Paul Krugman, Nobel Prize-Winning Globalist
Oh, but... but... Paul Krugman is a LIBERAL. Ah, yes. That makes it okay: his global free-trade advocacy—advocacy that won him the Nobel because he masqueraded it as scholarship—is the naïve battle cry of the American political "center" that has allowed China to gut the American economy of tens of millions of jobs and hundreds of billions of dollars by manipulating the yuan-dollar exchange rate for years and years while our intelligentsia sat back bleating about the beauty of their theories of free trade making people's lives better.
However, in the spirit of academic collegiality, I want to congratulate Dr. Krugman and offer a few admittedly biased observations about the life and works of a fine, respected, tenured man of the new world.
Sir, good for you! You got a Nobel Prize for your work on the impact of industry-level economies of scale on global trade patterns. Your advocacy of free trade is praiseworthy, and I am hoping you will now be willing to pursue your passion in an empirical, down-to-earth way. In fact, collecting this data should be done by you, personally, rather than by your grad research assistant lackeys. Here's what you need to do to get this research underway.
Go, sir, and have a long, hard look at the rusted spine of American manufacturing industries obliterated by years and years of having our products artificially overpriced in foreign markets while Chinese products were artificially underpriced in American markets.
Be an American union worker constantly under assault to make wage and benefits concessions while trying in vain to remain "competitive" in that-there "global economy" about which you and your fellow mainstream economists talk so glowing.
Incessantly repeat that tripe about how the United States must adapt to being a "services"-oriented economy, where low-margin, low-wage jobs are all we can get when, in fact, that whole meme has been nothing other than an excuse for watching tens of millions of high-paying industrial jobs fly overseas, not because some other countries are "better" than us (we economists say those countries have "comparative advantage" in manufacturing), but merely because exchange rate manipulation massively, systematically, and catastrophically distorted terms of trade and completely obscured any free market-driven allocation of productive enterprise in the global manufacturing and trading system. You famously claim that the solution is somehow "political" in the sense that we should spend U.S. tax dollars to retrain or reinvent our workforce instead of cracking down hard, fast, and painfully on the countries that are cheating in the global trade game. There's a liberal solution if ever I heard one: cower from the bullies and find "inner strength," perhaps even "peace" with our inner wuss. God forbid we should ever lean over the trade negotiations table and say to the apparatchiks in Beijing, "Knock it off with your 'free markets' lie: you are, have been, and always will be communist authoritarians; you have no place in your world view for 'free' anything, so stop claiming you're free trade advocates when you're most decidedly nothing but old-fashioned mercantilists trying to bleed a giant capitalist economy dry to keep your own failed socialist system going and your corrupt gerontocracy filthy rich." Yes, God forbid we should offend those freedom-loving rulers in Beijing. They might stop selling us their melamine-laced food.
[Note to readers: The next paragraph starts light and political but takes a rather hard turn into the monetary theory. Be forewarned.]
Yes, Dr. Krugman, soak up all that liberal love with your righteous condemnation of the Bush Administration and its policies while you, yourself, and all your fellow globalists cower in convenient silence as that same Bush Administration keeps using the accumulation of greenbacks in foreign central banks to finance reckless federal tax and spending policies. You know exactly why the Bush economists and trade "experts" make the ludicrous claim that China does not manipulate the yuan-dollar exchange rate. Somewhere behind all that silence, you and your fellow globalists have the so-called Classical System trade theory firmly embedded in the backs of your minds, believing that monetary phenomena are irrelevant in the long-run despite the accumulating, compelling evidence to the contrary that the U.S. economy has been gutted by the exchange rate pegging game being continuously executed by those 'irrelevant' monetary phenomena. In fact, you and a decent slate of other reputable economists do a darned good job of vociferously arguing about the nuances of how the current account (trade deficits and surpluses) drive exchange rates, and by doing this little backward flip, you and your fellow globalists first ensure that cause and effect are reversed for the purposes of your discussions, and then you are able to completely ignore the capital account effect when the currency of one country earned by another country flows back to the country of origin. This might not be such a big deal except that the Bush Administration has been using monetary policy—which, again, the Classical System claims is irrelevant in the long run—to have the Federal Reserve overprint U.S. dollars, which China has continually sopped up by buying them with yuan to keep the Chinese currency weak and the dollar strong. That blows the whole short-run/long-run interest rate model of monetary policy dynamics affecting the price of money; but you folks don't have to worry about that because your whole debate among yourselves has the model working backward to begin with. You guys aren't exactly dumb: you know better—or, at the very least, you could know better—but you all have a huge, vested interest in keeping the argument on the other side of the galaxy from anything having to do with long-term, economy-wrecking exchange rate manipulation propelling domestic interest rates, much less driving the growth path of comparative advantages among countries.
