Favorite recent posts

Here are some interesting recent posts:

David Henderson finds another gem from Krugman:

Finally, it’s nice, although a little late in the game, to see Krugman explicitly say that only “a small piece” of the Bush tax cuts was for high-income people. It’s at about the 7:05 point of this video.

As usual, I eagerly await the creative and amusing explanations from his fans.

And speaking of Mr. Krugman, here he hints at the next transformation; Krugman 3.0 for the 2010s:

I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications.

Just reading that is making me uncomfortable.

Garett Jones on how the GOP continues it’s suicidal death march:

Derek Khanna, the author of the important policy brief on the excesses of copyright law, has been fired by the Republican Study Committee. The brief, which the RSC pulled from their website, is here. From the Examiner:

“The staffer who wrote the memo, an ambitious 24-year-old named Derek Khanna, was fired — even before the RSC had decided on other staffing changes for the upcoming Congress. The copyright memo was a main reason.”

David Brooks wrote about Khanna two weeks ago:

“Rising star Derek Khanna wrote a heralded paper on intellectual property rights for the House Republican Study Committee that was withdrawn by higher-ups in the party, presumably because it differed from the usual lobbyist-driven position.”

Brooks continued:

“Since Nov. 6, the G.O.P. has experienced an epidemic of open-mindedness. The party may evolve quickly. If so, it’ll be powerfully influenced by people with names like Reihan, Ramesh, Yuval and Derek Khanna.”

Looks like the epidemic is being contained.  Whew!

Lars Christensen on how Singapore solved the zero lower bound problem:

So in that sense MAS is a flexible inflation targeter in the same ways as for example the Swedish Riksbank or the Australian Reserve Bank. But contrary to most central banks – including the Icelandic central bank Sedlabanki – which use interest rates to hit the inflation target – MAS instead uses the exchange rate.

I see two very clear advantages to this operational set-up compared to “interest rate targeting”. First, there will never be a problem with a lower zero bound.

Matt Yglesias on the “staggering incompetence” of the ECB:

It gets boring to write this kind of stuff every month or so, but it really is worth taking note of the stunning ineptitude of the European Central Bank. Earlier this week they published new forecasts revising their projections for growth and inflation downward but taking no action on interest rates “because of concerns about the negative signal a cut might send.”

Imagine you’re piloting a ship. You think you’re in good shape. But it turns out you misestimated the currents and now with your revised estimate you see you’re going a bit further north than you’d thought and are probably going to arrive late. Then you decide torefuse to change the heading of the ship because steering would send a bad signal about your likely trajectory. But then you publish the revised estimates anyway. And then leak that you’re refusing to steer because you don’t want to send a negative signal.

It’s bizarre. It’s insane.

And it’s very funny.

Here’s Yglesias on the $1,000,000,000,000 platinum coin:

The administration officials to whom I’ve raised this point generally respond by chuckling. Kevin Drum offers what amounts to an incredulous stare argument that this is undoable, “no way an actual president would ever try anything so obviously childish . . . so wildly contrary to the intent of the law . . . banana republic territory.”

I’ve got news for Kevin Drum.  The Congressional fights over the debt ceiling already put us squarely into banana republic territory.  It’s a question of whether Obama has the guts to fight fire with fire.  FDR did, I say Obama doesn’t.

It’s interesting that Nick Rowe and David Glasner have completely different definitions of Cantillon effects than me, and also completely different from each other.  I look at the “who gets the money” question.  Rowe looks at the impact on fiscal policy.  Glasner looks at the impact on relative prices.  Bill Woolsey has a couple very good posts as well (here and here.)  I pretty much agree with everything in the 4 posts.


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54 Responses to “Favorite recent posts”

  1. Gravatar of Steve Steve
    8. December 2012 at 08:36

    That Krugman post made me want to hurl. I how Krugman would feel about an endowment tax on the wealthiest universities, in order to redistribute to less fortunate schools…

  2. Gravatar of beamish beamish
    8. December 2012 at 08:58

    Just reading that is making me uncomfortable.

    Soon your discomfort will turn to revolutionary fervor.

    More seriously, the spirit behind the post is surely compatible with your support of redistribution on grounds of the diminishing marginal utility of money. Was it intentionally included in a list of favorite recent posts?

