US Politics Mega-thread - Page 266

On May 30 2013 13:07 KwarK wrote:
And there's absolutely no middle way or alternative where two guys can go into business together and both make 500k for 42 hour weeks? Because what you've done here is say that entrepreneurship is so incredibly painful for the people involved that only a low tax rate which, after the universal costs of living which everyone has to pay pretty much evenly are deducted, actually leaves them with a higher proportion of their take home income as surplus than people struggling to make rent can compensate them for that misery. Sure, if that were true then to make our economy work we'd need to treat them with soft gloves and work extra hard to make their horrible lives wonderful for the common good. But it's not true. Not even a little. You can tell because in countries which do have high progressive tax rates people still take chances, make investments, start businesses etc.

My heart does not bleed for the plight of the super rich. Nor does the argument that the economy will grind to a halt due to a lack of ambitious economic activity if you punish it too much (when too much is any punishment at all) have any basis in reality.

On May 30 2013 12:52 KwarK wrote:

I'd much rather be a millionaire than not, even if I paid a higher proportion of my income than I do now. If you proposed a plan that would make me one and I thought it'd work I'd absolutely think it was worth my labour and time. I think 99.99999% of people would rather be obscenely wealthy before tax and just extraordinarily wealthy after tax than pay no tax at all on an average income. You'd have to be an anti-tax ideologue not to.

On May 30 2013 13:38 KwarK wrote:
The cost of education compared to other countries with more socialised systems and higher tax rates will leave a huge number of people with extraordinary economic potential simply unable to fulfil it due to losing the birth lottery. Again, sure, only making 210k on the 700k between 300k and a million if taxed at 70% is going to be discouraging. But it probably won't be the factor that stops him starting a business, that'll be because he dropped out of school.

On May 30 2013 08:41 Wegandi wrote:


Yes, I am well aware whenever I read 'mainstream' (Neoclassical or Keynesian) works. How many times must I see that vast destruction, war, and other such activities are economic boons. Lol...

The argument depends on what the overall state of the economy is in. I agree that it is better to have resources (including people) go towards useful things (such as consumer goods) rather than useless things.

However in certain circumstances it can be economically sensible to have people doing useless things rather than doing nothing. I'll try to explain this but it might get a bit long, sorry.

When the economy is weak, meaning when unemployment is high and growth is low, the economy can enter a vicious circle; (private) demand is low because individuals are trying to save money, hence businesses are not running at full production capability and so have little incentive to invest money into production, and they may even fire people because they don't need all their employees. This makes it harder to find jobs and people who have jobs are more worried about losing them, hence they cut down on their spending, decreasing overall demand and so the economy spirals downwards.

So in such a situation (which was the case in the 1930s, and seems to be what is going on now) it falls on the government to get money flowing, to increase demand until the private economy picks up. If monetary policy proves insufficient then it comes down to fiscal policy. Then the government should spend money (even if this means temporarily raising debt) to use the production capabilities that would not be used otherwise. This is the purpose of a stimulus.

Then it would be economically sensible to pay people to build bombs and immediately detonate them instead of doing nothing. It would be even better to spend money on more useful things, which is why a lot of Keynesians want the government to spend money on improving infrastructure (building/repairing/improving bridges is quite topical).

In the 1930s the stimulus was forced by WW2. The government spent money on bombs and tanks etc which gave people jobs and put production capabilities to use.

It's not that those bombs and tanks etc made an immediate improvement to life of an average citizen, but it did boost the economy overall which is good for everyone. Resources shouldn't be taken away from other purposes but if the resources are not being used then using them in a pointless way can be better than doing nothing with them.

In summary, in a weak economy Keynesian economic theory calls on the government to spend money, even if that is on pointless things, although ideally not :p

On May 30 2013 09:04 Wegandi wrote:

I made no such argument, my only argument is the fact that if you make more money by not working, you're not going to seek a job in the first place. Similarly, if unemployment pays you 35,000$, most people will not take a job that makes less than 50-60k since they value their leisure/other time/activities greater than that 25k.

This does add to unemployment problems.

If you could address my argument without strawmanning I would appreciate it. Are you making the argument that paying people to be unemployed, does not cause unemployment?

