Matt Welch, editor in chief of reason magazine, weighs in on the "scandal" of very well paid government bureaucrats using their computers to look at porn instead of doing their jobs.
He touches on something that doesn't get enough attention, especially from those who seem to think that the recent problems came about because there weren't enough regulations, what he call the two Iron Laws of Regulations:
1. Heavy regulatory schemes inevitably favor, and are favored by, market leaders at the expense of little-guy upstarts who can't afford compliance.
2. Regulators inevitably download porn, either figuratively or literally.
He also addresses the bogus claim* that regulations and regulators were turned off during the Bush administration. Thousands upon thousands of pages were added to the Federal Register and spending on regulation enforcement increased 29% from 2001-2009.
Adding more regulations narrows the playing field and reduces competition. Competition will keep market players more honest than rooms full of government employees raking in six-figure salaries while looking at boobies. The new regulations that will be promulgated will benefit the current big wigs and make it more difficult for small companies and upstarts to challenge them.
But so long as congress gives the impression that it is "doing something" about the problem, and most people don't realize that the something that they're doing is only going to make things less efficient and more expensive and not stop the next recession, it's all good. No?
*In the church of Sean.E.Boy, Veronique de Rugy is a saint.
26 April 2010
25 April 2010
Teaching
I saw a brief interview (below) with Corey Booker, mayor of Newark, NJ. One of his ideas is to pay teachers as "professionals" as opposed to "wage workers". "We should pay them to get a job done. We should pay them for results." The second statement sounds pretty reasonable until you combine it with the stupidity of the first statement. The interviewer says "we know that better teachers in schools run by principals who have more autonomy ("yes") create more effective learning environments ("yes"). Period ("period")."
So it's clear that the interviewer and interviewee are in agreement. And that's super.
"Good teachers, radically pay them more, hold them accountable."
Wait, I think I missed something.
"...So I want to be the best, and as America [sic] I'm willing to make that investment."
Well, I'm glad he is. But does he mean "he" the individual idiot elected mayor of Newark who apparently has the personal wealth to overpay every elementary and secondary teacher? Or does he mean "he," as in America, as in he's perfectly willing to over-spend other people's money?
Then Mayor Booker goes completely off the deep end.
He says he wants "that math professional" coming out of graduate school to consider working as a teacher in Newark as opposed to taking that "$200,000 job with Microsoft."
First of all, Microsoft is an extremely successful, well-run company. And I'm pretty sure they don't offer too many entry-level positions to math PhDs that pay $200,000/year. I could be wrong, but it's just a hunch.
Second, there is a distinct difference between designing algorithms and programs for a major, private software corporation (located in Redmond, WA) and teaching algebra and pre-calculus to teenagers (in Newark, NJ). Actually, there are many differences, but I'll just go with the most obvious. It may not have occurred to Mayor Booker that many, many more people are able to master the skills required to teach elementary or secondary mathematics (or any other subject) rather than develop, write, test and implement programs for Microsoft. There were more people willing and able to do the former even before the job of teaching kids was "professionalized" by the unions which began requiring college degrees. It certainly doesn't take a PhD in mathematics to teach high school kids; it would be completely inappropriate to have a PhD requirement for teaching it; and it certainly doesn't make sense for high schools that are funded solely through the public fisc even to contemplate competing with the private sector in terms of dollars for graduate level talent to perform their respective tasks.
Wages are the price people charge for their labor. Wages (and most other prices) are determined by relative scarcity (& subjective value, but I'm not getting into that here). Labor unions cartelize the labor force to drive wages up (good for them, bad for everybody else). Now, I don't know what teachers are paid in Newark, NJ, but I know enough teachers, public and private, throughout Jersey and Pennsylvania, that I can say the notion that any public school teacher is compensated as anything other than a professional is absurd.
Let's also disregard the fact that our ersatz PhD's employment is subject to very strenuous competition along with the vicissitudes of the market place, whereas public teachers are not. No matter how many private schools pop up, there will always be the public school whose employees wages are determined not by the market but by what the union was able to squeeze out of neighboring districts.
