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.
1. I'm not a big believer in saying "this person won this award so their argument must be well thought out". Even geniuses can make stupid arguments.
2. Krugman is an ideologue and people like that tend to ignore facts that don't fit their world view. So he doesn't have to be a "bumpkin" to not realize an obvious fact he just needs to not want to see it (just one example: http://tomstechblog.com/post/Another-Defense-of-the-Paywall....)
"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?"
"... 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?
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
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.
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.