On May 30 2013 08:38 Wegandi wrote:


Anecdotal experience is a terrible methodology. Economics has many counter-intuitive laws, for instance, Frederic Bastiat's Seen and Unseen (broken window fallacy). Economics demands reason and logic not intuition or anecdotes precisely for this reason.

http://en.wikipedia.org/wiki/Broken_window_fallacy

This is why I always laugh at Krugman because he is such an economic moron (or simply an ideologue with an economics cover).

On May 30 2013 16:10 JonnyBNoHo wrote:
Edit:
And yet higher education in the US remains the best deal in the OECD.

On May 30 2013 16:10 JonnyBNoHo wrote:

That's not really the issue. The issue is either:

Getting already high earners (via labor income) to earn more by working more. Them working more means more economic activity, but it's more work - a tough sell if taxes are very high.

Or, getting wealthy investors (or an entrepreneur) to part with their capital. The higher the taxes the worse the DCF will look, which holds back investment.

Edit:
And yet higher education in the US remains the best deal in the OECD.

On May 30 2013 09:14 aksfjh wrote:
Funny, the state with the highest unemployment benefits (Mass.) has an unemployment rate at least 0.5 pp lower than the national average. Somebody should tell those suckers that their free time is more valuable and they should act more selfishly.

On May 30 2013 16:55 Melliflue wrote:
Wegandi has said a few things that I disagree with, so I'm going to try to deconstruct his/her argument a bit. Some of Wegandi's comments have already been discussed (such as Jormundr's response to the fishing proverb)


You said a similar thing earlier in a PM to me and I replied via PM. Here's what I said

I think it's relevant and you never replied


That's not actually a fact. Work gives people a sense of meaning which has a positive effect. See this paper for example, which looks at the importance of work on psychological health. People want to believe they are doing something useful with their life. It's called "contrafreeloading".

There is also this paper where participants were paid to assemble lego structures, under a diminishing pay scale (i.e. the amount of money they earned went down with each completed structure, although the time taken to assemble one remained the same). If the structures were immediately disassembled in front of them by the examiner (instead of being put in a cupboard or a box) then the people stopped much sooner.

An individual's identity is tied up with their job. Your hypothesis relies on the idea that people are perfectly rational from an economic point of view, and this just isn't true.

Btw, contrafreeloading also exists in animals. See here for example. Or this paper if you want to go down as far as rats.


Earlier when you said Krugman had the credibility of a sociopath I linked a review of how accurate various pundits had been with predictions about the economy, and Krugman was the most accurate. (The link again) Krugman and his Keynesian view seem to be a good model of economics. (Since you consider him an economic moron I presumed this meant you thought his economic theories were bad, but I wanted to point out that they're not. I don't want to make this a discussion about Krugman as an individual, but the theories).

And one request not directed at Wegandi;

I'd like to see some evidence to back up that assertion.

Partisanism

The Economist cites critics of Krugman stating that "his relentless partisanship is getting in the way of his argument". In addition, a website (titled "Lying in Ponds") that tracks partisanship among public intellectuals rated Krugman second in the overall partisan slant of his columns, behind only Ann Coulter.[30] As Richard Posner and economist Mark J. Perry note, the site, which uses careful statistical analysis to make assessments political partisanship, has ranked Paul Krugman the number 1 or number 2 most biased every single year from 2002-2008.[31][32]

The Economist magazine supported the finding, noting the vast majority of Krugman's columns feature attacks on Republicans and almost none criticize Democrats, making him "a sort of ivory-tower folk-hero of the American left—a thinking person's Michael Moore" and that "a glance through his past columns reveals a growing tendency to attribute all the world's ills to George Bush."[30] And speaking on Krugman's recent "prophecy of doom" regarding the 2010 election, the magazine calls it a "baseless partisan freakout".[33]

A study published in the peer-reviewed Econ Journal Watch examined statements from 17 economists from 1981 through 2009, and gauged the consistency of their stances on deficit spending and reduction during Republican and Democratic administrations. According to the study, Krugman was the only economist of the 17 to "significantly" change his stance on the federal budget deficit for partisan reasons.[34]

This finding of inconsistency was supported when The Wall Street Journal (WSJ) showed that Krugman contradicted his own findings in order to criticize Republican policy. When Republican Senator Jon Kyl stated that unemployment relief doesn't create new jobs and in fact is a disincentive for unemployed individuals to seek new work, Krugman called it a "bizarre point of view" and stated that "What Democrats believe is what textbook economics says [...] But that's not how Republicans see it". James Taranto of the WSJ reproduced a passage from a textbook called Macroeconomics which states: "The drawback to [unemployment benefits] is that it reduces a worker's incentive to quickly find a new job." The authors of the textbook are Paul Krugman and his wife.[35] This led John Hinderaker of the conservative Claremont Institute to proclaim: "only the existence of Frank Rich prevents Krugman from being the world’s worst columnist."[36]

