Free Markets, Free People

Paul Krugman


Krugman, Obama and “Progressive Revolt”

Michael Barone recently wrote an article in which he pointed out, “there are more conservatives than Republicans and more Democrats than liberals”.

Let that soak in for a minute and then consider today’s Paul Krugman article in which he seems a bit surprised by the Obama administration’s surprise that liberals are furious with him about the goings on in the health care debate.

Says Krugman:

A backlash in the progressive base — which pushed President Obama over the top in the Democratic primary and played a major role in his general election victory — has been building for months. The fight over the public option involves real policy substance, but it’s also a proxy for broader questions about the president’s priorities and overall approach.

This is where “progressives” always go off the track. It is a large dose of hubris which allows them to convince themselves they’re a bigger group than they are, they’re a more influential group than they are and they have played a bigger role than they have.

While Krugman’s point about primary victories has some substance (activists turn out in primaries), in the general election, compared to George Bush and the economy’s one-two combo, they were a non-factor.

Rasmussen took a look at how Americans view themselves in terms of liberal, conservative and moderate. He found that those who consider themselves liberal range from 12% to 30% depending on the issue. On social issues 30% had a more liberal view, which could be the inclusion of libertarians – who normally share the progressive principles on social issues – boosting that number.

But when it came to the the issues of taxes, government spending and the regulation of private business, only 12% claim to be liberals – libertarians would and do not share liberal principles in that regard. And it is within that realm that the health care reform (and the cap-and-trade) debate is taking place.

The 12% are the hard-core “progressives” who, as I stated, think they’re a much larger group than they really are. And it is the political desires of this 12% – reflected in a Congressional leadership which is proportionately completely out of synch with the rest of the country – that is being resisted by the rest country that does not share its principles or ideals.

So there’s a growing sense among progressives that they have, as my colleague Frank Rich suggests, been punked. And that’s why the mixed signals on the public option created such an uproar.

And they’re shocked and surprised by this? Two points. One, Obama knows progressives have nowhere else to go. So in a hunt for support for this legislation, where should he make his appeal? Well not with those who have nowhere else to go. He’s going to fashion his appeal to attract those who do have an option. Politics 101 for heaven sake.

Two – they elected an entirely political creature who “punked” them from the very beginning of his candidacy. The right has neither been shocked or surprised by anything Barack Obama has done since his inauguration, although they have certainly enjoyed pointing out how Mr. Hope and Change is the consummate old-style Chicago pol. It is fun to watch the so-called “reality based” community begin to figure out they’ve bought into a fantasy. In actuality, they “punked” themselves.

Krugman concludes:

So progressives are now in revolt. Mr. Obama took their trust for granted, and in the process lost it. And now he needs to win it back.

Really? Does he? See points one and two above. Winning their trust back, given the reality of the situation would most likely guarantee him a one-term presidency and Congressional Democrats an electoral shellacking in 2010. That is if he did what was necessary to actually win back their trust.

Face it, progressives – you’ve played your part, you’ve served your purpose and, in the big scheme of things, you’re a 12% constituency with no other place to go. This is big-boy politics and Obama knows he has to move away from much of what you demand to get this passed. And at this point, he’ll take just about anything that can be called health care or health insurance or whatever it’s called today. Or said more simply – the reality is politicians focus on gaining and maintaining power and they will throw anyone under the bus to do that if the situation requires it.

So lay down and take your medicine – Greyhound is ready when you are.

~McQ


The Left: Trying To Make Legitimate Dissent Racist

That’s one of the trends now. If you can’t argue the merits of the legislation, make gross and unsubstantiated assumptions and claims and take off from there. For instance, this from Keith Boykin at “The Daily Voice”, which claims to be “black America’s daily news source”:

In the past few months, we’ve witnessed the unleashing of the radical elements of the Republican Party base. The anti-tax economic conservatives, racist Obama-haters, gun-toting Second Amendment fanatics and birth certificate conspiracy theorists have two things in common: they’re mostly white and they despise President Obama.

