We’re So Lucky to Live in Times Like These

Our greatest glory consists not in never falling, but in rising every time we fall. — Confucius

If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man. — Mark Twain

Doomed! Professor Krugman:

The GOP prescription for higher employment is actually quite spectacular — it’s a thing of many levels, an ignorance wrapped in a fallacy.

The idea is this: we’ll lay off government workers; this will raise unemployment, putting downward pressure on wages; and lower wages will lead to higher employment.

So, for this to work you first have to have a downward-sloping demand for labor as a function of the nominal wage rate. There’s no reason to believe that’s the case: in a liquidity trap, falling wages probably reduce the demand for labor, because they worsen the burden of debt.

And even if you somehow bypass this objection, the argument is still nonsense: it says that by reducing demand, you cut the price, which increases demand, which means that you end up selling more than before. Um, no — that’s the kind of answer that, in Econ 101, has you suggesting that the student get special tutoring.


The “solution,” according to those same companies, is for the U.S. to offer a tax amnesty that will allow them to repatriate profits (which they have to do in order to, for example, pay dividends or buy back stock in the U.S.) at much lower tax rates — like zero. The lobbyists’ talking point is that if the companies have more cash in the U.S., they will invest it in ways that will create jobs. This doesn’t even pass the laugh test: as Coy and Drucker report, U.S. nonfinancial companies are already sitting on over $1 trillion in liquid assets within the U.S. (Link.)

How we’re winning in Afghanistan. Not.

Let’s see if I’m clear: Invading Iraq to destabilize the nation and in the process enable the slaughter of minorities is a good thing. So now Joe Lieberman wants to hit Syria because their leader isn’t doing a good enough job killing his own people?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s