In 2008, economist Peter Boettke noted: "[Over the years] Krugman's work devolved from science to ideology and finally to political partisanship" and that Krugman "has used his platform as an economist and as a columnist for the New York Times for his Democratic partisanship purposes."[37]

Author and federal appeals court judge Richard Posner called Krugman "an unabashed Democratic partisan who often goes overboard in his hatred of the Republians." [sic][31]

Economist Donald Boudreaux has stated that Krugman does "a disservice to non-'liberal' scholars as well as to scholarship generally" by asserting that serious thinking is done only by Krugman himself and other liberals.[38]

Liberal journalists also openly point out Krugman's obvious political bias: New York Magazine called Krugman "the leading exponent of a kind of liberal purism" that he is "not altogether comfortable with, but it is [a role] he has sought."[39] Liberal journalist and author Michael Tomasky in The New York Review of Books stated "Many liberals would name Paul Krugman of The New York Times as perhaps the most consistent and courageous—and unapologetic—liberal partisan in American journalism."[40]

Liberal historian Michael Kazin has stated Krugman’s account of the right succumbed to the Marxist flaw of false consciousness: "Unlike what Krugman says, conservatism is not some kind of smoke screen for another agenda."[39]
Contradictions

Krugman has garnered a reputation for contradicting himself on many occasions. When documenting such inconsistencies several writers have made references to such an occurrence being commonplace: "It's not newsworthy when Paul Krugman contradicts himself."[41] "Not that you needed any more evidence that New York Times columnist Paul Krugman is a flip-flopping charlatan..."[42] "This just in: New York Times columnist Paul Krugman is a raging hypocrite. You'll be shocked to find out, I'm sure."[43]

In addition to the instance reported in the WSJ (see above), a single article published in the conservative online magazine The American Thinker documents Krugman making contradictory statements in a wide variety of topics. He is documented as stating that when deficits are high interest rates are low, and when governments run up a deficit, interest rates rise. He argued that higher national debt and spending were bad for people early in their careers, as they would have to pay for it later in life, and nearly twenty-five years later, he argues that the national debt is not a problem, as it never needs to be paid off. Krugman argued it is not the debt that matters, but rather the debt-to-GDP ratio. But in an open letter to Alan Greenspan he asserted, "...you obviously realize that the ratio of debt to G.D.P. is a highly misleading number." He has argued that Social Security is sustainable and unsustainable, opposed government-run health care before supporting government-run health care, and opposed the bailout of Fannie Mae before congratulating the government for the bailout of Fannie Mae.[44]

Krugman has stated labor unions and higher wages cause unemployment, as well as stating labor unions create a stable middle class, and lower wages have a contractionary effect on the economy (which is characterized in part by unemployment). He has argued that governments do not cause recessions and are not responsible for business cycles, but he also blames the Bush administration for the current recession. Krugman claimed that nothing the government has done has had an impact on the economy, and states that government actions are like using a water pistol to shoot an elephant -- but he also claims that "big government" saved the economy. He declared that workers' fears of losing jobs to workers in China and India due to globalization aren't irrational, when he earlier stated that those who blamed the global economy for the loss of jobs were "silly."[44]

Conservative blogger and political commentator Michelle Malkin noted that in April 2011, Krugman assailed entitlement reform advocates, lamenting that "the fervor with which Washington types call for raising eligibility ages is a ‘tell’: it shows how disconnected they are from the way the other half lives (and dies)" and called life expectancy "more and more a class-related issue." But in 1996 he called similar proposals (such as raising the age of eligibility for federal entitlements) "sensible".[42]