With the groundwork laid (one has to wonder – if blacks despised George Bush, was that because they were racists or because they were ideologically and substantially opposed to his agenda?), however loosely with everyone lumped into the same category and characterized by race, Boykin finally gets to his point:

And it doesn’t matter that the president’s domestic policies of providing universal health care, middle class tax cuts, and economic stability will benefit the very people who cry the loudest. This is not about policy. It’s about politics. The politics of rage and race.

Of course Boykin again assumes things not in evidence to make his claim that it is all about race. First, he dismisses the legitimate arguments which have been brought forward about health care, secondly he seems to believe that the spending spree the administration has been on won’t have to paid off and third, he’s apparently blind to the fact that the “economic stability” he touts has been purchased with a future debt which will cripple us economically. Notice I made those points easily and without once even hinting about the race of the president.

They all are legitimate reasons to speak out, all legitimate reasons to be a bit enraged about the direction of the country. But, with his grand generalities and false assumptions in place, Boykin continues to build his case for this all being about race:

The town hall meetings have been branded “town brawls” by the media, but they are really “town mauls” where angry mobsters silence dissent and discourse. And despite the denials from the right, race is a deciding factor here.

So now, Americans acting like Americans are not only un-American for doing so, they’re racist.

And Boykin isn’t the only one pushing this line. David Boaz at CATO has a couple more examples. Paul Krugman, whose arguments for the health care legislation have been weak at best, also pulls the race card to lump “town hall mobs” in with “birthers”:

But they’re probably reacting less to what Mr. Obama is doing, or even to what they’ve heard about what he’s doing, than to who he is.

That is, the driving force behind the town hall mobs is probably the same cultural and racial anxiety that’s behind the “birther” movement, which denies Mr. Obama’s citizenship.

Philip Kennicott throws race around in a Washington Post piece entitled “Obama as the Joker: Racial Fear’s Ugly Face”::

[T]he poster is ultimately a racially charged image. By using the “urban” makeup of the Heath Ledger Joker, instead of the urbane makeup of the Jack Nicholson character, the poster connects Obama to something many of his detractors fear but can’t openly discuss. He is black and he is identified with the inner city, a source of political instability in the 1960s and ’70s, and a lingering bogeyman in political consciousness despite falling crime rates…

Superimpose that idea, through the Joker’s makeup, onto Obama’s face, and you have subtly coded, highly effective racial and political argument. Forget socialism, this poster is another attempt to accomplish an association between Obama and the unpredictable, seeming danger of urban life.

This is a building theme which is a classic diversion by the left. Using it allows them to play the powerful “politically correct” card they’ve so lovingly cultivated for decades. And it is something which needs to be nipped in the bud right now.

The assumption that this is all about race attempts to plaster that claim over the obviously horrendous problems evident with government taking control of health care and the history of Americans of all races protesting such attempts at government expansion. It is, in reality, a classic move by the left to use political correctness as it was intended to be used – to stifle debate. And what we see coming out of the likes of Boykin, Krugman and Kennicott are the racialists laying the ground work to make the charge.

Their arguments are weak, but their intent is clear – broad-brush tarring of those who oppose this administration as nothing more than racist whites opposing the administration’s plans for no other reason than the president is a black man. That, of course, makes dismissing their arguments much easier to do and that is precisely the intent of playing the race card.

~McQ


Quote Of The Day

It comes from Paul Krugman -

So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.

Is it? Or is it a false premise?

Who said we were headed for a “second Great Depression”? And how does a non-falsifiable claim prove the point that “Big Government” saved us from anything?

~McQ


Quote of the Day

Paul Krugman whining about how the views of those who are “pro-stimulus” are not covered by the media:

One of the mysteries of the way issues are covered in much of the news media is how certain views get ruled “out of the mainstream” and just don’t get covered — even when many well-informed people hold those views.

This, of course, after calling climate skeptics “traitors to the planet“. He has a point, he just doesn’t know how emphatically he’s made it himself in the past.

