or consider them an alternative liberal opinion. It drives me nuts.

So, BB asked to me write something about what I research and teach and usually regurgitate to you. You know that the austerity narrative has theoretically fallen apart. Well, it’s also falling apart via the numbers, data, facts and reality So, let’s start out with some very bad, awful, terrible horrible Dubya Bush Policy 10 years ago and why tax cuts for the rich still don’t do good things for the economy or now, even the investment markets. This is written by economist Bruce Bartlett who was an adviser to the Reagan administration.

Ten years ago this month, Congress enacted the third major tax cut of the George W. Bush administration. Its centerpiece was a huge cut in the tax rate on dividends. Historically, they had been taxed as ordinary income, but the Bush plan, enacted by a Republican Congress, cut that rate to 15 percent. The tax rate on ordinary income went as high as 35 percent.

This initiative originated with the economist R. Glenn Hubbard, who had been chairman of the Council of Economic Advisers when the proposal was sent to Congress. Mr. Hubbard was a strong believer that the double taxation of corporate profits – first at the corporate level and again when paid out as dividends – was a major economic problem.

During the George H.W. Bush administration, Mr. Hubbard had been deputy assistant secretary of the Treasury for tax policy and wrote a Treasury report advocating full integration of the corporate and individual income taxes.

Mr. Hubbard had also spearheaded enactment of big tax cuts in 2001 and 2002 that he said would jump-start the American economy. In an op-ed article in The Washington Post on Nov. 16, 2001, he predicted that the soon-to-be-enacted 2002 tax cut, which President Bush signed on March 9, 2002, would “quickly deliver a boost to move the economy back toward its long-run growth path.”

Mr. Hubbard predicted that it would create 300,000 additional jobs in 2002 and add half a percentage point to the real gross domestic product growth rate.

There is no evidence that the tax cut had any such effect. The unemployment rate remained above 5.7 percent all year, rising to 5.9 percent in November and 6 percent in December. The real G.D.P. growth rate fell each quarter of 2002, and by the fourth quarter growth was at a standstill. Hence the need for yet another big tax cut.

The idea of the 2003 legislation was to raise dividend payouts, thereby bolstering personal income, and raise the prices of common stock, which would improve household balance sheets. As President Bush explained in his signing statement, “This will encourage more companies to pay dividends, which in itself will not only be good for investors but will be a corporate reform measure.” He also said the dividend tax cut would “increase the wealth effect around America and help our markets.”

The Treasury Department issued a fact sheet on July 30 asserting that the decline in dividends had been a cause of the weak stock market and noting that dividend payouts had risen since enactment of the tax cut on May 28.

Subsequent research, however, found that the increase in dividends was a short-term phenomenon and mainly at companies where stock options were a major form of executive compensation. A 2005 Federal Reserve Board study found that the United States stock market did not outperform European stock markets after the dividend cut. Nor did stocks qualifying for lower dividend taxes outperform those, such as real estate investment trusts, that did not qualify for lower dividend taxes. Non-dividend paying stocks slightly outperformed dividend-paying stocks, and many corporations that did pay higher dividends scaled back stock repurchases by a similar amount.

So, this is yet another example where Republican economic policy is totally out of step with outcomes, data, and reality. Yet, they keep repeating that it works the way it doesn’t work just because, remember, the agenda is greed, power, and more wealth to the already greedy, powerful and wealthy. The deal is they get it wrong, got it wrong, and continue to get it wrong but that doesn’t stop them from trying to weasel their way into a narrative that says, hey, this really isn’t wrong. There’s still some validity there and all economists must be liberals like Paul Krugman who are just talking up their philosophical line. Take austerity economics, please. I mean it. Take it and those idiots who push it to hell and leave them there. Still, the very serious people want to take this very seriously even when it is just plain seriously wrong. Take Michael Kinsley, please. He can report from Hell.

I’ve spent a rather alarming portion of this week wading into intellectual pissing matches, so I’m loath to respond to Michael Kinsley’s response to last week’s brouhaha over austerity policies. But one paragraph does merit some pushback. After noting the backlash to his last column, Kinsley writes the following:

There are two possible explanations. First, it might be that I am not just wrong (in saying that the national debt remains a serious problem and we’d be well advised to worry about it) but just so spectacularly and obviously wrong that there is no point in further discussion. Or second, to bring up the national debt at all in such discussions has become politically incorrect. To disagree is not just wrong but offensive. Such views do exist. Racism for example. I just didn’t realize that the national debt was one of them.

Kinsley assumes that it must be the second explanation, and then goes on from there.

I can’t speak for anyone else who pushed back against Kinsley’s column from last week. Speaking for myself, however, I blogged about it because Kinsley was “spectacularly and obviously wrong.” I say this because almost everything I wrote in my response to Kinsley I knew at age 18 after taking Economics 101 in college.

To explain, let me focus on Kinsley’s motivation for thinking that the austerians have a point:

Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run. This doesn’t mean that they have forgotten the lessons of Keynes and the Great Depression. It means that they remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to.

This is wrong for three reasons, one pedantic and two substantive. First, to be pedantic, the austerity debate is about the wisdom of using expansionary fiscal policy — i.e., running a significant federal budget deficit — to alleviate downturns. Paul Volcker was the chairman of the Federal Reserve and thereby responsible for setting monetary policy. He had nothing to do with fiscal policy. This is a distinction that I learned in my first few lectures on macroeconomics. So either Kinsley phrased this badly or he’s confused about what this debate is about.