In 2007, Krugman berated then-Senator Barack Obama for worrying about the future of Social Security, stating Obama had been misled by "decades of scare-mongering about Social Security’s future from conservative ideologues." Economist and former Chairman of the Council of Economic Advisors Greg Mankiw responded by stating that "Paul's interpretation seems to be based on either a faulty memory or an especially inclusive definition of what constitutes a conservative ideologue", pointing out that not only did Democratic President Bill Clinton voice similar concerns, but that he was under advisement of well-known economist and non-conservative Edward Gramlich, whom Krugman had in the past praised as being particularly prescient.[45] In addition, less than a month prior, Mankiw had previously pointed out Krugman's contradiction on Social Security when he quoted from an interview in which Krugman stated it is "one of the best" federal government programs in terms of funding, and that it's not for certain the program has a problem. However, as Mankiw shows, Krugman himself stated ten years earlier that crisis loomed ahead when the baby boomers would start to retire around year 2010.[46]

In an open letter to The New York Times Donald Boudreaux pointed out that Krugman suggested trade with low-wage countries poses real problems for high-wage America, despite years earlier penning a paper stating that wages are determined by worker productivity.[47]

Columnist Tom Bevan asked in 2009 how Krugman reconciles a call for economic stimulus while at the same time arguing that additional environmental regulations and taxes are needed to avert the "utter catastrophe", outlining that stricter environmental policies such as carbon taxes, capping emissions, and additional regulations come at a cost to the economy.[48]

Economist Robert Murphy has documented so many contradictions made by Krugman that he has coined the term "Krugman Kontradiction" or "Klassic Krugman".[41] [49] [50] [51] [52] [53] [54] [54]
False claims

Columnist Richard Baehr has written several pieces documenting false and contradictory statements by Krugman. In August 2005, Baehr published a series of articles detailing Krugman's continuous misrepresentation of facts surrounding the 2000 Presidential election and votes cast in Florida.[55][56] (A gaffe that was also noted by Michelle Malkin[57][58][59], Donald Luskin[60][61][62][63], Mickey Kaus[64], and Patterico[65][66], among others.) Baehr closed the series stating: "The continuous rise of the internet has enabled critics to hyperlink source material proving Krugman's lack of integrity. Krugman simply could not get away with his lies if he were required to post hyperlinks [...] Why is the New York Times still employing a serial liar in its op ed pages?"[67]

In 2010 Baehr detailed Krugman's August 23 column on extending the Bush tax cuts as being "not merely misleading; it is an outright and deliberate fabrication."[68]

In 2003 Krugman falsely accused conservatives of embracing the lump of labour fallacy, when the paper he cited did not commit the error.[30]

James D. Agresti documented Krugman claiming total government spending had fallen under the Obama administration, then changing his claim to say it had remained flat, both of which were shown to be false according to the data published by the federal Bureau of Economic Analysis.[69] This led economist Robert Murphy to ask: "Is Krugman just lying now?"[70]

Economist Robert Higgs noted that in a telephone news conference Krugman commented the Late-2000s recession "in fact" resembles the Great Depression. Higgs mentions various measures, including the unemployment rate, GDP decline, commercial bank failures, and others, all which empirically contradict Krugman's claim.[71]
Economics

The Economist notes that in addition to his obvious partisanism, "even [Krugman's] economics is sometimes stretched." He used game theory to argue that President Bush was probably encouraging North Korea to become a more dangerous nuclear power. The magazine notes that while "this probably did not convince most game theorists", it still in effect gives lay readers "the illusion that Mr Krugman's perfectly respectable personal political beliefs can somehow be derived empirically from economic theory." Krugman is also said to have embraced the concept of the free lunch—"even though as an economist he should know better."[30]

Economist and former United States Secretary of the Treasury Larry Summers has stated Krugman has a tendency to favor more extreme policy recommendations because "it’s much more interesting than agreement when you’re involved in commenting on rather than making policy."[39]

Krugman's contradictions and alleged poor economic reasoning have led to much attention, particularly in the blogosphere and the economics community. "[Krugman] has made a habit of distortion [...] Several website [sic] have sprung up to deconstruct each Krugman column,and others respond to specific errors, which are routine."[55] Economist Bill Anderson maintains a website dedicated solely to documenting Krugman's errors and inconsistencies, called "Krugman-in-Wonderland".[72] U.S. House Republican candidate Jeff Semon founded a similar website titled "KrugmanIsWrong.com" to document Krugman's inaccuracies.[73]

Calling him a "doctor of (bad) economics", Sheldon Richman has pointed out inconsistencies and conflicting notions in Krugman's prescription for international trade and domestic social safety nets.[74]

