

The Competition Myth - gatsby
http://www.nytimes.com/2011/01/24/opinion/24krugman.html?bl

======
WalterBright
Krugman doesn't realize that the economic success of America (and other
countries) has all depended on producting more output with less labor input -
i.e., increasing productivity.

That is what has enabled us to move beyond an economy where 97% of the workers
worked on the farm raising food. That's down to something like 2% now. The
rest of us can now do other things like make cars, computers, and software.

~~~
msbarnett
Nobel Prize winning economist Paul Krugman isn't aware of the relationship
between America's economic success and productivity increases?

You may disagree with his thesis, but let's not pretend he's a naïve bumpkin
when it comes to economics.

~~~
WalterBright
I based my comment on this Krugman quote:

"Consider: A corporate leader who increases profits by slashing his work force
is thought to be successful. Well, that’s more or less what has happened in
America recently: employment is way down, but profits are hitting new records.
Who, exactly, considers this economic success?"

~~~
inerte
Krugman was talking about running the country as a business (America Inc), not
productivity.

------
bootload
_"... what America needs now is corporate tax cuts and across-the-board
deregulation ..."_

Did I read this right? Didn't the finance industry [0] and the car industry
[1] get bail-outs? The question I want to know is if a large portion of the
population don't have enough purchasing power how does business grow in the
US?

[0]
[http://en.wikipedia.org/wiki/Emergency_Economic_Stabilizatio...](http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008)

[1]
[http://topics.nytimes.com/top/reference/timestopics/subjects...](http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/auto_industry/index.html)

~~~
stedwick
"The unfavorable interpretation is that ... what America needs now is
corporate tax cuts and across-the-board deregulation."

------
xiaoma
This link goes to the article instead of a registration page:
[http://www.nytimes.com/2011/01/24/opinion/24krugman.html?par...](http://www.nytimes.com/2011/01/24/opinion/24krugman.html?partner=rss&emc=rss)

------
HilbertSpace
Sorry, Professor Krugman, you are more of the problem than the solution.

Let's start with your:

"The financial crisis of 2008 was a teachable moment, ..."

Yes it was. Okay. Now, where's the _teaching_? Here are three cases of lack of
teaching: (1) At least since 1929, we should have understood how a financial
bubble that bursts and makes a large fraction of the banking sector broke can
wreck an economy.

(2) In particular, for the housing bubble, we should have had the teaching at
least since Clinton's term. Uh, as I understand it, Clinton and Bush 43 both
saw the dangers of having Fannie and Freddie guarantee liar, junk, sub-prime
mortgages but (A) didn't see anything to do about it that was practical
politically and (B) just hoped we would get by somehow anyway. Uh, to be more
clear, it was the lack of _teaching_ that made the solution not practical
politically.

(3) As the housing bubble was developing, we should have had some real details
on what the heck was going on. We didn't. Indeed, we still don't want to talk
about the _politically incorrect_ details and want to blame _Wall Street_
instead of the Congressional Black Caucus and Barney Frank and what they told
Fannie and Freddie, the Community Reinvestment Act, and how some of the
_adjustable rate_ loan writers _gamed_ the system. Wall Street and even the
bond rating agencies, as bad as they were, were really only the tail of that
sick dog.

So, US irresponsible nonsense shot the world economy in the knees. The Asian
banking crisis was another example. And 1929 was another example, with severe
_consequences_ through 1945 and continuing consequences through the Cold War.
Are we learning yet? For the US 1929 bubble, I chalk up about 100 million
people killed in WWII; so I'm for more _teaching_. Yes, we've needed a lot of
_teaching_ right along.

But for this needed _teaching_ , in the national media and in particular in
the NYT and in the Krugman columns there we get nothing significant. We get
much more on Lady Gaga than anything at all serious on the economy, and the
economy is a very serious subject.

So, Professor, to start we were talking about, uh, what was it now, oh, I
remember, _the economy_. Okay, what's that? I mean, can we have a description,
please? So, we should get the relevant data and present it usually in graphs
and where each graph addresses one or several relevant questions about, say,
standard of living, unemployment, government deficits, our _intellectual
capital_ (from education, research, and development), foreign trade, GDP,
taxes as a fraction of GDP, where the taxes are coming from, government
spending as a fraction of GDP, where the spending is going, and these
quantities over time with percentage changes. We need to know where the money
is and what the flows are. Similarly we need to know a description of US and
world economic activity and flows, e.g., in the sense of Leontief. That's for
a start in any _teaching_ about the economy. At least such data would give us
a basis for discussions about the Federal deficit. Of course, to get early
warning about housing bubbles, etc., we need much more detail than that.

So, where is this data? Professor, I see next to nothing in your columns, the
NYT, or the US media.

Uh, Professor, since you are a professor of economics, you actually do have
the data, don't you? And you have some good analysis of the data? So, for
_teaching_ , think you will let us see the data and the analyses too?

Professor, on the US economy, the US is flying blind. The situation is
grotesque, outrageously irresponsible, and apparently little better among
economists than the _newsies_ and the public.

