Monday, April 25, 2016

Krugman Ignores Economic Evidence to Slight Sanders — Sharmini Peries interviews Gerald Friedman


The saga goes on.

Real News Network
Krugman Ignores Economic Evidence to Slight Sanders
Sharmini Peries interviews Gerald Friedman

22 comments:

Matt Franko said...

This from Freidman's latest Evonomics thing:

http://evonomics.com/orthodox-economics-become-place-visions-die-hopes-banished/

"Might this debate even serve a socially useful function by giving voters an alternative to the xenophobic political economy of Donald Trump? "

They have some sort of cognitive bias or cognitive blindness towards the external sector... hence you dont see it addressed by any of the MMT top end lefties... Sanders thinks it is a completely domestic sector problem due to the "banksters" or something...

They look at anyone who is aware of external system interfaces as "xenophobic"... its pretty blatant and unscientific/incompetent....

And another thing that is pretty funny is if you look at the contributors to Evonomics over there, you have BOTH Freidman here AND Krugman who he is supposed to be arguing with...

Survival of the fittest?

Simsalablunder said...

"They look at anyone who is aware of external system interfaces as "xenophobic"..."

Ok, you found "Trump" in the text… Got it.

Matt Franko said...

LOL I'm not the disgraced academic now working for the Trump campaign...

Ok the guy in the other thread says:

"A budget deficit and trade deficit each at -3% of gdp is fiscal neutrality."

Ok so that is where we are about $500B each for the last few years ... so how does Sanders get to a fiscal surplus by taxing the domestic "banksters" or wtf while ignoring the USD savings of the foreign sector and not taxing them?

What will the domestic sector look like if that is attempted?

I know... I know... if we talk about the external sector then we are "xenophobia!"... yes I know... so we can just ignore that...

Matt Franko said...

Hey Sims maybe they are a different species from the post above:

"Human vision relies on what is known as trichromacy, .... most other animal species are hamstrung with dichromacy, "

They can only see TWO sectors NOT the THREE ... they think anybody who can see all three sectors are "xenophobia!" or something... could be a cognitive bias they have inherited somehow via how our visual centers operate...

Simsalablunder said...

"I know... I know... if we talk about the external sector then we are "xenophobia!"..."

No, that's your own dumb conclusion. You're mixing things up due to your sherry picking and of course you're constantly making a fool of yourself by doing so. But that's fine by me. I can always fade out a looser whenever I feel the urge…

Simsalablunder said...

"Hey Sims maybe they are a different species from the post above:"

You do understand that you too might belong to one of "those different species"? Probably not…

Ignacio said...

Well, 'xenophobic political economy' seems like a pretty biased assertion too IMO.

Ignore all Trump 'macho' talking and focus at the issues, it's true that providing to the infinite desires of other monetary zone users to save in your own currency necessarily drives deficits and debt issuance (under the current system) higher.

Is that a problem? According to economists ' imports are a benefit and exports a real cost' (including MMT position) it shouldn't be a problem, but reality is always more complex than that, and perennial trade balance deficits lead to fundamental changes in the economic structure. Could be those addressed with the proper policies? Probably... But this applies to everything else too.

The problem is that the 'rationalist' approach some economists want to take is not what ends up happening ever, hence you get the 'anti-rationalist' emotionally driven agendas winning because they may end up being implementable in the end (ie. a pure MMT driven agenda is not possible right now, from a social point of view; but a traditional isolationist agenda is probably more palatable to a considerable part of the population, remains to be seen if it's really practical to implement though, w/o much bullying to other nations).

With immigrants is the same thing (not something USA should be worried bout though, as now the trend is reverting and will probably keep doing so), more labour competing in a saturated job market drive wages down and are a race to the bottom for workers. Is the same if you allow free trade between nations, only easier to pull off as it doesn't require physical movement of workers between frontiers. The left seems to have a bias towards open borders because traditional 'internationalism', shooting their own workers in the foot, then wonder why people like Trump gets wider support.

I think we have had enough experience with history by now to connect the dots... That left-leaning economists cannot connect the dots must necessarily be because some bias. So who is in reality being the pragmatist rationalist and who is being idealistic? Both camps seem biased in some way or an other, but it would be a start if economists start acknowledging reality instead of favouring certain policies because they fit their ideal world.