In 2002 Bill Anderson documented Krugman's notion that health care is the only industry in which improvements in knowledge and the development and acquisition of capital drive up costs, not reduce them, as laws of economics dictate. Anderson says Krugman's assessment "provides ample proof that one can be called an 'economist,' yet not know much about economics."[75]

Economist and former Chairman of the Council of Economic Advisors Greg Mankiw stated he was left scratching his head when Krugman claimed a Tobin tax on foreign exchange trades is possible because "modern trading is a highly centralized affair", with a majority of transactions settled at a single London-based institution. Mankiw points out that if taxes made transacting in London even slightly more expensive, companies could easily move elsewhere, thus making the tax useless, and Krugman's claim null.[76]

Investor and businessman Jim Rogers said of Krugman "He doesn't know anything about economics. He's an idiot."[77]

On May 30 2013 17:26 Wegandi wrote:


I'll get to your other points later, but I just have to throw this out there:



Krugman is perhaps the most partisan, most sycophantic, ideologue who makes a mockery of the economics profession there is. *Note the bit about unemployment where even he states in his book it disincentivizes employment then goes on to contradict himself just because a GOP'er said the same thing lol*

Proleague is coming up so I'm going to divert my attention there + U/D. I'll probably get back to you tomorrow sometime.

On May 30 2013 16:55 Melliflue wrote:

I'd like to see some evidence to back up that assertion.

On May 30 2013 17:09 KwarK wrote:

I was talking about access to education, something which US higher education with its insane cost is arguably the worst deal in the OECD. Saying "but the education is good" misses the point of everything I've said.

On May 30 2013 18:17 JonnyBNoHo wrote:


Going off of the OECD report on education. (See page 33)

The cost of higher education in the US is high, but the benefits are very, very high. On net it's a fantastic deal.

On May 30 2013 19:20 Melliflue wrote:

Thanks. The table has the UK as more expensive than the US, which is weird.

On May 30 2013 19:20 Melliflue wrote:

Thanks. The table has the UK as more expensive than the US, which is weird. Looking at the data it calculates "private cost" by taking not only fees but also lost earnings. The uni fees in the UK were $28,704 but $71,053 in the US. The lost earnings for people in the UK is twice as much as for people in the US though.

The benefits were calculated by comparing the earnings of university graduates to the earnings of people who had completed secondary education but not university (tertiary). It can't say this increase in earnings is because of university; anybody who could afford $71,053 to attend university was probably going to have higher than average earnings even without attending university :p

If you mean "best deal" in terms of how worthwhile it is for a person to go to university then the highest internal rate of return for men was in Hungary, and for women was in Slovakia...

I think what I've learnt here is do a degree outside the US but then move to the US after finishing

On May 30 2013 18:17 JonnyBNoHo wrote:


Going off of the OECD report on education. (See page 33)

The cost of higher education in the US is high, but the benefits are very, very high. On net it's a fantastic deal.

On May 30 2013 13:07 KwarK wrote:
My heart does not bleed for the plight of the super rich. Nor does the argument that the economy will grind to a halt due to a lack of ambitious economic activity if you punish it too much (when too much is any punishment at all) have any basis in reality.

On May 30 2013 21:13 coverpunch wrote:

I would add to this point that subsidizing higher education is a direct transfer of wealth to the future rich. The irony is that living in a high-tax system where we all agree higher education is a necessary (but not sufficient) condition for future wealth means that you are entrenching wealth even further by allowing the rich to transfer wealth to future generations of wealthy individuals, who the current rich and powerful are likely to ensure are their own children.

EDIT: I will conclude that education is a symptom but not a cause for why the United States is so much more unequal than the rest of the OECD.

On May 30 2013 18:17 JonnyBNoHo wrote:


Going off of the OECD report on education. (See page 33)

The cost of higher education in the US is high, but the benefits are very, very high. On net it's a fantastic deal.

On May 30 2013 21:55 Melliflue wrote:

I'm not sure I understand your argument, but what I think you're saying is that if university is subsidised by the government then the children of wealthy individuals are more likely to be wealthy when they grow up. However, I think the exact opposite is true; if there were no government subsidising at all then only the children of wealthy individuals could afford to go to university and become the 'future rich'. Having subsidised education benefits the children of poor individuals.

NDAA
Torture
IRS scandals
Signature Strike
MCA 2008(Habeus)
Whistleblower prosecutions
AP/Rosen
Rendition
Blackwater/Monsanto
Fast and Furious
Beer summits over bullshit