I should not be so harsh, Dr. Krugman, as to make it sound like you have no idea that China engages in exchange rate manipulation. The truth of the matter is, sir, you actually called for more Asian countries to institute exchange rate "controls" like the ones in China! Well, gee, as long as the guy next door is hosing our house with a flame thrower, let's encourage everyone in the whole darned neighborhood to make Molotov cocktails with gallon jugs of grain alcohol.
I sympathize with you, Dr. Krugman: my second and last course for my field specialization in development economics was taught by a Right-wing, hard-core, free trade theorist who hijacked the entire curriculum to blow through high-powered trade theory. Those equations were straight out of grad school math, and the graphical renderings of terms of trade were enough to fog even a math jockey like me. I'm quite sure that many folks like you, having invested so much mental capacity in getting your mind around the elegance of theories like that, aren't about to let minor matters like exchange rate manipulation and other forms of cheating and bluffing disturb you. Perhaps, hailing as you do from Princeton, your fellow Princeton Nobel Prize winner, game theorist John Nash, convinced you that optimal game strategy need not be concerned with the triviality of human incentive to violate the established, if unspoken, rules of a board game. No one could possibly imagine a world where optimal moves have to be computed under conditions where opponents can actually just steal your pieces from the playing field. Speaking as one who took grad-level game theory, I happily concede that it's hard enough modeling a simple game under perfect conditions; throwing in cheating on the order of hundreds of billions of dollars would make those equations look like quantum electrodynamics.
So, once again, Paul, I offer you congratulations. Like last year, when the Nobel Peace Prize was award to Al Gore—a vastly rich man laying the ground work to make huge money with a venture capital firm investing in "green" technologies—those fine Nobel Prize award-givers have ignored hundreds, if not thousands, of equally deserving recipients who have the misfortune of living their productive lives working, suffering, and making the world better out of the limelight of fame and respectability. Al Gore got the Peace Prize while political prisoners, human rights workers, and others were doing the hard work. His global warming hype whipped the world into a corn-for-fuel hysteria that ended up driving corn-for-food prices through the roof while giving authoritarian governments an excuse to evict indigenous peoples from their land so corn could be grown and inducing millions and millions of dollars to be spent on ethanol fuel plants that now sit idle. For your part, you and your fellow globalists give legitimacy to failed trade policies that ignore compelling incentives to cheat and thwart efforts to enact and impose massive, punitive tariffs on exchange rate cheaters like China. Good for you.
Now, you might sense some sarcasm here in my article, and you might attribute that to bitterness on my part since, once again, I did not win the Nobel Prize in economics. Let me disabuse you of that thought. I don't want the Nobel Prize in economics. I don't want to be on any list whatsoever with Nobel Prize winning economist Milton Friedman, a Right-wing windbag who never had an original idea of his own but nonetheless got the Prize in 1976 for his lifetime of achievements, most of which were nothing but derivative ripoffs from others, including Ludwig von Mises, an economist who was treated like dirt by liberal academia when he came here to the United States to escape persecution as a European Jew.
Paul, I hold no grudge against you for winning that Nobel Prize in economics. You deserve it. People like you should get the prizes, the honors, the accolades, the admiration, and the money: those are the things that ensure you will never see the consequences of your theories on everyday people who live and work in this new world of globalization that brings deteriorating wages, economic uncertainty, family break-ups, crime, structural unemployment, inter-generational poverty, early death, and utter, growing despair to tens of millions of Americans, some of whom still, despite all the evidence to the contrary, believe that their leaders and the academic giants who advise them have real, effective solutions.
Congratulations, Dr. Krugman. Now, go write some more liberal articles for the gullible.