It just keeps coming down to the fact that most journalists and politicians simply do not know what they are talking about when it comes to economics. So, they assume an economist like Paul Krugman has a liberal bias on all things–including the color of the sky and the laws of gravity and demand–and they make the worse assumption that those arguing Republican policy these days must have a valid point when the only point is, yes, you know it … to deliver more wealth, power and influence to themselves and their friends that already have it. Some times a lie really is just a lie.

Here’s a good blog post by Jonathan Bernstein that’s just oozing with the issue. There is no argument or theoretical question about austerity. But that’s not stopping the punditry.

A wonderful example of the myopia of the deficit scolds…

The background is that Michael Kinsley wrote a particularly bad column last week about “austerity,” a key point of which was based on factually incorrect memories of what went wrong in the 1970s; as you can imagine, this earned him plenty of corrections and dismissals from people who used access to accurate economic and government policy statistics.

Kinsley was quite taken aback by this, apparently, and wrote a follow up to defend himself. Dan Drezner has already pointed out that Kinsley is still relying on the same inaccurate memories that got his first column into trouble, but I actually found a different part of Kinsley II more interesting, in which he thinks he’s caught Paul Krugman in a contradiction.

Kinsley writes:
Paul Krugman takes credit for good economic news whenever it happens. On Krugman’s blog site (“The Conscience of a Liberal”) last week were two bits of prose side-by-side. One was an ad for his latest book, End This Depression Now! “How bad have things gotten?” the ad asks rhetorically.” How did we get stuck in what now can only be called a depression?” Right next door is Krugman’s gloat about the recent pretty-good economic news. “So where are the celebrations,” he asks, “now that the debt issue looks, if not solved, at least greatly mitigated?” Greatly mitigated? By what? Certainly not by anyone taking Paul Krugman’s advice. He has been, in his own self-estimate, a lone, ignored voice for reason crying out in an unreasoning universe.

What’s the problem? The linked post by Krugman isn’t a gloat about good economic news! It is, to be sure a gloat; it’s a gloat about deficits…Krugman goes so far as to call lower deficits “progress,” although as I read it he’s really just saying that lower deficits should be counted as progress from the point of view of the deficit scolds.
What’s happening here is that Kinsley is projecting onto Krugman a classic deficit scold mistake; Kinsley is conflating the federal budget deficit with the economy. Krugman isn’t doing that; it’s purely Kinsley’s invention.

It gets, however, to exactly why Kinsley was buried under a large pile of abuse after his first column. Well, in part; the other part, as Krugman notes elsewhere, is “the existence now of a policy blogosphere…which makes bluffing harder.” Say something factually inaccurate these days, and you’re going to get slammed; it seems that some pundits who preceded that development find it hard to get used to it.

I still have no idea why journalists feel they just know everything about economics compared to say, knowing everything about Brownian motion or performing brain surgery. It’s the same with politicians. They just seem to confuse a really complex subject that most people really struggle with in college and never take beyond that with something like a political science class or a journalism class. You don’t even get real economic stuff until you way up there in school. The introductory stuff is like the ABCs and they don’t even seem to grasp that. Anyway, stop confusing getting facts wrong with just another opinion …

Read the rest of this entry »

Tuesday Reads: A Mashup of Recent Stories I Liked

Posted: March 12, 2013 | Author: bostonboomer | Filed under: Crime, morning reads, U.S. Economy, U.S. Politics | Tags: "grand bargain", Alex Pareene, Auschwitz, budget deficits, Jeffrey Sachs, Joe Scarborough the stimulus, Josef Mengele, Keynesian Economics, Mark Thoma, media hacks, Menachem Bodner, Millennium Villiages, Milton Friedman, Paul Krugman, Ryan Cooper, shock therapy | 35 Comments

Good Morning!!

Over the weekend, I came across this amazing story in The Daily Beast, and I just had to share it: An Auschwitz Survivor Searches for His Twin on Facebook. It’s the story of Menachem Bodner who was just four years old when the Nazi prison camp was liberated. He is now 72 and is now trying to find his twin brother whom he last saw when they were being used as experimental subjects by the infamous Josef Mengele.

It’s most likely that Menachem Bodner last saw his identical twin in 1945, in Dr. Josef Mengele’s gruesome Auschwitz laboratory. He was 4 then and doesn’t remember his time in the notorious death camp. But in the 68 years that have followed, Bodner says he’s “always” been certain he was one of a pair. He just didn’t have any proof until this past year. Now, he’s searching for Jeno, a man who probably looks just like him, and who has a distinctive “A-7734” tattoo on his forearm. And 1 million Facebook users are helping him look.

Mengele, known among prisoners as “the Angel of Death,” was deeply fascinated with twins and used them for research experiments in his macabre Auschwitz lab. Thankfully, Bodner, now 72, has no recollection of the cruelty he most certainly endured while undergoing experiments, though he can remember a sense of paralyzing fear. Unfortunately he also has few impressions of his family’s prewar life in a small town east of Munkacs, Hungary, which is now in the Ukraine. But despite the lack of memories from a war-marred childhood, Bodner says that throughout his life he’s felt a deep connection with his twin—and is positive he’s still alive and out there. But where?

Until last May, Bodner didn’t even know that his own name was once Elias Gottesmann. Now he knows that. And he knows for certain that he has a twin—thanks to the Nazis’ dogged, pathological documentation of their crimes. Ayana KimRon, a professional genealogist in Israel, found the evidence, clearly written in a record put together by the organization Candles, of twins who were “identified as having been liberated at Auschwitz or from a subcamp”:

A-7733, Gottesmann, Elias, 4
A-7734, Gottesmann, Jeno, 4

Incredible! As a result of his search, Bodner has already found family members that he never knew were looking for him, but his dream is to find his brother. What a story it would be if they could be reunited!