It kind of surprising that a mayor of a fairly large city could say things this obtuse and not be challenged by a reporter, especially a reporter that holds the title "CNN Education Contributor." Then again, maybe it isn't that surprising.
I think the residents of Newark, NJ should be pretty happy that Mayor Booker has no authority as to how school dollars are spent.
I also won't be surprised if Mayor Booker gets endorsed by the New Jersey Education Association if/when he runs for governor.
So it's clear that the interviewer and interviewee are in agreement. And that's super.
"Good teachers, radically pay them more, hold them accountable."
Wait, I think I missed something.
"...So I want to be the best, and as America [sic] I'm willing to make that investment."
Well, I'm glad he is. But does he mean "he" the individual idiot elected mayor of Newark who apparently has the personal wealth to overpay every elementary and secondary teacher? Or does he mean "he," as in America, as in he's perfectly willing to over-spend other people's money?
Then Mayor Booker goes completely off the deep end.
He says he wants "that math professional" coming out of graduate school to consider working as a teacher in Newark as opposed to taking that "$200,000 job with Microsoft."
First of all, Microsoft is an extremely successful, well-run company. And I'm pretty sure they don't offer too many entry-level positions to math PhDs that pay $200,000/year. I could be wrong, but it's just a hunch.
Second, there is a distinct difference between designing algorithms and programs for a major, private software corporation (located in Redmond, WA) and teaching algebra and pre-calculus to teenagers (in Newark, NJ). Actually, there are many differences, but I'll just go with the most obvious. It may not have occurred to Mayor Booker that many, many more people are able to master the skills required to teach elementary or secondary mathematics (or any other subject) rather than develop, write, test and implement programs for Microsoft. There were more people willing and able to do the former even before the job of teaching kids was "professionalized" by the unions which began requiring college degrees. It certainly doesn't take a PhD in mathematics to teach high school kids; it would be completely inappropriate to have a PhD requirement for teaching it; and it certainly doesn't make sense for high schools that are funded solely through the public fisc even to contemplate competing with the private sector in terms of dollars for graduate level talent to perform their respective tasks.
Wages are the price people charge for their labor. Wages (and most other prices) are determined by relative scarcity (& subjective value, but I'm not getting into that here). Labor unions cartelize the labor force to drive wages up (good for them, bad for everybody else). Now, I don't know what teachers are paid in Newark, NJ, but I know enough teachers, public and private, throughout Jersey and Pennsylvania, that I can say the notion that any public school teacher is compensated as anything other than a professional is absurd.
Let's also disregard the fact that our ersatz PhD's employment is subject to very strenuous competition along with the vicissitudes of the market place, whereas public teachers are not. No matter how many private schools pop up, there will always be the public school whose employees wages are determined not by the market but by what the union was able to squeeze out of neighboring districts.
It kind of surprising that a mayor of a fairly large city could say things this obtuse and not be challenged by a reporter, especially a reporter that holds the title "CNN Education Contributor." Then again, maybe it isn't that surprising.
I think the residents of Newark, NJ should be pretty happy that Mayor Booker has no authority as to how school dollars are spent.
I also won't be surprised if Mayor Booker gets endorsed by the New Jersey Education Association if/when he runs for governor.
23 April 2010
On 5 & Leadership
Recently Donovan McNabb was recently traded to the Washington Redskins by the Philadelphia Eagles. I have some interest in this as I am from (& still live in) the Philadelphia area and have been a Redskins fan since I was a little boy (yes, since even before Super Bowl XVII).
McNabb's time in Philly was done. He's the most successful quarterback in the franchise's history, by all significant metrics and he was a model employee. By all accounts, he has been an upright citizen. The move was mostly financial, he was in the last year of his contract. The Eagles' options were either to trade him, re-sign him to a long-term deal with a significant signing bonus or let him play out the final season and he would then leave as an unrestricted free agent.
The third option would have been a disaster as McNabb, head coach Andy Reid and every one else in the organization would have been asked about nothing other than McNabb's status. For the entire year. And after the same question 10,538 times, it may start to become distracting. Also, he does still have some worth, so it behooved the team to try to get something for him.
