Take, for example, John McCain’s admission that economics isn’t his thing. “The issue of economics is not something I’ve understood as well as I should,” he says. “I’ve got Greenspan’s book.”
...
Meanwhile, Rudy Giuliani wants us to go for broke, literally: his answer to the economy’s short-run problems is a huge permanent tax cut, which he claims would pay for itself. It wouldn’t.
About Mike Huckabee — well, what can you say about a candidate who talks populist while proposing to raise taxes on the middle class and cut them for the rich?
...But Mr. Romney, who really needs to take chances at this point, apparently can’t break the habit of telling Republicans only what he thinks they want to hear. He’s still offering nothing but standard-issue G.O.P. pablum about low taxes and a pro-business environment.
On the Democratic side, John Edwards, although never the front-runner, has been driving his party’s policy agenda. He’s done it again on economic stimulus: last month, before the economic consensus turned as negative as it now has, he proposed a stimulus package including aid to unemployed workers, aid to cash-strapped state and local governments, public investment in alternative energy, and other measures.
Last week Hillary Clinton offered a broadly similar but somewhat larger proposal. (It also includes aid to families having trouble paying heating bills, which seems like a clever way to put cash in the hands of people likely to spend it.) The Edwards and Clinton proposals both contain provisions for bigger stimulus if the economy worsens.
...
Anyway, on Sunday Mr. Obama came out with a real stimulus plan. As was the case with his health care plan, which fell short of universal coverage, his stimulus proposal is similar to those of the other Democratic candidates, but tilted to the right.
For example, the Obama plan appears to contain none of the alternative energy initiatives that are in both the Edwards and Clinton proposals, and emphasizes across-the-board tax cuts over both aid to the hardest-hit families and help for state and local governments. I know that Mr. Obama’s supporters hate to hear this, but he really is less progressive than his rivals on matters of domestic policy.
...
So if I go by McCain's example, I can go out and read Greenspan's book and then I'm suddenly qualified to run the country? Sweet.
8 Comments:
First, I would like to note that Krugman is one of the most partisan economic columnists in the United States today. Thus, be careful in taking any of his arguments seriously unless they are actually good (sometimes they are), since he is usually pushing some partisan message or another, often subtlety. Unfortunately, his argument concerning McCain in this article is just that, partisan BS.
Second, I recognize you are partially trolling here, but I do sense enough seriousness in your snarky comment at the end of your post to bite...
Who do you think designed the nuanced details of Clinton, Obama, and Edward's economic stimulus proposals?
I bet they did not, and I bet each campaign hired economic advisers who did (as happened with each campaign's health care plans). After all, it is fair to say that none of the leading candidates has an advanced degree in applied econometrics, microeconomics, or macroeconomics.
Now, whom would their advisers be comparable to professionally? The answer: professional economists like Greenspan... I wonder why Krugman did not bother to mention this… I am guessing it is because he is a partisan hack, who happens to have an impressive academic background in economics, but his frequent lack of logical and judgmental fairness does not make this fact obvious.
Bearing all this in mind, McCain's comment is likely a humbling recognition of the fact that he is not an academic or professional economist and that the closest thing to getting the insight of one on economic issues is to read a book by one. I would hope Clinton, Obama, and Edwards possess the humility and candor to admit the same, since their campaigns’ actions certainly do as much. I also hope you, me, and every other person on this blog would act sincerely enough to acknowledge as much in a similar situation as well.
David, you and I are econ MAJORS and I bet we still would have trouble understanding some of the complex intricacies of the economic plans and the theory behind them. No one expects the candidates to have the PhD in economics required to design the plans. I think Krugman thought it would go without saying that the candidates had help from economic advisors. But you don't need deep understanding of economics to understand whether your economic stimulus package is geared toward the rich or poor. Or to understand whether you are actually trying to stimulate the economy by putting money in the hands of people who are likely to spend it or to further cut taxes on the rich to further reduce the progressivity of the tax system. These basic ideas shouldn't be beyond the reach of any candidate qualified to be president. This idea that candidates shouldn't be judged on the economic policies they advocate because they didn't actually design their economic plans is really kind of absurd.