  3. Gravatar of Greg Ransom Greg Ransom
    8. December 2012 at 09:08

    Let’s looks at the ‘neutral money’ NGRAM again:

    http://books.google.com/ngrams/graph?content=neutral+money%2CCantillon+Effects&year_start=1900&year_end=2000&corpus=15&smoothing=1&share=

    This whole topic explosed in 1931 when Hayek went through the history of economic thought on the matter in his 1931 Prices and Production, discussing Hume and Cantillon and others.

    The conversation was linked with forced savings.

    The issue of forced savings is *more* involves Bohm-Bawerkian
    Effects.

    Glasner’s who article was about how a conception of Cantillon Effects as a mere effect on relative prices as economist today understand them was a relatively trivial matter, which would not have attracted the interest of Hayek, who set off the modern conversation.

    When Scott says, “Glasner looks at the impact on relative prices” the concept of Bohm-Bawerkian effects is not in his head because the logic of choice between longer production processes with superior output and shorter production processes with inferior output is not part of the thinking of economists today, and Scott has spent years demonstrating that.

    But Glasner’s whole piece was on how Bohm-Bawerkian Effects are the thing of interest in this conversation.

    So Scott is still seeing like an economists who doesn’t recognize the existence of heterogeneous production goods and Bohm-Bawerk Choices.

    Bohm-Bawerk’s insight into the logic of choice: no one will choice a longer production process unless it promises superior output, and the margin on the choice for longer production processes changes in the context of a flow of increase or increasing available investment resources.

    Stick Bohm-Bawerk into your Cantillon Effects.

    Then stick Bohm-Bawerk Effects linked in to the endogeneous creation of purchasing power in the banking and financial system, eg money going in and out of banks as credit, secured with investments in Bohm-Bawerk Effects, and the closely associate growth of shadow money. Lets take a look at the Credit Suisse paper on shadow money again:

    http://faculty.unlv.edu/msullivan/Sweeney%20-%20Money%20supply%20and%20inflation.pdf

    Most of this stuff is in Prices and Production. 1931.

    The book, evidently, is unknown to Scott.

  4. Gravatar of Greg Ransom Greg Ransom
    8. December 2012 at 09:09

    the whole topic *exploded*

    I’m in a rush to get out of the house with the kids.

  5. Gravatar of Steve Steve
    8. December 2012 at 09:15

    I should add that the wealthiest universities are the recipients of one of the biggest tax loopholes on the planet: the ability to invest and compound CAPITAL (at the expense of labor) completely tax free.

  6. Gravatar of Greg Ransom Greg Ransom
    8. December 2012 at 09:18

    If you read Glasner’s piece, Scott, I think it’s been made clear that when you put an uncharitable reading the mechanism of the redistributional effects of government and Federal Reserve policies into Sheldon Richman’s mouth, and you suggested that your invented conception might be “what Austrians thought” we can directly answer, no, this is not what those working on the Hayekian scientific research program are thinking.

  7. Gravatar of Becky Hargrove Becky Hargrove
    8. December 2012 at 09:50

    I was just mulling over that Krugman paragraph before seeing this post. The part that bothers me most – which one hears all the time – is the idea that soon, robots will be able to do most everything and all we’ll need to do is tend to one another getting old. That is so untrue. The work of the mind is everywhere what robots will only augment – especially the constant adjustments and challenges people take on with one another in their daily lives. But first we have to wrap our heads around the fact that – as Tyler Cowen also suggests – it isn’t as easy to fulfill those activities with money as it once was. It seems a slow adaptive process lies ahead, in which a lot of the things that once seemed separate from one another will probably come back together in new ways, especially as education becomes a greater part of our daily lives as well. Perhaps we’ll one day describe the Great Recession in terms of gradual skills use adjustments.

  8. Gravatar of Michael Michael
    8. December 2012 at 10:01

    Does the “platinum coin option” have the potential to unmoor inflation expectations in a way that nothing the Fed has done in the past 30 years has ever done?

  9. Gravatar of Russ Abbott Russ Abbott
    8. December 2012 at 10:05

    In the first video Krugman said that only a small piece of the Bush tax cuts will be eliminated. Presumably he meant that the vast majority of people (985) will keep their tax cuts. Was there every any dispute about that?

    Also, are you arguing that allowing the Bush tax cuts on income over $250,000 to expire is insignificant? We know that’s not the case. It will raise a lot of money. So what’s the point here, that Krugman is ok with retaining the Bush tax cuts for everyone making less than $250,000? Is that news? Why the crowing about this?

