Krugman on welfare state

A lot of interesting information of welfare state from Paul Krugman.

Krugman about US debt

Paul Krugman on the US national debt: 
"And you don’t have to be a right-winger to acknowledge that yes, very high marginal tax rates act as a disincentive to productive activity. So real GDP may well fall significantly.

This is what I mean when I say that the burden of debt is about incentives, not about having to deliver resources to other people.

Private debt, by the way, creates a different kind of problem: again, it doesn’t directly make us poorer, but it increases our macroeconomic vulnerability.

The general point is that the analogy with a family that owes too much is all wrong. Unfortunately, this dumb analogy dominates our national discourse."

Krugman about inflation and the liquidity trap

Some food for thought about inflation from the Paul Krugman's column:
"OK, strictly speaking the time hasn’t run out — we could, I guess, see an explosion of inflation next year. But with commodity prices down, wages going nowhere, and the dollar actually strengthening against other currencies, it’s kind of hard to see where that’s supposed to come from.

Look, the Austrian/Ron Paul types made some very strong predictions about inflation — and rightly, given their model of how the world works. In their version of reality, it really isn’t possible to triple the monetary base without dire effects on the price level. In my version of reality, of course, that’s not only possible but what the model predicts in a liquidity trap.

So since we did indeed triple the monetary base with nothing much happening to inflation, the right lesson to draw is that their model is all wrong. Unfortunately, I see no hint that anyone in that camp is prepared to consider that possibility."

Is Eurozone break up inevitable?

In Paul Krugman's opinion Eurozone break-up is already decided... at least decided by the markets. While he might be right on this one, I would take his statements with a bit of scepticism - he has too often subjected his economic opinions to his political baises (at least when writing on his New York Times page.)

Objective reality vs. subjective views

Paul Krugman, a Nobel prize winner, engages in a silly game of tying economic ideas to political ideologies:
"First things first: The attempt to create a common European currency was one of those ideas that cut across the usual ideological lines. It was cheered on by American right-wingers, who saw it as the next best thing to a revived gold standard, and by Britain’s left, which saw it as a big step toward a social-democratic Europe. But it was opposed by British conservatives, who also saw it as a step toward a social-democratic Europe. And it was questioned by American liberals, who worried — rightly, I’d say (but then I would, wouldn’t I?) — about what would happen if countries couldn’t use monetary and fiscal policy to fight recessions."

One may argue whether Economics is a science or not - it is certainly not a science in the same ways as physicists and mathematics are, but the argument will essentially boil down to what you define as a science, and how you call a field of knowledge which, although falling short of the precision provided by physics/math, is nevertheless capable of logical analysis and predictions in the areas where the "sciences" are powerless.

Yet, anything with a claim for being a kind of knowledge should be objective - which is independent on the subjective (conservative or progressive) views of the person presented with such knowledge. Otherwise, it would not worth a Nobel prize.