On Krugmanism: The opposite of unwisdom isn’t always wisdom

Owen Gray at Northern Reflections and The Moderate Voice takes a cue from Paul Krugman, whom, Gray concludes, “has a right to be pessimistic.”

The powerful elites on both sides of the Atlantic suffer from group think. And, instead of proving the truth of the old adage, “great minds think alike,” they offer a vivid illustration of the flip side of that coin: fools never differ.

Like Gray and many others, I’ve been reading Krugman’s commentary on our “Lesser Depression” for quite some time.  Yet I still wonder about questions that Krugman never, or at best only peripherally, confronts: Why precisely is it that our political culture is not capable of accepting the neo-Keynesian free lunch that he wants on the menu? If we ordered it, what would the impact be globally, with what feedback possibly limiting its effectiveness? What would its actual implementation further require in terms of decision-making – real choices about recipients of all the artificially created “demand,” real winners and losers?

Justly and effectively implementing massive fiscal and monetary expansion of the sort Krugman favors (he uses precisely those words) would be impossible without a level of express social democratic intent and control that is currently beyond the imagination, traditions, and ideals of American and even European political culture. The frequent invocation of the error of 1937 – or, to cite the title of a recent Krugman blog post,  1937! 1937! 1937! – emphasizes this fact:  Even our greatest peacetime statist, FDR, sought to return to the other free lunch tradition – laissez-faire – as soon as possible, prematurely in the view of Krugman and other economic historians.  In this one respect, regarding the implicit further-leftism in practice of Keynes and one-step-beyond Keynes, the suspicions on the hard right are correct, and the failure to confront those suspicions directly and openly, in order to overcome them, may tell us what we really need to know about why Krugmanism is merely a stance among political intellectuals rather than a live policy option:  It’s the political love that, for now, dare not speak its name.

What Krugman and his supporters are calling for is always and inevitably a supremely political and cultural project as much as it is an economic one – assuming that it’s realizable enough to be called a “project” at all. Otherwise, massive stimulus or expansion is and can only be a massive stimulus and expansion of this – this very same whole thing, this state of affairs, this political system and the culture it upholds and, through complex and interlocking habits, assumptions, and real transactions, re-produces. Integral to those habits, assumptions, and real transactions are the ones that allow for and require the very disproportions and inequities that infuriate Krugman and those who have adopted his criticism uncritically. In that sense, and even setting aside the fact that under present circumstances the Krugman option is pure counter-factual fantasy (something Krugman also frequently acknowledges), it suggests a proposal to push really hard for some limited period on the biggest string of all.

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17 comments on “On Krugmanism: The opposite of unwisdom isn’t always wisdom

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  1. It’s an old finance cliche – used to be very common esp. in comments on Federal Reserve interest rate policy whenever rates got too low, back in the pre-econopalypse days.

  2. Not just the size but the structure of the stimulus, and the uses applied with the TARP, which ‘unexpectedly’ were not employed toward the designated targets. One has to struggle to find any real
    infrastructure development in the first stimulus,

  3. @ miguel cervantes:
    Actually, one didn’t have to struggle very much to find infrastructure work in ARRA – at least not in my neighborhood, but, though you and I may disagree about very, very much, we agree that the structure or distribution of “demand replacement” is an important consideration. That’s my point. A massive expansion of the sort Krugman is constantly arguing for will sooner or later have to be expansion of a certain type. It may not have to be full-blown industrial planning, but it’s not as simple as plugging in new numbers in pre-existing equations, especially if there’s going to be any effort to stimulate our economy, or certain sectors of it, more than lots of other people’s economies.

  4. More people expecting a greater number of goods and services that in 1937 were not expected, not widely available and, in some cases, not yet imagined has led to the “of this”.

    Expansion has been a part of this country and a large part of the “of this”.

    Massive stimulus may not be any more transformative than significant long-term contraction.

    I do know that when I undergo massive stimulation, I feel transformed…but I’ve found that it’s not a permanent change.

  5. Then again, the Japanese example of the MITI induced bubble, (which Fallows might have noticed, then again neither did Von Wolferen). if we’re lucky it’s just the70s, but more like the 90s, the 1890s.

  6. For some reason I was thinking your next post after the last video post would help define the direction of this blog. This one, while fine and everything, and interesting to Fuster and Miggs, confounded my thinking. Again, nothing wrong with it, and it was probably my problem for putting any weight on any particular post. I will anticipate that you (CK) don’t let this make you feel defensive. I just thought a William Saffire furthering, or a new movie connected video play within a play, or blog poetry direction defining moment was presenting itself.

  7. Well the current events suggest nothing less than Python’s ‘Upper Class Twit of the year’ ‘The How to Do it’ sketch, and other selections
    from the ouevre, Scott, you weren’t a writer on the VR series, because
    alternative realities is another template to consider. I imagine there is another world in the multiverse, wher Obama know what he is talking about, and Krugman is too,

  8. @ Scott Miller:
    I was going to leave a comment at one of the blogs linked at the top, but changed my mind and wrote it up as a small post instead.

    Wish I were a little more confident about the right way forward with the stuff I’m “really” working on – when sharing it is a good idea, and how much attention and effort I should be devoting to the sharing.

  9. But I’ll just add that my theory and my experience have always been that events in the external world as I internalize them and events in my internal world as I externalize them have always sooner or later been interpretable as translations of each other.

  10. @ CK MacLeod:

    Wish I were a little more confident about the right way forward with the stuff I’m “really” working on – when sharing it is a good idea, and how much attention and effort I should be devoting to the sharing.

    Nesting confusions.

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Noted & Quoted

TV pundits and op-ed writers of every major newspaper epitomize how the Democratic establishment has already reached a consensus: the 2020 nominee must be a centrist, a Joe Biden, Cory Booker or Kamala Harris–type, preferably. They say that Joe Biden should "run because [his] populist image fits the Democrats’ most successful political strategy of the past generation" (David Leonhardt, New York Times), and though Biden "would be far from an ideal president," he "looks most like the person who could beat Trump" (David Ignatius, Washington Post). Likewise, the same elite pundit class is working overtime to torpedo left-Democratic candidates like Sanders.

For someone who was not acquainted with Piketty's paper, the argument for a centrist Democrat might sound compelling. If the country has tilted to the right, should we elect a candidate closer to the middle than the fringe? If the electorate resembles a left-to-right line, and each voter has a bracketed range of acceptability in which they vote, this would make perfect sense. The only problem is that it doesn't work like that, as Piketty shows.

The reason is that nominating centrist Democrats who don't speak to class issues will result in a great swathe of voters simply not voting. Conversely, right-wing candidates who speak to class issues, but who do so by harnessing a false consciousness — i.e. blaming immigrants and minorities for capitalism's ills, rather than capitalists — will win those same voters who would have voted for a more class-conscious left candidate. Piketty calls this a "bifurcated" voting situation, meaning many voters will connect either with far-right xenophobic nationalists or left-egalitarian internationalists, but perhaps nothing in-between.

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