  10. Gravatar of Russ Abbott Russ Abbott
    8. December 2012 at 10:06

    Sorry, in the preceding “985″ should have been “98%”.

  11. Gravatar of Russ Abbott Russ Abbott
    8. December 2012 at 10:16

    The quote from Krugman mentioning Marxism was from a blog post this morning: http://goo.gl/iCTYG. His point was that the trend over the past 40 years is that labor has been getting an increasingly smaller share of GDP. That’s a trend that can’t continue forever. It seems to me to be important to point that out and to suggest that we think about it. What is the objection to that?

  12. Gravatar of kebko kebko
    8. December 2012 at 10:20

    The horse has been out of the barn for a long time now. We should have known that mechanizing 98% of ag workers out of jobs wouldn’t end well. Now the streets are lined with urchins who can’t afford the bounty that john deere foists on us year after year. You naifs always use the past to claim Marx was wrong, but he’s always been right in my fever dreams.

  13. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    8. December 2012 at 10:21

    Krugman;

    ‘If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an “opportunity society”, or whatever it is the likes of Paul Ryan etc. are selling this week, won’t do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.’

    Which is pretty obtuse. Shouldn’t the message to workers be, ‘To better your condition, save and invest, rather than consume.’ Or, ‘Start your own businesses, don’t settle for being a wage slave.’

    Aka, join the Opportunity Society.

  14. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    8. December 2012 at 10:29

    ‘It has echoes of old-fashioned Marxism…’

    No kidding, Paul. You’re just noticing?

  15. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    8. December 2012 at 10:35

    Speaking of old-fashioned Marxism, I just happen to be reading this;

    http://www.amazon.com/Bitter-Waters-Life-Stalins-Russia/dp/0813323908/ref=sr_1_5?ie=UTF8&qid=1354991431&sr=8-5&keywords=bitter+waters

    ‘A memoir of life in Stalin’s Soviet Union in the 1930s that tells us more of how the system worked–and how shrewd workers outwitted it–than a dozen monographs. Sentenced in 1927 to ten years in the Gulag for “counter-revolutionary activities,” Andreev-Khomiakov, a staffer at a provincial newspaper and a writer of short stories, was released two years early, in 1935, but forbidden to stay in 41 cities or within 200 kilometers of the Soviet border. He was fortunate enough to land in the forest industry, in charge of planning for one Neposedov, a man of splendid enthusiasms and a manipulative cunning that enabled him to sidestep much of the prescribed constipation of the Soviet system. It was impossible to attain the goals demanded of the system honestly, and Andreev captures the shifts and evasions, the bribery and falsification required actually to do the job, otherwise described by the authorities as “manifesting a healthy initiative.” And he describes, too, the delight of the workers when, Neposedov having obtained appropriate machinery by arcane strategems, they actually could do their work and be paid a fair wage for it. Soon the factory is exceeding its production targets by 30 percent and more. It can’t last, of course, and in 1938 they are notified by the Peoples’ Commissariat of Forestry that it will cease delivering timber. Neposedov tries everything, but it is the end. The whole process has ruined the forests and the lives of those working in the industry, despite, Andreev remarks, “ `all-hands efforts,’ `all-out offensives,’ `mobilizations,’ `mechanization,’ and of course . . . sacrificing millions of people.”

  16. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    8. December 2012 at 10:38

    Regarding the above Kirkus review of ‘Bitter Waters’, Krugman should recognize that those people in Russia faced very high effective marginal tax rates. Sorta what Casey Mulligan is trying to measure in his new book.

  17. Gravatar of W. Peden W. Peden
    8. December 2012 at 11:00

    Patrick,

    I’m fascinated how people managed to actually survive and work out modest ways of enjoying a decent standard of living during the Soviet years, despite the economic system.

  18. Gravatar of W. Peden W. Peden
    8. December 2012 at 11:01

    * Decent in comparison to total destitution.

  19. Gravatar of ssumner ssumner
    8. December 2012 at 11:19

    Thanks Russ, I knew the Krugman fans with their endless creativity wouldn’t let me down. But only one fanciful interpretation? Surely there must be more Krugman fans out there?

  20. Gravatar of beamish beamish
    8. December 2012 at 11:49

    Surely there must be more Krugman fans out there?

