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Who is behind the deficit hysteria?

By Fred Bethune on Thursday June 3, 2010 12:11 PM

Over at Corrente, Lambert recently took Paul Krugman to the woodshed over his use of "passive constructions and flaccid verbs … designed to obfuscate" in Monday's column on the emergence of the need for austerity as a central tenet of the economic conventional wisdom.

Why does Krugman avoid naming the culprits behind the spread of monetary and fiscal hawkishness? Krugman has responded with more evasive manoeuvres. He claims that "it’s not so easy to identify the culprits, and … vested interests aren’t as clearly the villains as one might imagine."

Let's take a closer look at the evasive language being used here: "It's not easy to identify the culprits" is not to say that one cannot identify the culprits, and that "vested interests aren't as clearly the villains as one might imagine" is not to say that vested interests are not the villains.

Is it really so difficult to identify a group of culprits or the links to the vested interests? The relationship between the propaganda, the agents that disseminate it and interests that benefit from it may not be immediately clear those unaccustomed to asking "cui bono?" and following the paper trail, but that hardly applies to us here at SMBIVA, does it?

For culprits, how about the mercenary economists: both high-end academic economists like Ken Rogoff (shown above, explaining his theory about what happens when debt exceeds 90% of GDP to a member of Obama's Fiscal Commission), and their down-market cousins at the think tanks? I'd say that easily takes care of the proximate source, but what of the vested interests that ultimately set the agenda and determine the payscale of said economists? Larry Summers, mercenary economist extraordinaire, has always had a sharp eye for scouting out his next meal ticket, and scoped out the primo patrons a long time ago: the "stateless elite".

Obviously such an elite is a bit amorphous, but it still has one dominant, highly visible social institution through which it seeks its interest: the multi-national corporation. The multi-national corporation enables them to freely move around money and goods, allowing them to exploit the differences in regulations, price levels, tax rates, etc. and scoop up arbitrage profits along the way.

What does this have to do with promoting austerity in the developed nations? If we were to fully stimulate the economy, the huge trade deficit generated in the US (mainly with China) would lead for calls to reinstate tariffs and capital controls, or for harmonization of labour and environmental standards, or for reform of the forex system. That would mean hampering the ability of the stateless elite to move money and goods around the world, and/or eliminating the most lucrative sources of profit (the high dollar, in particular). The stateless elite would rather have the developed countries stagnate than have their perpetual profit machine shut down.

So why the hysteria? No citizen in their right mind would accept policies that are likely to result in their own unemployment, and no politician can campaign on increasing unemployment, but the stateless elite needs to make such policies acceptable as "necessary" evils. Solution: send forth the dismalians.

Angry face

Comments (21)

At one time, multinational corporations were technically distinguishable from transnational criminal enterprise. I'm not so sure that's the case today.

CF Oxtrot:

Why does Krugman avoid naming the culprits behind the spread of monetary and fiscal hawkishness?

Because they bake his bread, and churn the butter he spreads on it.

SCORE: Krugman 1, Truth 0


bethune strikes the mother load

nice chance to see if smbiva econ con line gets a better notice
when written in actual orthodox english sentences:

for comparison

here's my private blog entry on same

paul krugman in presto reflexo mode :

"Lambert has a righteous rant about my Monday column, in which I decried the emerging conventional wisdom that we need to tighten monetary and fiscal policy, but didn’t say much about who is responsible for this emergence.

Fair enough, although I’d like to point out the space issue: I had room enough in my 4800 characters including spaces either to explain what’s wrong with the new view or to explain who’s pushing it, not both."

and of course he's never explained what's wrong
with the "new view" before ...right ??
only a zillion times since summer 09

pk dilates :

"But I’d also say two things: first, it’s not so easy to identify the culprits, and second, vested interests aren’t as clearly the villains as one might imagine."

he bows to corporate hegemon
but knoweth not what it is
because it has echos of its voice everywhere
as befits a hegemon

"On the first point, the pain caucus isn’t being orchestrated in the same way that, say, the cut-entitlements caucus (and it’s not the same thing)."

in other words the deficit hawks and inflation phobia mongers
are so pervasive extensive and multiplicatively well placed
in multi purpose multi pulpits and multi oracle positions
thru out his reference class the chattering class
the merit class

they are not even individualy itemize able like say ".. Pete Peterson ... deliberately pushing the line that Social Security must be destroyed;"

nope there are no easily identifiable groups of hardened resolutes pushing
"policy induced fast recovery
must be destroyed "

why ??