The Dark Wraith has finished this praise-laden post to the newly crowned King of Economics.
Comments
Wrote Minstrel Boy:
Wrote Dark Wraith:
Good evening, Minstrel Boy.
I remember losing more than a little money at poker.
Late one afternoon, an old mess sergeant explained to me what a tell was. I'd never heard the term. He then suggested I learn how to fake a tell.
Quite moralistically, I mumbled that all I wanted to do was play cards. He asked me, "Then why the f--k are you playing poker?"
Once I got out of the service, I started playing backgammon for money.
Card games have too many rules.
Wrote 2Truthy:
Good Evening Dark Wraith,
I knew there was a reason I never like Paul Krugman:)
This offering is the Nobel Prize on why the esteemed value of this coveted, precious coated metal nude statue and what it represents is the latter day equivalent of an old Cadillac hood ornament. Everyone wants one, but nobody knows what for -- much less what to do with it. Or something like that.
And who's next? MoDo? Why not. (Although she's no Princeton economist, she's at least a Liberal.) But hey, so what? Al wasn't an economist either, and if Al can get one, well, there goes the neighborhood. Tom Friedman hasn't bagged one of these things yet, has he? If he does, that's it. I'm moving to China where I can get my own Nobel Prize knock off without the inconvenience of having to memorize an acceptance speech or being chased by paparazzi and Leonardo di Caprio.
You know, they really ought to designate/describe specific categories for the Nobel Prize... For example, in Krugman's case, it could be called the "Charlatans in Economic Excellence" Award and so forth.
Wrote Peter of Lone Tree:
"1. the banks aren't even done failing, they are only going to consolidate down to maybe five or six monsters."
Indeed. Economic Policy Journal: They Are Getting Ready To Divvy Up The Lucre: US Summons Only Super Elite Bankers To A Meeting
The Bush administration summoned executives from leading banks to a meeting in Washington Monday afternoon to work out details of the $700 billion plan.
And, as they say in Chicago, "If you are not at the table, you are on the menu."
For the record those expected at the table are:
Goldman Sachs CEO Lloyd Blankfein, Morgan Stanley CEO John Mack, Citigroup CEO Vikram Pandit, JPMorgan Chase & Co. CEO Jamie Dimon, and Bank of America Corp. CEO Kenneth Lewis were all asked to attend. There was some speculation that Paulson might have expanded the invitation to at least three other CEOs from various regional banks, people said.
The FDIC directly examines and supervises about 5,250 banks and savings banks, and Paulson invites at most 8 bankers to discuss how to divvy up $700 billion?
"It was expected that whatever comes out of the meeting will be used to put the finishing touches on the plan," AP reported its sources as saying.
Wrote trog69:
I admit it; I'm the chump at any poker table, which is why you won't catch me at a poker table. I'll be at the pool table when you're ready to leave.
Wrote Wild Clover:
DW..
When I heard the news my very first thought was "Wonder what the Wraith thinks about this?"
I have been answered.
Wrote Minstrel Boy:
good morning dark wraith:
once, while leaving a table where i had just conducted a shearing of some salemen at a convention sheep, i, while dropping of a bill or two of carfare, told one of them:
dude, your biggest mistake was that you came here to play cards. if you can't play poker, play algebra, you'll last longer.
Wrote Minstrel Boy:
p.s.
trog, i make my longest bucks of folks that think they are good with a stick.
the "sucker's rally" at a pool table is pretty much the same concept. lose the little games, win the big ones.
my last backgammon session i won only 4 out of around 12 games. i murdered him in the money. that cube can be a five by motherfucker yo.
Wrote Dark Wraith:
Indeed, Minstrel Boy.
Backgammon is as much about the cube as the dice. The stones are there to give you something to do with your hands when you put down your cigarette.
The Dark Wraith used to have such a good time.
Wrote Weaseldog:
Giving Krug or Gore the prize, still doesn't beat giving Henry Kissinger, the Nobel Prize for Peace.
Mr. Wraith, I'm in a discussion on another forum where someone is patiently explaining to me how this situation does not resemble the IMF austerity measures that the IMF imposed on Argentina.
The more we discuss, the more parallels I see.
