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If I were Paul Krugman, I would immediately offer a profuse apology for the hiatus in blogging. So luxurious is Mr. Krugman's sense of self that he warns his vast herd of gullible lemmings when he knows that his busy schedule will compel him to be away. He advises us to "be patient." We will all have to stagger around in a confused state until he returns to his Conscientious Liberal post, slaps up a couple of graphs, and makes everything clear again.
Although yesterday...yesterday, Mr. Krugman did something rather strange. In commenting at length on a presentation Larry Summers made to the International Monetary Fund, that organ of imperialistic Neoliberalism which used to be very successful in transferring the material resources of the Third World to Wall Street and other Western capitals, Krugman let slip that the American economy is permanently fried. As in:
"So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s."For Mr. Krugman, Ace Economic Reporter for a Great Metropolitan Newspaper, this insight is stunning. He needed Larry Summers, a genuine Big Thinker, to point it all out for him, and then Krugman, of course, had to muddle the picture with his usual jargon and obfuscation - the stuff about "negative interest rates" and, elsewhere in his fumbling analysis of the Summers take, his usual "liquidity trap" ....claptrap. Mr. Krugman lives in constant terror that his readers are going to see just how obvious it is that the American economy is stuck in what Summers calls a permanent "secular stagnation." If people begin to see that, then Mr. Krugman's shamanistic incantations about "Keynesian stimulus" and deficit spending and the rest are going to be seen for the futile, dangerous acts of lunacy which they are. If the American economy isn't going to recover to its robust, humming 1964 essence (which is Mr. Krugman's apparent vision), then Mr. Krugman and the other mainstays on the New York Times Op-Ed pages (the Council of Morons consisting of David Brooks, Bill Keller, Tom Friedman and Mr. Krugman himself) have become completely irrelevant. Worse than irrelevant, because the "globalization" cheerleading of guys like Mr. Krugman and Mr. Friedman have assured America that it now has nothing left to fall back on. Without the housing bubble, for example, the Planning (parties & weddings) & Tanning (one's own skin, not cowhide) Economy cannot reemerge, because the discretionary income to propel it is all gone. American Commoners are just scraping by, saving their money to pay for relentlessly high gasoline and food prices, with only 62% of the working age population actually employed in some kind of job.
You have to work at places like the New York Times and Princeton to miss all of that. If you're an unemployed auto worker living in Detroit, you figured it all out a long time ago, and the wonders of the Flat Earth have been lost on you throughout this "secular stagnation." Indeed, my reaction to Mr. Krugman's epiphany is identical to the young Alvey Singer's to the perennially-worng Ivan Ackerman. Forehead slap!
It is gratifying to see that others are coming around to the truth about Mr. Krugman. For example, in a long piece on Counterpunch, Paul Craig Roberts muses about the possibility that Mr. Krugman might be a "voodoo economist."
"Krugman has a social conscience for which I respect him. I am confident that he would agree with me that economists who lack a social conscience do more harm than good. In my opinion, for what it is worth, Krugman does not understand or realize the way in which jobs offshoring has changed the US economy, the position of US workers and employees, and the efficacy of economic policy.
As I have often explained, when US corporations pursue higher profits at the expense of US labor by offshoring the jobs that produce the goods and services that they sell to Americans, they separate the US labor force from the incomes associated with the production of the goods and services that they consume. Eventually, this destroys the consumer market. According to the Census Bureau, American median family income is 9% less than a dozen years ago. This means that what once was spending power of American consumers is now the paper wealth of the mega-rich.
Keynesian stimulus policy works when the jobs from which people have been laid off still exist. By boosting aggregate demand for goods and services, the stimulus puts people back to work. But if the jobs have been moved offshore and the factories closed, the jobs no longer exist. No stimulus policy can put the unemployed into jobs that no longer exist.
Krugman has not come to terms with this basic fact. Nor have the majority of economists. Economists assumed that new and better jobs would take the place of the offshored ones. However, as I am forever pointing out, there is no sign of these jobs in the employment data.
Most economists believe that jobs offshoring is free trade and that free trade is beneficial, which simply demonstrates their confusion. Jobs offshoring is based on the pursuit of absolute advantage, the antithesis of comparative advantage that is the basis of free trade."
Well, Paul Craig Roberts is maybe new at this game, and there is a tendency at the outset to pull one's punches when dealing with Mr. Krugman, who, after all, is a Liberal and must therefore be a force for good. In time Mr. Roberts will get over this misconception and will not bother with the obeisance and flattery. He will see that the American Commoner is the very least of Mr. Krugman's concerns, and in time Mr. Roberts may even begin to appreciate the effect of the finite nature of Planet Earth's resources, and the unsustainable ecological path we are on, and how this "factor" precludes the "recovery" of any Western economy, now and forever.
One cannot hope for everything at once.