Response to: Was Greed Good?
Krugman’s self-righteous confidence delivering such intellectually bankrupt propaganda is really inspiring. No doubt inspiring many people to join Al Qaeda.
Krugman uses a few graphs to prove that greed is bad, and the root cause of A) slower productivity; B) rising trade deficits; and C) income inequality. Got that? He feels he can prove that sufficiently enough with 3 graphs to warrant publication.
This is a text-book example of disregarding cause-and-effect in favor of using conjecture to spread propaganda. This blog by Krugman is academically corrupt and empirically meaningless - which is, ya know, his, er, “typical writing style.”
I’m going to reprint his post - in its entirety - then reply with some instruction on reality using his exact same graphs. But, first, you must suffer through this:
As the debate moves – appropriately! – to a discussion of Romney’s career at Bain, one thing I’ve noticed is that everyone on the right, and a fair number of people who should know better, basically believes that Gordon Gekko was right. Before the Gekkos came along, they assert, American business was sluggish, unproductive, and uncompetitive. Then came the LBOs and all that, and our economic energy was unleashed.
As I said, everyone on the right knows that this happened. Needless to say, none of it is at all true.
Let’s look at how trends changed after 1980 or so, when the underlying rules of American business (and politics) shifted. Start with productivity – I use a log scale, so that the slope of the trend represents the rate of growth. See the big acceleration? Neither do I – productivity growth has actually been slower since the rise of Bain-type operators.
Ah, but competitiveness – we began selling competitively on world markets instead of running big trade deficits, right? Well, no.
So did anything change? Why, yes: income distribution became radically more unequal.
And that, I think, explains why everyone on the right knows, just knows, that great things happened after the forces of greed were unleashed. Great things did indeed happen to their patrons. For ordinary Americans, not so much.
Okay.
Was Greed Good? Is Santa Real? These are ridiculous questions. Let’s try posing another one: Is Money Printing Good?
Krugman loves to print money. In fact, in most all of his writings, he argues in favor of inflation because he believes it can solve our economic problems. But has the ability to print endless amounts of money (at no cost) been good?
Well, everyone on the left knows money printing is beneficial to society and the economy. Needless to say, none of it is at all true.
Let’s look at how the trends changed after 1971, when the definition of money went from having a specific value to becoming a meaningless concept for central planners to manipulate without concern for archaic concepts like a gold standard. Start with productivity. See the big acceleration? Neither do I – productivity growth has actually been slower since the implementation of fiat money. In fact, the slowest period of growth came immediately after the switch.
Ah, but competitiveness must have increased. Because, as it is often argued by liberals, a weaker dollar will help increase American exports. So, during this period of rapid dollar devaluation, we began selling competitively on world markets instead of running big trade deficits, right? Well, no.
So did anything change? Why, yes: income distribution became radically more unequal.
And that, I think, explains why everyone on the left knows, just knows, that great things happened after the forces of money printing were unleashed. Great things did indeed happen to their patrons. For ordinary Americans, not so much.
Of course, you could still prefer Krugman’s take on these graphs - but you’d have to also accept the following:
• The idea that “greed” was only introduced to humanity after a “shift” in 1980.
• The post-1980 concept of “greed” had a larger, more widespread impact on the economy than the removal of money’s defining value.
I guess you can decide. While Krugman may have based his argument on a fictional character from a 1980s movie - he is, after all, the one with the Nobel Prize.