For starters, Argentina was forced to pony up 33% of their government revenue to the IMF banks. They devalued their currency in the process.
Is this materially different than the bailout the USA is engaging in?
It seems like the difference is like arguing whether someone was run over by a Peterbuilt or a Mack truck. Yeah, they are different trucks, but the effect works out much the same.
Wrote Peter of Lone Tree:
AAaahh, jeeeezz DW!
The stock markets start blasting off into the stratosphere.
A cheerfully optimistic outlook prevails throughout the financial universe.
It looks like we're saved again.
But then you come with another of "those" essays.
And now the markets are headed for DuckShit Alley.
Wrote trog69:
Minstrel Boy, I don't have to consider myself pretty good with a stick. Back in my real playing days, I had plenty of people willing to back up my stick with some pretty big cash.
I will say this though, one of the best things ever taught to me was how to miss properly.
Wrote Dark Wraith:
Good afternoon, Peter of Lone Tree.
You think this one was rough? Wait until you see the next couple of articles I'll be publishing.
If the stock markets are, indeed, reacting to my flaming rants, you might want to consider digging a hole for the convenience of the Dow to save it the trouble of making its own crater as I flame the Republicans and the Democrats both for this insanity.
My GOD! Paulson and his toadies are holding a meeting with the top bank bigwigs to carve up the entire bank industry into their own giant financial cartel, with the United States government acting as the interlocking director/holding company.
The blubbering fools call this "socialism"?! No, sir, this is definitional "fascism": the fusion of corporate and state sovereignty into a governing coalition.
The banks have just been handed to the government as its financing division, and the government has just been handed to the bankers as their legitimacy.
You wanted an October Surprise. Well, here it is, all wrapped up in $700 billion as the down payment.
And where, by the way, are Super-Maverick McCain and Lord Jesus Savior of Us All Obama to say, "STOP IT!" to this insanity? Oh, that's right: McCain's top advisers are lobbyists for Wall Street and the banking industry, and Obama got vastly more than McCain did in campaign contributions from Wall Street and the banking industry.
Boy-o-boy, I can hardly wait for a new President: George W. Bush with all the brute corporate shenanigans and authoritarian tendencies but less of the stupid.
Whee.
The Dark Wraith would call for revolution, but he keeps hearing the voice of Thomas Jefferson saying, "Don't bother."
Wrote Dark Wraith:
And yes, Weaseldog, the parallels you note are obvious, and I've even gone so far as to note them in my macroeconomics class, although I have to put a little more flesh on basic monetary theory and practice to make this evident to most of my students.
The principal difference between Argentina and the United States is that there was a veil between the efforts of the "rescue" team that cleaned up Argentina that is absent from the rescue team that's now cleaning up the financial mess in America. Essentially, what's happening now is more or less an internalized version what happened down there.
The other shoe still has to drop, though. I've said all along that the only way to mop up the trillions of dollars that have been overprinted by the Bush Administration's Federal Reserve lackeys was to take the Volker dive of clamping down hard and fast on the money supply and sustaining the pressure until the inflationary expectations drain out of the economy. When Volker did it, of course, a major, painful recession ensued, which is why Carter got kicked out of office in favor of Reagan, who benefited hugely from the enduring re-alignment Carter had set in motion through the Federal Reserve under Paul Volker.
This time, the pain will still have to be delivered, but we are going to see no heroics from the current President; and regardless of who assumes the throne of failed Empire in January of next year, he will have no taste for doing what has to be done.
On the bright side, he won't have to: before even entering office, he has been stripped of his power, which is now in the good hands of the corporate bankers and their fellow, if subordinate, directors at Federal Reserve, which now in coalition control the reins of power, just like the banking interests did in the cleanup of Argentina.
Parallels? Not really, I suppose because, this time, it's Americans who are poor and middle class who will suffer major pain, both financially and in terms of their freedom to live in a liberal, open society.
Remember: when it's Americans who suffer, it's bigger news than when it's people in Second and Third World countries.
The Dark Wraih is already gearing up for a rantfest that will last from Here to Eternity.
Wrote kelley b:
Truth, Dark Wraith. You justify the disquiet of many here. But really, I do not think Obama stands a chance of winning this. The deck is just too stacked any way the cards are cut. He's not among the chumps, either.
