The Paul Krugman Thread

Krugman wasn't all that impressive last night, but he always comes across as diffident in front of a camera. One imagines that as his Kryptonite Factor. To his credit, Colbert has learned to treat Paul with kid gloves compared to his usual style.

The important part is that the message got out.

Krugman wrote something here:

a blog post

Of course, providing equality of opportunity would mean doing lots of wealth redistribution in the first place, so it's not like I'm disagreeing with his point.

Pretty much, yes. The issue here is not that a fully meritocratic society couldn't work, but that as long as we have fundamental inequalities of food, housing, medical care, education, and even legal protection, there is no possibility for equality of opportunity to exist in the first place.

And would equality of outcome be a good thing? I suspect not...

No, that doesn't make sense. You still need some way to motivate people to produce and excel. It's just that living in abject poverty is one hell of a dismotivator.

edited 13th Mar '14 3:18:16 PM by Fighteer

Krugman posted a micro-review of a new book by Piketty on the relationship of economic growth to dynastic wealth — that is, the ability of people with wealth to accumulate a dominant position in society on the basis of that wealth alone, without producing anything of value.

Long story short, our apparent belief that it is possible to "get ahead" through hard work and innovation may be an aberration in the general trend. Specifically, throughout most of history, most wealth has been inherited (or accumulated through rents), not earned, and it is only in rare cases that society shifts enough to allow the converse to be true.

I have to pull this thread back up to the top, not to discuss economics, but because Paul is also a university professor and sometimes waxes sarcastic about his students' writing.

I'll admit I loled.

That being said, what's wrong with impact as a verb and the word incentivize? :P

edited 21st May '14 8:28:54 PM by TheyCallMeTomu

They are trendy buzzwords that say more about your lack of creativity than your education.

Blame my economics professors for teaching me buzzwords, then.

Brevity is the soul of wit; is there any more precise a way of saying "creates an incentive towards behavior X" than saying "incentivizes X?" that conveys the same meaning?

Language is a matter of function. If it were something where it's vapid and meaningless fine, but I don't see how "incentivise" is.

Though apparently it's not a real word, so I guess there's that. Stupid red squiggly lines.

"Incentive" and "incentivize" are greasy ones where you think you know what they mean. But, it's like "need". When you pin it down... it just keeps trying to wriggle away.

Motivation, after all, is a complex ball with a lot of factors involved. But, this cheery word "incentivize" tries to boil it all down into a single thought and make it look... easy... to shift.

edited 22nd May '14 3:40:27 AM by Euodiachloris

That's America. We use our nouns as verbs. Deal.

The concept of incentives is pretty key to Economics. You can't use the "but what does it MEAN" argument against incentivize unless you're willing to make the argument against the word incentive as well.

Krugman's review of Tim Geithner's Stress Test.

From , what could be the effects of the Government(s) paying off/writing off mortgages early?

edited 18th Jun '14 1:51:35 AM by Greenmantle

What I gather the general Neo-Keynesian assumption is by freeing up loans (whether it be student debt or mortgage loans), it should free up household income, which should allow for at least necessities to be paid for, or if you're better off, allow you to buy luxuries you otherwise wouldn't of bought.

Basically reduction of debt should increase demand and potentially consumption, thus improving economic performance.

I'm not sure as to the counterargument, but I suspect the counterargument is it shoots confidence in the foot and makes the financial sector less likely to lend for anything.

Which strikes me as odd, as unless you have a moral objection to being paid by the government, any money is good money.

Though I think part of the financial sector's objection to such payments right now is so many loans are underwater, they'd be paid pennies on the dollars spent for the loans/mortgages in the first place, thus netting losses.

You'd think that would be the primary argument, but no — amazingly the financial sector seems not to mind the idea of having debts (which might be at high risk for defaulting) paid off by the government instead of the debtor. Even if they're yelling about it behind closed doors, they've realized that it wouldn't make them look that good to the public.

Instead, the argument against debt relief is centered around "moral hazard": the idea that bailing out consumer debtors encourages them to take future risks — to be irresponsible with their money. That this concept was disregarded when the banks themselves got bailed out is quietly ignored.

edited 18th Jun '14 7:11:29 AM by Fighteer

The real reason, of course, is that they dont want the lower classes (or ethnic minorities) to be able to access tax money. The conservatives see that as redistribution of wealth, which they are against on principle.

I suspect the Banks don't care who pays off the debt, as long as it is paid off.

edited 18th Jun '14 7:30:46 AM by Greenmantle

What the banks desperately want to avoid is setting a precedent that consumers can be relieved by the government of bad loans without going through a process of default and/or bankruptcy. This poisons their ability to set any onerous terms and conditions they want and expect that the consumer will be beholden to them.

It threatens their power as absolute masters of their universe.

edited 18th Jun '14 7:32:40 AM by Fighteer

One thing against debt relief:

If there's one person buying up EVERYTHING, that one person has more bargaining power. Firms can prop themselves up with "book value" of assets; from an accounting standpoint, selling debts to the government makes the firm's books look worse.

So there are sooooome reasons why said firms might not want debt relief.

There are two primary reasons to be concerned with "book value" of assets: stock price/market valuation and the ability to borrow using your assets as collateral. Doing the latter (in complex ways, but it comes out to the same thing) is what crashed the markets in 2008.

I'm not saying they're RIGHT to oppose debt relief!