Ryan said: "David, you and I are econ MAJORS and I bet we still would have trouble understanding some of the complex intricacies of the economic plans and the theory behind them."
Yup.
Ryan said: "No one expects the candidates to have the PhD in economics required to design the plans."
I certainly don't, most people aren't former Senators Phil Gramm or Paul Douglas.
Ryan said: "I think Krugman thought it would go without saying that the candidates had help from economic advisors."
Doing so and including the McCain quote meant criticizing only McCain for something every major candidate in the race has done and that they shouldn't be criticized for: seeking guidance from people who know more about economics than they do (whether it is through advisers or reading books). Plus, if you want to tell me that Obama or Clinton have never read pop-economics books like “Freakonomics” (or Greenspan’s: The Age of Turbulence: Adventures in a New World ) I’d call so much BS. Further, I doubt you or I haven’t either and, to bring Suchita into the discussion, I know for a fact she has read the pop-economics book “The World is Flat” by Thomas Friedman for a similar purpose (and I have as well).
All McCain did was mentioning publicly that he has lately read a pop-economics book to boost his knowledge of economics and in a very humbling manner (the actual article Krugman was quoting is this: http://www.boston.com/news/politics/politicalintelligence/2007/12/mccain_its_abou.html). Frankly, I see his honesty and humility in these remarks as a plus versus the Bush administration’s track record on this kind of thing, not a minus.
Ryan said: "But you don't need deep understanding of economics to understand whether your economic stimulus package is geared toward the rich or poor. Or to understand whether you are actually trying to stimulate the economy by putting money in the hands of people who are likely to spend it or "
Yes, a PHD certainly isn't required to know who economic policies target, but McCain certainly isn’t inferring he can’t grasp as much. He never implied he doesn’t recognize who his economic policies are geared towards (and his record on economics shows as much), let’s not put words in his mouth. Additionally, he never implied he is ignorant of both the policy advantages of targeting lower income earners with their higher marginal propensity to consume (MPC) and of targeting higher income earners and corporations with their higher marginal propensity to invest capital (MPI). Higher MPC and MPI are key elements of healthy short and/or long term economic growth (Krugman I hope would admit this, even though he is such a partisan… I know most respected liberal and conservative leaning economists would) and so I would hope all the presidential candidates' economic stimulus proposals would try to address both factors. Fortunately and unfortunately, as the below reuters article shows, McCain understands economic stimulus proposals just as well (or just as badly) as the leading Democrat presidential candidates (they all seem to get half of the picture, but different aspects of it)…
http://www.reuters.com/articlePrint?articleId=UKN1724142420080117
Overall, we see that McCain is lagging on the marginal propensity to consume point (MPC), but the leading Democrats (Clinton, Obama, Edwards) are lacking on the marginal propensity to invest (MPI) issue (so all these candidates seem to be part economic competents and part incompetents)…
To see this, let’s look at some of the candidates’ economic stimulus proposals (see above reuters link)…
From McCain:
“REPUBLICAN U.S. SEN. JOHN MCCAIN
The Arizona senator said the economy was "in some difficulty now" and laid out a plan for a cut in the corporate tax rate to 25 percent from 35 percent. He would also allow companies to speed up their tax deductions for investments in new equipment and would establish a permanent tax credit for research and development.”
A decent policy from McCain in dealing with the MPI issues, but contains nothing addressing MPC issues…
From the Democrats:
“DEMOCRATIC U.S. SEN. HILLARY CLINTON
The New York Democrat has proposed a $70 billion package to stave off a possible recession, including $40 billion in spending for heating assistance, an extension of unemployment insurance and investments in energy efficiency.
The other $30 billion would go toward helping low-income families hit by the mortgage crisis.
A second phase of the package, which would total an additional $40 billion, would be triggered if the economy failed to respond. That would pay for tax rebates for low- and middle-income workers.
DEMOCRATIC FORMER U.S. SEN. JOHN EDWARDS
The former Democratic senator from North Carolina has proposed a $25 billion job creation plan with the possibility of $75 billion more if there is more evidence the United States is entering a recession.
