Paul Krugman, dupe of the regime: take 2

[natedogg]

Paul Krugman is these days merely a shill for so-called progressive ideas ie.
classic FDR economics. He actually (I'm not making this up) has called for new
Depression-era-style public works projects which even amateur economists know
failed to help the economy
and probably hurt it until the war got started.

Krugman constantly promulgates his statist paternalism*. He long ago stopped talking economics and focuses primarily
on beating the drums of the loyal opposition. He does a disservice to clear-
thinking individuals on both the right and the left by indulging in
paranoiac ad hominems** rather than reasoned analysis.

For example, he made the intentionally inflammatory and baseless assertion in a
recent appearance on Hardball 12/14/2004
that the USA was a "banana republic".

banana republic
A small country that is economically dependent on a single
export commodity, such as bananas, and is typically governed
by a dictator or the armed forces.

Calling the USA a "banana republic" is the latest
talking point of loyal opposition who (rightly) criticize the deficit.*** But
having a large deficit does not a banana republic make. Paul, to quote
Inigo Montoya,
"I don't think that word means what you think it means".

If Krugman really thinks that the US is a banana republic, I question not only
his ability to analyize economic issues but his grip on reality in general, not
to mention his vocabulary.

But let's not stoop to his level, let's look at one of his more strident
critiques of Social Security reform and analyze the specifics of the ARGUMENT,
not the ARGUER (something he should do more of).

He says SS privatization is no more than shuffling money around without changing
anything fundamental about the finances, while exposing the eventual
beneficiaries to unnecessary risks.

From his 12/27 appearance
on the deplorable "HardBall" show:

WILLIAMS: ... what is wrong with privatization?

KRUGMAN: It doesn`t solve the problem. It`s just three-card monte. It`s
pretending that you can make the problem go away by reshuffling things among
accounts and pretending that, somehow, you are going to create magic and make
money come out of nowhere.

If it's just shuffling money around why oppose the reform? No harm no foul....

... [It is] pretending that we know for sure that stocks will somehow yield
enough money to offset the -- more than offset the couple of trillion dollars
we`ll have to borrow over the next 10 years to make it happen.

Apparently his objection is that private sector growth may not be as strong as
the govt's ability to quash it!

In other words we should increase/maintain SS tax revenues to ensure we can
outlay more in SS than private investments would provide, and this will prove
that private investments are a worse option. That is called circular reasoning.

Furthermore, while most experts agree that Social Security provides
~2% return,
the market has traditionally given about seven percent .

And yelling "risk!" at old people is a low tactic besides being irrelevant to
their current status with SS anyway. Sure there's risk that your private
investments will not do as well as govt's ability to tax and outlay, but it's
not likely,
not at all.

Ask yourself this, if you could transfer all your investments into SS now and
have it be part of your benefit calculation when you retire, would you do it?

Even if the pace of market returns were to drop drasticaly to 2%, SS would most
likely be unable to continue providing a 2% return anyway in that kind of
economy. We'd all be in a world of hurt and likely want our 12.4% back.

He also argues that we risk too much with private investment because there's no
guarantee behind it. Defending Social Security by fingering the alternatives'
lack of guarantees is a brazen excercise in
doublethink and
reveals smug disdain for his audience's intelligence. Mr Krugman, quick, what
is the guarantee backing our social security benefits, pray tell?

Answer and
And another answer.

Krugman appears to have internalized the Depression era distrust of banks,
markets, and private capital. He thinks that the govt can be trusted to
provide you a more solid, reliable return ( and that you should be coerced to
rely on it ) despite the fact that:

1. There is no accountability whatsoever from the govt. At least if
your money is mismanaged by Schwab you can sue or you can call the SEC.
Congress members know they won't be accountable for your missing SS checks in 30
years and they have already played

voodoo economics with your future. "Let's borrow it from
ourselves and then promise to pay it back later once the system becomes
untenable! Sweet, we'll all be out of office by then!". On Wall Street you go
to jail for doing that kind of thing with people's money.


2. There is absolutely
no guarantee whatsoever
about your social security "benefit", (yet Krugman cites as an
argument against private investments the same lack of guarantee! Don't throw
stones.... blah blah)

and last but not least

3. While it's true private investment can shrink during stock market downturns,
govt ability to hand out social security checks goes down when the job market is
down ie. the IMMEDIATE FUTURE where there will be many more retirees and fewer
workers replacing them.

So basically, he argues against private accounts on the paternalist belief that
you should trust your financial future to the govt rather than yourself, and he
justifies this because private investment markets can have downturns while
ignoring the fact the the "market" that drives social security is just as
susceptible to down turns. In fact, the downturn for the social security
"market" is GUARANTEED. We know its coming. There's no avoiding it. The
retiree-to-worker ratio is declining and that won't change.

Unlike private investments which can be diversified to mitigate risk, the social
security benefit is SOLELY tied to payrolls (ostensibly at least). All your
eggs are in one basket with this investment, which is a disaster waiting to
happen as any semi-conscious financial adviser will tell you.

So, according to Krugman's logic, we shouldn't be allowed to risk our money in
diversified private investments that MIGHT go through downturns. Rather we
should be coerced into a wholly monolithic investment in a non-diversified govt
program whose underlying market is GUARANTEED to hit a downturn in the near
future.

His curious use of "logic" leads me to wonder if he has a deal with the SSA
similar to Armstrong Williams' deal with the Dept of
Education. What else can explain his tortured reasoning that could only work on
people who are too stupid to breathe on their own?

Time for a FOIA request I think.....

Come to think of it, those people who are swayed by Krugman's poor logic might
actually benefit from a woefuly inefficient govt retirement program**** considering
how stupid they are, it's probably better than anything they could do for
themselves .... but I still wouldn't force it on them.

natedogg

* Q: what's the difference in result between statist repression and statist
paternalism? A: At least when you have no freedom or rights under paternalism
you know they mean well

** yes, I admit it, that's pretty much what I'm doing here in the first
paragraphs.

*** I join them in that criticism except that I disagree on what the problem
really is. The critics of the deficits feel we should increase tax revenues to
match spending, whereas I feel we should decrease spending to match the
revenues (which should be lower still anyway)

**** Taking everyone's money in order to spend billions of dollars administrating
a program that merely gives the remainder back to them is, at best,
woefully inefficient. I'd go so far as to say it's irresponsible to the level
of being immoral. The chart I linked to shows that this year's SS admin costs
will be 8.5 BILLION dollars. That's right, 8.5 billion just to do the
paperwork to get people their own goddamn money back.