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Paul Krugman | Below The Fold
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Posts Tagged ‘Paul Krugman’

Well, Someone Doesn’t Understand Insurance Anyway

Saturday, February 20th, 2010

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People have made the point before that, for a couple of reasons, there really aren’t any healthcare experts on the right. Between a combination of conservatives generally believing there aren’t significant problems with America’s healthcare system and people who spend some time investigating and researching it concluding otherwise, pretty much everyone who becomes an expert or something close on healthcare issues winds up developing opinions that fall in line somewhere in the broader left. What I think goes less remarked on is the degree to which a substantial number of people on the right just don’t understand how health insurance works. Timothy Noah hit on this a little bit recently, but consider this declaration from CATO’s Michael Cannon, ironicallycontained in a post asserting that Paul Krugman doesn’t understand how insurance works:

  • Healthy people dropping coverage would not lead to across-the-board premium increases in California, because California allows markets to set premiums.  Only when the government imposes the kind of price controls that Krugman wants does an “adverse selection death spiral” follow.
  • To be polite about it, this just doesn’t make a whole lot of sense. The adverse selection problem Krugman is discussing is what happens when younger, healthier people opt not to enter into insurance pools, leaving the pool older, unhealthier, and more costly than they would be with them. Because this is how insurance works; risk is pooled together, and costs are distributed amongst the people in the pool. This makes coverage cheaper for people at higher risk, and more expensive for people with lower risk. But of course, everyone gets older, so while this may be a bad deal at one point, at a later point you’ll be on the other end of the spectrum. As Cohn notes, this is why conservatives love of high-risk pools illustrates that they’re simply not serious about doing real healthcare reform. I’m not really sure why Cannon thinks price controls would exacerbate this problem, if anything they ought to make insurance more attractive to younger customers. But then, I don’t really understand how libertarians think anymore than they understand how health insurance works.


    Voters Don’t Really Pay Attention

    Tuesday, February 9th, 2010

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    by Brien Jackson

    I liked Krugman’s column from yesterday quite a bit, but this blurb here is a good example of a tendency in political writing that really irks me:

    The truth is that given the state of American politics, the way the Senate works is no longer consistent with a functioning government. Senators themselves should recognize this fact and push through changes in those rules, including eliminating or at least limiting the filibuster. This is something they could and should do, by majority vote, on the first day of the next Senate session.

    Don’t hold your breath. As it is, Democrats don’t even seem able to score political points by highlighting their opponents’ obstructionism.

    It should be a simple message (and it should have been the central message in Massachusetts): a vote for a Republican, no matter what you think of him as a person, is a vote for paralysis. But by now, we know how the Obama administration deals with those who would destroy it: it goes straight for the capillaries. Sure enough, Robert Gibbs, the White House press secretary, accused Mr. Shelby of “silliness.” Yep, that will really resonate with voters.

    First of all let me say that I’m very much unconvinced that Gibbs didn’t have exactly the right approach. As someone who has spent some time writing and talking about procedural issues and problems with the Senate, I can pretty confidently say that it’s very, very, difficult to get people outraged about it. Getting someone to agree that the Senate and its rules are ridiculous is one thing, but generating a legitimate, emotional, response of outrage is basically impossible. People just don’t know/care that much about it, and it’s not a visible, visceral issue.

    But beyond that, a larger problem with this argument is that it assumes “voters” are paying attention to this which, of course, they aren’t. How many voters are going to see the WH press briefing at all? How many of them care about Senate procedure? Hell, most political junkies/writers/bloggers can’t accurately explain the mechanism of how a hold works, you really think the White House is going to turn it into a winning issue simply by framing it right?

    And the reason this irks me is that it’s symptomatic of a larger trend in progressive commentary, which seems to be to assume that the problem is that we just can’t get the messaging right. That the White House and Congressional leadership just won’t say the right thing, and that we know exactly how they need to frame it. This is a very silly, simplified way of looking at some very difficult problems for progressive politics, and pretending that the problem is that political actors won’t read your script, and that American voters are paying far more attention to the minute turns of language at the WHPB, simply isn’t going to help us figure out a solution to those hurdles.