Nothing of this means that Trump will actually end up ding anything of what he says he will do, ofc.

Tom Hickey said...

It could be that capitalism doesn't work for everyone owing to the asymmetries and cyclical volatility, and as the world is increasingly more capitalized the contradictions become more and more apparent. Following (imposing) the theory leads to increasing social dysfunction, political turmoil and conflict, and broader and wider economic-financial asymmetries.

Interesting that we are not only hearing the formerly forbidden terms of "socialism" and 'revolution" in the mainstream, but also they are being used more frequently and the volume in being amped. That is to say, the signal is getting stronger.

And climate change hasn't even begun to bite yet.

The question is whether capitalism is fixable and there are many reasons to suspect not. Then the question becomes what the transition to the next iteration is going to look like.

Salsabob said...

Two separate but related issues - (1) can Sanders deliver on his promise to break up the big banks in a year or two and (2) are the big banks the appropriate target.

For the first, it is absolutely ridiculous, politically, to suggest new legislation will provide a path to deliver on his promise. Under the best possible 2016 election scenario of Sanders in the WH, a Dem majority in the Senate, and even the farfetch notion of the Dems gaining the House, the Senate will not be filibuster proof. Moreover, a lot of Dem Senators will join the GOP in voting down with a simple majority any attempt at more stringent measures beyond Dodd-Frank - look up their voting records.

Sanders suggesting legislation was laughable if not dishonest. His only option is relying on existing regulation, and that is Dodd-Frank.

Dodd-Frank sets up the Financial Stability Oversight Council Report (FSOC), with the Treasury Sec. as its chair and the FED Chair and other key agency heads as members. The FSOC does make the determination that a bank's required "living will" is sufficiently "credible" - just note that each of these Council members are subject to Congressional confirmation. The real problem for Sanders, however, is that under Dodd-Frank it is the Federal Reserve Board, an independent agency, that the law provides the authority to determine what remedies, if needed (they can wait to see if the bank and time heals the issue), will actually be imposed to make a bank's living will credible.

The President has no direct role; all he can do is nominate/appoint FSOC members and new FED Board members - his first FED nominee will be about two years after he is elected (he can change the Chair in about 18 months, but she would still be a Board Governor) and a majority that would reflect his nominations will take years. These people are bankers, and even credible Sanders' nominees will be bankers that need Senate confirmation. These folks are going to be driven by market certainty and impacts on the economy - they may lope off a subsidy here, a division there, or a financial arrangement in the air, but anyone thinking that Goldman Sachs is going to be "disappeared" is smoking something that they should share with the rest of us - and that's before Goldman's highest paid lawyers in the field take the government to court.

Either Sanders didn't understand this or he didn't want to tell his voters that his magic unicorn will not be pooping out bank breakups (as well as single payer) any time soon - either reason is troubling.

On the second issue of whether the big banks are the appropriate target, one needs to go back and look at Krugman's original thought - before all the BernieBots got butthurt over someone questioning their savior's understanding or pragmatism. Whether it is big banks, shadow banks or even your local community bank, the real problem is a lack of sufficient regulation, oversight and enforcement. That view is broader and encompassing of the fetish for big bank breakups, particularly when it is a fact that unregulated financial institutions are, well, unregulated. It's a little hard to argue against sufficient regulation of the financial sector, regardless of type and size so a BernieBot needed to highlight Krugman's pointing out that it ain't all big banky boo and suggest he didn't care or believe in big banky boo. Hey, its an election year. sillier things have happened.

Looking at it in reverse, are there BernieBots who are just fine-and-dany about the recent court action that let MetLife shed its designation as being "too big to fail?" Really? If you do, I suggest you educate yourself a tad more on our financial sector.

This debate has clearly divided those who want more out of government in policing the financial sector, even though we should have common cause. The problem is one side doesn't like having their magic unicorns gored while the other side doesn't like having magic unicorns promised in the first place.

Simsalablunder said...

"Ignore all Trump 'macho' talking and focus at the issues"

Why? What Trump says concerns a lot of people. On the right side you have those who believe in what he says and wish for it to happen. On the left you have those who fear for what he says can be true if he becomes president. That drives some to take a clear stand, among those are economists, some who take the left side based on what Trump actually says in other fields than just economics.