~McQ


Waxman Questions GOP’s Patriotism

First Paul Krugman calls anyone who opposes climate change legislation “traitors against the planet”. We then have Al Gore claiming fighting those who oppose such legislation akin to fighting Nazis. The latest to resort to ad hominem is Henry Waxman, who claims the GOP, and by implication, anyone who is against the nonsense he just pushed through the House is an unpatriotic so-and-so:

Rep. Henry Waxman (D-Calif.), who has had an eventful couple of weeks to say the least, believes House Republican opposition to climate change legislation and the stimulus indicates they’re cheering against the good ol’ US of A.

“It appears that the Republican Party leadership in the Congress has made a decision that they want to deny President Obama success, which means, in my mind, they are rooting against the country, as well,” the powerful House Energy and Commerce Committee chairman told WAMU radio host Diane Rehm on Tuesday morning, promoting his new book, “The Waxman Report.”

Yeah, see it couldn’t at all be that they’re concerned with the crippling effect it will have on the economy or that it is based in bad science that is daily being successfully challenged.  Or that the stimulus was a bad idea that put us into much worse shape fiscally while doing very little to help the economy.

Nope, it’s all about wanting to “deny President Obama success”, and that, of course means it is OK to question their patriotism.

Because, as we’ve all learned, since the election of Obama and the rise of the Democrat left, dissent is no longer the highest form of patriotism, is it?

UPDATE: Oops – looks like Michael and I came to the same conclusion at about the same time.  Ah well, such is blogging – read ‘em both.  They’re just different enough (and short enough) to warrant it.  And btw, Michael, it doesn’t surprise me that Steve Benen, hack that he is, doesn’t find the rhetoric to be “over the top” when a Democrat says it, but would be devoting a full week of outraged blogging if it had been the other way around.

~McQ


Krugman Endorses “Carbon Tariff”

Paul Krugman came out today for “border adjustments” (tariffs) on goods from countries who aren’t participating in economy killing CO2 emissions control taxation.

His argument:

If you only impose restrictions on greenhouse gas emissions from domestic sources, you give consumers no incentive to avoid purchasing products that cause emissions in other countries; as a result, you have an inefficient outcome even from a world point of view. So border adjustments here are entirely legitimate in terms of basic economics.

Actually they’re “entirely legitimate” if you swallow the premise Krugman is pushing here, namely that CO2 is a “pollutant” and its restriction is a “legitimate” reason for imposing taxes on both your own economy and the goods coming from another economy which doesn’t agree with the premise. And, of course, this ignores the probable reaction countries hit with this tariff might have.

Krugman then attempts to justify such a “border adjustment” by claiming such a move is probably legal under “international law”:

The WTO has looked at the issue, and suggests that carbon tariffs may be viewed the same way as border adjustments associated with value-added taxes. It has long been accepted that a VAT is essentially a sales tax — a tax on consumers — which for administrative reasons is collected from producers. Because it’s essentially a tax on consumers, it’s legal, and also economically efficient, to collect it on imported goods as well as domestic production; it’s a matter of leveling the playing field, not protectionism.

And the same would be true of carbon tariffs.

What he sort of dances around when he claims this will “level the playing field” is all products, regardless of their origin, will see dramatically increased pricing. The point of the tax is to hopefully steer consumers to domestically produced products which are produced under government approved conditions rather than those from countries like China and India which aren’t playing the game the US wants them to play. Not only will the consumer here be asked to pay for the CO2 offsets imposed on domestic industry, but they will have to pay for offsets for foreign producers as well when the VAT cost is passed on in the price of the goods.

The thinking, obviously, is that if prices are the same, US consumers will buy US goods instead of, say, Chinese goods. The problem, of course, is much of what we consume isn’t made here anymore. So the result would be the US consumer would end up paying higher prices for goods produced in China with no change in behavior by China.

Additionally, China will view this as a protectionist measure, whether the WTO thinks it is “legal” or not. China will simply claim that the US, as a rich country and large “polluter”, should be doing more than they are doing in terms of emissions control, and impose its own “WTO legal” VAT in response. Same with any other country targeted by the US for a tariff.