    Is Krugman an Oracle?

    Tuesday, March 24th, 2009

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    by Brien Jackson

    I think Justin Fox is making an awfully big leap here:

    Whether it’s worth an “expensive subsidy of a few entities” to do this is of course debatable, and it’s entirely possible that Hempton and I are guilty of wishful thinking about Treasury’s intentions. But it’s also possible that Krugman is guilty of whatever the opposite of wishful thinking is. And I guess that what set me off about tc125231’s comment, and caused me to ramble on and on here, is the omniscience it seems to attribute to Krugman. It’s not just tc125231: Krugman’s critique of the Geithner plan got huge amounts of uncritical play in the media today. He’s getting to be one of those people whose every statement is treated as oracular. Which I tend to take as a dangerous sign.

    Krugman is a great economist and a great writer (the latter is in evidence more in his blog and his pre-NYT writings than in his column). He’s also a guy with tons of opinions, some of which are backed up by economic theory and many of which aren’t. He has some “emotional biases,” as do we all.  And every so often, he’s going to be dead wrong.

    I certainly think there’s far too much deference in some quarters to Krugman’s writing vis-a-vis the financial crisis. Indeed, I think a lot of it amounts to a basic appeal to authority fallacy to continue to cite “Nobel prize winning economist Paul Krugman” when talking about his financial opinions, simply because his (much deserved) Nobel had nothing to do with finance. Which isn’t to say that Krugman isn’t smarter than most people, myself included, but he’s certainly not infalliable, and if you’re really looking for the opinion of accomplished experts in the field of finance, you’re not going to find a much higher authority in this country than…Tim Geithner or Ben Bernanke.

    Of course, I think a lot of the deference you see to Krugman in some circles (see Sirota, David), is simply a function of the fact that Krugman is agreeing with them. I doubt very much that you’ll see the same sort of citation should Krugman disagree with them, and I certainly doubt you’d see much of a shift in opinion based on what Krugman says (that Krugman supported the bailout certainly didn’t change the OpenLefters opinion any). So I think Fox is being a bit hyperbolic here.

    Really Smart People Doing Things I Don’t Understand

    Tuesday, March 24th, 2009

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    by Brien Jackson

    I’m glad someone other than me went there first:

    I’m biased in this regard, obviously, because I think the costs of nationalization likely outweigh the benefits, and that in any case it would be very difficult for Obama to get Congress to authorize the trillion dollars or more the government would need to take over America’s biggest banks. And I agree with Thoma that the Geithner plan could work. But what I like best about his conclusion is something else: his implicit recognition that the people who came up with this plan — Geithner, Larry Summers, and Ben Bernanke — are well-versed in the problems of the banking system and serious about trying to solve them, rather than being either oblivious or corrupt. Much of the discourse around the Geithner plan, and around the nationalization debate more generally, seems to assume that Obama’s economic policymakers don’t understand the gravity of the situation or the virtues of nationalization, or else it assumes that they don’t really care about improving the real economy. I’d be very surprised if either of those things was true.

    I don’t agree with the first sentence, but the rest of it seems on. It’s easy enough for us (yes, I’m including myself) that writing on the internet doesn’t actually make you an expert about everything, and agreeing with me doesn’t make you the smartest person in the world. Similarly, disagreeing with me doesn’t, necessarily, mean you must either be completely corrupt or the dumbest person in the world, although that’s certainly a possibility. It’s certainly fair to point out that Paul Krugman is a Nobel prize winning economist, but you know who else is a very accomplished economist? Tim Geithner! And Ben Bernanke! And even Larry Summers! And each of them has more experience with financial issues than Krugman, whose Nobel was won for his work on trade issues (and I don’t think David Sirota would approve of those ideas, for the record). Which isn’t to say that Krugman is wrong, or that I think he’s unqualified to give an opinion on the plans, rather it’s simply to point out that he’s not the only really smart person in the room, and there are plenty of really smart people who don’t share his opinions. These guys aren’t quarterhorse afficianados.

