Propaganda Lesson: Economics and Recessions from The NYT: A Long [Sad] Story and Stern Tutorial on Tax Cuts.

  

From Friday, February 08, 2008 10:16 AM

We are always stimulated and enlightened by studying the logic stream of those who would give us a stale, tautological propaganda blast while never budging from their narrow political objectives. This is always an adventure; it is like a cipher and the key is always the word liberalism. In today’s screed, based solely on the usual lack of government controls of our society, in any and every form, we sift through the gloom and doom and find out that tax cuts must have caused the problems .

In an article entitled A Long Story [1] by Paul Krugman the Op-Ed Columnist at the Walter Duranty Papers and most prestigious non economist economist of our political times we are treated to a long list of sorrows from previous recessions:

“The economic news has been fairly dire this week. The credit crunch is getting worse, and a widely watched indicator of trends in the service sector — which is most of the economy — has fallen off a cliff. It’s still not a certainty that we’re headed into recession, but the odds are growing greater.”

A little doubt is wise in starting off on a screed so as to give the reader the illusion that the author is not omnipotent in all matters.

“And if past experience is any guide, the troubles will persist for a long time — say, into the middle of 2010.”

Now, there is no doubt. The Terror is upon us. So, how bad will it be?

“On one side, the bursting of the housing bubble is playing the role that the bursting of the dot-com bubble played in 2001. On the other, the subprime crisis is creating a credit crunch reminiscent of the crunch after the savings-and-loan crisis of the late 1980s, which led to recession in 1990.”

“Now, you may have heard that those recessions were short. And it’s true that the last two recessions both officially ended after only eight months.”

Now, we are given three clichés and the notice that the actual lifetimes of the economic tumors were much longer than what the official numbers showed. Apparently, the books were cooked and the truth will be revealed by Professor Krugman. We can wring our hands and promise to vote Democrat as a partial solution.

The propagandist now sifts through the numbers, carefully selecting those features that suits his little sad story here and then sums up:

“Since the current problems of the U.S. economy look like a combination of 1990 and 2001, the shape of this episode of economic distress will probably be similar to that of the earlier episodes: even if the official recession is short, the bad times will linger well into the next administration.”

This is something like a double whammy in economic terms. Oh, woe is us!

Our vaulted economist then relies on ‘experts’ to support his vision:

“And some highly respected economists are issuing dire warnings. There has been a lot of buzz about a new paper by Carmen Reinhart and Kenneth Rogoff that compares the United States in recent years to other advanced countries that have experienced financial crises. They find that the U.S. profile resembles that of the “big five crises,” a list that includes, for example, Sweden’s 1991 crisis, which caused the unemployment rate to soar from 2 percent to 9 percent over a two-year period.”

Ken Rogoff [2] was a very formidable chess opponent at the New Haven Chess Club when he was majoring in Russian Economics at Yale in the early 70s. The Russians taught us much about economics, the value of an hour’s work and how well Moscow Central Planning was the key to the howling success of the USSR. I never won a game on the boards against Ken, even when he was blindfolded,  I wonder if he ever learned anything about capitalism. Rogoff is famous for attacking the 2001 Nobel Prize winner Joseph Stiglitz,[3] [4] for his criticism of World Bank policies [5] and debt,  for which Rogoff called snake oil as he reflexively reacted to “…debt…printing more money… inflation.. and such.” Stiglitz was offering a criticism of neoliberal [6] assumptions that may have wrecked the Asian economies. Stiglitz stressed that emerging countries should focus on “…macroeconomic issues, such as the budget deficit, its monetary policy, its inflation, its trade deficit, or its borrowing from abroad…” and not rush to free trade until they were ready to compete. Here we are reminded of the Adam Smith absolute advantage.[7] Don’t do this until you have a true market advantage for your products. Stiglitz railed against those elitists who would fly into a place like Ethiopia, spend some time in luxury hotels and fly off to Europe and their friends while the money was sucked out of the victim country.

This is all very complicated and tends to show us that Ivy League graduates cannot fully understand macroeconomics, as they demonstrated to us recurrently, but they do understand their left-liberal political objectives.