For one example, let's have a little _reality check_ :

We might consider the campaign, I mean the 2008 campaign for president -- you
remember, that, right? So, now the president wants to talk about jobs, the
economy, and _competitiveness_ , right?

In the campaign, we remember the interview of Obama by the San Francisco
Chronicle on 1/17/2008. The video has been on YouTUBE at two URLs, but both
are now dead. Some of the more important audio is now at

<http://www.youtube.com/watch?v=Hdi4onAQBWQ>

So, here Obama deliberately intends to use carbon taxes to "bankrupt" US coal
fired electric generating plants, that is, about half of our electric
generating capacity.

Then he wants to replace that capacity with his favorite _100% all-natural,
pure, pristine, precious, green, clean, renewable_ energy from whatever and
especially from wind turbines and solar cells and associated equipment sold by
his good buddy GE CEO Immelt.

And, of course the _reason_ to destroy half of our capacity is to _save the
planet from the hideous scourge of global warming caused by CO2 from evil
humans_ , oops, not "global warming" but now, may I have the memo, please,
"climate change". Right: Now the problem is "climate change" as if we were
going to keep the climate from changing. Looks like a permanent job.

Yup, it's a really good _morality play_ : Human _sin_ results in human
_transgressions_ against an angry, vengeful god that inflicts _retribution_
from which humans need _redemption_ via sacrifice.

Uh, recall, Padawan learners, that the trilogy of transgression, retribution,
and redemption is an old formula fiction _framework_ with leading examples in
Wagner's _Ring_ , Tolkien's _Ring_ , and Lucas's _Star Wars_.

Such a morality play and trilogy are very old flim-flam, fraud, scams
inflicted on easily manipulated, fearful, ignorant, superstitious masses and a
favorite of various charlatans, witch doctors, religious leaders, etc. for
hundreds of years including the Mayans who killed people to pour their blood
on a rock to _keep the sun moving across the sky_ , _The Music Man_ who wanted
to use a "pool table in town" to raise the specter of "sin and corruption" and
sell band instruments and uniforms and catch the next train out of town, up to
Saint Laureate Al Guru, Immelt, and Obama.

So, raise the cost of electric power at the plant from about 3 cents per KWh
to, drawing from experience in Germany and Spain, about 50 cents.

So, shoot the US economy in the gut just to see it bleed. Some contribution to
"US competitiveness".

The guy wants to destroy half of our electric generating capacity; that would
do us more damage than any foreign enemy has yet accomplished.

Thus endth one reality check.

But our highly self-esteemed professor continued with:

"a much-needed increase in public investment" apparently on "on infrastructure
and education".

For "infrastructure", here in NY one of the Obama proposals is a high speed
train from Manhattan to Albany. Hmm .... Last time I got a car registration, I
had to pay a big surcharge to support the money losing trains from the NYC
suburbs into Manhattan. So, those trains don't make money. Amtrak loses money.
For getting from Manhattan to Albany, now a good way is via car mostly up the
Taconic State Parkway, and I can assure the erudite one that for the last half
of the trip there is nearly no traffic. Net, such a train would just lose
money. All or nearly all the passenger trains in the US lose money.

Uh, we had passenger trains: E.g., can go to NE Indiana, to Fort Wayne, 30
miles west to Warsaw, 15 miles south to Claypool, a crossroads with two
churches, one school, a cemetery, a trailer park, and a few retail stores. And
there are railroad tracks and an old train station. At one time, could catch a
passenger train there and get to essentially any big city in the US and from
the back to nearly any such crossroads in the US. But the Model T Ford did a
lot to kill the passenger trains, and by 1960 they were nearly all gone.
There's no chance that passenger trains will have success against current
cars, roads, and airplanes. Apparently passenger trains are where you and
Obama are saying "Yes we can". Sorry: No you can't. In the US, passenger
trains lose big money.

Uh, Professor, just what is it about losing money you find so attractive?

For "education", just what is it you would like to teach? The US is awash in
educational institutions, and now a big concern is that students should not
get loans for such education because the return on investment is too low and
much a student's financial strength for life can be ruined trying to pay back
the loans. Uh, Professor, in NYS, an electrician's license is a better
foundation for a career that will permit buying a house and supporting a
family than a Ph.D. in electrical engineering or, for that matter, most Ph.D.
degrees.

Or you want students to take out loans to have you teach students economics to
help them avoid the pitfalls of the real US economy that you avoided by being
a professor of economics supported by student loans, gifts from wealthy
alumni, and research grants from the US Federal government from taxes
extracted from people who actually do productive work for a living?

No sale.

Net, Professor, I would make two points, both well supported by history:

First, a real economy is important, often gets sick, and then ruins many lives
and kills lots of people.

Second, the academic economic profession studies essentially only imaginary
economies, there usually using irrelevant mathematics (e.g., the Kuhn-Tucker
conditions), and knows next to nothing about any real economy. E.g., you are
missing the first step -- good descriptive data.

So, I conclude: Sorry, Professor Krugman, you are more of the problem than the
solution.

