Saturday, April 7, 2012


The affliction is so widespread that it requires its own diagnostic category.

Those who suffer from it believe that their point of view is the only correct point of view. When faced with someone who thinks differently they wave the garlic around and denounce the person as ignorant, deranged or evil.

The problem seems more endemic to liberals than to conservatives. Psychologist Jonathan Haidt has shown that liberals, in particular, believe that there is one true faith, theirs, and thus, that differences of opinion cannot be tolerated.

Conservatives, Haidt explains, are more fair and balanced in assessing ideas that differ from theirs.

Predictably, during the recent Supreme Court hearings on Obamacare, liberal commentators were shocked to discover that theirs was not the only position. They were gobsmacked when they saw that people could make cogent arguments against positions that they took to be unimpeachable truth.

Apparently, liberals live in a bubble where they spend their time inhaling group-think. Since they consistently fail to engage points of view that differ from theirs they suffer from a special affliction, one that we can label Krugmania.

I hope to see it included in the next edition of the psychiatrist’s diagnostic manual

No influential commentator today is more narrow-minded and intellectually bigoted than New York Times columnist and Nobel Prize winning economist Paul Krugman.

Under normal circumstances Krugman is unreadable. Filled with self-righteous zeal he divides the word into two warring camps: his side and the other side. Krugman never even pretends to be fair-minded.

Conservatives and Republicans are the enemy. They are never right. They are the cause of everything that goes wrong in the world. Liberals, especially Krugman, are always right and are responsible for everything that goes right in the world.

After a time, it feels like mindless propaganda. Surely, it is a sign of an inflated ego. It characterizes someone who lives in an ideologically-defined fictional world, a fairy-tale kingdom, where there are absolutes of good and evil.

Yesterday Krugman returned to one of his old ideas. He is alarmed, even frantic, at the way the austerity mongers, those who want to bring down the budget deficit, might influence the Federal Reserve and make Bernanke and Co. stop inflating the currency.

For those who have not yet cracked the code, this means that if anything bad happens to the markets or to the economy Krugman is at the ready to cast blame at the big, bad Republicans.

Krugman offers two plausible reasons for wanting to have the Federal Reserve inflate the currency.

First, as is well known, when you suffer from a massive overhang of debt, inflation is your friend. If prices go up and your salary goes up while your monthly mortgage payment, for example, remains constant, you will find it easier to pay off debt.

Second, if inflation is so bad that you become persuaded that prices will be higher tomorrow than they are today, you are more likely to purchase that iPad today.

Thus, inflation fuels consumption and consumption produces economic growth.

As one might have expected, Krugman is passing half-truths off as whole truths. You do not have to be a prize-winning economist to see the ruse.

For example, Krugman says that we should stop worrying about inflation because the recent rounds of Federal Reserve easing have not produced any appreciatble inflation.

However, do these inflations statistics comprise the cost of food and energy? Of late, both have been seriously inflating. If you think that inflation has not gotten a toehold on the American economy, try filling up your gas tank or buying provisions at your local supermarket.

Besides, if you want to inflate the currency you need to maintain unnaturally low interest rates. That makes it cheaper to borrow and spend money, but for anyone on a fixed income, low interest rates are decidedly unfriendly.

Over the past few years Social Security payments have risen only very modestly while food and energy prices have risen much more quickly. This has immiserated large segments of the population.

People who rely on investment income have found it increasingly difficult to live on bond interest. Many of them have been pushed into investing more and more of their money in the stock market. Dare we say that this might turn out to be a dangerous place to be?

As for Krugman’s second argument, namely that inflation fuels consumption, this is also a half-truth.

True enough, when there is hyperinflation people tend to buy what they need today. They tend not to put off spending for tomorrow.

But, what if income and even salaries do not keep up with price inflation? Again, if you are on a fixed income price inflation is not your friend.

How many people today have had to cut back on personal and household expenditures because they are forced pay more than $4.00 a gallon for gasoline.

Price inflation can spur certain kinds of consumption, but it can also cripple consumption.

Krugman is correct to see that the Federal Reserve is trying to solve the debt problem by printing money.

By failing to appreciate the potential damage such a policy can do, Krugman is functioning more like a Krugmaniac and less like a contributor to the national debate.

After all, there are many wise men and women who fear that inflation will cause the dollar to lose its reserve status, thus imposing an extremely ugly form of austerity.

Sometimes it’s better to kick the can down the road, but sometimes it’s better to take the bitter medicine today. Tomorrow your condition might be so bad that the medicine will no longer work.

1 comment:

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