    Also, making sure the executives get hit hard is not a recovery plan in its own right, and recognizing that does not make you a Wall Street stooge.

    Disagreeing with Krugman

    Monday, March 23rd, 2009

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    by Brien Jackson

    One thing that tends to create problems for me in sorting through issues outside of my realms of expertise is my healthier-than-most respect for the expertise of others. It’s nice when there’s a consensus, at least amongst ideological brethren, on these matters, but when peole like Paul Krugman and Brad Delong are disagreeing on something, what am I to do?

    Well, for starters, boil down the disagreement to matters more on my footing, if possible. And conveniently enough, this seems to be where most of the disagreement on the Geithner bank plan is. Delong thinks the assumptions policy makers are making are probably somewhat sound, and the plan they’ve developed fairly well constructed to address the problem as they see it. Krugman, on the other hand, thinks that they’ve misconstrued the problem, so any plan made on those assumptions must be flawed. But as far as I can tell, he thus far hasn’t contended that the plan is a bad one if the assumptions are accurate, which signals to me that the difference of opinion centers on these assumptions where, alas, you’ll have to find your own way, absent making silly judgments about which experts are better than others forever and always (as I think a lot of progressive bloggers have a tendancy to do with Krugman).

    What’s more, Krugman seems to be basing a lot of his analysis on his estimation of the political variable in question. And, to put it as gently as I can, it’s important to remember that political calculations are certainly not Paul Krugman’s area of expertise. Indeed, for as good as he is with economics, he tends to be eqaully bad in matters of politics. His column today, for example, is mostly based around the fear that we won’t have the political will to undertake a different course of action should the Geithner plan fail, a fear that I simply don’t see any merit to. As A.L. explains:

    I wouldn’t for a second presume to take issue with Krugman’s economic analysis (I’m just a lawyer), but to the extent his opinion is based on his assessment of the current political climate, I think he’s probably wrong. Saving the financial system isn’t like enacting health care reform. With something like health care, you may only get one shot. If the public sours on your idea, they have the status quo to fall back on and the odds are that nothing will get passed. But if the Geithner plan doesn’t work, the financial system is still going to need rescuing and nobody is going to be content to do nothing. Obama would likely pay a price politically, but everyone would still be clamoring for him to do whatever it takes to save the economy. And nationalization would be the obvious next option.

    I think this is mostly correct and, from a political standpoint, nationalization is a much trickier proposition than from a policy standpoint. It will certainly help that if it is seen as a true measure of last resort, and if the necessary scale is as small as possible. So, with that in mind, I’d say the best case scenario for the Geithner scenario is that it shores up some less troubled institutions, leaving them in decent shape going forward, and as such weeds out the truly bad banks that will subsequently need to be nationalized. This would both minimize the investment necessary for nationalization and demonstrate that nationalizing is truly a measure of last resort, with no other options left on the table.

    Return of the Shrill

    Thursday, February 12th, 2009

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    by Brien Jackson

    Clive Crook wants to be serious:

    I do try to be reasonable, which I know can be infuriating, but as it happens I don’t think that “being reasonable means declaring, in all circumstances, that Democrats and Republicans are equally in the wrong”. Each side is usually somewhat wrong, I find, but the proportions do vary according to topic. I am very much in the Democratic camp on the stimulus, for instance. I think it is unreasonable, on the other hand, to regard everything Republicans say as definitionally wicked or stupid or both, which is the organising principle of everything Paul [Krugman] writes in the NYT.

    I don’t know if that’s really the underlying assumption to everything Krugman writes, but Krugman’s point in the larger discussion going on, that you simply can’t “seriously engage” with Republicans on the stimulus because there’s nothing to engage with, is pretty sound. Forget, for a second, the “economic theory” of modern Republicanism. Forget grave intonements about spending, and deficits (all of a sudden) and the preferability of tax cuts, and their hand-wring over “Europe,” and just consider the following.

