Krugman’s blog, 8/21/15

There were four posts yesterday.  The first was “Fairy Tales:”

Brad DeLong is searching for the origins of the phrase “confidence fairy”. I’m pretty sure — you can never be completely sure, because things can stick in your mind — that it was an original coinage on my part, a snappy way to characterize the deep implausibility of the Alesina-Ardagna stuff that was sweeping Brussels and other corridors of power in 2010. Since then, a lot of further evidence has come in — and all of it confirms the original critique.

But confidence-fairy type arguments and critiques of the same go back a long way, of course. And there’s a reason. As Mike Konczal, channeling Kalecki, pointed out some time ago, arguments rejecting Keynes and declaring that only business confidence can achieve full employment serve a very useful political purpose: they empower plutocrats and big business, while rendering populists impotent.

This is the story of Greece right now. Euro membership — and the unwillingness of Tsipras and co to take the risks of a plan B — have left Syriza with no policy tools, nothing it can do except try to placate investors, which means not just macro punishment but the forced adoption of policies like privatization.

And this speaks to the wider point of the politicization of macroeconomics. Why did freshwater macroeconomists refuse to learn from the lessons of the Volcker recession and recovery, which clearly refuted their approach and supported some kind of Keynesian view on monetary policy? Why has the overwhelmingrecent evidence for a Keynesian view of fiscal policy been ignored? You might think that business, at least, would welcome policies that boost sales; but the ideology of confidence must be defended.

Yesterday’s second post was “Winner Take Less? (In Music):”

I very much liked Steven Johnson’s piece on the failure of the feared creative apocalypse to materialize. I do have a bone to pick, however: you do not write things like this:

According to one source, the top 100 tours of 2000 captured 90 percent of all revenue, while today the top 100 capture only 43 percent.

without either naming the source or providing a link. As it happens, however, a bit of searching does lead to the actual source — Pollstar, whose concert revenue data do suggest a decline in the dominance of live music by the biggest acts.

And that’s a result that makes me happy. As regular readers know, I’ve turned into a 60-something wannabe hipster, with a taste for indie bands that aren’t giant grossers and will probably never get into the top 100, no matter how devoted their fans. What I’d like to believe is that streaming media makes it possible for more people like me to find these bands, and then seek out the live experience. And a casual look at the Pollstar data seems to support that hopeful story.

What I don’t know is whether we can safely use the data that way. Did the top 100 acts really account for 90 percent of concert revenue in 2000? Pollstar mentions that festivals are a rapidly growing field; how are they handled in the totals? For what it’s worth, these data show top 100 revenues growing roughly in line with GDP, but overall revenues growing considerably faster; is this real, or an artifact of wider reporting?

Inquiring minds want to know.

The third post yesterday was “Classification Follies:”

The Clinton email “scandal” goes on — still no sign that she broke any rules, no sign that she sent or received anything labeled “classified”, but she may have received and even forwarded items that were later classified or “should” have been classified. By normal human standards this is a big nothing; but Clinton Rules apply, under which malign behavior is the default assumption and where there’s smoke there must be fire even if everyone knows that the usual suspects are operating big smoke machines. How many people still think that there really was a Whitewater scandal, or for that matter that Hillary is the subject of a criminal investigation?

But Jeffrey Toobin adds a further twist: to the extent that some things may have been classified after the fact, it’s a very good guess that they shouldn’t have been — because the government classifies everything.

I know a bit about this from first-hand, if very old, experience. I was the senior international economist at the Council of Economic Advisers in 1982-83. (Yes, Reagan was president, but it was a technocratic post. The senior domestic economist was a guy named Lawrence Summers. Whatever happened to him?) And I received a lot of reports labeled SECRET NOFORN NOCONTRACT PROPIN ORCON (maybe out of date — no foreign nationals, no contractors, proprietary information, origin controlled). I can’t remember a single document so labeled with information that was remotely sensitive — or for that matter, with stuff that you couldn’t read in the Times or the Post.

Pretty soon, by the way, I got casual. We had a security officer who would come through offices at night, and if he found classified material left out he would take it away, put it in the safe, and issue a demerit. Luckily, the chairman got even more black marks than I did.

Of course, I wasn’t working in an area of genuine security concerns. But that’s kind of the point.

Yesterday’s last post was “Carter, Reagan, and Machiavelli:”

Rex Nutting has a very nice article about the reality of Jimmy Carter’s presidency, which has been distorted out of recognition by the myth of Saint Reagan. As he points out, Carter presided over faster average job growth and lower unemployment than Reagan; unfortunately for Carter, his timing was bad, with vigorous growth for most of his presidency but a recession at the end.

Or to be more specific: the Federal Reserve put the US economy through the wringer from 1979 to 1982 in order to bring inflation down. Carter presided over the first part of that double-dip recession, and got wrongly blamed for it; Reagan presided over the second part, and wrongly got credit for the later recovery.

What you see in all this is the remarkable political dominance of recent rates of change over even medium-term comparisons. The chart shows real median family income, which rose a lot through 1979, and was still far from having returned to that peak by the end of Reagan’s first term. Nonetheless, Carter was booted from office amid derision — “are you better off now than you were four years ago?” (actually yes), while Reagan won a landslide as a triumphant economic savior.

But Machiavelli knew all about this:

Hence it is to be remarked that, in seizing a state, the usurper ought to examine closely into all those injuries which it is necessary for him to inflict, and to do them all at one stroke so as not to have to repeat them daily.

Make sure that the bad stuff happens early in your rule; then you can claim credit when things get better, even if you leave the nation in a worse condition than it was when you arrived.



One Response to “Krugman’s blog, 8/21/15”

  1. Perfidy Says:

    Well it is also obvious to many that Hillary could have used her very own GI computer as a virtual server. Secondly given the uselessness of mediocre bureaucrats to do a thing about security why would anyone with clout trust their documents to the contractors with visas? Or anyone who finds budgeting security is too expensive?

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