Re-signing him would have been silly. He's 33 years old. He's had several injury-shortened seasons. They would have had to have structured the contract in such a way that, had they been forced to cut him, the signing bonus, which would have to be significant, would be a serious hit to their salary cap. And the Eagles have been nothing if not savvy about their salary cap. They've also been shrewd about releasing older players before they become a liability.
So trade him they did. They got the Redskins' 2nd round draft pick this year and a third or fourth round pick next year. So the Eagles, who drafted Kevin Kolb in 2007 with an eye on him eventually becoming the starter, parted ways with McNabb.
And the Redskins got him. I've never particularly been a fan of Mr. McNabb. There was always something about him that was a little off-putting. Maybe it's the fact that he thinks he's funny (he isn't); or the fact that he took it personally when a few idiots booed the Eagles for picking McNabb instead of Ricky Waters (yes, back in 1999 this was a matter of debate and consternation); or his habit of stating how things are a team effort when they lose and then slipping in areas that could have been better (oddly, though, rarely the quarterback).
I'm not happy because, as bad as the Redskins have been, the problem wasn't quarterback. Now, I may not like McNabb, but I know he is a better quarterback, right now, than Jason Campbell. Running back has been touchy because Clinton Portis is getting dinged more and more and suffered his first, I think, serious concussion last year. The offensive line was wretched last year. Chris Samuels missed most of last season and retired this off-season. The other tackle spot has been a revolving door since Jon Jansen left (and he was starting to decline rapidly when the 'Skins cut him). Only Center Casey Rabach played his position well. Sean Suisham, their kicker, almost drove me to suicide. Their receivers came up small; the defensive backs played soft (DeAngelo Hall is a locker room cancer and not worth what he can bring on the rare occasions when he wants to); The LBs were about the only unit that played well all season.
The point is, with all of the things that are going poorly on the team (almost everything), the one (slight) glimmer of hope was a young quarterback who was unlucky enough to have had several different coaches (and offensive systems) in his short career. So they give away draft picks to bring in a moderately successful, older QB that will keep Campbell off the field for a few years. And giving away draft picks is something the Redskins have excelled at since Dan Snyder bought the team. In fact, the few things the Redskins have done better than piss away draft picks is sign free agents that don't fit the team, hire and fire coaches on sheer whimsy, and lose football games. They have also, counter-intuitively, made gobs and gobs of money.
Another of the things that struck me about McNabb was/is his constant refrain that he was "the leader" of the team. In my experience, the guy who says he is the leader, isn't. And the guy who is never, ever has to say it. I don't remember ever hearing Joe Montana or John Elway or Brett Favre say he was the leader. I do remember Favre, who I respect but don't necessarily like, saying he was responsible. And there is a tremendous difference. Also, I get the feeling that if, in the huddle, someone could hear a quarterback who is a leader, someone would tell their teammates to be quiet. If he couldn't hear McNabb, I get the feeling that someone would tell McNabb to speak up.
There is a recent political analogue. When George W. Bush said he was the "decider." I don't believe in conspiracy theories or shadow governments or that Dick Cheney secretly ran things. Ok, maybe a little bit on that last one. But the one thing I knew, as soon as Bush said that, that of all the people making decisions down in Washington DC, he wasn't one of them.
McNabb's time in Philly was done. He's the most successful quarterback in the franchise's history, by all significant metrics and he was a model employee. By all accounts, he has been an upright citizen. The move was mostly financial, he was in the last year of his contract. The Eagles' options were either to trade him, re-sign him to a long-term deal with a significant signing bonus or let him play out the final season and he would then leave as an unrestricted free agent.
The third option would have been a disaster as McNabb, head coach Andy Reid and every one else in the organization would have been asked about nothing other than McNabb's status. For the entire year. And after the same question 10,538 times, it may start to become distracting. Also, he does still have some worth, so it behooved the team to try to get something for him.