I don’t know if you have been following the latest episode in the ongoing battle between Joe Scarborough and Paul Krugman. Scarborough somehow got together with Jeffrey Sachs of The Earth Institute at Columbia University to publish an op-ed in the Washington Post last Friday: Deficits Do Matter. In the op-ed, they attacked Paul Krugman by setting up a series of straw men and then knocking them down–mainly the false claim that Krugman thinks deficits are never a problem for governments. Here’s the introductory paragraph:

Dick Cheney and Paul Krugman have declared from opposite sides of the ideological divide that deficits don’t matter, but they simply have it wrong. Reasonable liberals and conservatives can disagree on what role the federal government should play yet still believe that government should resume paying its way.

It has become part of Keynesian lore in recent years that public debt is essentially free, that we needn’t worry about its buildup and that we should devote all of our attention to short-term concerns since, as John Maynard Keynes wrote, “in the long run, we are all dead.” But that crude interpretation of Keynesian economics is deeply misguided; Keynes himself disagreed with it.

However, if you read Krugman piece that Sachs and Scarborough link to, you’ll see that it doesn’t say what they pretend it does. It says that deficits don’t matter in the short term, but it’s not true that they never matter. Krugman in the quoted column from March 2011:

Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern monetary theory people — who say that deficits never matter, as long as you have your own currency.

I wish I could agree with that view — and it’s not a fight I especially want, since the clear and present policy danger is from the deficit peacocks of the right. But for the record, it’s just not right.

The key thing to remember is that current conditions — lots of excess capacity in the economy, and a liquidity trap in which short-term government debt carries a roughly zero interest rate — won’t always prevail. As long as those conditions DO prevail, it doesn’t matter how much the Fed increases the monetary base, and it therefore doesn’t matter how much of the deficit is monetized. But this too shall pass, and when it does, things will be very different.

I guess Sachs and Scarborough assumed their WaPo readers wouldn’t bother to click on the link. Anyway, Mark Thoma wrote an epic takedown of the Sachs-Scarborough op-ed at his Economist’s View blog: Crude Sachsism.

Frankly, I doubt that Scarborough had anything to do with writing the op-ed, and I think it would be really hilarious if someone would ask him to explain it on his show. Why is Scarborough so obsessed with proving Krugman wrong? As for Jeffrey Sachs, he is a follower of Milton Friedman and The Chicago School of Economics who is famous for his failed “Millennium Villages” project and his so-called “shock therapy” in Latin America, Russia, and Eastern Europe. Judge for yourself whether you want to buy into his neoliberal, modified supply-side arguments.

I know I’m kind of a weirdo, but I had a blast reading all this stuff over the weekend, including this post by Ryan Coooper (filling in for Ed Kilgore at The Washington Monthly) questioning why Sachs doesn’t even know what was in the stimulus.

Jeff Sachs has long been known as the celebrity-hobnobbing economist with the seriously flawed “shock therapy” plan for economic development. Lately he’s taken a weird turn in the public debate, coauthoring an op-ed piece with Joe Scarborough of all people, attacking Paul Krugman.

Today he’s back with one of the most bizarre pieces of economic analysis I’ve seen, arguing among other things that 1) the stimulus was too focused on short-term stuff like tax cuts which 2) aren’t effective stimulus anyway (huh?) and 3) should have had much more long-term investment.

Wrong again! Read all about it at the link.

The back and forth quieted down yesterday, but today Cooper–who is filling in for Ed Kilgore at The Washington Monthly–brought it up again with this post: How Does Jeffrey Sachs Explain The Great Recession?

I need to read it carefully and follow the links and responses to today–my idea of fun! I guess it’s partly the psychologist in me–I’m fascinated by these human interactions and the verbal battles over important issues of the day.

Continuing the economics theme, Alex Pareene has a great piece at Salon on The competitive advantage of deficit hacks. It’s all about how the media helps the false Village memes and tries to marginalize people like Paul Krugman who actually know something about economics. The gist:

I think a lot about contemporary political debates makes a great deal more sense when you realize that hacks, especially hacks shilling for awful ideas, have a competitive advantage over non-hacks: They do not care if they constantly repeat themselves, even if what they are constantly repeating is wrong.

For a writer or pundit who actually feels some sort of responsibility to inform and/or entertain his or her readers, writing the same damn thing over and over again seems wrong (it is also boring). But bad ideas are constantly being repeated by people who feel absolutely no shame about saying the same things over and over and over again. Indeed, “shamelessness” is in general a defining characteristic of hacks. Also, frequently, people are being paid to repeat the same awful ideas over and over again, and unfortunately usually there’s more money to be made repeating bad ideas than good ones. (Hence: Lanny Davis.)

Arguably, American conservatives are better at sticking to their pet causes in general, as liberals move from fight to fight. Look at how contraception “suddenly” became a matter of national public debate last year, years after liberals thought it a well-settled question. Or look at how long the movement spent trying to roll back the majority of the New Deal, a project that continues to this day!

And on the question of the deficit and the “grand bargain,” Pete Peterson and a few others have spent hundreds of millions of dollars and decades of their lives making the exact same argument, and setting up organizations that pay others to make the exact same argument, until a majority of Beltway centrists internalized the argument and began making it themselves, over and over again. When it comes to centrist pundits, the unsophisticated brainwashing technique that has utterly failed to move the public at large over the last 25 years has worked perfectly. (Because centrist pundits are simple, credulous people, by and large, and also because they will not rely on “entitlements” to survive, when they retire from their very well-compensated jobs.)

Plus— another must read from Alex Pareene: The undead, unnecessary, unhelpful Grand Bargain.