    I’m a Krugman fan. I thought that you were, in your way, a Krugman fan.

  21. Gravatar of flow5 flow5
    8. December 2012 at 12:08

    “Most of this stuff is in Prices and Production. 1931″

    You miss the connection. SEE: Commercial Banks and Financial Intermediaries: Fallacies and Policy Implications–A Comment
    Leland J. Pritchard

    Journal of Political Economy
    Vol. 68, No. 5 (Oct., 1960), pp. 518-522
    Published by: The University of Chicago Press

  22. Gravatar of Mike Sax Mike Sax
    8. December 2012 at 12:31

    “Finally, it’s nice, although a little late in the game, to see Krugman explicitly say that only “a small piece” of the Bush tax cuts was for high-income people. It’s at about the 7:05 point of this video.”

    Maybe next Henderson can find another “gem” where Krugman claims otherwise-that they were all for the rich. This phrase “just a small part” I think can be parsed-depends what you think is a small part. But certainly not all the cuts were for the rich.

    What is clear is that the net effect of the Bush tax cuts were highly regressive as an authority no less than Evan Soltas tells us.

    ” “The Bush tax cuts were sharply regressive — that is, people with high incomes benefited far more as a percentage of their income. The expiration of the cuts would be correspondingly progressive, with large increases in the tax burden on high-income and wealthy families and individuals.”

    “If all the tax cuts were allowed to expire, after-tax income of the lowest income quintile will fall 0.5 percent, and the middle-income quintile’s income will decline 2 percent. For the top-income quintile, however, after-tax income will fall by $7,119, or 4.1 percent. And the top 1 percent by income bears the brunt of the change, paying an extra 6.4 percent of income, or $70,746.”

    http://diaryofarepublicanhater.blogspot.com/2012/12/evan-soltas-and-whos-afraid-of-fiscal.

  23. Gravatar of Mike Sax Mike Sax
    8. December 2012 at 12:37

    I guess the punch line is that Krugman needs to take a position and hold to it forever. Anything less is cheating.

  24. Gravatar of Mike Sax Mike Sax
    8. December 2012 at 12:49

    “I’ve got news for Kevin Drum. The Congressional fights over the debt ceiling already put us squarely into banana republic territory. It’s a question of whether Obama has the guts to fight fire with fire. FDR did, I say Obama doesn’t.”

    Certainly agree with that, it is banana republic territory and if some are to be believed the GOP now plans to fight over the debt ceiling every single month.

    As to Obama having the guts, I’m more optimistic on this than most-including most liberals. I think he’s learned a lot over 4 years and what I’ve seen postelection suggests that he does have it now.

    Again, time will tell.

  25. Gravatar of Nick Rowe Nick Rowe
    8. December 2012 at 13:11

    1. Paul Krugman actually faces exactly the same problem Marx faced. How you get a theory in which technical change causes *both* increasing immiserisation of the proletariat *and* a falling rate of profit. How can he reconcile a capital bias in technical change with falling real interest rates (they were falling before the recession)?

    I did a post. http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/capital-biased-technical-change-vs-low-interest-rates.html

    2. Matt Y understates his case. Because if you tell ships you are not going to keep them on course, the ships’ own expectations lead them even further off course.

  26. Gravatar of Daniel Daniel
    8. December 2012 at 13:55

    Scott I remember you posting about a replacement for the IS-LM framework that involved ‘NI’ as a variable. Could someone direct me to this post as I think that is something you should consider hammering at nonstop. It remember it being simple and intuitive and it would pose a direct counterweight to Krugman’s current framework.

  27. Gravatar of ssumner ssumner
    8. December 2012 at 14:04

    Mike Sax. If only a “small piece” of the tax cuts went to the rich, and if the rich got much bigger cuts in percentage terms, then only a really, really, really small piece of income must be earned by the rich. Is that your view?

    You said;

    “I guess the punch line is that Krugman needs to take a position and hold to it forever. Anything less is cheating.”

    That’s a rather stupid claim, is that your belief, or someone else’s?

    beamish, I think he’s brilliant, an extremely talented blogger, and of course I read him. But I’m not a fan. I don’t like his style at all, especially the way he uses statistics, or out of context quotations. Nor do I like the way he assumes the worst about those with whom he disagrees.