I suspect your Palin the Ripper pic a few days back is just as prophetic as your economic elucidations.
Wrote blackdog:
Remind me to never play cards or shoot pool with you guys until i have a chance to get back into real life, and with enough in my pocket where I can lose gracefully.
I used to be fair with a stick, but I do suffer from a poker face. Been dealt four aces twice in a five card stud game we used to do over at the squids house way back when. My grin was likened to acid coming on. Everyone took one look at me and folded.
Shit.
Wrote Peter of Lone Tree:
But does Obama REALLY want to win?
Does anybody? Pallid doesn't count.
There's a cutesy-poo graphic entitled Ten biggest percentage gains in the Dow Jones Industrial Average that everybody oughta take a look at. It's in a WSJ article entitled Dow Takes Giant Leap as Bailouts Snap Gloom.
8 of the 10 biggest gains occurred WHEN!?
Wrote Lisa Ranger:
I'm speechless. Withering commentary, yet it makes sense. You are the go-to spot for all things economics, and I have much to learn. Thank you for taking the time. You have been right all along.
Wrote Weaseldog:
Dark Wraith, the IMF policies are unknown to most people.
But in essence, if you read their charter, and get past the gobblespeak, it says, "Once you borrow money from us, we own your country."
They grant themselves the right to take full control of a nation anytime, they aren't happy with the financial outlook. They alone decide. Then they strip mine the country.
You're right I think. The only difference is that rather than the vacuum hose coming from the outside, we're being sucked from the inside out.
And yes, because this is the USA, it's more important to the world than when the USA was doing it to Argentina.
When you're a bully kicking ass, it's funny. When a bigger bully kicks your ass, it isn't so funny.
I think that some very smart folks that I correspond with, don't see the parallels because, they never did any self study of the IMF, and they have faith that the same thing can't happen in the USA. It's too horrible to contemplate, and it's not on their radar screen.
The IMF has systematically strip mined nation after nation. They started in Africa in the 1970s. If you can find nighttime satellite pictures from the 1970s of Africa, you'll see that all but the Congo is lit up with criss-crossing highways and cars. Large urban centers are brightly lit, everywhere but the Congo. Now you only see the ports cities lit. The IMF did that. They put the lights out.
And why? When the USA peaked on oil, the world oil supply grew slower. For nations that wanted to keep getting richer, like the USA, and keep increasing consumption faster than production increases, other nations had to be blocked from using the oil.
So Africa was shut down. No industrialization, no oil consumption. More for other countries.
In South America, things were looking bright for a few nations, until their oil production peaked. If those nations didn't get shut down, they'd become oil importers instead of exporters. So the IMF knocked them down, destroyed their economies and made sure that they kept exporting oil.
We're running out of nations to shut down, in order to free up supply. The biggest bang for the buck, would be in shutting down the biggest consumer, the USA. And since the USA's only worthwhile export is military force, it doesn't really need to compete in the industrial world anymore. Other nations can pick up the slack.
The people that run the banks, can live anywhere in the world they want. When it costs you pocket change to fly around the world everyday and you own nations, you don't need to be burdened with patriotism or nationalism. You can have private kingdoms in multiple nations. In this view, the USA is no more special than any other nation.
So how is the banking system in Dubai doing? I bet that since it's decoupled from the Western Finance systems, it's doing just fine. It isn't even subject to anti-terrorism laws so it's used by Halliburton, Middle East terrorist organizations, the world drug trade and pirates. And it's where our Iraq war money is being funneled to through all of those no bid contracts.
Further, the principles that own that system, also own significant interests in Western banks and corporations.
While the world languishes, Dubai continues to grow and expand.
When the USA has been completely strip mined, they'll move on to the next target. When world oil finally runs out, Dubai will be the last nation to turn their lights out.
At least if I look at the strategy being played out, it sure looks like this is the game being played.
It's a shame that most Americans don't grow up playing chess.
Wrote kelley b:
This is exactly the point I've been trying to make for awhile, Weaseldog.
Things appear to be progressing to a point where the greater fraction of the world including most of the USA lives in a post-industrial feudalism.
