Sunday, October 13, 2013

Krugman, again

When Paul Krugman isn't engaged making thinly-based accusations of racism, he apparently likes to spend part of his time as an amateur psychologist. Or at least that is a reasonable conclusion based on one of his recent blog posts on the debt ceiling brouhaha: 
Republicans are getting a lot of pressure from business, which doesn’t like what’s happening. And some pundits are already speculating about the possibility either of a split within the GOP or a kind of coup in which the business-backed party elders take control back from the crazies. 
So I’ve been thinking about this, and have managed to convince myself that it’s wishful thinking. 
Now, it’s true that Republicans are bad for business — and they didn’t start being bad for business when the latest hostage crisis erupted. Ever since Republicans retook the House, federal spending adjusted for inflation and population has been dropping fast:
        Real federal spending per capita 
This is exactly the wrong thing to be doing in a still-depressed economy with interest rates at zero; my back of the envelope says that GDP would be at least 2 percent higher, and corporate profits at least 6 percent higher, if this wrong-headed austerity weren’t taking place. So even before the current crisis Republican obstructionism was costing corporate America a lot of money.
Note how Krugman repeatedly states opinion as fact ("Republicans are bad for business"; "Republican obstructionism was costing corporate America a lot of money") and refuses to entertain alternative points of view. That his calculations and/or model may be wrong/open to question, or that corporate America may believe that reduced federal spending is a prudent movie, are not mentioned as possibilities. Then Krugman decides to dial the crazy up to 11:
But here’s the thing: while the modern GOP is bad for business, it’s arguably good for wealthy business leaders. After all, it keeps their taxes low, so that their take-home pay is probably higher than it would be under better economic management. 
Also, when you make as much money as the 0.1 percent does, it’s no longer about what you can buy — it’s about prestige, about receiving deference, about what Tom Wolfe (in an essay I haven’t been able to find) called “seeing ‘em jump.” And there’s clearly more of that kind of satisfaction under Republicans; under Democrats, as Aimai at No More Mister Nice Blog points out, tycoons suffer the agony of having to deal with people they can’t fire. 
In a way, this is an inversion of the usual argument made by defenders of inequality. They’re always saying that workers should be happy to accept a declining share of national income, because the incentives associated with inequality make the economic pie bigger, and they end up better off in the end. What’s really going on with plutocrats right now, however, is that they’re basically willing to accept lousy economic policies from right-wing politicians as long as they get a bigger share of the shrinking pie. 
This may sound very cynical — but then, if you aren’t cynical at this point, you aren’t paying attention. And I suspect that the GOP would have to get a lot crazier before big business bails.
Again, the possibility that business leaders/corporate America may simply disagree with Krugmanomics and/or the notion that Republicans are bad for business is not allowed. Instead, the support of business leaders for GOP politics -- strangely they aren't bowled over by the awesome weight of Krugman's back of the envelope calculations -- is simply chalked up to a bizarre theory based on prestige and relative standing. Evidence presented? None (his one link is to a harangue which relies mostly on theories about tipping). Mind you this is the same guy who recently stated that "the other side doesn't care about evidence."

When given the choice between the pretty simple and well-grounded theory that business leaders lean Republican because they think their policies are better for business than those proffered by the political left/Democrats -- literature indicating such a belief system is not hard to find (note, for example, the considerable overlap between common GOP policy positions and the US Chamber of Commerce's 2013 American Jobs and Growth Agenda) -- and an outlandish one concerning business leaders motivated by the pleasure they derive from their power over minions, Krugman opts for the latter. That he has the temerity to reference GOP "crazies" is a classic case of the pot calling the kettle black.

Oh, and what's this about a "shrinking economic pie"? 

Ladies and gentlemen, I give to you one of the political left's leading intellectual lights.

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