    And I particularly detest the zombie-like nature of his fans, the way they keep insisting he’s right no matter how ridiculous the statement turns out to be. Some of the Krugman defenses that have been constructed in my comment sections over the years have been mind-bogglingly preposterous.

  28. Gravatar of ssumner ssumner
    8. December 2012 at 14:06

    Nick, Good points.

    Daniel, I can never find my old posts, but it might have been nominal income or nominal expenditure. That’s what I favor replacing AD with.

  29. Gravatar of Mike Sax Mike Sax
    8. December 2012 at 15:06

    Actually Scott I was quoting from Evan Soltas. It does seem that knocking Krugman for any inconsidetency real or imaigned is a favorite parlor game of certain Right of Center economists.

  30. Gravatar of Mike Sax Mike Sax
    8. December 2012 at 15:10

    I mean “inconsistency” in terms of what he’s said in the past. So if he says something today but someone quotes him 10 or 15 years ago that presumbably be read as different from what he said today then it’s a gotcha moment

    If you change your mind though you will “contradict” what you said in the past.

  31. Gravatar of beamish beamish
    8. December 2012 at 15:40

    Nor do I like the way he assumes the worst about those with whom he disagrees. And I particularly detest the zombie-like nature of his fans, the way they keep insisting he’s right no matter how ridiculous the statement turns out to be.

    I guess your troubles are not my troubles. And I suppose you need to take care to avoid assuming the worst about his fans, on pain of hypocrisy.

    Was there anything ridiculous in the video or the blogpost? On reading Rowe’s post, it seems to me that Krugman’s Marx scholarship isn’t great, but I suspect that wasn’t your point.

  32. Gravatar of Steve Steve
    8. December 2012 at 17:41

    I’m struck by the semantic similarities in the Krugman title “Rise of the Robots” and his oldie but goodie “Ascent of E-Man”. Yes, my friends, Paul is a visionary.

    http://web.mit.edu/krugman/www/eman.html

    “The retreat of business bureaucracy in the face of the market was brought home to me recently when I joined the advisory board at Enron–a company formed in the ’80s by the merger of two pipeline operators. In the old days energy companies tried to be as vertically integrated as possible: to own the hydrocarbons in the ground, the gas pump, and everything in between. And Enron does own gas fields, pipelines, and utilities. But it is not, and does not try to be, vertically integrated: It buys and sells gas both at the wellhead and the destination, leases pipeline (and electrical-transmission) capacity both to and from other companies, buys and sells electricity, and in general acts more like a broker and market maker than a traditional corporation. It’s sort of like the difference between your father’s bank, which took money from its regular depositors and lent it out to its regular customers, and Goldman Sachs. Sure enough, the company’s pride and joy is a room filled with hundreds of casually dressed men and women staring at computer screens and barking into telephones, where cubic feet and megawatts are traded and packaged as if they were financial derivatives. (Instead of CNBC, though, the television screens on the floor show the Weather Channel.) The whole scene looks as if it had been constructed to illustrate the end of the corporation as we knew it.”

  33. Gravatar of Steve Steve
    8. December 2012 at 17:43

    It’s also ironic that the only way Obamacare can work is if health care laborers are replaced by, um, robots!

  34. Gravatar of Steve Steve
    8. December 2012 at 19:41

    Nick Rowe wrote: “How can he reconcile a capital bias in technical change with falling real interest rates (they were falling before the recession)?”

    The problem is that Krugman, um, doesn’t have, um, a model. No model!

  35. Gravatar of Benjamin Cole Benjamin Cole
    8. December 2012 at 22:00

    Day after day, week after week, great blogging from Scott Sumner.

    You know, blogging has really, really raised the bar for columnists of all stripes.

    Time was, a guy could pen one column a week, and suffer little feedback.

    Now, the better bloggers post fresh several times a week, and then trade intellectual punches with ferocious commentators. All to the good—weak ideas eventually get hooted down (although some blogs are echo chambers or pure mudfests).

    No wonder Scott Sumner has (I think) such an influence on the direction of macroeconomic debate.

    Imagine the past, and Sumner trying to get a piece published in a quarterly econ journal, or maybe a friendly magazine.

    Times have changed, and I think for the better.

  36. Gravatar of Bob Murphy Bob Murphy
    8. December 2012 at 22:21

    Just reading that is making me uncomfortable.

    Aww, I can’t stay mad at you Scott when you write stuff like that.