Re-signing him would have been silly. He's 33 years old. He's had several injury-shortened seasons. They would have had to have structured the contract in such a way that, had they been forced to cut him, the signing bonus, which would have to be significant, would be a serious hit to their salary cap. And the Eagles have been nothing if not savvy about their salary cap. They've also been shrewd about releasing older players before they become a liability.
So trade him they did. They got the Redskins' 2nd round draft pick this year and a third or fourth round pick next year. So the Eagles, who drafted Kevin Kolb in 2007 with an eye on him eventually becoming the starter, parted ways with McNabb.
And the Redskins got him. I've never particularly been a fan of Mr. McNabb. There was always something about him that was a little off-putting. Maybe it's the fact that he thinks he's funny (he isn't); or the fact that he took it personally when a few idiots booed the Eagles for picking McNabb instead of Ricky Waters (yes, back in 1999 this was a matter of debate and consternation); or his habit of stating how things are a team effort when they lose and then slipping in areas that could have been better (oddly, though, rarely the quarterback).
I'm not happy because, as bad as the Redskins have been, the problem wasn't quarterback. Now, I may not like McNabb, but I know he is a better quarterback, right now, than Jason Campbell. Running back has been touchy because Clinton Portis is getting dinged more and more and suffered his first, I think, serious concussion last year. The offensive line was wretched last year. Chris Samuels missed most of last season and retired this off-season. The other tackle spot has been a revolving door since Jon Jansen left (and he was starting to decline rapidly when the 'Skins cut him). Only Center Casey Rabach played his position well. Sean Suisham, their kicker, almost drove me to suicide. Their receivers came up small; the defensive backs played soft (DeAngelo Hall is a locker room cancer and not worth what he can bring on the rare occasions when he wants to); The LBs were about the only unit that played well all season.
The point is, with all of the things that are going poorly on the team (almost everything), the one (slight) glimmer of hope was a young quarterback who was unlucky enough to have had several different coaches (and offensive systems) in his short career. So they give away draft picks to bring in a moderately successful, older QB that will keep Campbell off the field for a few years. And giving away draft picks is something the Redskins have excelled at since Dan Snyder bought the team. In fact, the few things the Redskins have done better than piss away draft picks is sign free agents that don't fit the team, hire and fire coaches on sheer whimsy, and lose football games. They have also, counter-intuitively, made gobs and gobs of money.
Another of the things that struck me about McNabb was/is his constant refrain that he was "the leader" of the team. In my experience, the guy who says he is the leader, isn't. And the guy who is never, ever has to say it. I don't remember ever hearing Joe Montana or John Elway or Brett Favre say he was the leader. I do remember Favre, who I respect but don't necessarily like, saying he was responsible. And there is a tremendous difference. Also, I get the feeling that if, in the huddle, someone could hear a quarterback who is a leader, someone would tell their teammates to be quiet. If he couldn't hear McNabb, I get the feeling that someone would tell McNabb to speak up.
There is a recent political analogue. When George W. Bush said he was the "decider." I don't believe in conspiracy theories or shadow governments or that Dick Cheney secretly ran things. Ok, maybe a little bit on that last one. But the one thing I knew, as soon as Bush said that, that of all the people making decisions down in Washington DC, he wasn't one of them.
22 April 2010
21 April 2010
Why Conservatism is Dying
Ross Douthat issues a challenge, of sorts, to conservative intellectuals to call out conservative politicians and entertainers. Here is the relevant bit:
This whole thing started because a former speechwriter named David Frum was let go by the American Enterprise Institute for, apparently, not being nice to other conservatives (if you're interested, there's loads of stuff about this on the internets; I'm not getting into it here). The point is that this seems pretty sensible stuff.
Well, a fellow named Jim Manzi who has written extensively and well on climate change and how it should be addressed from a right of center approach, took this as a bit of a personal challenge and called out a fellow conservative, a little fella named Mark Levin who has a radio show and who wrote a book called Liberty and Tyranny. In his little book, the little fella spends 30 pages discussing "Enviro-Statism." This amounts to 15% of the entire text, so it is a significant sample. Manzi, who sometimes I agree with and sometimes don't, offers a well-written, well-reasoned critique of Levin's take on issues environmental. What Manzi doesn't do is employ ad hominem attacks or any of the fallacies, logical or otherwise, that Levin uses so often one would think that is what his compensation was based on. (I urge you to read the post).