This is, frankly, an invitation to a trade war. Krugman can wrap his protectionist argument in whatever legality he’d like, but the fact remains most countries effected will view it as an attempt to limit trade and react accordingly. And, of course, by Krugman’s own admission, it is you who will be paying the tariff cost for China and India if this is ever passed into law.

~McQ


Paul Krugman – Climate Expert (UPDATE – Krugman Calls Skeptics “Traitors”)

Bumped to the top for obvious reasons.

Here’s a perfect example of why Paul Krugman should stick with writing about economics:

One of the favorite arguments of climate-change deniers is “but it was warmer in the late 90s.” In fact, the odds are good that I’ll get that argument from George Will on This Weak tomorrow. I basically know the answer: temperature is a noisy time series, so if you pick and choose your dates over a short time span you can usually make whatever case you want. That’s why you need to look at longer trends and do some statistical analysis. But I thought that it would be a good thing to look at the data myself.

So here’s the data he chose:

temptrend

Anyone know what happened prior to 1850?

A little thing called the “Little Ice Age”, remember? And before that? Yup, the Medieval Warm Period. So what did that look like?

2000_Year_Temperature_Comparison

So what are the two things you notice right away? Well, one is “cycles”. In fact, if you go back even further you’ll see the same sorts of cycles repeated through out our planet’s history. Looking at data from 1850 in the context of climate change history is to use an eyeblink of data for comparison (coming out of the depths of a centuries long planetary cold spell). It is a classic misuse of limited data in an attempt to support a point of view.  It certainly can’t be called “science”.

And secondly, our temperature now isn’t much different than in the 1000′s (not to mention there is much debate as to whether the temperature measurements of today are even accurate), with a very small population relative to today and with no industry, no burning of fossil fuel, and no worries about “green house gasses”. How in the world can that be?

Meteorologist Augie Auer said it best:

“It is time to attack the myth of global warming,” he said.

Water vapour was responsible for 95 per cent of the greenhouse effect, an effect which was vital to keep the world warm, he explained.

“If we didn’t have the greenhouse effect the planet would be at minus 18 deg C but because we do have the greenhouse effect it is plus 15 deg C, all the time.”

The other greenhouse gases: carbon dioxide, methane, nitrogen dioxide, and various others including CFCs, contributed only five per cent of the effect, carbon dioxide being by far the greatest contributor at 3.6 per cent.

However, carbon dioxide as a result of man’s activities was only 3.2 per cent of that, hence only 0.12 per cent of the greenhouse gases in total. Human-related methane, nitrogen dioxide and CFCs etc made similarly minuscule contributions to the effect: 0.066, 0.047, and 0.046 per cent respectively.

“That ought to be the end of the argument, there and then,” he said.

“We couldn’t do it (change the climate) even if we wanted to because water vapour dominates.”

Yet the Greens continued to use phrases such as “The planet is groaning under the weight of CO2” and Government policies were about to hit industries such as farming, he warned.

“The Greens are really going to go after you because you put out 49 per cent of the countries’ emissions. Does anybody ask 49 per cent of what? Does anybody know how small that number is?

“It’s become a witch-hunt; a Salem witch-hunt,” he said.

And Krugman seems to be trying out for head inquisitor. There are the numbers Mr. Krugman. Why not try crunching those instead of selectively picking the data that supports your point of view. You wouldn’t stand for that in the economic world. Why should we put up with it from you when you talk about science?

UPDATE: Yeah, no inflammatory language here:

And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.

Quite an argument, isn’t it – “disagree with me and the “consensus” and you’re committing “treason against the planet?”

You have to wonder, would disagreeing over economic policy be “treason against the economy” in Krugman’s wacky world?  How desperate are you when you have to resort to name calling like “traitor” over a policy dispute?

UPDATE II: Irony alert Ezra Klein referring to the Krugman chart above which begins at the end of the period known as the “Little Ice Age”:

Paul Krugman has a nice response to the variant of global warming denialism favored by the statistically illiterate.

Who is “statistically illiterate” here, Mr. Klein?

~McQ


Krugman: The “Nipponisation” of the World

After a lot of partisan “happy talk” about how the Obama administration is handling the economic crisis here, Paul Krugman goes on record saying the world is doomed to suffer Japan’s lost economic decade on a global scale.