Washington has Grand Bargain fever, again. Thanks to the sequestration, Republican government-shrinking mania and Barack Obama’s apparently sincere desire to get some sort of huge long-term debt deal done, the Grand Bargain is looking more possible than at any point since the heady days of the National Commission on Fiscal Responsibility.

For some reason, the options for dealing with sequestration — a self-inflicted made-up austerity crisis — are being purposefully and pointlessly limited to a) spending cuts, either those in sequestration or different ones, or b) spending cuts and tax increases. “Let’s just not do this, everyone” is rarely presented as a viable option. Instead, the single best end result, according to lots of pundits, Democrats and even Republicans, is tthe Mythical Grand Bargain.

This is awful news, for most people. A “grand bargain” is not going to be good. But after Barack Obama had fancy dinners with some Republicans last week, everyone is again hopeful. The president is hopeful. John Boehner is hopeful. David Gergen is probably hopeful. They can all taste the Bargain. Ooh, it’ll be so great when we get that Bargain!

Read it, and you’ll laugh and cry at the same time!

Now a few more reads that tickled my fancy–in link dump fashion:

LA Times: Harvard faculty outraged after administration spies on emails

WBZ Boston: Harvard University Issues Explanation Of Resident Deans Email Search

The Guardian: World’s top 100 universities 2013: their reputations ranked by Times Higher Education

The Daily Mail: Meet the former Harvard University admin assistant who built up a multimillion-dollar empire… selling sex toys

Cleveland Plain Dealer: Steubenville rape trial will center on issue of consent

New York Daily News: Mike Bloomberg’s supersized ego does in planned soda ban

Now it’s your turn. What’s on your reading list today? Please share your links in the comments.

Have a fabulous Tuesday!!

Paul Krugman Tries to Explain “Facts” to Ron Johnson and ABC “Powerhouse Roundtable”

Posted: March 10, 2013 | Author: bostonboomer | Filed under: Affordable Care Act (ACA), Barack Obama, Medicare, open thread, Republican politics, Social Security, U.S. Economy, U.S. Politics | Tags: ABC's This Week, Paul Krugman, Senator Ron Johnson | 23 Comments

Are there stupider Senators than Ron Johnson (D-WI)? Maybe, but he has to be in the top five. Via Think Progress, this morning on ABC’s This Week, Johnson pulled out an old Republican canard, claiming that the Social Security Trust Fund is “a myth.” Nobel Prize-winning economics Paul Krugman attempted to set him straight. You can watch the partial video down below, but I decided to read the whole transcript of the interaction. Here’s how it went down.

Johnson and Krugman participated in the “Powerhouse Roundtable” with George Will, Bloomberg News White House Correspondent Julianna Goldman, and DNC Chair Rep. Debbie Wasserman Schultz. The group began by discussing President Obama’s supposed charm offensive of the past few days. Johnson rambled on about how Obama is doing the right thing by “reaching out” to the GOP and maybe something can come of it. I have to hand it to Krugman, because he immediately steered the discussion toward the GOP and Obama’s hopes for cutting earned benefit programs.

From the Transcript:

KRUGMAN: I’m really skeptical, because I — I mean this is not — this is not about bad personal relations. People are perfectly capable of being polite to each other, being nice, having a nice dinner. This is about a fundamental difference in visions about what America should be…One party really wants to take down the — the — the safety net we have. One party really wants….to privatize Medicare, wants to, you know roll back, wanted to try to privatize Social Security back in 2005. The other party wants it somewhat extended, wants Obamacare to go into place, would do more if it could. That’s not something you’re going to resolve with a few dinners.

Corporate media shill Juliana Goldman chimes in to state the village consensus:

Look, both sides understand what a grand bargain is going to look like. You’re going — Republicans are going to have to give on revenues, Democrats are going to have to give on entitlements. And so there is some case for optimism now that if the president, in trying to build trust…if Republicans see the president moving forward, putting Medicare savings on the table that doesn’t just hit providers, but also hits beneficiaries as well, then — and also going out and selling it to give Republicans some cover, then there could be a sense that you could get some Senate Republicans to — to help bring the House along.

George Will brings up raising the Medicare age and asks Debbie Wasserman Schultz if there’s any chance all those old codgers in Florida will ever see the light so that Democrats could go along with this brilliant idea? No real response from Schultz, so Krugman (he was on fire today!) jumped in again. From here on, I’ll just focus on the interaction between Johnson and Krugman and leave out the few remarks by others.

KRUGMAN: Is it a condition of any Republican support that you have to go for really terrible policies? Because raising the Medicare age is a terrible policy. It raises medical costs, it does very little to improve the budget. It introduces a lot of hardship. Means testing in Medicare is a better policy. I don’t particularly like it, but it’s a better policy. There are other things you can do. There are other ways you can cut. Even — I don’t like the business about changing, you know the price index for Social Security, but that’s not as bad…

JOHNSON: To say that the Republicans haven’t done anything, is just false. The House has actually passed budgets. You know with — with proposals to — to try and save Medicare, bipartisan proposals, quite honestly. The Senate hasn’t passed a budget in over four years. Listen, unless we do something, these programs are going broke. It drives me nuts. When I — when I hear people say that Social Security is solvent to the year 2035, it’s not….

Listen, if you — if you’re taking a look at, in a entitlement reform package, in term — you know actually bringing in revenue for those entitlement reforms, I might look at that. But the fact of the matter is — the fact of the matter is, we already have a $1 trillion in middle income tax increases hitting us in Obamacare. They’re hidden, but it’s middle-class….it’s certainly true, as well as another $600 billion. So, you’ve already got $1.6 trillion worth of tax increases hitting us in the next 10 years….