So, Manzi writes his piece. Guess what happens?
He gets attacked by two colleagues at National Review, here and here. Mind you, neither of the posts address any of the substance of Manzi's post, they just don't like the "Pearl Harbor" job he does on Levin.
I read Levin's book. It sucks. I wouldn't insult my dog's feces by picking it up with a page from it. At it's very best, the book is simply nonsensical. And if someone can't say that a book that sucks sucks simply because it was written by someone with whom you are otherwise ideologically simpatico, then all intellectual honesty and integrity have been surrendered.
National Review has been going down this route for a while and it has just gotten distressingly worse. When the magazine wanted to blast immigration reform in the previous decade, and take pot-shots at John McCain, it featured on it's cover a picture of McCain and Ted Kennedy. Never mentioned was then President Bush's ardent support for the legislation and the active involvement that the administration played in the doomed legislation.
And why do radio yakkers, especially of the conservative bent, take such umbrage at being referred to as "entertainers." That's what they do (for some). They contrbute absolutely nothing of substance to any other endeavor. They attract listeners and sell products, at this they are successful. It is commercial entertainment.
What you don’t hear enough from the pundits and intellectuals, I think, are complaints about this state of affairs. Conservative domestic policy would be in better shape if conservative magazines and conservative columnists were more willing to call out Republican politicians (and, to a lesser extent, conservative entertainers) for offering bromides instead of substance, and for pandering instead of grappling with real policy questions. This is part of why David Frum attracts so much attention, positive and negative: Not because his policy preferences are so far outside the conservative mainstream, but because he’s made it his business to hold various prominent right-wingers and Republicans accountable for being vacuous or inflammatory, instead of just training all his fire on liberals. I don’t always agree with the targets he picks and way he goes about it, but conservatism needs more of that kind of internal criticism, not less. (emphasis added).
This whole thing started because a former speechwriter named David Frum was let go by the American Enterprise Institute for, apparently, not being nice to other conservatives (if you're interested, there's loads of stuff about this on the internets; I'm not getting into it here). The point is that this seems pretty sensible stuff.
Well, a fellow named Jim Manzi who has written extensively and well on climate change and how it should be addressed from a right of center approach, took this as a bit of a personal challenge and called out a fellow conservative, a little fella named Mark Levin who has a radio show and who wrote a book called Liberty and Tyranny. In his little book, the little fella spends 30 pages discussing "Enviro-Statism." This amounts to 15% of the entire text, so it is a significant sample. Manzi, who sometimes I agree with and sometimes don't, offers a well-written, well-reasoned critique of Levin's take on issues environmental. What Manzi doesn't do is employ ad hominem attacks or any of the fallacies, logical or otherwise, that Levin uses so often one would think that is what his compensation was based on. (I urge you to read the post).
So, Manzi writes his piece. Guess what happens?
He gets attacked by two colleagues at National Review, here and here. Mind you, neither of the posts address any of the substance of Manzi's post, they just don't like the "Pearl Harbor" job he does on Levin.
I read Levin's book. It sucks. I wouldn't insult my dog's feces by picking it up with a page from it. At it's very best, the book is simply nonsensical. And if someone can't say that a book that sucks sucks simply because it was written by someone with whom you are otherwise ideologically simpatico, then all intellectual honesty and integrity have been surrendered.
National Review has been going down this route for a while and it has just gotten distressingly worse. When the magazine wanted to blast immigration reform in the previous decade, and take pot-shots at John McCain, it featured on it's cover a picture of McCain and Ted Kennedy. Never mentioned was then President Bush's ardent support for the legislation and the active involvement that the administration played in the doomed legislation.
And why do radio yakkers, especially of the conservative bent, take such umbrage at being referred to as "entertainers." That's what they do (for some). They contrbute absolutely nothing of substance to any other endeavor. They attract listeners and sell products, at this they are successful. It is commercial entertainment.
Prices and Regulators
Great piece in the Wall Street Journal.