The plan calls for investing in clean energy infrastructure, increasing federal aid to help states avoid cutting programs that help families through hard times, reforming unemployment insurance and tackling housing crisis.
DEMOCRATIC U.S. SEN. BARACK OBAMA
The Illinois Democrat's $75 billion plan includes an immediate $250 tax cut for workers that would double if the economy worsens.
Older Americans would receive a one-time $250 bonus in their Social Security checks that would also double in a severe downturn. Obama would offer assistance to homeowners facing foreclosure and aid to states hit by reduced tax revenues. He would also extend unemployment insurance for laid-off workers.”
*Shock*… The Democrats have the MPC point concerning lower-middle income earners down great, but offer absolutely nothing utilizing corporate or higher income earner’s tendencies to have a greater MPI. In conclusion, noting that both high MPC and MPI demographics are useful entities to target in mitigating a possible recession, as we both should know from contemporary economic literature, McCain has it half right and the leading Democratic Party candidates have it half right.
Although, McCain is mentioning a concern no Democrat or Republican candidates have emphasized in trying to pay for these stimulus proposals (something that is important when all candidates seem to be “implying” they will balance the budget):
"You're going to hear from the Democrats, let's pump $70 billion, let's pump $80 billion, let's do this, let's do that. My friends, remember who's going to pay that. It doesn't come off a printing press, OK? It comes out of your pockets," (http://www.reuters.com/article/politicsNews/idUSN1722925220080117)
Unfortunately, to be fair (since I try to be an intellectually honest guy), I must note that he has a weak answer for how he intends to pay for his stimulus package (as do all the rest of the candidates):
“McCain said he would pay for the plan by cutting what he called wasteful government spending in Washington” (see the above article cited).
Quick disclaimer: I criticize Republicans and Democrats a lot for such generic answers as to where they intend to get revenue to pay for stuff and McCain cannot be an exception to such criticism. Even though I support him for the GOP nomination, if I want to remain intellectually honest (and I do, there are few things I value higher than intellectual honesty) I must hold him to the same standard as all the other candidates.
Your next point on economic fairness issues in reference to McCain…
Ryan said: " to further cut taxes on the rich to further reduce the progressivity of the tax system."
On the contrary, McCain has definitely considered economic equity issues in the past:
“I cannot in good conscience support a tax cut in which so many of the benefits
go to the most fortunate among us at the expense of middle-class Americans who need
tax relief” (Washington Times, 06/09/01).
Ryan said: “These basic ideas shouldn't be beyond the reach of any candidate qualified to be president. This idea that candidates shouldn't be judged on the economic policies they advocate because they didn't actually design their economic plans is really kind of absurd.”
That isn’t my point. My point is that McCain acknowledges he is not an expert on economics and that he reads pop-economics books like Freakonomics (or Greenspan’s The Age of Turbulence: Adventures in a New World ) to become more proficient in this field. Additionally, his admitting as such is not a free pass from being judged on his economic policies. A level of academic knowledge on a topic – whether it is high or low – should never be a free pass from scrutiny for anyone. Moreover, his admitting as much is little different from other candidates admitting they read pop-economics books or that they are not professional economists. Finally, his economic proposals and record show he is just as knowledgeable and/or clueless on economics as the Democrat candidates that Krugman flatters in the article (since as shown earlier...McCain completely ignores MPC factors, while the leading Dems entirely ignore MPI factors, in crafting their economic stimulus proposals).
I hope this all clarifies my argument further. I await your rebuttal.
blah blah blah.... did anyone actually read that Lapidus or are you getting off just by typing it and showing us all your economic superiority?
krugman is allowed to be biased. he's an OPINION columnist. unless your saying that your opinion columns are going to be bias-free.... then i call BS on you.
I don't think the point of Krugman's op-ed was that McCain is unqualified BECAUSE of his reading of pop culture econ books and lack of advanced econ degree but rather that his economic policies are just plain wrong. Perhaps that comment was a cheap shot since none of the candidates have econ degrees but it reflected the kind of self- deprecating humor we have come expect from the Bush Administration that seems to make light of a lack of seriousness about a topic of major importance.