KRUGMAN: Just a question, you say let’s start with the facts, but there — we’ve just — we’ve just run aground right there….JOHNSON: You’ve made my point — you’ve made my point, we have to agree on the facts….But the facts are false.

JOHNSON: No they are not….They are not false.

KRUGMAN: The Social Security thing, Social Security is — there — it has a dedicated revenue base. It has a trust fund based on that dedicated revenue base. You can’t change the rules midstream and say, oh suddenly….

JOHNSON: …here’s the problem with the trust fund, the federal government owns U.S. Treasury bonds, it’s the same thing as if you have $20.00, you spend it. And by the way, that money is spent, it’s gone. You write yourself a note for $20.00, stick it in your pocket and say, I got 20-bucks…No, you don’t. You — you have a note that you have to sell in the open market. The trust fund is a fiction, it doesn’t — it’s…

KRUGMAN: If you — if you want to think of Social Security as not just being part of the government, then there’s no such thing as a Social Security problem, it’s just part of the general budget. You — you cannot say on the one hand….on — on the other hand we’re going to — we’re going to restrict it to only operating off of…it’s important to realize that the facts that are being brought out here are in fact, non-facts.

Here’s the video from Think Progress:

From a piece Kevin Drum wrote last fall in response to WaPo columnist Charles Krauthammer spouting the “Social Security Trust Fund is a fiction” meme. Like Johnson, Krauthammer was arguing that because Social Security funds are invested in Treasury bonds which it cashes in when current funds aren’t sufficient for immediate needs, that the Trust Funds is just “a bunch of useless IOU’s,” to quote George W. Bush.

Here’s Drum:

What Krauthammer means is that as Social Security draws down its trust fund, it sells bonds back to the Treasury. The money it gets for those bonds comes from the general fund, which means that it does indeed have an effect on the deficit.

That much is true. But the idea that the trust fund is a “fiction” is absolutely wrong….Starting in 1983, the payroll tax was deliberately set higher than it needed to be to cover payments to retirees. For the next 30 years, this extra money was sent to the Treasury, and this windfall allowed income tax rates to be lower than they otherwise would have been. During this period, people who paid payroll taxes suffered from this arrangement, while people who paid income taxes benefited….

As the baby boomers have started to retire, payroll taxes are less than they need to be to cover payments to retirees. To make up this shortfall, the Treasury is paying back the money it got over the past 30 years, and this means that income taxes need to be higher than they otherwise would be. For the next few decades, people who pay payroll taxes will benefit from this arrangement, while people who pay income taxes will suffer.

If payroll taxpayers and income taxpayers were the same people, none of this would matter. The trust fund really would be a fiction. But they aren’t. Payroll taxpayers tend to be the poor and the middle class. Income taxpayers tend to be the upper middle class and the rich. Long story short, for the past 30 years, the poor and the middle class overpaid and the rich benefited. For the next 30 years or so, the rich will overpay and the poor and the middle class will benefit.

The trust fund is the physical embodiment of that deal. It’s no surprise that the rich, who didn’t object to this arrangement when it was first made, are now having second thoughts. But make no mistake. When wealthy pundits like Krauthammer claim that the trust fund is a fiction, they’re trying to renege on a deal halfway through because they don’t want to pay back the loans they got.

It’s disgusting that this has to be explained over and over again to the willfully obtuse Republicans and the media talking heads, but I have to say that I’m glad Krugman was there this morning to call attention to the stupidity of what the GOP–and Obama–are proposing.

Now, here’s a bonus for you that I found at Americablog this morning. Florida Rep. Alan Grayson is warning there will be “civil disobedience” if Social Security benefits are cut.

What are you hearing and seeing out there? This is an open thread.

The Agony and the Idiocy

Posted: February 16, 2013 | Author: dakinikat | Filed under: Catfood Commission, Domestic Policy, Economy, Federal Budget, Federal Budget and Budget deficit, We are so F'd | Tags: austerians, deficit hawks, Joe Scarborough, Mourning Joe, Paul Krugman | 38 Comments

Some one needs to take the shovel away from Joe Scarborough. He’s about ready to wind up in Siberia with that hole he’s digging himself. I’ve never seen such obsessive compulsive self-destructive behavior. The man cannot admit he’s wrong and knows nothing about economics. He also doesn’t appear to know the difference between an economist and a lawyer and a foreign policy expert. I expect that one of these days he’ll have heart failure then go to his Politico blog to instruct another lawyer on how to do his surgery correctly. Maybe, he’ll start giving lectures on the origins of the universe to Neil Degrasse Tyson next.

Who knew one man could become apoplectic convincing every one he wasn’t beaten up in a one-sided match of wits by Nobel Prize Winning Economist and ubernerd Paul Krugman over 2 weeks ago? He’s written the second of two “I know you are, but what am I?” blog threads at Politico in two days. What Scarboroughs’s become is your run-of-the-mill internet troll who is now blog stalking Dr. Krugman. Only “Tiger Beat on the Potomac” would continue to give this pathetic man a platform for what looks like a developing psychological disorder. We thought he’d over done it on Nate Silver and the presidential poll analysis. But, nope, he’s back and convinced he knows enough about investment and econometrics to analyze the whims of investors.

Yesterday’s Scarborough rant was so bad and so wrong, I actually stepped into it. Scarborough relentlessly insists that Krugman is wrong and that all the rest of us economists think he’s wrong too. To prove his point and to try to get back for being shown up on his show, Mourning Joe used an article written by Princeton economist and Paul Krugman colleague Alan Blinder. The only problem is that Blinder is basically saying the same thing Krugman’s been saying all along. Scarborough not only proved Krugman’s point, he totally missed the point–and the headline–of the Blinder article as well as ascribing the article to the wrong publication. Mourning Joe must’ve read only a sentence and ignored the rest. Does that first sentence not read “Today, there is no deficit crisis” or do I need to up my script for my reading glasses?

