Well, here's one theory on Krugman....
Al
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Paul Krugman's hurt feelings
P.M. Carpenter
THE FIFTH COLUMNIST by P.M. Carpenter
As a newspaper columnist addressing a general readership subliterate in the arcana of economics, Paul Krugman must refrain, naturally, from what comes naturally to him in an academic sense. Economic analyses still apply in his columns, of course, but they're democratized, so to speak, for the political masses.
Throughout the Bush regime, Krugman's approach presented no conflicts, no difficulties, no unease, since Bushonomics was as conspicuously dunderheaded as Bush's politics were supremely dominant. It required little comment of genuine economic expertise to trash virtually everything Bush did in that arena, since virtually everything he did was both brazenly trashy and brazenly political.
But most of all, for at least six out of eight years, whatever Bush wanted, Bush got.
That was Krugman's Golden Age of political commentary, since no cognitive dissonance abounded. Only market fundamentalists defended Bush's policies; they were the fairest and easiest of game for everyone else.
Now, however, the politics of economics is as tricky as the economics itself, perhaps even trickier. And that is what Barack Obama must deal with. That's the reality; hence any commentary that embraces the political while suppressing economic reality is vastly attenuated, just as economic commentary that suppresses the political is merely so much spitting in the wind.
It's within the latter that we find Paul Krugman today -- and largely, I would venture not unreasonably, because of sour-grape politics. I have this nagging feeling that had his candidate prevailed, Prof. Krugman would now be lecturing us on the profound political constraints of economic policy. But of that fairness, it seems, Mr. Obama is undeserving.
Heavy on the econ and light on the politics, Krugman's treatment of yesterday's Treasury Department announcement was, unfortunately, typical: "the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt." (They would also walk away with a loss, but let's not muddle our condemnation.)
Krugman continued: "there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different."
But what they're doing -- like it or not -- is the politically possible, which is far better than nothing, which is what they might get if they dug in their heels. Yet Krugman refuses to openly concede this while, astoundingly, unintentionally conceding it: "You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost."
Yes, that likely occurred to the (few) boys at Treasury -- you know, the ones receiving frantic phone calls every three minutes from the political boys at the White House. (Oddly enough, and in fairness to Krugman, he once ever-so-gently conceded that the inadequate economic stimulus package might have been all that was politically possible at the time, while I was one of the many who begged to disagree: the Obama administration could have strong-armed more out of Congress, but it failed to try.)
The gist of Krugman's criticism of the Geithner plan was that your tax dollars are being heaved out the window, onto the happy sidewalks of Wall Street, and to no greater positive effect. It was that clear-cut, which puzzled, since liberal economist Brad DeLong of UC-Berkeley, for one, found much in the Geithner plan to lovingly caress:
The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off -- in either case at an immense profit.
But pray tell what, one is bound to ask, "if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?" Well, in that case, writes DeLong with the kind of politico-economic bluntness I admire, "we have worse things to worry about than government losses on TARP-program money -- for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition."
From another inquiring angle: "So the Treasury is doing this to make money?" No, writes DeLong, "making money is a sidelight. The Treasury is doing this to reduce unemployment" -- which, purportedly, was Krugman's chief concern.
Let's just face and accept the dynamics of another discipline in play here -- the psychology of Krugman's economics and politics today, as they shall stand for the next four to eight years. They're going to be hypercritical, because Obama thumped his candidate, Krugman can't get over it, and it'll bleed into most every column.
So take each with a grain of salt.
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