Favorite part:
Favorite part:
Nobel laureate Friedrich Hayek described the price system as an information-transmission mechanism. The interplay of producers and consumers establishes prices that reflect relative valuations of goods and services. Subsidies distort prices and lead to misallocation of resources (judged by the preferences of consumers and the opportunity costs of producers). Prices no longer convey true values but distorted ones.But the entire article is a great read.
Hayek's mentor, Ludwig von Mises, predicted in the 1930s that communism would eventually fail because it did not rely on prices to allocate resources. He predicted that the wrong goods would be produced: too many of some, too few of others. He was proven correct.
06 April 2010
Good Job
Sometimes people really surprise you. My hat is off to Congressman Barney Frank of Massachusetts for doing his part to curb the influence of lobbyists.
Well done, Mr. Frank.
Well done, Mr. Frank.
05 April 2010
Bad Policy Advice
Posted in its entirety from mises.org:
Krugman's Intellectual Waterloo
Mises Daily: Monday, June 22, 2009 by J. Grayson Lilburne
Last Monday evening, Lew Rockwell, from a tip by someone named "Travis," posted this damning quote of Paul Krugman's from a 2002 New York Times editorial:
The quote caught on in the blogosphere, to such an extent that Krugman actually responded in his New York Times blog Wednesday morning:
Guys, read it again. It wasn't a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that's just what happened.
So with a deft little two-step, Krugman paints himself as a doctor who gave an excellent diagnostic, and not a disastrous prescription. One of his ditto-heads posted on his blog that saying Krugman advocated or caused the housing bubble was "Like saying Nostradamus caused the rise of European fascism."
The Lone Gunmen
At the same time, with his headline of "And I was on the grassy knoll, too" he paints his critics (especially the Austrians) as conspiracy theorists, akin to the Lone Gunmen (the Kennedy-assassination theorists from the X-Files TV show). Just like with the matter of Jekyll Island and the events leading up to the creation of the Fed, an obvious conclusion from a matter of public record is portrayed by establishment sophistry as unmoored crankiness. And once again, it works: another ditto-head dismissively remarked "no need to reason with those folks."
Even economist Arnold Kling bent over backwards to interpret the column in a benign light:
He 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.
Krugman thanked Kling for his "gracious, sensible explication". I can just imagine Kling running around his office in glee at having been nodded at by a celebrity Nobel Laureate, exclaiming, "He likes me! He likes me!"
Mark Thornton on the Mises blog followed up with a devastating collection of 2001 Krugman quotes clearly documenting his support for inducing a housing bubble. The most damning of this batch is the following from a 2001 interview with Lou Dobbs:
Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. [emphasis added]
How the hell can anyone spin that as a purely academic musing, and not a policy recommendation for artificially inducing housing spending?
Ignoring the other quotes for a moment, and just judging from the 2002 column, did Krugman support pumping up a housing bubble or not? Given that, even in his recent blog defending himself, he explicitly stated his belief that "the only way the Fed could get traction would be if it could inflate a housing bubble," there are only two possibilities:
He did not support inducing a housing bubble, and wanted the Fed to not fight the recession.
He did support inducing a housing bubble.
Anyone even somewhat familiar with Krugman's attitude toward Fed activism should know that proposition #1, that Krugman supported a do-nothing policy, is preposterous. So, especially after bringing back in the quotes gathered by Mark Thornton, the case for proposition #2 is overwhelming.
And what about his strawman protests that he didn't cause the housing bubble, much less the Enron scandal or Kennedy's assassination? The man is willfully missing the point. What is damning about these quotes is not that he necessarily caused anything. What is devastating about them is that they expose the intellectual bankruptcy of his economic principles. Those who look up to him like the second coming of Adam Smith should realize that the neo-Keynesian principles that lead him to advocate aggressive interest-rate cuts and mammoth public spending now, are the very same principles that led him to advocate inducing a housing bubble then. He would himself affirm that his economic principles haven't fundamentally changed since then. So the conclusions and policy prescriptions he infers from them are just as wildly wrong now as they were then.