well because they are too numerous too pervasive
to look like a special voice

"it’s really hard to see exactly where the line that the Fed funds rate must rise is coming from."
ya if its coming from every corner of your walk of life
from the media in the morning
thru the lecture hall/ seminar at mid day
to the cocktail party after

".. in this case I don’t think there’s a vast hard-money conspiracy"
why a conspiracy
when its everywhere you don't need a conspiracy

but paul
isn't a religion just a cult that's every where

"it’s a bad idea bubbling up among many people."

yup like belief in embryonic "souls"

bubbling up like a mass feeling bubbles up
emergent spontaneously
like what

march madness ??

its deficit angst time again folks
and twow
its inflation dread time too ...

a long interval of mass conditioning
still needs its articulated prompts
it's cues
these calls from the public minerets
are all traceable back
to the mullahs of corporatism
and corporatism now knows precisely what it wants next
and why
for oecd economies
and yes hard money is a key to the emerging program

the forex tilts must survive is not a special projest
identifiable catalytic agents like peterson or scaife or the walton kids that's for repealing an elite tax or a prole benefit
targeted stuff
specific stuff
purveyed by a narrow cast
like the abortion movement

where as this is so basic and general
its pure "all u sinners repent "

an all points broadcast

"none of those people are the sorts who are likely to find themselves, or anyone they know, among the long-term unemployed. So class is certainly a factor."
notice he sees them exempt from the pain they think is necessary
no they won't be hurt
but who will the pain of the proles actually benefit pleasurable
just how ?? ...that PK should be your fuckin message

".. I find myself in conversations with people I don’t think have a deep urge to inflict pain and/or safeguard the rentier class "
as if conventional wisdom relied on personal revelation or deductive demonstration
not dimmly acknowleged authority and un examined
plausible meme tale programming

“But how long can we keep interest rates low? Won’t bad things happen?”" is the question of a talking dupe a meme zombee

the conditioning is universal
we speak like a chorus

its a religion we share stupid
not some obscure cult

its learned responses from the congregation
are always there when needed

"Which is not to say that this position makes any sense. What it does reflect, instead, is the pervasive bias toward believing that imposing suffering is good policy."

pk you dumbo
good policy for who
the pwog dupes the victimozed proles maybe not
but its damn good for the corporate elite
the inner sanctums everywhere of every congregation
knows what corporate america needs today
whether they identify the source themselves or
just don't care

"is the stag and its pain
good for the petty "rentiers" ?"

sez the high carnival priest
"maybe yes maybe no "answers the high carnival priest
"..but who the fuck cares
in the end they're just rubes too "

if corporate agents run policy
then their motive not some pwog dupes motive
is the motivation to talk about

fuck the clogged headed notions of the benighted lower pwogery


" I wrote about this(babbit-pwogie axis ) bias
a little while back, citing Keynes,"

ya ain't you just
on top of it all paul !!!!

the singing phrases of k quoted :

"..it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good,"

but the key is the stinger this hideous cant
by its pacifying outcome

" commended it to authority "

and authority ever eager to prserve a favorable status quo ..

then comes this muddle up
as is inevitable
with a meritoid view
which by middle position
must remain
ever the agnostic
about the big classes eteranal zero sum antagonism
this muddle
a classic
the strategic retreat into multi causality

where the cause isolated has sttark consequences upon action
it's not the full story "
here :

" it’s not just simple class interest "

it isn't ?? class interest isn't
the decisive the trumping cause ???

" which is why arguing with the ideas can make a difference"
here arguing mens what ??--btw note the defensive under tone --
pk's misiion unblock thinker type heads
if we clear up these clogged pwog brain networks
by unknoting their meme wrecks
piece by piece why then .with proper reframing we can ...

elmer "merit" fudd stuff eh ??

and of course it's encouraged
by the inner cuacus
its utter inability to electrify
the pwogs into anti wall street frenzy
recommends it

ya that's the ticket get that fuckin terrier there krugdoodleman
to get em into an agonizing jock strap re appraisal

" on the one hand ...on the other hand "

yes indeed trhat sermon
by pastor krugman's
commends itself to "authority "



I think that Krugman's main issue here is not so much that he is beholden to the same interests, but that he thinks of himself as constantly fighting a high-stakes battle of ideas. He needs to believe that the arguments he has with people (other economists, policy makers etc.) are in good faith, and that if his opponents were smarter or less biased or he made his case better that they would agree with him and adopt his favoured policies (within his estimation of what is politically realistic). Those that he thinks argue in bad faith go neatly into a category of "movement conservative" or "freshwater economist" and come with bright warning flags.

