Tag: Economists

Then the Rich Got Richer.

“Through midcentury, when times were good economically, most of the benefits trickled down to the bottom 90 percent of households. Then came the Reagan era and actual trickle-down economics. Suddenly, the benefits started sticking with the rich. Since 2001, the top 10 percent have enjoyed virtually all of the gains.”

As making the rounds of late, a devastating graph of rising income inequality in America, “post-trickle-down”. “This isn’t a totally new story. But it is a vivid and visceral illustration of what we’ve basically known to be true for a while.”

Along the same lines, Mother Jones is posting a new chart on income inequality every day this week. “In the past few years, we’ve heard a lot about overtaxed ‘job creators’ and freeloading ‘takers.’ But consider this: As the income rates for the wealthiest have plunged, their incomes have shot up.”

If it’s any consolation, presumptive 45th president Hillary Clinton has recently “talked to friends and donors in business about how to tackle income inequality without alienating businesses or castigating the wealthy.” Er…sorry, that’s not going to get it done.

The New Gilded Age.

“[This] is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.”

In the NYRB, and in very related news, Paul Krugman sings the praises of Thomas Piketty’s new magnum opus, Capital in the 21st Century. “This is a book that will change both the way we think about society and the way we do economics…Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”

As a counterpoint of sorts, CEPR’s Dean Baker — neither a Pollyanna nor a conservative — argues Piketty has picked up some of Marx’s bad habits, and finds the book too deterministic and despairing by far:

“[T]here are serious grounds for challenging Piketty’s vision of the future…the book [suffers from a] lack of attentiveness to institutional detail…In the past, progressive change advanced by getting some segment of capitalists to side with progressives against retrograde sectors. In the current context this likely means getting large segments of the business community to beat up on financial capital…[T]he point is that capitalism is far more dynamic and flexible than the way Piketty presents it in this book. Given that we will likely be stuck with it long into the future, that is good news.”

Update: Galbraith weighs in. “[This] is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world’s wealthiest countries…Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.”

For Want of a Spreadsheet Check…

“This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.”

As Mike Konczal of Rortybomb explains, the Reinhart-Rogoff paper “Growth in a Time of Debt,” which argued that high debt-to-GDP ratios stymie growth and has been one of the key economic foundations for recent deficit hysteria, turns out to be fundamentally flawed.

“This has been one of the most cited stats in the public debate during the Great Recession,” embraced by both Paul Ryan and the Washington Post. And it’s totally upside down. As Konczal says, “[t]he past guides us…it tells us that a larger deficit right now would help us greatly.”

Update: Dean Baker weighs in. “If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit reduction policies being pursued in the United States and elsewhere. It should also cause reporters to be a bit slower to accept such sweeping claims at face value.”

The Village Plays Hathorne.


“Even worse than that is the common assertion by these millionaire pundits that ‘we all’ must sacrifice for the greater good and allow Social Security to be slashed. This is usually spoken with such a tone of lugubrious forbearance that one imagines they would like us to believe that while they might be forced to become Wal-Mart greeters in their elder years, patriotic duty demands we all pitch in. They seem to have no idea that the median wage in this country in 2009 was $26,261 — sadly, lower than it was in the year 2000.“

In very related news: In The Hill, Heather D. Parton of Digby fame rails against establishment media’s complicity in the deficit witchhunt. “It’s very easy to prescribe ‘shared sacrifice’ when you will not personally sacrifice anything at all.”

The Deficit-Witchhunt: The Long Depression.


“We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. And this third depression will be primarily a failure of policy.“

They used to tell me I was building a dream…In the NYT, Paul Krugman calls out the deficit peacocks one more time before the wheels come off around the world. “[This is] the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.“

In very related news, from the bowels of the Fed comes a taxpayer-paid response to Krugman, DeLong, and others sounding the alarm about the deficit witchhunt: Quiet, you nasty bloggers! You have not sufficiently mastered our economickal arts! “[W]riters who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy…[T]here is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new.“

Having spent much of the past decade in academe, I’d like to point out that this is a pretty classic overreach by the writer here. I mean, you spend all those years chasing down a degree that’s not particularly useful anymore…there must be some upside to it, right? Am I not now part of the intellectual — in this case, macroeconomic — Elect? No, Mr. Athreya, I’m afraid not. Sometimes people spend so much time examining, say, the myriad variances in an oak leaf (or worse) they miss the forest for the trees.

Update: In an attempt to move past the entitlement-cutting hysteria out and about in DC at the moment, the Center for Economic Policy and Research offers up handy tool: The People’s Deficit Calculator. “The budget options in the calculator include ending the wars in Iraq and Afghanistan, adopting a carbon tax, reduction in the size of the health care subsidies created by the health care reform bill, progressive price indexing of Social Security, adopting a financial speculation tax and others.“

Update 2: James K. Galbraith reads the riot act to the deficit witchhunt tribunal. “You are plainly not equipped, either by disposition or resources, to take on the true cause of deficits now or in the future: the financial crisis.”