Today, there is no deficit crisis. Tomorrow, there will be no deficit crisis. But in ten years, we will have a massive problem of exploding health care costs. Now that’s a crisis to worry about.

But, to Mourning Joe, this means:

But the same could not be said of a fabulously misleading Business Insider post that claimed to list 11 economists who shared Krugman’s debt-denying views. Never mind the fact that most of the links provided actually undercut Krugman’s reckless position and supported my view that the most pressing fiscal crisis is not next year’s deficit but next decade’s debt.

The Business Insider link to an Alan Blinder piece was particularly supportive of the “Morning Joe” panel’s view. Blinder, a former Fed vice chairman and Princeton economics professor, warned of “truly horrific problems” caused by long-term debt, health care costs and interest on the debt. Paul Krugman’s Princeton colleague even shared my conclusion that the coming Medicare crisis will be so great that Democrats won’t be able to tax their way out of it.

Far from supporting Mr. Krugman’s extreme position, the link to Professor Blinder’s New Yorker article undercuts his Princeton colleague’s exaggerated “In-the-end-we’ll-all-be-dead” approach to U.S. long-term debt.

Then he added a short list of noneconomists--including Ed Rendell who is paid lobbyist for deficit hawk group Fix the Debt associated with Simpson & EB who make about $40,000 a speech as travelling austerians–as proof that all economists think Krugman is as extreme on economics as Wayne LaPierre is on gun safety laws. Considering Krugman’s name resides on a well-known trade model, he’s published in just about every prestigious peer-reviewed journal possible, and he’s got one of the best-selling set of text books in the country right now, I’d say Joe just won’t admit he’s way out of his league. Krugman calls Scarborough desperate. Frankly, he gone way beyond that to pathetic to me.

First up, the sad story of Joe Scarborough, whose response to my anti-austerian appearance on his show has been a bizarre campaign to convince the world that absolutely nobody of consequence shares my views. Why is this bizarre? Because while I could be wrong about macroeconomics (although I’m not), it’s just not true, provably not true, that I’m alone in arguing that the current and near-future deficit aren’t problems.

I actually wrote about all of this over two weeks ago (1/30/2013) when the incident first happened, so it seems all deja vu to be at this again. But let me tie this to a bigger problem again. Hillary Clinton left the Benghazi hearings uttering something profound. These hearings were some of the more bizarre things I’d ever watched until the Hagel hearings started and the obsession with conspiracy theories went nuclear. Clinton said some ‘‘just will not live in an evidence-based world’. This includes Joe Scarborough who thinks his “analysis” in his latest little short blog blurb shows Krugman as being wrong, wrong wrong. This is what he thinks is a “TA DA”! moment. I would expect better analysis from Macro 101 students. I would also expect any student in basic statistics or econometrics to have a hey day with his methodology which doesn’t even broach the high school level. But, he’s real proud of it and thinks it puts Krugman in his place.

Investors may be growing skittish about U.S. government debt levels and the disordered state of U.S. fiscal policymaking.

From the beginning of 2002, when U.S. government debt was at its most recent minimum as a share of GDP, to the end of 2012, the dollar lost 25 percent of its value, in price-adjusted terms, against a basket of the currencies of major trading partners. This may have been because investors fear that the only way out of the current debt problems will be future inflation.

More troubling for the future is that private domestic investment—the fuel for future economic growth—shows a strong negative correlation with government debt levels over several business cycles dating back to the late 1950s. Continuing high debt does not bode well in this regard.

I can tell you that the minute all the econ and finance professors who blog get a hold of this, there will be laughter so loud that it will leave the blogosphere and escape to a permanent home in the universal annals of Pathos. Frankly, I can already see using this in a first level, midterm statistics class, corporate finance class or economics class. How many wrong things can you point to in this analysis in just 45 minutes? Go!

Joe probably eyeballed domestic investment numbers and debt levels then labelled it correlation so he can jump an infinite number of sharks to go AHA!!!! GOTCHA PROFESSOR MORIARTY errr Krugman!! He also appears to be blissfully unaware of Fed policy concerning the dollar which basically sets the supply of our currency and the fact that supply interacts with the demand for our currency to set exchange rates. Oh, and the dollar’s been up against the major currencies (especially the EURO) since Dubya left office, so one of his arguments is just factually wrong. The USD has been up against the Yen for well over a year and then up then flat against the Pound Sterling for years so I’m not sure which currency he’s worried about in that basket. It’s even been flat against the Cayman Islands Dollar which I’m sure is more of interest to him than anything else. It’s way down against the Chinese Yuan but then, I wouldn’t consider that a problem at all.

I’m tempted to go there and there and all the places I could go with this, but I won’t because most of you probably don’t want a stats lecture and I don’t have all day. Let me just say that there are a lot of factors that drive investment, which is the least logical component of the national income accounts; and to single out one possible factor without controlling for any of the other factors is a fool’s errand. It shows complete ignorance of investment, finance, and economics so we can add a few more things to the list called what Joe doesn’t know. Actually, worse than that is that he appears to have gotten this blather from an anonymous “senior economist” from the Rand Corporation. Is he misquoting another economist or did some one actually write this for him? Worrying either way!!

