June 11, 2010

Schizoid Krugman

Filed under: Corporatism, Mainstream Media — Tags: , — Russ @ 3:43 am


In Paul Krugman’s version of corporate liberalism he stills wants there to be a modicum of deployed fiscal policy, i.e. pseudo-stimulus spending to go along with the Bailout. That’s part of the “neoclassical synthesis” beloved of such pseudo-Keynesians (“bastard Keynesians” as Joan Robinson called them). So he objects to the calls for total assault on the people via “austerity”, at least for right at this moment. So he’s been in a squabble with them. But as we’ll shortly see, it’s purely an arcane squabble among the technicians of kleptocracy over the tempo and mechanisms of destruction, not over the great crime itself.
In a Thursday blog post on the matter, Krugman disagrees with fellow Obama hack Brad DeLong about the motivations of austerity-mongers like the OECD, Raju Rahan, and Jeff Sachs. DeLong seeks to find a reasonable explanation for why they’re advocating something so contrary to all the “models” and all the evidence of history. (Needless to say, neither Krugman nor DeLong have any moral or political objections to austerity, just technical ones.)
Krugman makes an excellent point:

There should be a standard phrase for the construction of anti-straw-men — for attributing to your intellectual opponents sophisticated, reasonable positions they do not in fact hold, ignoring the nonsense they actually espouse.

I concur, we do need a handy term for the anti-straw man, as I’ve had occasion to point out several times over the last few days, for example here, here, and here. This species of Big Lie, that criminal cadres aren’t criminals but rather “misguided” in some way, that we should even have to go in for sophisticated psychoanalytical explanations, is one of the most pernicious lies going.
But wait a minute – what did K himself say just the day before about these same criminals?

What’s going on here? I don’t think you can resort to class-warfare arguments.

What I think is happening is that we’re seeing the deep seductiveness, for many economists (and others), of taking what sounds like a tough-minded position in favor of inflicting pain on the economy — and the people who make up that economy.

Keynes knew all about this. Writing about the peculiar appeal of classical economics even in a world in which it had manifestly failed, he argued

That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue.

Something like that, I believe, is going on here. Calling for austerity and tight money feels courageous, tough-minded, and virtuous; it allows the economist making such calls to take the pose of a Serious Person standing firm against the easy-money guys.

“I don’t think you can resort to class warfare arguments”?
So let’s get this straight. The observed fact is that these professional political cadres are siding with the banks while calling for massive further robberies from the people. So the only reasonable conclusion from the observed fact is that they are aggressively waging class war. But Krugman a priori rules out stating the obvious, and instead confabulates a wild psychoanalytical contraption. Exactly the same thing for which he would shortly criticize DeLong. You can’t “resort” to going with the simple empirical truth, but have to go to lengths of absurdity to obfuscate it? 
Is he practicing to write a novel? Why is he lying and refusing to call class war criminals what they are?
I hope it won’t be seen as “psychoanalysis” on my part if I answer that in the technical dispute among the class warriors I described above, Krugman wants to argue without compromising the overall class war front. So while he’ll dispute the OECD and Sachs on technical grounds, and argue with DeLong about their “rational” motivations, he will not question their morality or integrity. That’s because they all share the same fundamental immorality and lack of integrity. From Thugman’s point of view, they’re all members of the same death squad. So while they may debate the tactics, they must never admit that they are a death squad at all, or accuse one another of being part of a death squad.
This is why Thugman bizarrely says we mustn’t call class war what it is. Because he wants to maintain silence on the fact that he just as much as the OECD and Sachs is waging class war.
Also, I suppose he wants to keep his options open in case he eventually has to agree with them, like if Obama directly orders him to. In that case I suppose he’ll say something like “I was wrong, there was a model after all” or “the situation has changed in a way I didn’t expect, and now it turns out their prescription is right and mine was wrong”. (Here’s a recent precedent for Krugman doing exactly that.)
But this flip-flop would be much harder if he had called it what it is, class war. So he doesn’t. Instead we get the geocentric version of the Big Lie, as I described it in one of my comments linked above:

It reminds me of all the bizarre stellar behavior Ptolemy had to build into his astronomical model once he started from the premise that the earth is stationary at the center of the universe.

Once you let the evidence induce the hypothesis that the sun is at the center, everything becomes much simpler to depict and easier to explain.



  1. It’s sort of a kinder, gentler Wansee Conference.

    Comment by Edwardo — June 11, 2010 @ 7:25 am

  2. Yeah, but only kinder and gentler for as long as they can continue looting that way.

    Comment by Russ — June 11, 2010 @ 9:41 am

  3. Krugman is maddening. It’s like the guy gets so close to getting it right sometimes, and then his bootlicking instincts kick in.

    He’s against the austerity insanity–one of the most notable voices to call it the madness that it is–but for the wrong reasons.


