Reality Trumps Theory – Austerity Is Not Working

Paul Krugman knows his economics. You may know that he is a Nobel Prize winning economist and author, he can also think fast on his feet in a language most of us can understand. This video from the BBC showcases his handle on the subject, even when double teamed. He makes a point about the conflation of the small state idea vs. dealing with the economy. The finance experts on the right first begin talking about economic measures, then seamlessly segue into how the state should be shrunken; Krugman calls that out for the ideology that it is. Ideologies and actual tactics may both be relevant to this debate, but they are not the same conversation. The whole nine minute clip is worth watching, but check out 3:53- 5:50 for the bit about ideology vs. pragmatism.


Paul Krugman on the BBC

Hat tip to Tom Sullivan at Scrutiny Hooligans.

Every business book I’ve read says that you are living in a dream world if you expect to turn a profit from your business in the first year or even  two. Ms. Leadsome, believes young college graduates should be starting businesses, not looking for jobs, so my question is what are those college graduates supposed to eat and shelter themselves with while if their business gets off the ground? Are we now asking those parents of young adults to continue the “upkeep” of their capable and energetic – but very green – offspring, who may be losing money rapidly in a deteriorating economy and undoubtedly thin experience with the dog eat dog market. If the corporations are also growing ever larger via subsidies, why would they not prey on the vulnerability and fumbles of a brand new entrepreneur? In this country it is morally and legally wrong for a corporation to fixate on anything but the bottom line; we are reminded of this regularly with an it-can’t-be-helped kind of shrug. A new business is a fresh new critter, naked to the world, ignorant and vulnerable; it’s kill or be killed. The fact is that most new businesses are killed.

In the capitalist philosophy, the bottom-line-is-all-that-matters philosophy, young businesses are supposed to die. People that can’t make it in the harsh economic environment are supposed to fail – they are drags on society according to that way of thinking. If a person can’t be made to profit someone financially, they are ballast keeping the rest of us down.

Dog eat dog is for the dogs. We are humans. Should we differentiate ourselves from the rest of the animal kingdom? By using our skills, talents and compassion to build society, we can make room for the financially ambitious as well as those nurturers that support, care for, and enliven our communities with those tasks that are not rewarded very well financially…like teachers, environmentalists, artists, caregivers, janitors, gardeners, farmers, counselors, spiritual guides, writers, the elderly – the list is long and could go on.

Once again those in favor of venture or “vulture” capitalism assume that, like them, the rest of the world is focusing on hoarding money; the rest of the world is not. The rest of the world may have lives to live where money is only necessary to stay fed and dry, and our attentions are focused on more important matters (like caring for for humans, planting food, expressing creativity, etc.). There are enough resources to do this, but only if we recognize, relate, and remain human – not dogs, not machines, not widgets, but humans, flesh and blood, fallible, and fantastic.

 

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17 thoughts on “Reality Trumps Theory – Austerity Is Not Working

  1. lokywoky says:

    Paul Krugman is a Nobel Prize winner. He was right about the housing bubble before it happened. He has been right about so many things I cannot begin to count them. People in Europe hang on his every word.

    In this country however, that means he is an elitist snob and he must be ignored. And ignored he is. He is “allowed” to write an op-ed occasionally in the NYT but other than that, he is almost never allowed on the Sunday talk shows and his advice is not asked for. His ideas are not considered and the PTB go on their merry way being wrong as usual since they are the MOTU and they know everything there is to know. NOT.

    A prime example of this is Jamie Dimon. I rest my case.

    • lokywoky says:

      I just read a transcript of remarks given by George Soros a couple of days ago. He is another one who is demonized at every turn by the MOTU on Wall Street and the right wing.

      However, he knows more about economic theory and the total failure that most of it is than all the people who deride him put together.

      Soros was explaining the reasons why the European Union is in danger of coming apart – and that they have a very short window (about 3 months) to save it. Germany is the key so it remains to be seen whether it will work. But he also explained why almost all economic theory fails because it doesn’t take into account the fact that people are involved – and they make decisions based on their own perceptions of what the future will be. The future cannot be quantified. Economics is a social science – it is not a physical science and cannot be quantified and is just a bunch of guesses. Too many economists seem to think that economic theory is a physical science and treat it as such and that is why there is always chaos.

      It makes a whole lot more sense to me than any other explanation I’ve heard so far!

    • Robert Malt says:

      Paul Krugman called for a housing bubble in 2002. He wrote in the NYT, “Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
      http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

  2. Amy Meier says:

    Sorry, but what is PTB and MOTU?

  3. […] seems that this is another case, like birth control, like austerity, like DOMA – in which the Republican establishment says that they are all about American values of […]

  4. Robert Malt says:

    Krugman has been totally discredited. Among his most idiotic assertions:

    1) more debt and deficit spending can solve a problem caused by too much debt and deficit spending;
    2) 9-11 wasn’t all bad because rebuilding the WTC would stimulate the economy;
    3) Japan (despite following his advice and spending to a 230% debt to GDP ratio, and 25 years of stagnation) is following the correct Keynesian policies…and the US should do so as well;
    4) war is good for the economy…we should find a war (or at least build up for one as if we were going to be invaded by space aliens…yes, he really did say that)

    If you are still listening to Krugman, you are a flat-earther.

  5. Robert Malt says:

    If you truly want to understand how economic works, please read Economics in One Lesson, by Henry Hazlitt.

  6. Robert Malt says:

    Krugman has been totally discredited. Among his most idiotic assertions:

    1) more debt and deficit spending can solve a problem caused by too much debt and deficit spending;
    2) 9-11 wasn’t all bad because rebuilding the WTC would stimulate the economy;
    3) Japan (despite following his advice and spending to a 230% debt to GDP ratio, and 25 years of stagnation) is following the correct Keynesian policies…and the US should do so as well;
    4) war is good for the economy…we should find a war (or at least build up for one as if we were going to be invaded by space aliens…yes, he really did say that)

    If you are still listening to Krugman, you are ignoring the facts to satisfy ideology.

    • Amy Meier says:

      I know next time you can use a more descriptive and interesting adjective than “idiotic”. When you use that adjective, it is a gesture toward shutting down conversation. I, for instance, think that Krugman is quite intelligent. Much of the world agrees with me.

  7. Robert Malt says:

    Paul Krugman = Dick Cheney = deficits don’t matter

    • Amy Meier says:

      Krugman most definitely does not resemble Dick Cheney at all. If they agreed on one point, it is an exception to the rest of their personalities and character.

      Krugman only claims expertise in economics.

      • Robert Malt says:

        You are entitled to your own opinion, but not to your own facts. Japan has been following the Krugman/Keynesian path for 25 years, and they are worse off than they were 25 years ago. Keynesianism has failed every objective measure. To believe in Keynesianism is to suspend reason.

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