Krugman’s Blog, 2/14/13

There were 3 posts yesterday.  The first was “More Marcoeconomics:”

No, that’s not a misspelling of “macroeconomics”.

Matt O’Brien beats me to it: Marco Rubio’s SOTU response also included a shout-out to Say’s Law:

Every dollar our government borrows is money that isn’t being invested to create jobs. And the uncertainty created by the debt is one reason why many businesses aren’t hiring.

I know where he gets this stuff: it’s what the Heritage Foundation guys were saying four years ago. It was obviously wrong even then: we have an excess of desired savings over desired investment — that’s why the economy is depressed! — so it makes no sense to assume that government borrowing must crowd out private investment dollar for dollar, or indeed at all.

But some things have changed over these past four years. Back then, the Heritage guys, Niall Ferguson, etc. made a prediction: those government deficits supposedly competing for funds with business would send interest rates soaring. Instead they hit record lows. And we also have evidence on what happens when government try to slash deficits in a depressed economy. Here’s IMF data for all advanced countries, where austerity is measured by the change in the structural budget balance as a percentage of potential GDP:

Contractionary policy has proved contractionary.

So Rubio has embraced an economic doctrine that was fairly stupid to begin with, and has produced ludicrously wrong predictions these past four years; this on top of accepting a completely bogus story about how we got into this mess in the first place. The GOP’s savior!

Next up was “The Kids Are Alright:”

Via Brad DeLong, I see that Nick Eberstadt has written more about America’s moral collapse. Eberstadt, readers may recall, was responsible for the “nation of takers” meme that did so much to ensure victory for … Barack Obama.

What I think is interesting is that of the three terrible trends Eberstadt claims to see, he’s right about two. (Growing dependence on government is mostly a myth). Traditional families are indeed in decline; so is traditional organized religion.

From these declines Eberstadt concludes that we are in danger of social collapse. But what he somehow misses is that the notion that traditional families and religion are essential to social order is a theory, not a fact — and it’s a theory that is overwhelmingly refuted by recent experience.

I look at America in the 2013 of the Common Era — notice my war on Christianity — and see the healthiest society, in some key dimensions, of my adult life. Consider a couple of objective indicators. Here’s teenage pregnancy:

And here’s violent crime:

Weren’t we supposed to me in Escape From New York territory right now? Instead, New York in particular is a nicer, cleaner, safer place than anyone imagined possible a couple of decades ago.

And yes, I’m aware that this also means that inequality can’t be quite as corrosive as some liberals, myself included, sometimes imagine.

But back to Eberstadt: his whole argument is based on the presumption that society is doomed if the traditional — and, I think it’s fair to say, patriarchal — structure isn’t maintained without change. Let people cohabit, maybe even marry others of the same sex, choose their faith or choose not to have any faith, and we will degenerate in a Hobbesian nightmare. We used to point to Scandinavia as a counter-example, but the reply would be that their homogeneous societies (not really, but that was the legend) were nothing like ours. But now we’re a cohabiting, free-love, free-religion dystopia too — and it’s OK.

Why do they hate America?

The last post of the day was “Memories of Bubble Denial Past:”

A further thought on the “Barney Frank did it” view of the housing crisis that has become GOP orthodoxy, and was regurgitated by Marco Rubio: at the time when evil liberals were supposedly forcing helpless bankers to lend into a housing bubble, leading to crisis, pretty much the very same people now claiming that it was all the government’s fault were vehemently denying that there was a bubble — and asserting that the only reason anyone even imagined that there might be a housing crisis looming was the malign impact of the biased liberal media.

It’s really pretty awesome.


One Response to “Krugman’s Blog, 2/14/13”

  1. Barely Legible Says:

    If Republicans were watching “Downton Abbey” they would have caught a glimpse of themselves. As the biggest investor in DA surmised it was crumbling under the weight of mismanagement. But the Lord of the Realm would hear nothing of this. Not even after his huge investment in Canadian rails ran aground. The lawyers saw the truth but none is so blind as those for whom easy money is the only venture worthwhile. I wonder how long Buffett can run up loans on red and still walk on golden pond?

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