Technology has the capability of equalizing all things, or it can be used as a yoke to enslave everyone that it doesn't hammer to the ground. It all depends on how the people controlling technology use it.
It's increasingly clear what the real priorities are: hegemony uber alles.
Add Comments
Log in
Become a Registered Commenter
« Return to the main page.
This blog offers Internet travelers a place where they can discuss economics, finance, politics, and other topics of scholarly and practical interest to thinking people. Your comments are always welcome, and your visits are most appreciated.
Your host of this Weblog is an award-winning college teacher and writer who specializes in economics, finance, mathematics, business administration, computer hardware and software skills, and English grammar and composition. His extensive writings on the history of the English language appeared on About.com in the avatar of the Selig Wraith in the 
Send a Secure Message to the Dark Wraith
![[Valid RSS]](http://dark-wraith.com/images/valid-rss.png "Validate my RSS feed")
Good Evening Dark Wraith:
fer cryin' out loud sparky, when the hell are you going to quit soft pedaling and really say what's on your mind?
i'm not asking for you to "take the gloves off" i've been in enough scraps to know that the tape jobs and the gloves let me hit harder. tape up friend wraith, glove up, and go to fucking town on these creeps.
let's point out that the policies of paulson, bernanke, et al, have merely thrown governmental panic into the already panicked street of commerce. more pretend money won't solve the problems that have been caused.
recently you used the term "sucker's rally" to describe the pretend gains that the pretend money has brought to the market.
i'm not an economist. beyond my own personal quest for understanding i have no formal training in economics. i did survive as a self-supporting, working musician out of the vegas hall for a long time. i also spent some of my leisure time at the poker tables before it was a "respectable" thing to do.
i'm not sure how this works out in so-called "game theory" but there was a thing we used to do at the tables that worked like a goddamned charm. the way we would engineer and play a sucker's rally in a poker game was sweet. and, while not cheating, it was enough of a sure thing that it worked more often than it did not (sometimes in a poker game you can play the shit out of it, set the mark up perfectly and watch the cards give the chump a reprieve)
it worked like this: three of us, who knew each other well would be at a table full of out of town chumps. (note: if you're at a poker table and you can't point out all the chumps, it's you ) we'd do things like back out when one of us raised at a level which told insiders "dude's got mortal nuts" and things. we'd spend a reasonable amount of time sucking off reasonable amounts of money. one thing for sure though, after a big score, we'd be sure to quite literally throw a hand or two to the suckers. usually for some chump change, but we knew that if we didn't do that, they'd get discouraged and leave. a favorite technique for that was to establish what the suckers thought was a "tell." i'm talking about a tell so obvious that an autistic on the level of "rainman" would be able to read that shit. flash the tell a couple times, let them call, toss over an obvious bluff, maybe even smile sheepishly or blush to give them an emotional charge and feeling of control. all the while you wait, lurking, reading your pocket and folding 8 out of 10 hands until you see something really sweet. then, put on the best "poker" face, remember to show them the tell, and make your "bluff" at a level slightly higher than normal. they'll know that they have you figured and either call or raise. if they raise, smooth call. see the flop. if you hit, check, just like you did that last time you had them catch you bluffing. if they bet, smooth call. see the next card. if you've got the nuts still, check again. they'll bet, and bet a decent amount, i fucking promise, remember these are suckers. when they bet, just before you raise them, remember to give them your "tell" again. they'll think they have you so bad that most of the time they'll shove their whole stack at you. they'll be so in line for this they'll bet the ranch, the car, their mom's iron lung, all of it.
smile sweetly when you take it. it's only polite.
three big thoughts are keeping my money out of the market right now.
1. the banks aren't even done failing, they are only going to consolidate down to maybe five or six monsters. which, of course, only means that the next failure will be fucking nuclear.
2. derivatives are going to blow right the fuck up in everybody's faces next. most of their positions are "naked" and eventually fall apart anyway.
3. peak oil is real. if the u.s. were to reduce it's oil consumption by the millions of barrels it might barely compensate for the reductions in supply that will take place when the mexican and venezualan fields start kicking out dust and salt water.
nope, not this kid. i've been at enough rigged games to know that the only way you can survive eight aces in a deck is to be absolutely certain what you've dealt each player.