    Comment by jimmy james — June 11, 2010 @ 10:39 am

    • Yes, he doesn’t fight it on visceral anti-mugger grounds, but because it’s not indicated by the “models”.

      Well, that’s how he won the nobble pries. 🙂

      Comment by Russ — June 11, 2010 @ 3:15 pm

  4. Did you know that Joan Robinson was considered too beautiful to be effective as an economics teacher?

    Warren Buffet said somewhere, “there is a class war, and our class is winning.”

    I think your criticsm can be extended to the entire economics profession, excepting only a few institutional economists following in the tradition of Veblen. Keynes, of course, was not a Keynesian. I see him as a gentler Veblen.

    Comment by jake chase — June 11, 2010 @ 10:51 am

    • Last week I bookmarked a page where they have the text of Leisure Class. I guess I’ll have to print it out since everyone keeps recommending it.

      Let me recommend in return Lawrence Goodwyn The Populist Moment, which also keeps being recommeded. I’m about 2/3 through it, and it’s revelatory.

      I’ve never seen a picture of Robinson. I didn’t know she was beautiful.

      Comment by Russ — June 11, 2010 @ 3:19 pm

      • On Veblen, you should read the Theory of Business Enterprise, which explains that the essence of big business is perpetual recapitalization of assets through the leverage of credit. It exposes the predatory character of a credit economy, which is not about producing goods and services but about capturing gains through asset corners. In 100 pages one gets a better business education than the one offered at Harvard.

        Leisure Class is quite amusing but more focused on sociology, pretty much a detour on the road to understanding.

        Comment by jake chase — June 12, 2010 @ 1:12 pm

      • Thanks, I’ll write down that title too.

        Comment by Russ — June 12, 2010 @ 4:22 pm

  5. Help me out here. I don’t read well between the lines. Are you saying we need another trillion+ or- in stimulus? If so, did you read the last bill? Keynes was in favor of public works projects during time of high unemployment and heaven knows, we could use bridges, highways, rail, trolleys, etc. I saw very little of this type of expense in the bill. Are you saying that there is no fat to cut from the budget? Even if Bernanke et al. are correct and now is not the time to cut the deficit (he suggests 3-5 years) because of slow recovery, does that mean that any and all goverment spending is a good thing and any cutting is a bad thing?
    My perception is that the middle class is dead in this country and being squeezed from top and bottom. I am sick of hearing how teachers will lose their jobs if budgets are cut, ignoring the fact that school administrations have grown at rates 4 times the rate of growth of student populations. This is a form of extortion. Cuts are being made to reduce the hours of assistance received by homebound people who suffer from cerebral palsy and other life limiting health problems. Cut the amount needed to preserve services to these poor souls from the HHS/ Washington administration budget.
    All spending is not equal in my mind.

    Comment by Jessica — June 11, 2010 @ 11:30 am

    • I’ve consistently said that this system is a kleptocracy and that anything it does, no matter how rational or beneficial it could be in theory, would be a scam meant to loot on behalf of the corporations and the rich.

      That includes a stimulus, as we saw last year when the “stimulus” went to reactionary crap like Cash for Clunkers and yet another homebuyers tax credit. Just propping up the zombie. Any further stimulus, like Krugman wants, would be more of the same.

      Comment by Russ — June 11, 2010 @ 3:13 pm

    • Cutting into the circle is not easy. We no longer have an economy organized to provide essential goods and services on the one hand, and employment for all able and willing to work on the other. Rather, our so called economy churns out trashy goods, phony services, while extracting rents pocketed by well connected corporate oligopolies and looted by their executives.

      Education is a prime example of a phony service. One no longer acquires in college the education my parents received in high school. The legal education I got at a cost of $9,000 in 1964-67 now costs $150,000 and leads nowhere unless the recipient becomes a tool of the predators or a freelance shyster scamming the medical industry.

      There is no conceivable solution to what amounts to a wholesale moral collapse of what America was organized to become. In a society characterized by rampant ignorance and virtual illiteracy, democracy is the worst imaginable form of government, which is why the rulers are so determined to perpetuate it. As Emma Goldman told us, if elections changed anything they would stop holding them.

      Comment by jake chase — June 12, 2010 @ 1:28 pm

      • That sums it up well. That’s the corporate oligopoly and the soft fascism of pseudo-democracy all right. I don’t hear the word “election” without thinking back with sarcastic disgust to the lie from school: “In the Soviet Union they have elections, but there’s only one party to vote for, so it’s not a real election like ours!”

        Yeah, that’s how it is. Not like a one-party system at all. In Sheldon Wolin’s theory of “inverted totalitarianism” he explains why under neoliberalism it’s preferable to have the “two” parties. Much easier to astroturf the sheep that way.

        Goldman pegs it, as always. (There’s another book I’ve been meaning to reread – I read Living My Life for a college course but haven’t revisited it since.)

        Since you brought up how “higher education” has become primarily a rentier racket by now, I might as well chuck in this link I was saving but probably won’t end up using:


        Good take on “subprime” college loan rentiers.