While your points about MPC and MPI are well taken for constructing good economic policy in any old country all things being equal, we have to actually consider what policies we want to implement given the present situation. If we think the U.S. is getting close to a recession and the government wants to mitigate the effects of that recession, we have to understand the reasons for the economic weakness.
So why do we have economic weakness now? The consensus seems to be that the subprime mortgage lending crisis is putting many consumers into debt such that they can't keep up with payments, are defaulting on their mortgages, and don't have money to spend on non-essentials. It has also been reducing demand for housing which had become a huge speculative bubble but now prices are crashing and homes are staying on the market unsold for longer. Middle class and poor consumers are also being squeezed by historically high energy, health care, and education costs. Really bread and butter issues for most families.
So these are ALL problems on the consumer side of the economy. Notice there hasn't been a problem with corporate spending as corporate profits have been at or near record highs throughout the Bush Administration. Notice that consumer spending makes up 70% of the economy so their spending is substantially more important to the economy than corporate spending. Finally, notice that income inequality in the U.S. is the highest it has been since the gilded age. So on WHAT planet is McCain living if he thinks the best way to deal with the impending economic crisis is to reduce corporate income tax rates? Why do other candidates, like Fred Thompson, want to further flatten the tax code so the rich pay less taxes and the middle class pays more? The reason is they are captive to powerful interests in the Republican Party that favor these economic policies for IDEOLOGICAL reasons, not because they are the best ways to help the economy.
Maybe some of the Republican candidates actually buy that these trickle-down economic policies are always the solution no matter what crisis is facing the economy like Bush clearly believes. In that case they are simply wrong, and if they did a little more research beyond reading Greenspan or Freakonomics, they would know those policies have been discredited. I'm willing to give McCain the benefit of the doubt on whether he actually believes corporate tax cuts are the answer or whether he is just pandering to the Republican base. But he flip-flopped on the 2001 and 2003 Bush tax cuts that you cited, now claiming that even though he voted against them he won't repeal any of them as president. The bottom line is what matters are the policies he advocates NOW, not what he said in 2001.
3:18pm,
You're an idiot. Don't read a blog if you don't want discussion.
-CB
"blah blah blah.... did anyone actually read that Lapidus or are you getting off just by typing it and showing us all your economic superiority?"
I would like to hear your opinions as well anonymous, instead of your unproductive whining and personal attacks. Ryan certainly read what I wrote and has many thoughtful and well-argued responses. I by no means have "economic superiority". I am just another pathetic human being, whose opinions must withstand the same scrutiny of logic and emotion as anyone else.
"krugman is allowed to be biased. he's an OPINION columnist. unless your saying that your opinion columns are going to be bias-free.... then i call BS on you."
There is a great difference between being biased and being a narrow-minded partisan hack. Of course, every editorial commentator is going to be biased (including myself next Thursday). Anyone with an opinion is biased.
Being a partisan hack means that you do not even take into account the other side's arguments or your side's flaws on an equal logical playing field when you pick your bias. This is why Krugman is a partisan hack, since he repeatedly criticizes the other person’s side, but conveniently ignores when his own side has similar logical liabilities.
Ryan, I will try get back to you later tonight. I have to go do some work for now. I really appreciate you taking the time to discuss these important issues. Unfortunately, some people like our anonymous friend here prefer otherwise.
“I don't think the point of Krugman's op-ed was that McCain is unqualified BECAUSE of his reading of pop culture econ books and lack of advanced econ degree but rather that his economic policies are just plain wrong. Perhaps that comment was a cheap shot since none of the candidates have econ degrees but it reflected the kind of self- deprecating humor we have come expect from the Bush Administration that seems to make light of a lack of seriousness about a topic of major importance.”
We probably are going to have to agree to disagree on this point. I like self-depreciating and humbling humor in politics more than you it seems, but this is a separate debate for another time probably.