Right now he's finding all sorts of smart non-movement-conservative people that he thinks are honest, realistic technocrats (dems, bernanke,academic economists, his general milieu) pushing a bad line on fiscal and monetary policy to the point where it is quite clear that their reasoning is not rational or consistent with mainstream economics. The one other policy where he runs into the same issue is China's exchange rate policy, where he is also unable to explain why other economists and politicians won't support/do the obvious right thing.

Krugman blames it on a "pervasive bias towards believing that suffering is a good policy" rather than contemplating that these people might not be arguing or acting in good faith. They know where their butter comes from, but Krugman is in denial about the extent of the corruption because it would render his whole strategy meaningless. If all of these people don't even care about ideas, then why argue and plead with them, why be Paul Krugman?



"why be paul krugman" indeed
i think the soup bowl krug swims in fits your description
so far as general folks even specialized
nit wit economists who forgot the bad macro they learned in grad school
and haven't continued to question the conventional wisdom of the macro -ites

but macro economists ???

he must delve deeper into their workings eh ??

or maybe he just shelves em
with the chicago whores

actually i leave reading the liberal merit mind particularly the celebrated ones to
their own devices
except as a high profile pinata


"that hardly applies to us here at SMBIVA, does it? "
if you mean the readership
i've not noticed they give a deuce
its too old news for em
once you hook on to the MNCs rule the planet gig
once you grasp that...the rest is dressage
as father s sez
he likes to quote goethe you know

"alles ist dresaage "
or something like that
i forget the nut that isn't dressage
at least the nut according to

"the greatest german
since martin luther "


I'm not sure why he doesn't really get into the deeper questions of macro.

I think he's a bit like Rodrik in that he would rather use the credibility of mainstream econ to back up his policy arguments than to start attacking the core economics theories themselves, like Stiglitz


ya stig can get down below periscope depth
a real banger roo on capital markets
his latest book gives a very boring recap

he's a demon condemned to the body and bleet
of a ewe


the merit class believes in sacrifice
the hard road...like spinoza

they see joe twelve pack
taking the the easy consumer credit road
eating too many sloppy joes
and lobster rolls
hitting the tanning booths and taverns
watching screaming fish bowl tv
their recliners make lumpy fans
of them all
and fills their hearts with rage
and a thirst
for redemption
on the installment plan

ya merit types look this over
and figure
these fat bastards need a tighter belt

so the crooked snarling job markets
are suddenly
the righteous icey face
of a vengeful god
a god
of industrious self improving secularity
--a god calvin falsely assumed was in heaven with his son and is really a tenured professor at princeton --

... Ich finde nicht die Spur
Von einem Geist, und alles ist Dressur.
I see no sign of any spirit; it's all... training.

Haven't thought of that in years, Owen. Thanks for reminding me.

CF Oxtrot:


I work on the assumption that anyone who is, or works with/for, the technocrats (a/k/a Merit Class) is smart enough to see the bullshit shell-game nature of technocracy.

Thus I assume Krugman is a shill who knows he's shilling... instead of assuming he's sincere and wrong.

Of course he could be sincerely wrong, which would make him unfit for punditry with a wide audience... and undeserving of the high praise he frequently gets.

I know people who look to Kruggie as a God among the rest of us wee insignificant men in the field of "economics."

I think of Krugman as the econ-pundit equivalent of Obama as POTUS-pundit... full of pompous merit-based argument and rhetoric, empty of substance, utterly devoid of moral rectitude, and completely without any holistic honesty.

I'm not so sure his intentions matter, not at all convinced that his "expertise" matters either. I'd rather judge people on their connection to reality and their honesty, rather than by the size of their fan base.



my god even written in sane north american prose english
written well even coherently and lots more
posts from
the now enlarged
SMBIVA political economics department
receive a polite silence

jay tabor gives us some historic insight aboit labels

oxy the ever vigilante
trounces pk for his objective venality
nothing else but venality passes
all the way up thru
the multi tiered MSM filtration system
to regular columnist
at a leading daily rag

and that's the total so far

--besides the two umble reporters
own idle hour ping pong


assumption :

"... anyone who is, or works with/for, the technocrats (a/k/a Merit Class)
is smart enough to see the bullshit shell-game nature of technocracy."

bold thesis to suggest is self evident oxy

i wish celtic sean
would pounce
or senecal the barnicle

maybe if i claim you're being
ultra left rash
rigidly categorical
dogmaticaly mechanical
petty bourgeois fenatical
you prolly don't bathe enough
and have flat feet
both you and they
all three champions of the back yard squabble will snap into my exposed pinkish fetlock

and we can get something sumptuous
cookin 'round here



I was hoping that maybe Lambert would want to defend his pure-class-malevolence theory vs. the cui bono self interest story, but no such luck. Maybe I'll write up a full frontal assault on MMT and see if that gets a response.