Reality Bites.

“I’m not going to put my lot in with economists.” As TPM noted, we seem to have finally reached the point where there are “no more sharks left to jump.“ For alas, Sen. Clinton’s final, fraying tether to the reality-based community (and my general election vote, not that she’ll be getting that far anyway) gave up its last this weekend, as she — in defiance of her usual m.o. and very much in the manner of Dubya and the GOP — deemed universal opposition to her gas tax pander to be merely a figment of “elite opinion“. (She’s also doubled down on her anti-Obama gas tax ads.) As Robert Reich noted: “In case you’ve missed it, we now have a president who doesn’t care what most economists think. George W. Bush doesn’t even care what scientists think. He rejects all experts who disagree with his politics. This has led to some extraordinarily stupid policies.” (Clinton partisan Paul Krugman, also a member of the elite-economist cabal, has yet to weigh in on his being cast down as an enemy of the people.)

As it turns out, one of the salt-of-the earth proles at the event (self-identified as an Obama voter making less than $25,000 a year) called Clinton out to her face for this blatant idiocy: “‘I do feel pandered to when you talk about suspending the gas tax,’ the woman said, adding: ‘Call me crazy but I actually listen to economists because I think they know what they’ve studied.’” Clearly, this woman will be requiring significant reeducation. “‘How can I help seeing what is in front of my eyes? Two and two are four.’ ‘Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.’” (Give Clinton credit: Her campaign has been a travesty, but it’s been great fodder for Orwell references around here.)

In any case, regarding the big picture: Unfortunately for earlier hopes that we’d be done May 6, it’s looking like tomorrow will almost assuredly bring a split, with NC for Obama and IN for Clinton. (That is, unless Zogby has finally broke out of its slump this cycle.) Meaning, of course, that Clinton will be even more mathematically eliminated. And yet, in all likelihood, we’ll slog on to June 3. Yay. (With that in mind, each side picked up another super today: Kalyn Free of OK for Obama and Theresa Morelli of Dems Abroad for Clinton. But as Morelli only counts for 1/2 a vote, that’s another 1/2-vote pick up for Obama.)

Update: make that two and a half: Obama picks up two more MD supers, Michael Cryor and Lauren Dugas-Glover. And it sounds like some of Clinton’s CA supers are reconsidering their options.

Update 2: Apparently, economists still mattered in 1992.

Kuttner: He’s the real deal.

“Barack Obama’s speech on the financial crisis was a remarkable breakthrough…I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was Roosevelt quality: the president as teacher-in-chief.“

The American Prospect‘s Robert Kuttner praises Obama’s economics speech of yesterday, and calls out Paul Krugman for his blatant partisanship: “Unlike some of my friends, I have not fallen in love with Obama…But Krugman, ordinarily an ornament of fair-minded progressive economics commentary, writes almost as if he has become part of the Clinton campaign. His latest characterization of Obama’s proposals in commenting on the New York speech — ‘cautious and relatively orthodox‘ — was preposterous.“

Krugman Jumps the Shark.

“Why, then, is there so much venom out there? I won’t try for fake evenhandedness here: most of the venom I see is coming from supporters of Mr. Obama, who want their hero or nobody.” He’s been teetering on the brink for awhile now. (Not for nothing did TNR deem his last anti-Obama column the “least surprising NYT column ever.”) But NYT columnist Paul Krugman finally, irrevocably jumps the shark with his column this morning, which blames the “cult of personality” around Obama for all the venom in the Democratic race at the moment, and claims Obama is turning the Democratic party into “Nixonland.” Um, yeah.

First off, it doesn’t seem like Krugman gets out around the blogosphere much, since every political board you can find out there is strewn with Clinton supporters saying wildly intemperate things. (I’m sure he’s suffering from a selection bias — given that he’s invariably writing anti-Obama pieces, he probably gets a lot more prObama hate mail.) Second, there’ no mention at all of any of the shadier tactics employed by the Clinton campaign over the course of the past few months, of course (and he cherry-picks rather drastically when it comes to discussion of the race card.) No, the problem for Krugman resides only in Obama cultists and a vast media conspiracy. Right.

When it comes to economics, Krugman is usually a sound thinker, even if I do think he has a tendency to belittle the progressive position on matters of political economy. (The title of his recent book, The Conscience of a Liberal, makes it plain.) But, when he strays off the economics reservation to dabble in history or politics, hoo boy. This column, frankly, is partisan hackery of the first order.

Godspeed, Galbraith.


“In all life one should comfort the afflicted, but verily, also, one should afflict the comfortable, and especially when they are comfortably, contentedly, even happily wrong.” R.I.P. John Kenneth Galbraith (1908-2006), a giant of 20th century economics and politics, and the wry conscience of an affluent society.