  37. Gravatar of Bob Murphy Bob Murphy
    8. December 2012 at 22:24

    It’s interesting that Nick Rowe and David Glasner have completely different definitions of Cantillon effects than me, and also completely different from each other. I look at the “who gets the money” question. Rowe looks at the impact on fiscal policy. Glasner looks at the impact on relative prices. Bill Woolsey has a couple very good posts as well….I pretty much agree with everything in the 4 posts.

    Wait a second, 6 economists say 6 different things about Cantillon effects, and only *I’m* the idiot? What the hell…?

    Now I’m mad again.

  38. Gravatar of Bob Murphy Bob Murphy
    8. December 2012 at 22:30

    Mike Sax, people aren’t mad at Krugman for changing his mind. The reason we pounce on his “inconsistencies” is that he is such a flaming hypocrite. Lately he’s been saying anybody who isn’t for fiscal stimulus right now is ignorant of Macro 101, and then you see him in 1998/99 saying the idea of a fiscal stimulus rescuing a depressed economy is dubious theoretically and has not a single well-documented historical example, not even the Great Depression.

    So yeah, you’re allowed to change your mind about liking John Lennon more than Paul McCartney. But it’s weird if you say, “Anyone who likes Lennon more is a freaking idiot with no taste in music,” if it turns out you started the John Lennon fan club 14 years ago.

  39. Gravatar of Liberal Roman Liberal Roman
    9. December 2012 at 01:41

    Bob, I would love it one time on one of the Sunday morning shows for someone to stick that Krugman quote in his face and see him dance. Unfortunately, the entirety of conservative movement is in some cave, talking to their own echoes and as Scott notes on a “suicidal death march”.

  40. Gravatar of Kevin Donoghue Kevin Donoghue
    9. December 2012 at 03:46

    So I found a transcript. I’m not especially surprised to find it doesn’t match David Henderson’s account:

    GWEN IFILL: So, let’s just assume for a moment that we do go over the cliff, as you suspect. Where do we land? Where is that balance that both sides are looking for, your best guess?

    PAUL KRUGMAN: Well, I mean, in a way, you could say a balanced outcome is that most of the Bush tax cuts will survive.

    In fact, the fact of the matter is just a piece of them, a small piece, is going to be taken away. There’s a lot of things that the Democrats want, extension of the payroll tax, expanded unemployment benefits, more stimulus in general, that probably won’t happen if we go over the cliff.

    So, it’s not as if we’re talking about a situation in which President Obama gets everything he wants. And I’m not sure. Why is balance — what we want is the least bad outcome for the U.S. economy and the U.S. long-term fiscal outlook that we can get.

    I don’t think that balance is what we’re seeking. What we’re seeking is — is, let’s try not to mess up this situation even more than it already is messed up.

    http://www.pbs.org/newshour/bb/business/july-dec12/krugman_12-04.html

  41. Gravatar of ssumner ssumner
    9. December 2012 at 05:57

    Mike Sax, Where did I “knock” Krugman for changing his mind? He did not “change his mind” about the size of the Bush tax cuts for the rich–he knows exactly how big they were. What he does is change the statistics that he wants to emphasize, to suit his political purpose. Believe me, he knew in 2001 whether only a “small piece” of the tax cuts went to the rich.

    I change my mind all the time, only an idiot would refrain from doing so.

    beamish, You need to lighten up–this post was a joke.

    Bob, You said;

    “So yeah, you’re allowed to change your mind about liking John Lennon more than Paul McCartney. But it’s weird if you say, “Anyone who likes Lennon more is a freaking idiot with no taste in music,” if it turns out you started the John Lennon fan club 14 years ago.”

    That what his fans can’t understand. They can’t see the absurdity has labeling as “stupid” opinions that he himself once held.

    Kevin Ha! You’ve shown that David was exactly right. Krugman says that only “a small piece” of the Bush tax cuts were going to be removed.

  42. Gravatar of Kevin Donoghue Kevin Donoghue
    9. December 2012 at 06:32

    David Henderson: Krugman explicitly [says] that only “a small piece” of the Bush tax cuts was for high-income people.

    Paul Krugman: just a piece of them, a small piece, is going to be taken away.

    Scott Sumner: David was exactly right.

    Stick to economics, Scott. I wouldn’t want to see mathematics graduates writing P+T=F & C-B=P => T=B.