“While your points about MPC and MPI are well taken for constructing good economic policy in any old country all things being equal, we have to actually consider what policies we want to implement given the present situation. If we think the U.S. is getting close to a recession and the government wants to mitigate the effects of that recession, we have to understand the reasons for the economic weakness.”
Fair enough, although the general causes of a recession are constant (contraction in consumer spending and business investment), I agree there can be some specific case differences sure.
“So why do we have economic weakness now? The consensus seems to be that the subprime mortgage lending crisis is putting many consumers into debt such that they can't keep up with payments, are defaulting on their mortgages, and don't have money to spend on non-essentials. It has also been reducing demand for housing which had become a huge speculative bubble but now prices are crashing and homes are staying on the market unsold for longer. Middle class and poor consumers are also being squeezed by historically high energy, health care, and education costs. Really bread and butter issues for most families…
So these are ALL problems on the consumer side of the economy. Notice there hasn't been a problem with corporate spending as corporate profits have been at or near record highs throughout the Bush Administration. Notice that consumer spending makes up 70% of the economy so their spending is substantially more important to the economy than corporate spending. Finally, notice that income inequality in the U.S. is the highest it has been since the gilded age. So on WHAT planet is McCain living if he thinks the best way to deal with the impending economic crisis is to reduce corporate income tax rates? Why do other candidates, like Fred Thompson, want to further flatten the tax code so the rich pay less taxes and the middle class pays more? The reason is they are captive to powerful interests in the Republican Party that favor these economic policies for IDEOLOGICAL reasons, not because they are the best ways to help the economy. ”
Yup, but we also must emphasize how farked the financial and capital goods sectors (which include the majority of bad story industries) got this year on top of systemic lower and middle class woes. Businesses within these sectors saw their bottom lines and top lines pwned by housing market and debt market problems.
Now, what are they starting to do as a result? Laying people off and paying less than they would otherwise in compensation (which includes more people going without health insurance), or even worse, going bankrupt. Moreover, they are starting to invest less in expansion, meaning less business and jobs for firms in other industries. Whom does all this hurt further? Lower and middle class Americans employed by the resultantly afflicted firms, who then consume less and increase their risk aversion to consuming, since a lay off or a lack of better compensation versus inflation lowers their consumption power and increases the risk of not having money on hand.
Our GDP is roughly 70% based on consumer spending yes, but that spending money comes in large part from consumers (lower-middle income earners included) who have private sector employment in these above farked industries and the many others (across the entire economy) that will also get farked as a result. So jolting this 70% part of the economy to the largest extent possible requires jolting the businesses of the economy that employ many of the consumers who make this 70% what it is.
Thus, if the government’s fiscal stimulus plan only targets lower and middle income Americans, with their higher MPC, and not the businesses that employ them (corporations and mid-sized and small businesses) with their higher MPI and employment of lower-middle income Americans with a high MPC, we are only targeting half of the cause of a recession.
As you said, the reason why McCain is not targeting both businesses and lower-middle income Americans is probably ideology and/or politics, but the same goes for the Democrats. It is a shame in my opinion; our leaders should be advocating every policy that mitigates bad situations like this, not JUST the conservative OR liberal solutions, which only get it half-right.
“Maybe some of the Republican candidates actually buy that these trickle-down economic policies are always the solution no matter what crisis is facing the economy like Bush clearly believes. In that case they are simply wrong, and if they did a little more research beyond reading Greenspan or Freakonomics, they would know those policies have been discredited. I'm willing to give McCain the benefit of the doubt on whether he actually believes corporate tax cuts are the answer or whether he is just pandering to the Republican base. But he flip-flopped on the 2001 and 2003 Bush tax cuts that you cited, now claiming that even though he voted against them he won't repeal any of them as president. The bottom line is what matters are the policies he advocates NOW, not what he said in 2001.”
The problem is many GOPers do not buy trickle up and many Dems do not buy trickle down. In reality, they both work and even reinforce one another. They can both be reasonable working economic theories at the same time. Contrary to what Democrats and Republicans often tell us, they are NOT mutually exclusive economic theories.
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