The View From 1776

Krugman and Friedman - Part Two

Round two of New York Times columnist Paul Krugman vs Nobel Prize-winning economist Milton Friedman.

Posted by .(JavaScript must be enabled to view this email address) on 04/12 at 02:05 PM
  1. I will say this in "support (?)" of Krugman. I believe the economy will still tank. Why? Because this administration is still "controlling" the economy. While it has spurred growth and jobs, it is still control that is unsustainable because it didn't just use tax cuts (some in the wrong places) but, also used government spending and artificially low interest rates to increase consumer spending based on home equity loans and credit card debt and a false sense of a rosy future.

    While Krugman's policies would have been worse, we still are on the wrong track. In the recent world wide boom, nation after nation has been reducing their debt with the "good times" to prepare better for the next downturn. We just keep increasing debt and dependence on foreign lenders to fund that rising debt.

    While we have no idea of when the next downturn is coming, most believe later this year or next is a realistic estimate. What do we do then? Increase spending to get the economy going? Where do we get that money from if the foreign lending dries up as is suspected will happen? If we print more money we fuel rampant inflation and while that means repaying loans with inflated dollars, it also kills the worker's buying power, leads to businesses closing or leaving and higher unemployment.

    Neither party can get us out of this mess until voters want them to get them out. Socialism has slowly eat away at our ability to compete in a world market and we are now seeing the "chickens coming home to roost."
    Posted by JanPBurr  on  04/12  at  09:13 PM
  2. Whether Keynes was a socialist or not is totally irrelevant to whether his scientific ideas are valid. Your articles always contain ad hominem attacks like these. Why? What do you think to accomplish with attacking the person instead of his arguments?
    Posted by .(JavaScript must be enabled to view this email address)  on  04/13  at  02:24 AM
  3. With regard to Patrick's comment, first, describing someone accurately - in this case, as a socialist - is not an ad hominem attack. In the 1920s and 30s, most intellectuals were proud to be identified as socialists, because they firmly believed that socialism was to be the world's salvation.

    Second, I was not aiming at Keynes, but at the misrepresentations by Paul Krugman, a man whom I despise. But rather than call him names, I am systematically taking his statements and showing them to be deliberate falsehoods.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/13  at  10:00 AM
  4. Further with regard to Patrick's comment, I am puzzled that he believes I never deal with arguments, but simply attack personalities. Can he read Part One of the Krugman vs Friedman posting and honestly say that I present no factual analysis?

    It is, of course, sheer speculation as to why Patrick has his impression that all I do is spout ad hominem attacks. One possibility is the elevation, since the late 1960s, of "tolerance" to the acme of virtues, "tolerance" in the Baby Boomer sense of having no standards of any kind, in short, pure amoral relativism.

    James Q. Wilson has written about his astonishment in his college classrooms upon discovering that students arriving from high schools today have been instructed that not even Hitler can be described as wrong, because everyone's actions must be considered from his viewpoint.

    Whether there are timeless moral standards emanating from the Mind of God, what Western civilization called natural law, is the great question raised by the advent of atheistic, materialistic socialism. For that reason, it is important to understand the reference point from which someone is arguing. Sophists like the advocates of Social Gospel routinely indulge in twisting logic to convince their hearers that the atheistic materialism of socialism is true Christianity.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/13  at  10:15 AM
  5. I believe we had to try Keynes and FDR's programs but they should have been abandoned long ago when we saw how bad they were for long term viability of our nation. We don't want pure capitalism and our founders knew that. That is why, I believe, they intended to prevent monopolies from accumulating too much power and allowed states to regulate business at the local and state level. They were, however, wise enough to know that regulation at the federal level was a huge mistake that could lead to mistake at a national level and thus, drag the whole nation down.

    Of course the other mistake that was a federal role was to go off the gold standard and use deficit spending for other than war. We now are facing a possible collapse of our currency. Since oil started being sold in euro's instead of dollars, the euro has risen to the dollar 63%. By not having the dollar tied to gold or some other stable system of measuring the value of our currency we have opened ourselves up to a very serious situation. Yet, tied to the "gold standard," socialist programs wouldn't have been able to be funded to the level FDR and others wanted.
    The 1944 Bretton Woods system maintained gold
    Posted by JanPBurr  on  04/13  at  11:06 AM
  6. The thing is that we will never know if Mr. Brewton's way is better or not because it didn't happen that way and it never will.

    The economy has take the course it has because God wanted it that way. God called on Mr. Keynes to put it as right as possible. And the world listened and found it mutually beneficial.

    Imagine the food poisoning there would be if the government wasn't involved in the production of food, an involvement that Mr. Brewton detests. His free market would be more jungle like and include many more dead people.

    Who is to say that government is not or should not be part of the free market system? Why, it is an accepted fact that the church is part of religion.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/13  at  05:17 PM
  7. Milton Friedman also believed in a free market of promiscuity, like all drugs should be legal. I don't think Mr. Brewton would go for that.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/13  at  05:23 PM
  8. David:
    Who is to say that government is not or should not be part of the free market system? Why, it is an accepted fact that the church is part of religion.

