There are not many times that I agree with Paul Krugman. In fact, I once dropped an economics class because the required textbook was written by him and I refused to give money to someone who is so vile and arrogant. I can deal with someone who respectfully disagrees with me, but when a columnist complains about greedy corporations and the cost of college, and then his textbook is the most expensive one around, I get irritated. This is why I was surprised that when I read his column “Springtime for Bankers” I found myself agreeing with what he wrote. At least the beginning that is.
Krugman complains that the Wall Street bailouts during the financial crisis in 2008 were misguided and show that Washington believe that “what is good for Wall Street is good for America”. This, of course, is ridiculous. Krugman points out that even after the bailouts, America still suffers high unemployment rates, even if the Dow is hitting record highs. He doesn’t mention this, but I find it ironic that Obama, who decries “trickle down economics” (which is a straw-man, no true conservative economists supports giving money to the rich and hoping it trickles down to the rest of us), uses the stock market’s success to claim he is doing a good job healing America’s economy. Krugman also attacks Tim Geithner for claiming that as Treasury Secretary he did all he could do to save the economy in 2008. Krugman says:
Now Timothy Geithner, who was Treasury secretary for four of those six years, has published a book, “Stress Test,” about his experiences. And basically, he thinks he did a heckuva job.
He’s not unique in his self-approbation. Policy makers in Europe, where employment has barely recovered at all and a number of countries are in fact experiencing Depression-level distress, have even less to boast about. Yet they too are patting themselves on the back.
How can people feel good about track records that are objectively so bad? Partly it’s the normal human tendency to make excuses, to argue that you did the best you could under the circumstances. And Mr. Geithner can indeed blame much though not all of what went wrong on scorched-earth Republican obstructionism.
But there’s also something else going on. In both Europe and America, economic policy has to a large extent been governed by the implicit slogan “Save the bankers, save the world” — that is, restore confidence in the financial system and prosperity will follow. And government actions have indeed restored financial confidence. Unfortunately, we’re still waiting for the promised prosperity.
This is where my agreements with Krugman end.
Basically, Krugman is saying that when people need to admit when they were wrong and not make excuses. This puzzled me considering that Krugman has never found a problem that can’t be blamed on Republicans, supported creating a housing bubble to offset the dot com bubble in the early 2000s (gee, housing bubbles ended up great), and supports the idea of government fiscal stimulus, despite the fact that it has never worked to truly revive and economy despite being tried multiple times. When he is confronted with the fact that he was wrong about predicting the success of Obama’s stimulus, Krugman used the excuse that he and other policy makers underestimated the severity of the crisis and therefore if the stimulus was only bigger it would have worked. To me, this just shows that governments can’t be trusted to intervene in an economy. If politicians and economists don’t even understand the problem, how can they hope to solve it?
If you want to see two of the great economists of the 20th century debate through rapping, click here