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Paul Krugman supports Occupy Wall Street, but he has some ideas about its agenda.
I'm going to seriously date myself here, but last year when writing about the Occupy Movement and its intellectual allies, I chose the above photo of New York Times columnist and Nobel laureate Paul Krugman specifically because it reminded me of the famous Playboy Interview and its equally famous triptych photo layout for interviews of famous people. I mean, this was where Jimmy Carter confessed that he had lusted after women in his heart.
The Playboy Interview with Krugman is a real treat, and not just because he confesses that he lusts after some members of Arcade Fire in his heart. Here's a taste:
I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.
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The National Debt Clock, a billboard-size digital display showing the increasing US debt, is seen on the corner of Sixth Avenue and West 44th Street on August 1, 2011 in New York City.
Paul Krugman does another one of his simple, straightforward Econ 101 columns in which he helpfully ridicules the idea that we're headed down a debt-paved road to ruin. He zeroes in on the tendency of commentators to compare the finances of families to the finances of governments:
First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.
Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.
This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.
AP Photo/Andy Wong
At the New York Times, Paul Krugman turns his attention to China. Simply put, the Middle Kingdom could be the next domino to fall — after the U.S. financial crisis an the ongoing eurozone crisis — in what now looks like a pitched global battle between regulated finance and finance that, if not purely criminal, isn't exactly above-board.
Krugman zeroes in on the big difference between limited consumer spending in China, surging investment spending, and our old friend, real estate:
Do we actually know that [Chinese] real estate was a bubble? It exhibited all the signs: not just rising prices, but also the kind of speculative fever all too familiar from our own experiences just a few years back — think coastal Florida.
And there was another parallel with U.S. experience: as credit boomed, much of it came not from banks but from an unsupervised, unprotected shadow banking system. There were huge differences in detail: shadow banking American style tended to involve prestigious Wall Street firms and complex financial instruments, while the Chinese version tends to run through underground banks and even pawnshops. Yet the consequences were similar: in China as in America a few years ago, the financial system may be much more vulnerable than data on conventional banking reveal.
A Solyndra solar rooftoop installation.
In a great column titled "Here Comes the Sun," the New York Times' Paul Krugman argues that we are on the brink of a solar transformation of our energy economy. Maybe he's right. During the course of proving his point, however, he has this to say about the controversial solar startup Solyndra, which recently went bankrupt and whose funding has brought the Obama Administration under fire:
These days, mention solar power and you’ll probably hear cries of “Solyndra!” Republicans have tried to make the failed solar panel company both a symbol of government waste — although claims of a major scandal are nonsense — and a stick with which to beat renewable energy.
But Solyndra’s failure was actually caused by technological success: the price of solar panels is dropping fast, and Solyndra couldn’t keep up with the competition. In fact, progress in solar panels has been so dramatic and sustained that, as a blog post at Scientific American put it, “there’s now frequent talk of a ‘Moore’s law’ in solar energy,” with prices adjusted for inflation falling around 7 percent a year.
Here's a quick primer on the difference between "Keynesians," who want to spend money to get the economy going, and "austerians" (a little play of words of "Austrians," an anti-Keynesian school of economics), who insist that we need to cut back, belt-tighten, and stop racking up debt. In the video, Henry Blodget of Business Insider sits down with Niall Ferguson, a Harvard professor and historian who hasn't just taken up a strongly anti-Keynesian stance since the financial crisis but has also argued that America's about to go down the imperial drain, and fast.
Ferguson's performance is masterful in its bet-hedging. For example, he wants to find a ceiling for U.S. borrowing — but the debate we had earlier this year about...the ceiling for U.S. borrowing displeased him.
Anyway, you get the idea. He's not in agreement with New York Times columnist and Nobel-winning economist Paul Krugman. Krugman and Ferguson have actually knocked heads at the same event, with Ferguson repeating his argument that markers for U.S. debt are OK "until they aren't," maintaining that the big risk for the USA is a loss of investor confidence. Krugman, for his part, insists that the multi-billion post-financial-crisis stimulus bill wasn't big enough.