  43. Gravatar of Mike Sax Mike Sax
    9. December 2012 at 06:37

    So youe complaint with Krugman is.that he’s intellectually dishonest to serve gis political agemda? A pretty seeious charge. Do ypu agree Greg Mankiw wasdishonest during the election?

  44. Gravatar of beamish beamish
    9. December 2012 at 07:19

    beamish, You need to lighten up–this post was a joke.

    Dude, I’m the spirit of lightness and indifference.

    I am curious whether you have any thoughts about the robots post, or, better about the follow up from Rowe and his commentators.

  45. Gravatar of ssumner ssumner
    9. December 2012 at 07:38

    Kevin, I have no idea what you are talking about, and I doubt any of the other commenters here do either. Perhaps you live in your own little world of hidden meaning. Why don’t I just quote Krugman, and leave it at that:

    “PAUL KRUGMAN: Well, I mean, in a way, you could say a balanced outcome is that most of the Bush tax cuts will survive.

    In fact, the fact of the matter is just a piece of them, a small piece, is going to be taken away.”

    That small piece is the tax cut for the rich, is it not? Or am I missing something?

    Mike Sax, I’m no mindreader–I usually give people the benefit of the doubt. I more interested in whether you know what the hell Kevin is saying.

  46. Gravatar of ssumner ssumner
    9. December 2012 at 07:44

    beamish, I don’t know, but my hunch is that intellectual capital and intellectual property rights may play some role in this. There are actually two issues; why is the share going to labor compensation falling, and why is it falling at a time real interest rates are so low? The first might be due to globalization or technological progress or immigration–I can’t say for sure. There’s also been a sharp rise in occupational licensing laws, but I doubt that’s the major reason. The second might have something to do with intellectual property rights, and other barriers to entry.

    It’s not my area of expertise.

  47. Gravatar of beamish beamish
    9. December 2012 at 08:35

    Thanks.

  48. Gravatar of Kevin Donoghue Kevin Donoghue
    9. December 2012 at 10:02

    “That small piece is the tax cut for the rich, is it not?”

    No, it’s a small piece of the Bush tax cuts, which Krugman expects will be taken back. That’s “the fact of the matter” as he sees it.

    Henderson interprets this statement about hypothetical future modifications as a statement about a subset of the original Bush tax cuts. It’s an explicit statement, he says. You agree.

    The man who taught me calculus used to throw things at pupils who did things like that.

  49. Gravatar of Kevin Donoghue Kevin Donoghue
    9. December 2012 at 10:13

    Scott to Mike Sax: “I more interested in whether you know what the hell Kevin is saying.”

    I certainly don’t mean to be obscure. If Mike has any difficulty with what I’m saying, then I too would like to know. It may help to read the transcript of the Krugman interview and then look at what David Henderson claims is “explicitly” stated. What implicit assumption is DH making?

    The most charitable assumption I can make is that DH doesn’t really know what that word means. If he tells me a movie involves explicit sex, I will expect to see a glamorous couple exchanging meaningful glances while a steam-engine makes puffing noises in the background. Hitchcock fans will know the sort of thing I mean.

  50. Gravatar of ssumner ssumner
    9. December 2012 at 15:51

    Kevin, I have no idea what you are talking about. He’s clearly referring to the tax cuts for the rich.

  51. Gravatar of Kevin Donoghue Kevin Donoghue
    10. December 2012 at 01:39

    The Bush tax cuts for the rich, in their entirety? That’s not clear to me at all. I’m expressing myself as simply as I can. If you really can’t understand me there’s no more I can do.

  52. Gravatar of Mike Sax Mike Sax
    10. December 2012 at 07:13

    Kevin I have no problem with anything you’ve said. It’s really nothing to debate about. You have a trancript. If anyone disagrees with you’re quotes they can check the trancript.

  53. Gravatar of Kevin Donoghue Kevin Donoghue
    10. December 2012 at 08:25

    Thanks Mike.

  54. Gravatar of Roxy Roxy
    10. December 2012 at 09:23

    Back of envelope, tax cuts for the rich appear to represent about 25% of the Bush tax cuts on a revenue basis. I don’t know if this is “a small piece” or not. Maybe that depends on context, but sorry, it’s hard to see this as a gotcha moment with respect to Krugman.

    Kevin, you have been very clear. Incidentally, the prevailing conventional wisdom in Washington seems to be that the top marginal rate will go from 35% to 37% …

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