August 10, 2013

Saturday Morning Essay: Mr. Krugman's Science and the Restoration of the Chazzer Economy

From Yiddish חזיר (khazer), from Hebrew חזיר (hazír).


chazzer (plural chazzers)
  1. (slang) pig

I read Paul Krugman's columns and blogs on a regular basis.  They are dull and often insufferable stuff, of course, but I find them a needed distraction from reality.  While Mr. Krugman fancies himself a pessimist (often lamenting in print that he finds it necessary to be that way), I actually think his outlook is remarkably, even outrageously, sunny. I often have a feeling, reading his dissociative takes on America's economic malaise, similar to the weird sensation I would get reading the Dick & Jane primers of so many years ago.  Here were these generic people, living generic lives in a generic house, saying generic things with no reference to a broader world, with no problems or emotional messiness.  Dwelling too long in the pages of Dick & Jane could produce a slight psychosis, in fact.

To you it may be 2013, the CO2 count in the atmosphere may be 400 parts per million, the Arctic sea ice may disappear altogether during the summer months in the next couple of years, the Earth's population of 7 billion may be straining the outer limits of Earth's ability to feed and sustain such a massive horde of humanity; but to Mr. Krugman it is always 1964, America is in its unchallenged suzerainty, and this latest cyclical downturn is simply another setback of the kind you expect in an advanced industrial economy.  The last four, or five, or six, or whatever number of years it's been since we headed south this time, is a "normal aftermath" of whatever.  There's no mystery and it's nothing out of the ordinary.  It's not worth worrying about, really, except to the extent we have been foolish enough not to follow Mr. Krugman's nostrums.  Mr. Krugman said so again yesterday:

The truth is that we understand perfectly well why recovery has been slow, and confidence has nothing to do with it. What we’re looking at, instead, is the normal aftermath of a debt-fueled asset bubble; the sluggish U.S. recovery since 2009 is more or less in line with many historical examples, running all the way back to the Panic of 1893. Furthermore, the recovery has been hobbled by spending cuts — cuts that were motivated by what we now know was completely wrongheaded deficit panic.

What we have here is a failure to demand enough.  That's because my spending is your income and vice versa.  And the economy is not a morality play.  And those who predicted inflation, even hyperinflation, were wrong, wrong, wrong.  There - I've saved you the trouble of reading a couple of hundred blog posts.

Mr. Krugman wants to restore the chazzer economy, the American dynamic system whereby we powered our way to the top by buying stuff.  A primarily service and information economy, fueled to the 70% level by the American propensity to spend today and worry about tomorrow some other time.  Unemployment is not "structural" - there is no mismatch between the job openings and the available skills among the American working force.  Everyone could work (95% at least, you don't want more than that) if we would jump start the economy through government spending, that is, Keynesian stimulus.

Then there are those who insist that restoring the chazzer economy will lead to the near-term extinction of the human race.  Mr. Krugman does not deal with this issue; I think it is an "externality" in his economic modeling, and an exceedingly messy one.  Those who advance this dire view have not won Nobel prizes from a Swedish bank (and thus may not own, as Mr. Krugman does, a condo in St. Croix, an apartment in Manhattan and a house in Princeton, New Jersey), but they point out that the lag time between the emission of CO2 from an industrial economy and its temperature-raising effects is about 30 years, so that we are currently experiencing the climate effects of emissions of 1983.  Thus, restoring the chazzer economy is not really an option; we have to move entirely in the other direction toward localization, efficiency, alternative energy and an emphasis on material simplicity.

All of these elements are also externalities in Mr. Krugman's classical economics.  Our Man Krugman, in other words, is the apotheosis of the American liberal: in favor of environmentalism, in favor of doing anything possible to save us from ecological collapse, provided it does not entail changing anything about how we live.

Another New Yorker, Joshua Headley of Deep Green Resistance, sees less relevance in the Panic of 1893 and more in the current state of the biosphere:

We are in uncharted territory – we are facing challenges never before experienced in the history of the human species. This presents a grave problem: if the best science we have today cannot accurately offer any model predictions for the path that we are currently on, how can we effectively plan for the future?  The honest truth: we can’t. We cannot effectively plan for a future that is beyond all known human experience. The best that we can do now is stop exacerbating the problem – stop contributing to the rapidly accelerating decline and destruction of the Earth’s biosphere and ecosystems.
Quite literally: we have to completely dismantle the industrial economy, we have to do it soon, and really, we should have done it yesterday.
The problem that such doomsaying presents to Mr. Krugman is understandable.  He prefers the view that we should definitely get CO2 emissions under control by, say, mid-century, so that sea level rise in 2100 is not catastrophic.  This is a nice, comfortable viewpoint and timeline.  It sounds responsible, and it has the added advantage of not disrupting Mr. Krugman's carefully constructed standing in the economics profession or making everything he writes not only irrelevant, but alarmingly destructive.  What about the condo, the Manhattan apartment, the leafy neighborhood in New Jersey, the travel to all the conferences?  The dilemma is, as Mr. Headley notes, and as all the real climate scientists affirm,  that the trend lines in climate disruption keep overtaking our projections.  We don't know what's going to happen when, but the tendencies seem to result in errors on the downside.  So the American liberal, of which cohort Mr. Krugman is only a vociferous and salient example, chooses scenarios more or less at random, but with an eye toward preserving his own status quo.  Because it's all so damn nice.  

However you look at it, you could call this a stark divergence of views: restore the free-spending chazzer economy and let America lead the way to a new orgy of consumption and energy expenditure, come what may; or dismantle the industrial economy, right now, and never look back.  How comforting were those Dick & Jane pages of long ago.

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