Joe, however, is more importantly a symptom of the much bigger problem identified by our former Madam Secretary. We have an entire political party that insists it’s right when clearly, the overwhelming amount of evidence says its wrong. For this analysis, I’m closing with something by Kevin Drum who occasionally can find the nut. We deserve a better press. We deserve better than Joe Scarborough littering up the air waves under the guise of “news” instead of misguided memes and propaganda.

It seems to me that something has happened over the past three months: the nonpartisan media has finally started to internalize the idea that the modern Republican Party has gone off the rails. Their leaders can’t control their backbenchers. They throw pointless temper tantrums about everything President Obama proposes. They have no serious ideas of their own aside from wanting to keep taxes low on the rich. They’re serially obsessed with a few hobby horses — Fast & Furious! Obamacare! Benghazi! — that no one else cares about. Their fundraising is controlled by scam artists. They’re rudderless and consumed with infighting. They’re demographically doomed.

Obviously these are all things that we partisan hacks in the blogosphere have been yapping about forever. But the mainstream press, despite endless conservative kvetching to the contrary, has mostly stuck with standard shape-of-the-world-differs reporting.

Recently, though, my sense is that this has shifted a bit. The framing of even straight new [sic] reports feels just a little bit jaded, as if veteran reporters just can’t bring themselves to pretend one more time that climate change is a hoax, Benghazi is a scandal, and federal spending is spiraling out of control. It’s getting harder and harder to pretend that the same old shrieking over the same old issues is really newsworthy.

This brings me back to Boston Boomer’s Valentine’s Day morning rant based on a phone discussion we had the night before. Why-oh-Why am I writing about this again? Why-oh-why can’t we put this kind of nonsense to bed like all sane people who know the earth is not flat, an apple will fall to the ground if dropped from a tree, and if you every one stops spending and only a few families have decent incomes, the economy will contract and say stay contracted? Don’t folks like Scarborough and the AEI know we buried Say’s ~~Law~~ Failed Hypothesis a long time ago? (Kinda like we buried that zombie Laffer curve! But some folks just want to believe the universe revolves around the earth and the entire set up is only a few thousand years old. Hmmm, like Mark Rubio.)

I’m not sure that last question was rhetorical or not, but hey, it’s a thread and there’s a discussion, so discuss amongst yourselves …

Here’s the topic:

Joe Scarborough, pathetic or desperate? or Why oh Why can’t we Have a better press corps? Joe Scarborough edition

or The Deficit Hawk Delusion: What the Krugman-Scarborough Slugfest Is Really About?

DISCUSS!!!

Incestuous Amplification and the Beltway Feedback Loop

Posted: January 30, 2013 | Author: dakinikat | Filed under: U.S. Economy | Tags: Kool Kids, Morning Joe, Paul Krugman, Simpson-Bowles | 47 Comments

So, all you kind folks that get up way too early in the morning for my tastes and habits sent me to the Morning Joe website to watch Paul Krugman commit beltway heresy. I actually had to play it twice to believe my eyes.

I am reminded of the occasional student that would turn up in a freshmen class and proceed to school the professor on his subject. I saw this when I went to university and I experienced it when I taught freshmen classes. For some reason, all your education, experience, research, and accolades matter naught before people who are absolutely convinced they are right because they just are. I’ve been watching for the internet reactions and they’re wonderful. None is better than Krugman’s response who likens it to the drumbeat leading up to the invasion of Iraq. Even though the evidence was weak and called bogus by experts, we invaded a country with the incestuous amplification of the villagers who really wanted to be war correspondents.

No matter how much proof we have that austerity makes things worse and the current deficit is cyclical, there are a bunch of those in the press that insist they’re not, well … just because they really love the idea of Simpson-Bowles and the unnecessary suffering that would be induced by a study that their committee wouldn’t even approve. I don’t know why they want to induce unnecessary suffering but maybe it has something to do with not being impacted but being able to report from the middle of homeless and starving grannies.

Krugman called it “Incestuous Amplification, Economics Edition”.

Back during the early days of the Iraq debacle, I learned that the military has a term for how highly dubious ideas become not just accepted, but viewed as certainties. “Incestuous amplification” happen when a closed group of people repeat the same things to each other – and when accepting the group’s preconceptions itself becomes a necessary ticket to being in the in-group. A fundamentally flawed notion – say, that the Germans can’t possibly attack though the Ardennes – becomes part of what everyone knows, where “everyone” means by definition only people who accept the flawed notion.

We saw that in the run-up to Iraq, where perfectly obvious propositions – the case for invading is very weak, the occupation may well be a nightmare – weren’t so much rejected as ruled out of discussion altogether; if you even considered those possibilities, you weren’t a serious person, no matter what your credentials.

Which brings me to the fiscal debate, characterized by the particular form of incestuous amplification Greg Sargent calls the Beltway Deficit Feedback Loop. I’ve already blogged about my Morning Joe appearance and Scarborough’s reaction, which was to insist that almost no mainstream economists share my view that deficit fear is vastly overblown. As Joe Weisenthal points out, the reality is that among those who have expressed views very similar to mine are the chief economist of Goldman Sachs; the former Treasury secretary and head of the National Economic Council; the former deputy chairman of the Federal Reserve; and the economics editor of the Financial Times. The point isn’t that these people are necessarily right (although they are), it is that Scarborough’s attempt at argument through authority is easily refuted by even a casual stroll through recent economic punditry.

The Krugman view on the economy isn’t an outlier in the community of economists. That’s because we know theory and we know the empirical evidence that supports the theories. Here’s a list of 10 People that disagree with the narrative of the deficit scolds as compiled by Joe Wiesenthal at TBI.

But actually there are plenty of economists and economically-literate minds who think that, to varying degrees, the deficit is not what we should be worrying about.