Me: If he hasn't made a habit, in his polemics at least, of being so fabulously wrong and pig-headed, I would give him the benefit of the doubt as to being misinterpreted. He's a Keynesian on steroids (everything can be fixed by more manipulations); he wrote what he wrote; he's been wrong on so many items and he was wrong on this one as well.
Krugman's Intellectual Waterloo
Mises Daily: Monday, June 22, 2009 by J. Grayson Lilburne
Last Monday evening, Lew Rockwell, from a tip by someone named "Travis," posted this damning quote of Paul Krugman's from a 2002 New York Times editorial:
To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.What's more, by explicitly calling for a new bubble to replace the recently burst one, he anticipated by 6 years the Onion's hilarious "report" that "demand for a new investment bubble began months ago, when the subprime mortgage bubble burst and left the business world without a suitable source of pretend income." Except Krugman was being serious.
Krugman. 2002. Calling for a housing bubble.
The quote caught on in the blogosphere, to such an extent that Krugman actually responded in his New York Times blog Wednesday morning:
Guys, read it again. It wasn't a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that's just what happened.
So with a deft little two-step, Krugman paints himself as a doctor who gave an excellent diagnostic, and not a disastrous prescription. One of his ditto-heads posted on his blog that saying Krugman advocated or caused the housing bubble was "Like saying Nostradamus caused the rise of European fascism."
The Lone Gunmen
At the same time, with his headline of "And I was on the grassy knoll, too" he paints his critics (especially the Austrians) as conspiracy theorists, akin to the Lone Gunmen (the Kennedy-assassination theorists from the X-Files TV show). Just like with the matter of Jekyll Island and the events leading up to the creation of the Fed, an obvious conclusion from a matter of public record is portrayed by establishment sophistry as unmoored crankiness. And once again, it works: another ditto-head dismissively remarked "no need to reason with those folks."
Even economist Arnold Kling bent over backwards to interpret the column in a benign light:
He 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.
Krugman thanked Kling for his "gracious, sensible explication". I can just imagine Kling running around his office in glee at having been nodded at by a celebrity Nobel Laureate, exclaiming, "He likes me! He likes me!"
Mark Thornton on the Mises blog followed up with a devastating collection of 2001 Krugman quotes clearly documenting his support for inducing a housing bubble. The most damning of this batch is the following from a 2001 interview with Lou Dobbs:
Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. [emphasis added]
How the hell can anyone spin that as a purely academic musing, and not a policy recommendation for artificially inducing housing spending?
Ignoring the other quotes for a moment, and just judging from the 2002 column, did Krugman support pumping up a housing bubble or not? Given that, even in his recent blog defending himself, he explicitly stated his belief that "the only way the Fed could get traction would be if it could inflate a housing bubble," there are only two possibilities:
He did not support inducing a housing bubble, and wanted the Fed to not fight the recession.
He did support inducing a housing bubble.
Anyone even somewhat familiar with Krugman's attitude toward Fed activism should know that proposition #1, that Krugman supported a do-nothing policy, is preposterous. So, especially after bringing back in the quotes gathered by Mark Thornton, the case for proposition #2 is overwhelming.
And what about his strawman protests that he didn't cause the housing bubble, much less the Enron scandal or Kennedy's assassination? The man is willfully missing the point. What is damning about these quotes is not that he necessarily caused anything. What is devastating about them is that they expose the intellectual bankruptcy of his economic principles. Those who look up to him like the second coming of Adam Smith should realize that the neo-Keynesian principles that lead him to advocate aggressive interest-rate cuts and mammoth public spending now, are the very same principles that led him to advocate inducing a housing bubble then. He would himself affirm that his economic principles haven't fundamentally changed since then. So the conclusions and policy prescriptions he infers from them are just as wildly wrong now as they were then.
Me: If he hasn't made a habit, in his polemics at least, of being so fabulously wrong and pig-headed, I would give him the benefit of the doubt as to being misinterpreted. He's a Keynesian on steroids (everything can be fixed by more manipulations); he wrote what he wrote; he's been wrong on so many items and he was wrong on this one as well.
02 April 2010
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