Paul Krugman

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Politics determine who has the power, not who has the truth.

Paul Robin Krugman (born February 28, 1953) is an American New Keynesian economist, Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times.


There was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus.
Do some homework to find out what these people really want. I’m not talking about deeply hidden motives; usually the true goal is in the public domain.
  • If you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.
    • Slate, 6 February 1997; as cited by Orrin Judd at brothersjuddblog, 14 August 2004
  • To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.
It should be noted that Krugman was being sarcastic; two weeks later, he wrote an article warning about the dangers of a housing bubble.
  • We’re now in the seventh year of a slump brought on by Wall Street excess; the wizardly job of “allocating the economy’s investment resouces” consisted, we now know, largely of funneling money into a real estate bubble.
  • There is no economic policy. That's really important to say. The general modus operandi of the Bushies is that they don't make policies to deal with problems. They use problems to justify things they wanted to do anyway. So there is no policy to deal with the lack of jobs. There really isn't even a policy to deal with terrorism. It's all about how can we spin what's happening out there to do what we want to do.
    • When asked to define the economic policy of the Bush administration in a BuzzFlash interview, 11 September 2003
  • The raw fact is that every successful example of economic development this past century – every case of a poor nation that worked its way up to a more or less decent, or at least dramatically better, standard of living – has taken place via globalization, that is, by producing for the world market rather than trying for self-sufficiency.
    • The Great Unraveling: Losing Our Way in the New Century, ISBN 0393058506, pp. 368–9; as cited by Edward Fullbrook at logosjournal, Logos 4.1, winter 2005
  • What saved the economy, and the New Deal was the enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.
    • Op-ed, "Franklin Delano Obama," New York Times, November 10, 2008 [1]
  • We’re living in a Dark Age of macroeconomics. Remember, what defined the Dark Ages wasn’t the fact that they were primitive — the Bronze Age was primitive, too. What made the Dark Ages dark was the fact that so much knowledge had been lost, that so much known to the Greeks and Romans had been forgotten by the barbarian kingdoms that followed.
  • I know that when I look at today’s Mexicans and Central Americans, they seem to me fundamentally the same as my grandparents seeking a better life in America. On the other side, however, open immigration can’t coexist with a strong social safety net; if you’re going to assure health care and a decent income to everyone, you can’t make that offer global. So Democrats have mixed feelings about immigration; in fact, it’s an agonizing issue.
  • ... politics determine who has the power, not who has the truth.
    • The Australian Financial Review, 6 September 2010, p.15, "Time for Obama to abandon caution". Also seen in the Sacramento Bee [2]
  • The appeal to the intellectually insecure is also more important than it might seem. Because economics touches so much of life, everyone wants to have an opinion. Yet the kind of economics covered in the textbooks is a technical subject that many people find hard to follow. How reassuring, then, to be told that it is all irrelevant -- that all you really need to know are a few simple ideas! Quite a few supply-siders have created for themselves a wonderful alternative intellectual history in which John Maynard Keynes was a fraud, Paul Samuelson and even Milton Friedman are fools, and the true line of deep economic thought runs from Adam Smith through obscure turn-of-the-century Austrians straight to them.
  • If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. … There was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus.
    • on CNN's "Fareed Zakaria GPS", August 21, 2011. [3]
  • ...and Newt [Gingrich] — although somebody said "he’s a stupid man’s idea of what a smart person sounds like," but he is more plausible than the other guys that they’ve been pushing up.
  • Sometimes economists in official positions give bad advice; sometimes they give very, very bad advice; and sometimes they work at the OECD.
  • I do not think that word “compromise” means what Mr. Ryan thinks it means. Above all, he failed to offer the one thing the White House won’t, can’t bend on: an end to extortion over the debt ceiling. Yet even this ludicrously unbalanced offer was too much for conservative activists, who lambasted Mr. Ryan for basically leaving health reform intact.

    Does this mean that we’re going to hit the debt ceiling? Quite possibly; nobody really knows, but careful observers are giving no better than even odds that any kind of deal will be reached before the money runs out. Beyond that, however, our current state of dysfunction looks like a chronic condition, not a one-time event. Even if the debt ceiling is raised enough to avoid immediate default, even if the government shutdown is somehow brought to an end, it will only be a temporary reprieve. Conservative activists are simply not willing to give up on the idea of ruling through extortion, and the Obama administration has decided, wisely, that it will not give in to extortion.

    So how does this end? How does America become governable again?

  • Things could have been even worse. This week, we managed to avoid driving off a cliff. But we’re still on the road to nowhere.
    • Regarding the last-minute deal that ended the 2013 U.S. government shutdown just before the U.S. defaulted on its debt
    • Paul Krugman (October 18, 2013). "The Damage Done". New York Times. Retrieved on October 18, 2013. 
  • This is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.
    • Of his paper "The Theory of Interstellar Trade"; quoted in The Economist, 26 October 2013, p. 86

Rules of reporting (2003)[edit]

The Great Unraveling: Losing Our Way in the New Century, 2003, Rules of reporting pp. 13-19
  • Do some homework to find out what these people really want. I’m not talking about deeply hidden motives; usually the true goal is in the public domain. You just have to look at what the people said before they were trying to sell it to the broad public.
  • When you are dealing with the revolutionary power, it’s important to realize that it will make whatever argument advances that goal. So, there should be no presumption that the claims makes any sense in their own terms.

Quotes about Krugman[edit]

  • Krugman [...] was not cheerfully advocating a housing bubble, but instead he was glumly saying that the only way he could see to get out of the recession would be for such a bubble to occur.
  • If you grew up in the 80s you probably remember Voltron. Although the show often had convoluted plotlines, it would somehow always end with Voltron (a super-powerful robot formed from five mechanical lions) facing off against a monster called a "Robeast". Voltron had plenty of weapons, but he would invariably strike the killing blow with his "Blazing Sword". Eventually the show became kind of routine, but to a four-year-old, it was pure gold.
    In the econ blogosphere, a similar dynamic has played out over the last few years. Each week a Robeast will show up, bellowing predictions of inflation and/or soaring interest rates. And each week, Paul Krugman...I mean, KrugTron, Defender of the Blogoverse, will strike down the monster with a successful prediction of...low inflation and continued low interest rates. Goldbugs, "Austrians", New Classical economists, and harrumphing conservatives of all stripes have eagerly gone head-to-head with KrugTron in the prediction wars, and have been summarily cloven in twain.
  • Until the emergence of Democrat leader John Kerry, Paul Krugman had virtually become the leader of the opposition in America, an unusual position for an academic economist.

External links[edit]

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