For Joe Scarborough’s sake, here’s a list of people. With each we’ve linked to comments they’ve made about their (lack of) worry about the deficit.

Goldman chief economist Jan Hatzius

Nomura economist Richard Koo

Brad Delong

Alan Blinder

Martin Wolf

Larry Summers

James Galbraith

Robert Reich

Bruce Bartlett

John Makin (a conservative AEI scholar with a new paper out today on the danger of overhyping deficit fears!)

Rep. Jerry Nadler (not an economist, but as knowledgeable on economics as anyone up on Scarborough’s list).

Anyway, that was just a partial list, but one that covers conservatives, liberals, Wall Street economists, and former government officials.

The funny thing is that polls show that the American public isn’t all that worried about the deficit either. The economy and jobs outpolls the deficit concerns by about 2 to 1 in polling from all kinds of pollsters. David Atkins–writing at Hullabaloo–calls it the problem of the Kool Kids Table.

Here at Hullabaloo we call it the Kool Kids Table, a pathway to power and social acceptance inaccessible to those who don’t hold the “right” views.

Do I believe that everyone in Joe Scarborough’s sphere of influence knows that Keynesianism is accurate and that Krugman is right, but chooses to say otherwise because it pads their bank account? Of course not. It takes a conspiracy theorist and an idiot to believe that. Washington is corrupt, but it’s not that corrupt.

No, most of these people believe what they say. I don’t doubt that Scarborough’s perplexed shock is genuine. Just like I believe that most of the conservative theologians who burned Giordano Bruno at the stake believed that our solar system was the only one of its kind. After all, anyone who believed otherwise wasn’t taken seriously and didn’t advance in the Church hierarchy. Everyone who was anyone knew better, and since Bruno refused to accept the conventional wisdom he had to be shunned and ultimately silenced. Bruno’s ideas were unserious and dangerous. The man had his head in the sand and couldn’t see what seemed obvious to everyone else.

Perhaps one day the Church of the Austerians will belatedly apologize to Keynes, Krugman, Stiglitz and all the other great economists whose names have been dragged through the mud. But not likely soon, and not during their lifetimes. In our own sordid lifetimes, Popes Simpson and Bowles will continue to bestow favors upon their cardinals, giving communion only to the Kool Kids who deserve it.

It is actually a freshman economics problem to argue that now is a very bad time to focus on the deficit. It’s very simple math. There are 4 actors in our economy. That would be businesses, the foreign sector, households and the government. During a bad economy, the first three actors generally pull back. Households tend to save and pay down debt, businesses don’t order as much inventory or expand because households are pulling back, and the foreign sector is generally impacted by the US economy and will slow down its buying too unless the dollar should become very weak and our prices fall dramatically. US policy normally doesn’t let that happen.

So, the idea is that the government–using its taxing and spending policy–can make up for the fall off in economic activity. It can buy things from the private sector or do things like public works and directly offer households jobs and income and businesses a reason to expand. It can also do this by handing money over to state governments to do the same. All the activity of the four actors contributes to our GDP so if all four of them are pulling back, we get a recession.

We know this not only by talking about it in conceptual terms but also by studying the great depression and the austerity policies of countries like the UK. The UK fixated on austerity and–as a result–has had miserable economy experience and is now fallen into another recession. As Krugman explains, we’ve done relatively better because we had some stimulus. Had it been politically feasible to make it stronger, we’d have had a much stronger recovery. It’s not just a matter of embracing a Keynesian mindset, it’s just a matter of knowing the math or what’s called the national accounting identity. Remember, it’s an identity which means it’s true by definition. You can’t have four negative numbers summed together on one side of an equation with out the other side being negative too.

We also know that we’ve been in worse situations with deficits. Notably, the post-World War 2 period saw huge government deficits. Our economy expanded, we had extremely progressive taxes, and we paid the deficit down. They sky did not fall down because we ran up huge deficits during the War. In fact, buying war bonds that financed the war was seen as patriotic. We personally supported government spending this way. We did not do the same thing in our following wars and skirmishes. Bush Two put two very expensive and long, drawn out wars on the deficit while lowering taxes and decreasing the progressiveness of the tax system. This policy behavior is a huge problem.

The truth is that Keynes himself never suggested an economy run a perpetual recession. The fiscal policy prescription is to run a deficit during recessions, run towards a balanced budget in a Goldilocks economy where everything is just right, and run a budget surplus in an overheated, inflationary economy. It seems we never hear any of this from the obnoxious freshman student that sits in the front row and insists his high school reading of Ayn Rand tells him something completely different. We also never hear this from ideologues who really have a completely different agenda in mind. Their agenda is basically just to drown government in the bathtub and they don’t want any thing to work.

The problem is the kids at the Koolaid Table never, ever learn and are more motivated by access to power than access to knowledge. It’s evident in that they keep playing the deficit hawks running around yelling the sky is falling and they’ve done so for about 5 years. Or, as Krugman puts it:

KRUGMAN: “People like me have been saying for five years don’t worry about these deficit things for the time being, they’re non-issues, other people have been saying imminent crisis, imminent crisis … how many times do they have to be wrong and people like me have to be right before people start to believe us?”

Krugman must have an endless amount of patience to continually sit down with a group of these obnoxious freshmen. I wonder at how he does it day-in-and-day-out.

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Okay Sky Dancers! What stories are you focusing on today? Please post your links on any topic in the comment thread.

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Good Morning!!

Now a few more reads that tickled my fancy–in link dump fashion:

Now it’s your turn. What’s on your reading list today? Please share your links in the comments.

Have a fabulous Tuesday!!

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What are you hearing and seeing out there? This is an open thread.

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