        Comment by Russ — June 12, 2010 @ 4:31 pm

  6. I think Krugman will have the vapors when he sees the the latest retail numbers. The Wall Street ponzi scheme collapses without perpetual growth yet consumers have thrown in the towel. What do you do when the peasants just won’t spend?

    Things are so terrifyingly bad on Main Street that even Wal-Mart, lowest of the barrel-bottom scraping low, is struggling to post numbers. It must be truly frustrating for the banksters and their pets on the Hill. It goes against the grain to give Joe 6P so much as a bent nickel, but one can’t squeeze blood from a stone. I expect Obama will start bleating ineffectually about jobs again. Of course he won’t actually do anything about them (that’s not in the plan). Why, just last fall the prospect of a doubled unemployment rate for years led everybody to enormous yawns. The only legislation Congress passes exists solely to bribe Americans to take on more debt, like Cash for Clunkers and the $8000 “buy a house” genius scheme. We still get white welfare/pacification like 99 weeks of unemployment, but only if you were lucky enough to be fired from one of the increasingly rare permanent positions, and only if your former employer doesn’t bother to fight you for your bent nickel when you file your claim.

    I suppose the final question is, can presidential exhortations (it’s your patriotic duty to shop) and the psychological sledgehammer of TV advertising convince Americans to go in hock another odd trillion? Thanks to the latest madness in Europe the world economy will collapse unless they do.

    Comment by reslez — June 12, 2010 @ 2:49 am

    • Thanks reslez, you sum up the situation well.

      They’re already psychologically giving up on those masses of Chinese consumers who were going to save the system, so now they’re reduced to trying to artificially restimulate their lost faith in the American consumer.

      But that’s gone forever, and they know it.

      Comment by Russ — June 12, 2010 @ 4:30 am

    • From the standpoint of the ruling class, twenty-five percent unemployment still leaves seventy-five percent of the monkeys on the debt treadmill, providing plenty of loot for the oligopolists, the executives and the politicians. What they will do is continually revise the numbers to define the unemployed out of existence. They have been doing this in the inner cities for thirty years. Unemployment there would be eighty percent were it not for illegal drugs. Perhaps the unemployed suburbanites will develop their own underground economy, even criminal gangs?

      Comment by jake chase — June 12, 2010 @ 1:34 pm

      • Peak Oiler Dimitri Orlov think the most likely emergence will be a nexus of “true” organized crime with ex-military and ex-police, together forming the new protection gangs.

        Their business will be to sell “protection” and prey on those who don’t buy it from them.

        (Just like Robert Nozick said is the way things should always be.)

        Orlov said that phenomenon was rampant for years in the post-collapse ex-USSR.

        I’d of course prefer colonial-style community militias (also to deal with such thugs), if they could be organized.

        Comment by Russ — June 12, 2010 @ 4:36 pm

  7. […]   [Just to be clear, lest there seem to be an inconsistency between my point of view here and in my prior post, in that post I was discussing the criminal actions of kleptocracy and the lies which would try […]

    Pingback by Walls (European Union, Kleptocracy, Relocalization) « Volatility — June 12, 2010 @ 4:25 am

    • Interestingly, we already suffer small time white collar organized crime: bucket shops, business opportunity rackets, gym memberships, vitamin rip offs, magazine subscriptions, etc. In California they have Vietnamese home invasion gangs. Haven’t heard much about them lately. If life insurance becomes a marketable product, expect buyers to employ hired assassins. Years ago I bought a NYC coop apartment only because not buying would have left a stranger with a financial interest in my demise. How many people are actually employed in a business which is not a racket? Fewer than you think.

      Comment by jake chase — June 13, 2010 @ 11:52 am

      • Well, I think it’s pretty low by now. The whole society is turning into a den of thieves.

        The philosopher’s stone of morality which I’d love to find would be that which gives the key to getting people to have a gangster mentality “upward”, toward big business and government, but not among themselves.

        But we know the reality’s likely to be the opposite.

        The life insurance thing reminds me of this great idea:


        Comment by Russ — June 13, 2010 @ 4:30 pm

  8. As I sat down to read the comments here, my phone rang. It was U.S. Bank offering me zero interest for a year on a credit card. How serendipitous! I told him to quit calling here. I hate pests like that. They hold our home mortgage, so I guess they felt like it was time to offer us a credit card – even though they’ve held our mortgage for years now. Then I come back and read reslez’ comment and see just how prescient the comment is.

    Comment by Bloodgroove — June 12, 2010 @ 9:20 am

    • Ha, that’s a good one. I don’t get as many mail solicitations as I used to, but once in a while.

      Comment by Russ — June 12, 2010 @ 12:13 pm

  9. […] […]

    Pingback by Krugman Watch June 28 (Sarajevo Day) « Volatility — June 28, 2010 @ 6:27 am

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