    I think you miss the point. Even in our founding days, government was involved but not the federal government in state economies. That is what the problem is. The federal government is interfering with the people's right to use state and local government to determine the amount of intervention in business that is needed. The Federal government shouldn't be in the business of regulating business for over 90% of business since that was a power left to the people and the people use state and local government for the things you are so concerned about.

    States and communities have always regulated business. But, some economists said a centralized government would be better. It isn't and all the nations that have tried it and failed prove that point. By having centralized power, we take away the freedom of the people in each state to determine how much they will or won't interfere with business.
    Posted by JanPBurr  on  04/13  at  08:28 PM
  9. The beauty of Keynesianism is it's ability to seemingly 'deliver the goods'. Don't discuss the long run costs involved since, as the great man said: "In the long run we're all dead". It will continue to 'work' until it crashes in flames.Government spending in the cause of social engineering is the legacy of Keynes. It's the bureaucrat employment act of the New Deal/ progressive era. The thing most citizens fail to grasp is the theoretical nature of Keynesianism. It's experimental through and through although real, flesh and blood people are the subjects of the experiment. How the US government assumed the power to run the experiment is the question.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/15  at  04:51 PM
  10. That is a very good observation. Also, it is "we the people" that suffer when each experiment fails.

    The power behind the government is a good topic for discussion too. Central banking of the form we created, allowed the deficit spending and going off the gold standard (not required in central banking) helped make things worse. However, the real rapid expansion of the problem came when we completely took gold out of the picture internationally by going off the Betton Woods policy. When you look at the charts of the damage being done, the really rapid rise occurred after we went off the Bretton Woods policy and used the sale of oil in dollars to create "value" for the dollar through "demand" for the dollar internationally.

    The biggest problem is still, with the voters. We have been told for decades this wasn't working and yet we continue to elect the people who promote this experiment. Why? Because those who warn, also tell us we will have to make some sacrifices and we aren't prepared for them. We want to have the programs and have somebody else pay for them.

    People have the right to have all the social programs they want. I don't disagree with that. The problem has been supplying them with deficit spending and taxes on business that cost us more in collections costs sometimes than the actual tax collected and have led to so many other costs tied to regulation as companies try to stay competitive by working around the tax code.

    As long as the people pay the taxes, and not business, I don't have a problem with any nation or state that decides through the majority that they want a social program. If they do it that way, they can quickly see if they have it so high that the wealthy leave them and it hurts the economy in some way. We have seen nations where the wealthy pay high taxes and stay because they feel it is worth the cost to live in a nation with those programs. It is when they drive business and the opportunities for wealth out that even those nations will lose the people who create the most jobs.

    It is our system of funding social programs that is as much to blame for this mess as the design of some of the programs like social security that requires more and more workers each generation to keep the system going. From 16 to 1 workers we are now down to less than 5 to 1 and even lower when you factor out government workers whose taxes are just some of the taxes we paid in the first place. Even the 7.5% paid by the employer (government) comes from our taxes and is just more of a burden on us. We were probably actually better off when government just had their workers in other plans as far as tax burden.

    The power to run the experiment also depended on reversing several Supreme Court rulings that previously ruled the "New Deal" policies unconstitutional. Those were accurate rulings but very unpopular in an age where socialism was popular in so many places.
    Posted by JanPBurr  on  04/15  at  06:40 PM
  11. " would be fair to say that Mr. Krugman has no purchase on reality."

    However, this blog seems to think it has a purchase on economic reality. And how does it think economic reality can be purchased and paid for if not through taxes and a collective economic will such as the one Keynes suggested.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/16  at  11:44 AM
  12. The one Keynes suggested doesn't work. It is the system of taxes and spending that is balanced without deficit spending that works.

    Look around the world today, David. What are the nations doing that are doing as well economically as we are? They are paying down debt. In fact, the IMF is losing millions in interest payments because those nations are paying down their debt ahead of time.

    The IMF needs cash to cover its operating costs. Normally that cash would come from interest paid on loans by debtor nations. But things have been so good for countries like Brazil and other traditional borrowers that they have paid back their IMF loans ahead of schedule. That
    Posted by JanPBurr  on  04/16  at  01:09 PM
  13. what a great monstrosity and evil was wrought, all starting with a supreme court decision about whether a bumpkin farmer in Ohio can grow some wheat for his own personal use.

    the founders must be rolling in their graves over what the "living document" interpretation of the commerce clause has done to our great nation.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/20  at  09:59 PM
  14. BTW, i was going to say that i just found this blog. so far i'm impressed! it would be hard to do a better job thrashing socialism than you have done here so far, Mr Brewton
    Posted by .(JavaScript must be enabled to view this email address)  on  04/20  at  10:01 PM
Commenting is not available in this channel entry.

Next entry: First Do No Harm

Previous entry: The Paradox of Reason