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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (34487)	10/24/1998 11:41:00 PM
From: Ilaine	Read Replies (2) \| Respond to of 132070

Thanks, Mike, actually you answered the question I was trying to ask. I think Krugman's short essays don't give enough substance to fairly evaluate his arguments, so I will look for something more substantive, but I like him. He addresses the argument that technological improvements which increase productivity also cause unemployment: "But wait - what entitles me to assume that consumer demand will rise enough to absorb all the additional production? One good answer is: Why not? If production were to double, and all that production were to be sold, then total income would double, too; so why wouldn't consumption double? That is, why should there be a shortfall in consumption merely because the economy produces more?" This, I think, is relevent to the debate about the cause of the Asian crisis, and relevant to my dilemma. Why, indeed, should there be a shortfall in consumption merely because the economy produces more? "Here, again, however, there is a deeper answer. It is possible for economies to suffer from an overall inadequacy of demand - recessions do happen. However, such slumps are essentially monetary - they come about because people try in the aggregate to hold more cash than there is actually in circulation. (That insight is the essence of Keynsian economics.) And they can usually be cured by issuing more money - full stop, end of story. An overall excess of production capacity (compared to what?) has nothing at all to do with it." Pretty arrogant. Pretty intriguing. Warning, the following is not Krugman, but products of my own diseased mind: let's think about the culprits who have not been actually fingered: 1. At least half of Russian banks are fronts for organized crime, used to funnel IMF money and other capital out of Russia. This is clearly a removal of money from Russian circulation. 2. A large part, not sure if it has been publicly quantified, of US stock market and bond market growth in 1998 was so-called "flight to quality," that is, removing foreign money from own country circulation and putting it into US investments. Note that now that Asian capital is flowing out of US markets, global markets are improving. 3. How much of "Asian crisis" is due to ill-advised sinking precious capital into production of computer chips and components that were already out-of-date and never to be saleable in US or other first world markets? [Why don't they sell the stuff to other Asians, even if at fire sale prices? Time for the Asian equivalent of Joe Sixpack to experience the computer revolution. Or am I saying "let them eat cake?"] Well, if I sound confused, I told you he was a lefty. I frequently (often?) find that reading something by someone with whom I don't agree more informative and helpful than otherwise. E.g., I spent this afternoon loafing in local Border's reading lefty magazines defending Clinton (e.g. Tikkun, New Yorker), trying to understand why they keep saying it's just about sex. Is it ok to commit perjury if you are being unfairly targeted by the right wing?

To: Knighty Tin who wrote (34487)	10/25/1998 2:19:00 AM
From: Merritt	Read Replies (1) \| Respond to of 132070

Mike: Re: point 2. of your response. Krugman, with his example of $35 gold in 1971, gives a real life example of Mencken's line, "There are lies, damn lies, and statistics." The $35 gold price was artificial, and later that same year, Nixon took the international dollar off the gold standard and gold immediately went to the $150 area, which is what you would have had to pay for gold all year, had you wished to purchase it in, say, India. IMO, he was purposely misleading so that the statistics would better fit his model...that's intellectually dishonest. Best regards, Merritt PS: Prior to '71, there were unscrupulous small-time miners <G> who would smuggle their dust out of the country rather than surrender it to the @*** gov't...I had a wild experience related to that - but if I told you, I'd have to kill you.<G>