Now, we get to hear the solution and salvation of our woes.

“Maybe we’ll be lucky, and that won’t happen. But what can be done to limit the damage?”

Tell us!!

But, first we need to hear what will not work and we get a list:

[1] Interest rate cuts did not work very well in the past.

[2] The stimulus package will not work because the Republicans refused to give extra money for unemployment and food stamps, all critical measures in our economy.

Should we raise interest rates or stop the stimulus package? What? Now, we get the solution:

“In particular, now would be a good time to think about the possibility of going beyond tax cuts and rebate checks, and stimulating the economy with some much-needed public investment — say, in repairing the country’s crumbling infrastructure.”

Didn’t Hoover and FDR try this and it didn’t work? FDR’s WPA, CCC and other programs did little to curb unemployment that ranged from 24% in 1933 to 14% in 1940. Social Security, the glittering star of the New Deal is going broke. So, let us wonder about fixing our ‘… the country’s crumbling infrastructure’ as the NYT Tax Hike Zombie[8] advocates. This didn’t work.

Then we are treated to the necessary intellectual attributes of the next President:

[a] He/She should be “…free of the ideological blinders..[that ruined our economy]…” and

[b] The need for the proper economic advice.

What does this mean? Oh, the next President needs economic advice? And, what better place to learn economics than from the New York Times?!! How do we pay for this?? Tax Hikes?

Whatever happens here, we need to learn that tax cuts are evil, that the  government can provide a proper life for us all and that neoliberal economists can guide us our of the looming recession into the Golden Age. We also have to slow the growth of the US!

“University of Maryland economist Carmen Reinhart and Harvard University economist Kenneth Rogoff agree. They say the current crisis appears on track to be at least as bad as the five most catastrophic financial crises to hit industrialized countries since World War II.

If those past experiences are any guide, the economy is in trouble, they argue in a recent paper. Indeed, "if the United States does not experience a significant and protracted growth slowdown, it should either be considered very lucky or even more 'special' than most optimistic theories suggest," they write.”[9]

Let’s go with Hillary’s 800 billion new spending adventures and balance the budget and tax ourselves into prosperity! Let us slow down growth and give jobs to the unions to fix the bridges and potholes.

Raise taxes, discourage capitalism and get on with some real slow economics.

Sure.

rycK

Comments: ryckki@gmail.com

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[1] A Long Story By PAUL KRUGMAN Op-Ed Columnist .Published: February 8, 2008. http://www.nytimes.com/2008/02/08/opinion/08krugman.html?_r=1&hp&oref=slogin

[2] http://en.wikipedia.org/wiki/Kenneth_Rogoff.

[3] Joseph Stiglitz Author of Globalization and Its Discontents

(New York: W.W. Norton & Company, June 2002)

[4] An Open Letter By Kenneth Rogoff, http://www.imf.org/external/np/vc/2002/070202.htm

[5]  http://en.wikipedia.org/wiki/Globalization_and_Its_Discontents.

[6] Neoliberalism  “…seeks to transfer control of the economy from the public to private sector.” http://en.wikipedia.org/wiki/Neoliberal

[7] The Complicated Issue of Free Trade and Balance of Trade Explained. “Adam Smith had used the principle of absolute advantage to demonstrate that traders will attempt to find the lowest cost of items, consistent with quality, so that they can preserve wealth. The only thing that works for those who are allowed to make decisions with their money is that people actually will compare prices and choose carefully so as to not waste their resources. Note that government spending does not fit into these narrow confines. The comparative advantage theory of Ricardo shows that two partners will both increase their output when the advantage is not equal. That works in a limited sense. There is a set of serious criticisms of comparative advantage[7] and all apply today.

[8] The Tax-Cut Zombies  By PAUL KRUGMAN Op-Ed Columnist Published: December 23, 2005. http://select.nytimes.com/2005/12/23/opinion/23krugman.html?hp

[9] http://leftword.blogdig.net/archives/articles/January2008/21/WHEEEEEEEEEEEE.html