The thing about Japan, as with all of these cases, is how much people claim to know what happened, without having any evidence. What we do know is that recessions normally end everywhere because the monetary authority cuts interest rates a lot, and that gets things moving. And what we know in Japan was that eventually they cut their interest rates to zero and that wasn’t enough. And, so far, although we made the cuts faster than they did and cut them all the way to zero, it isn’t enough. We’ve hit that lower bound the same as they did. Now, everything after that is more or less speculation.

For example, were the problems with the Japanese banks the core problem? There are some stories about credit rationing, but they are not overwhelming. Certainly, when we look at the Japanese recovery, there was not a great surge of business investment. There was primarily a surge of exports. But was fixing the banks central to export growth?

In their case, the problems had a lot to do with demography. That made them a natural capital exporter, from older savers, and also made it harder for them to have enough demand. They also had one hell of a bubble in the 1980s and the wreckage left behind by that bubble – in their case a highly leveraged corporate sector – was and is a drag on the economy.

The size of the shock to our systems is going to be much bigger than what happened to Japan in the 1990s. They never had a freefall in their economy – a period when GDP declined by 3%, 4%. It is by no means clear that the underlying differences in the structure of the situation are significant. What we do know is that the zero bound is real. We know that there are situations in which ordinary monetary policy loses all traction. And we know that we’re in one now.

Shorter Krugman, “we’re in new territory in terms of the size of the problem, but it is all eerily similar to what happened to Japan”. Unfortunately our reaction has been eerily similar to what Japan did as well.

Krugman’s bottom line:

WH: So, one way to think about it is that self-reinforcing financial crises rooted in overstretched, overborrowed companies and governments in less developed countries – like those in Argentina and Indonesia, which were amazingly destructive in the 1990s and 2000s, but localised – are now playing out in the developed world?

PK: There are really two stories. One is the Japan-type story where you run out of room to cut interest rates. And the other is the Indonesia- and Argentina-type story where everything falls apart because of balance-sheet problems.

WH: So in a nutshell your story is …

PK: The “Nipponisation” of the world economy with a bunch of “Argentinafications” playing a role in the acute crisis. But even after those are over, we have the Nipponisation of the world economy. And that’s really something.

And of course, implicit in the “Nipponisation” of the world economy is the “Nipponisation” of the US economy – something we’ve been talking about for some time. Now, add “cap and trade” and “health care reform” into the mix.

What will we be wishing we were suffering when that all kicks in, should it pass? Nipponisation, of course. As bad as lost decade or two might be, it would be heaven compared to the economic carnage those big tax and spend programs will inflict on a very weak economy here in the US. And that, of course, will ensure the “Nipponisation” of the world economy.

~McQ


Krugman Goes Off The Deep End

Two nuts apparently equal vindication of the Department of Homeland Security report on “right-wing extremists”. And Paul Krugman, like many of his ilk, ignores the dearth of statistical support his premise has to make this claim:

But with the murder of Dr. George Tiller by an anti-abortion fanatic, closely followed by a shooting by a white supremacist at the United States Holocaust Memorial Museum, the analysis looks prescient.

There is, however, one important thing that the D.H.S. report didn’t say: Today, as in the early years of the Clinton administration but to an even greater extent, right-wing extremism is being systematically fed by the conservative media and political establishment.

I noticed that one of our more asinine and logic-challenged commenters has picked up these talking points now that they’ve been published. Big surprise.

Noticably missing from the Krugman litany of right-wing extremists is the converted muslim and black man who shot and killed a soldier outside a recruiting station in Little Rock, Arkansas. Using the Krugman statistical model I assume I can interpolate that into a rise in “muslim extremist violence” in the US. In fact, one could certainly credibly argue that it is a 100% increase in such violence.

But of course, people would laugh and point at me and say how utterly stupid it is to use one whacked out nut-job to try and brand a whole religion through implication.