In other news, have you seen the latest from my favourite love/hate object Michael Woodford, aka The Borg ?
I'm still going through the article, but it seems like he's trying to work Minsky into the NK fold now


I find it funny how he can take a nice ripe question, and reduce it down to his rate-centric mainstream macro within two pages.

CF Oxtrot:


I probably do *not* bathe enough, and indeed my feet flatten more each day I age. They were a size 9 when I was in college, and they are a size 11 now, due mainly to pronation, and elongation by flattening. Maybe I need orthopaedic shoes.

I don't know why that statement of mine should not be self-evident. Honestly, I think most of what I say is obviously true. I post out of frustration rooted in what I see as people missing obvious truths. So most of what I post is going to be a self-evident truth, to me at least.

I don't really understand the points you and FB make about macro- versus micro- and why they are relevant to anyone except a fanboy of economics. As I have said many times, economics looks to me like the practice of sports fans arguing statistics instead of getting out there and playing the game themselves. It is a way to seem "informed" on something that they're not actually engaged in.

The field of economics is a way to seem intellectually deep when discussing hairs split and angels frolicking atop pinheads.

A thing either works, or it does not. It is either real, or it is a charade.

Macro- or micro-? Yeah, Hernandez has gone .313 against left-handed pitchers who have a bald spot on their crown and not receding from the front. What will he do against Clemens?

...instead of just watching the pitch, and the resultant swing.

...instead of realizing baseball is just a game, and not life itself.


wodford is indeed the measure of nk
its prime ox
i'll read it too


" getting out there and playing the game themselves"
what game oxy ??
or should i say playing in what part of reality

job unions??
tenant outfits ??
running a business ??

meeting a payroll???

what game ??
lobbying the Hill ???

demonstration building ??

electing candidates ???
what ??
Clemens was a right hander

micro vs macro ???

the whole versus its parts is a basic systemic distinction no ???


"A thing either works, or it does not"
now that comrade makes sense

the guiding model

-- specified with or with out non archimedean numbers --

can be far from predictive
and still usefully lead on to
a policy program
with a properly built
feed back mechanism


all the fuss over fiscal multipliers
in early 09 and late 08
both relative to each other
and absolutely is nonsense
whether unfunded spending increases
or tax cuts

just start pumping and watch the dials
right oxy ???


i mean woodford is an nk prime ox

as in
you can lead your life
like an ox or a lion

or as in
d one law for both an ox and a lion is tyranny

ox vs fox ??

that is another story

a big strong durable slow ...eunich


fucking imageshack... I was quite pleased with that image and now it's gone forever

CF Oxtrot:


To the sports fan, arguing statistics is highly meaningful. Examples are set by the commentary on televised and radio-broadcast sports, where the hairs are split and the angels atop pinheads are counted. It fills time. It gives profundity to a sporting contest's otherwise banal passage of idle time. It lends heft.

My detour into baseball statistics was a joke, not a real depiction. I don't know what Hernandez you were thinking of, but I wasn't talking about Keith, nor about the Clemens named Roger. I just picked two "star" names from when I last paid attention to baseball. The Clemens I mentioned is ambidextrous and keeps a tube of KY jelly in his glove. The Hernandez I mentioned corks his bat. They've fucked each other's wives, repeatedly. And they have the same agent. I think his story was told in a movie starring Tom Cruise, whose religion is a source of inspiration for millions of fools.

Clearly "economics" holds deep meaning for you and FB.

I'm saying that I'd rather play baseball, and I would rather talk about what works rather than hypothecating import from microanalysis of supposedly meaningful theoretical foundations.

The emperor really is naked, even if it's impolite to embarrass him by stating such.


From a sophisticated black limited attire, pretty pink baby doll attire, an asymmetrical sequined hemline, the ballerina to a sexy flounce and rufflugg boots classic minid salsa attire -- it is possible to truly come across any kind of prom gown in British. The selection depends upon you. If you want you'll be able to also go for a extra "vintage" promenade costume made of ruffles, lace and satin as nicely.

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