Matt seems to have really hard time understanding this. As if his brain interpret it to be conflicting ideas, where conflict is amplified due to his extreme sherry picking in a feedback kind of way which then gives the amygdalae strong signals to react immediately without any thinking through.

"That left-leaning economists cannot connect the dots must necessarily be because some bias. "

What does that even mean? That right wing economists can? Or some centric economists can, whoever they are? I've seen far to much triangulation to be impressed by it.

Ignacio said...

"What does that even mean? That right wing economists can? Or some centric economists can, whoever they are? I've seen far to much triangulation to be impressed by it."

No, as they usually share similar policy views (in this regard), due to different reasons. I don't like 'left' or 'right' labels, just using them for parsimony reasons on this topic, more 'right' economists are pro-business, pro-free trade and pro-open borders (directly or indirectly). Some 'left' economists end up backing up the same positions using a different rationale. Both have the same outcome: someone using that (Trump or someone else) to 'make a point' and gather population support.

By dismissing the underlying concerns with phrases like 'xenophobic political economic' you are not tackling those concerns, the only thing that is achieved is more back firing. The solution is not 'more of the same', or keep insisting on pushing a class of policies that will aggravate the problems and undermine your own case in the future (in case of progressive economists). Denying that there is a growing part of the population which share those concerns or dismissing them in a way Trump himself would are not going to make them go away.

Bob said...

Trump is protectionist and xenophobic. There is a distinction, perhaps Matt could explain it to us.

Simsalablunder said...

"By dismissing the underlying concerns with phrases like 'xenophobic political economic'"

Underlying concern? What's that underlying concern that cannot be phrased differently? Is expressing the "underlying concerns" in a clear fashion, without merging different topics in order smear so freaking hard? Of course not. So it's a choice for a reason, a political reason and not a reason to high light important issues or whatever.

Ryan Harris said...

Liberals have taken to pepper spraying Trump supporters when they go to Trump rallies. A guy yesterday unleashed his pepper spray on two little girls. It is worrisome, as weve seen on MNE, liberals get violent and irrationally angry when they encounter criticism and people that disagree with their ideology, whether from the right or left. Scary times as the neoliberal shibboleths break down and liberal scorched earth rhetoric abounds, Obama in the UK was a great example too, classic heavy handed Chicago policics, threatening voters if they dare cross him. The problem with the behaviour is that when liberal academics are thrown out, they think they are enlightened anday become security threats and opt for terror since they believe they are saving the world with their ideology.

Bob said...

Scary times will truly arrive when Hillary is anointed President.

Simsalablunder said...

Well, Trump supporters has showed elbows up opponents face. It is worrisome, as weve seen on MNE, right wingers get violent and irrationally angry when they encounter criticism and people that disagree with their ideology, whether from the right or left.

That game is so easy to play…

Ryan Harris said...

Right, the charges are arbitrary and capricious and politically motivated, Simsa. Those are usually the 'serious' charges that media and authorities bring against everyone else. On the left they say that Sanders supporters are young and dumb, white, ideological and just don't get the finer points of orthodox economic empirical realities while mindlessly pursuing climate change. On the right, everyone is violent, racist and religious and rabid supporters of the 1% hell bent on destroying the environment. As it turns out liberals suffer from the same frailties of being human as everyone else, their ideas flawed and supporters are irrational, ideological and violent as people everywhere when pushed. Maybe no one is as enlightened as they fancy themselves to be.

Simsalablunder said...

"Right, the charges are arbitrary and capricious and politically motivated"

Then we're in agreement on that issue. Not too shabby.

Six said...

Simsalsablunder, don't take Ryan's generalizations too seriously. He believes "hippies" are responsible for the 2008 financial crisis. We all know the immense power "hippies" wield over the world. At one time, he also believed that Bill Black was responsible for bank fraud because he once worked as a bank regulator. I think he may have come around on that one.

Ryan Harris said...

Six are you still bitter over me criticizing our favorite lawyer, academic, author, and a former bank regulator for not prosecuting corrupt politicians, banksters and the regulators that failed to regulate? I think it was a fair criticism, and I've praised the recent articles that he has written where he hold everyone in the system to account for their failures. It seems like that approach should reduce the accuracy of Minsky's prediction.

Six said...

No bitterness, I just recall asking you for evidence or examples and you repeatedly produced none.

Ryan Harris said...
This comment has been removed by the author.