Krugman’s blog, 8/15/16

There were two posts yesterday.  The first was “Lies, Lying Liars, and Donald Trump,” and the second was “Abenomics and the Single Arrow.”  Here’s “Lies, Lying Liars, and Donald Trump:”

So, there’s a new conservative take on who’s to blame for Donald Trump — and the answer, it turns out, is liberal commentators, and me in particular. Yep, by denouncing the dishonesty of people like Mitt Romney, I was crying wolf, so that voters paid no attention to warnings about Trump.

Actually, even if you leave aside the substance, this is bizarre. Do you really think that the fraction of the Republican primary electorate that selected Trump cares what New York Times columnists, me in particular, have to say — that they would have been warned off if only I had been nicer to establishment Republicans? That doesn’t even rise to the level of a joke.

But anyway, let’s talk about what I said about Romney. (By the way, I don’t think I referred to him as a “charlatan” — I used that word to refer to supply-side economists, because that’s what Greg Mankiw, who was advising his campaign, called them.) Here’s a key passage:

Every one of the Romney campaign’s major themes, from the attacks on President Obama for going around the world apologizing for America (he didn’t), to the insistence that Romneycare and Obamacare are very different (they’re virtually identical), to the claim that Mr. Obama has lost millions of jobs (which is only true if you count the first few months of his administration, before any of his policies had taken effect), is either an outright falsehood or deeply deceptive. Why the nonstop mendacity?

Is there anything wrong with that passage? The “apology tour” thing was a constant refrain, even though Politifact declared it pants on fire. So were the Romneycare not Obamacare and job loss things, which were equally false. So what is the assertion here? That I should not have called Romney out on lies, because that would undermine my authority when a much bigger liar came along?

How about a different hypothesis: the foundations for Trumpism were laid in part by conservatives who made dishonesty about policy a routine part of Republican politics, and also both-sides-do-it journalists who enabled that culture of lying. This left the Republican establishment helpless in the fact of someone who lied as much in a day as they did in a week, because they couldn’t credibly make the case that policy dishonesty was disqualifying.

Actually, I don’t fully believe in this hypothesis either; mainly, Trumpism is the GOP’s id triumphing over its weak superego, which was probably destined to happen regardless. But it’s a lot more plausible than blaming little old me.

And now here’s “Abenomics and the Single Arrow:”

Some disappointing numbers on Japanese GDP, and the usual suspects are out there denouncing Abenomics and calling for structural reform, the universal elixir. And the evidence that structural reform is the answer is …

What I believe to be the real lesson of Abenomics so far is the limits of monetary policy. There were supposed to be three arrows — monetary policy, fiscal expansion, and, yes, structural reform. But really only the monetary arrow was fired. Here’s the IMF estimate of the structural primary balance, a rough measure of the demand effect of fiscal policy (with bigger deficits meaning more stimulus):

Overall, fiscal policy in Japan has actually gotten tighter, not looser, since Abenomics began, mainly thanks to the consumption tax hike; other measures didn’t offset this much.

So all the weight rested on unconventional monetary policy, which did succeed in depressing the yen and pushing up stocks, but hasn’t been enough to generate a convincing boom or rise in inflation.

And that appears to not be enough, just as the ECB’s actions haven’t been enough without fiscal support. Never mind the third arrow: what we need is the second.



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