    Chuck Grassley (R-IA) is the ranking minority member on the Senate Finance Committee. He was also the chief agitator for including a $70  billion AMT patch in the stimulus bill. Many, many people pointed out that this was both wasteful and pointless; on the one hand it would mostly be targeted at upper-middle class earners who hadn’t lost their jobs, meaning there would be little stimulative effect, but that also, rightly or wrongly, Congress would no doubt have done it anyway at some point, so there was no reason to put it in this bill. Nevertheless, Grassley got what he wanted, and school construction, aid to states, and so on were cut in favor of Grassley’s AMT patch.

    Now, after being placated to the tune of 9% of the entire bill, what did Chuck Grassley do? He voted against the final bill of course. Along with all but 3 Republicans in the entire Congress.

    Put the economics aside for a second, and ask yourself what, exactly, there is to “engage” in such blatantly craven political positioning?

    Maybe a Bit Too Far

    Monday, February 9th, 2009

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    by Brien Jackson

    Daniel Drezner makes the fairly ridiculous assertion that “Keynsians” are becoming the new neocons, and that Krugman, specifically, is reminding him of Richard Perle. I suppose I should point out that this is basically just another invocation of “the Shrill One” and doesn’t actually contain any sort of substantive rebuttal to Krugman, but in the spirit of comity and seriousness I’ll give this a bit more thorough unpacking.

    First, it’s worth keeping in mind that the underlying circumstances Drezner is comparing are about as far apart from one another as night and day. In retrospect, one of the most appalling things about the neocons in the run-up to the Iraq War was the way they shamelessly exaggerated the threat Iraq posed. I mean, senior administration officials right up to the President actually said, repeatedly, that there was a risk Iraqi Predator drones might disperse a chemical agent over a U.S. city sometime this decade and warned, “the smoking gun may be a mushroom cloud.” It’s sort of hard to remember that now, mostly because subsequent discoveries have demonstrated just how ridiculous the idea was, and I suspect most of us just want to forget that we actually fell for the bullshit.

    On the other hand, I very much doubt that anyone really thinks we do not, in fact, have a dire economic situation on our hands. I mean, we lost 600,000 jobs last month, unemployment is at a 16 year high, and is likely to crack double digits by mid-year. It’s right in front o our faces, in other words. Indeed, even the biggest right-wing critics of the stimulus bill aren’t denying the existence of a problem so much as they’re trying to blame it on Democrats.

    Secondly, I suppose it’s just me, but if anything I think Drezner is painting with an overly large brush by invoking the specter of “Keynsians,” in the sense that he seems to be implying that Krugman, and others, have a knee-jerk, ideological, favor for massive fiscal expansion in the face of economic downturns. But that’s not really true, of course, and Krugman has written before that, usually, the best cure for an economic downturn is monetary policy. But every recession is not created equal, and in this unique situation that’s not an option. It’s a strategy of “fiscal policy of last resort” so to speak.

    Finally, I don’t really think Krugman is wrong to treat stimulus opponents so dismissively, and Drezner doesn’t really outline why he should. To wit, neither the Republican opposition nor the centrist trimmers are actually providing any sort of rationale for their positions and, when they do, the nonsense borders on comical. How, exactly, are you supposed to substantively engage with a party whose chairman is on national television arguing that a government job, or a job contracting for the government, isn’t really a job and that the problem with the stimulus bill is that it just “makes work?” I’m not saying that bona fide detractors shouldn’t be engaged with in a serious fashion, but for the most part there aren’t bona fide detractors in this sense. You have, on the one hand, a bunch of wingnuts (yes wingnuts) running around saying ridiculously absurd things on a daily basis and, on the other hand, a group of “centrists” looking for a chance to preen for the Broders of the world. That’s not a recipe for any sort of substantive debate, and treating either of those as intellectually serious positions would be insulting.

    Krugman Joins the Lanny Crew

    Friday, May 9th, 2008

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    Not quite as brazen as Davis or Carville, but today’s piece just drips with the sort of high-handed hawking while pretending not to hawk Krugman has perfected since last November or so. Of course, Krugman also had the chutzpah to try to suggest he wasn’t a Clinton supporter, so…

    And let me point out the obvious quickly; Krugman is an economist, he is not a political strategist.

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