Well, friends, that’s precisely what Mr. Krugman and the rest of the moonbats on the left are attempting with their nonsense. Michael warned you about it and here it is. Nevermind that the right-wing Weekly Standard was apparently on the “right-wing” whack job’s hit list. Facts only get in the way of an unsubstantiated rant.

~McQ


Health Care – “The Public Plan”

Ezra Klein discusses what has commonly become known as the “public plan” in the emerging “health care reform” legislation. Put simply it is “public insurance” which is supposed to compete with the private insurance industry and, as Paul Krugman claims, keep them “honest”.

Klein lays out the various flavors being floated out there concerning this option:

• The “Trigger” Plan: Olympia Snowe is pushing this compromise, as are some conservative Democrats. The basic idea is that the public plan would act as an invisible threat: It would be “triggered” into existence if the private insurance market was unable to offer, say, enough options in a particular region, or enough cost control. In addition, the public plan would only come into existence in this or that region, or this or that state. It would be effectively useless as an insurer. It could potentially have some competitive effect in that private insurers would still work to avoid its existence. Some have argued, however, that the conditions being mentioned in the “trigger” proposals have already been met.

• The Weak Public Plan: This is what people are talking about when they refer to a “level-playing field.” This incarnation of the public plan — first proposed by Len Nichols at the New America Foundation and later echoed by Peter Harbage and Karen Davenport at the Center for American Progress — would have no special advantages over private insurers. It couldn’t use the low rates that Medicare sets or access taxpayer subsidies. It couldn’t force its way into networks. It would simply be another insurer, albeit with different incentives than traditional insurers.

• The Strong Public Plan: This would be like Medicare for the rest of us. It could throw the federal government’s weight around. It could negotiate deep discounts with providers. It could muscle its way into networks. Outside groups like the Commonwealth Fund estimate that it would save the average consumer 20 percent to 30 percent. That would give it a massive competitive advantage over private insurers, and would probably result in tens of millions of Americans dropping their current coverage and entering the public plan to save money. A variant of this was in the draft of Ted Kennedy’s bill that was leaked last week.

While Blue Dog Democrats have come out in favor of the “trigger” option, liberals such as Klein and Krugman prefer the “Strong Public Plan” for the reasons stated (massive dropping of private insurance for “public” (i.e. government) insurance). And there’s a reason they both prefer that – they see it as a backdoor way to move health insurance to a single payer system.

And that is a distinct possibility with both the “strong public plan”. In fact it is a design feature. The “competition” touted would most likely be in name only as Greg Mankiw explains (quoting Krugman to set up his explanation):

What’s still not settled, however, is whether regulation will be supplemented by competition, in the form of a public plan that Americans can buy into as an alternative to private insurance.Now nobody is proposing that Americans be forced to get their insurance from the government. The “public option,” if it materializes, will be just that — an option Americans can choose. And the reason for providing this option was clearly laid out in Mr. Obama’s letter: It will give Americans “a better range of choices, make the health care market more competitive, and keep the insurance companies honest.”

It seems to me that this passage, like most discussion of the issue, leaves out the answer to the key question: Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what’s the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company. The fundamental viability of the enterprise does not depend on whether the employees are called “nonprofit administrators” or “civil servants.”

The bottom line: If the goal is honest competition in the provision of health insurance, the public option cannot do much good but can potentially do much harm.

That is a critical point in this debate – there isn’t an insurer out there that has as deep pockets as the US Treasury. If there is public money backing the public option, then the talk of “competition” is a sham. It is being used to placate and fool those who oppose a government takeover of insurance, the result which would surely happen if what Mankiw’s concerns are true. And if you follow the reasoning process that Mankiw has laid out above, it should be pretty darn obvious what the intent of this “public plan” really is, all the happy talk Klein and Krugman throw out there notwithstanding.

Last, but not least, while the “strong public plan” is an obvious short-cut to single-payer government run health care, the other two plans simply delay that same eventual outcome for a while. While there are certainly reforms that could be made in the insurance industry and health care generally, anyone who believes that government can do it a) better and b) more efficiently has simply not been paying attention to the shape government finances are in right now or how large the deficit has grown as it has mismanaged its entitlement empire to this point.

~McQ