Ep. 38 When Businessmen Are Clueless About the Economy

5 June 2016     |     Tom Woods     |     6

This week, Krugman makes one decent point: successful businessmen aren’t necessarily any good on economics. No argument there. Krugman doesn’t quite get why his insight is true, but at least it’s something. Bob and Tom discuss (1) why government can’t be run like a business, (2) why falling wages need not be a catastrophe for “aggregate demand,” (3) whether it makes sense to speak of a “manager” of the economy, and more.

Krugman Column

Trump’s Delusions of Competence” (May 27, 2016)

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Contra Column

Why Wage Cuts Are Good for Aggregate Demand,” by Bryan Caplan

Book Mentioned

Bureaucracy, by Ludwig von Mises

Related Episodes

Ep. 37 Our Most Brutal Takedown Yet: Krugman on the Clinton Economy
Ep. 33 Krugman and Hamilton Sitting in a Tree
Ep. 8 Does the Economy Perform Better Under Democrats?

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  • Brohemius Meebio-Blaps

    This episode has a sort of low energy feel. I won’t speculate on the reason.

    • Chris Williams

      I’ll tell you the reason: I’m Tom’s usual editor, and Saturday was my wedding day. He had to find a replacement editor for CK Ep. 38, and whoever that was didn’t even align Tom and Bob’s tracks properly, put the episode number at the beginning of the episode, or do any professional editing that I can detect. I always hate missing an episode. I’ve done every CK except this one and Ep. 36, which was live, and I believe edited by my buddy, Clay, at the Mises Institute, who knows his stuff. I haven’t asked who actually edited Ep. 38, but it sure doesn’t sound like Clay’s work.

      Shameless plug: chriswilliamsaudio.com

      • Brohemius Meebio-Blaps

        Congratulations on your wedding! Many happy years ahead!

        • Chris Williams

          Thanks!

  • https://www.facebook.com/david.rogers.hunt David_Rogers_Hunt

    The fact that so many Businessmen believe it is more praise worthy to give to charity than to invest their wealth in creating more wealth,… is the leading indicator that even they don’t understand what they do.

    But, frankly, in our Christian culture,… is this really a surprise?

    Matthew 19:21-26 Jesus answered, “If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow me.” When the young man heard this, he went away sad, because he had great wealth. Then Jesus said to his disciples, “I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. 24 Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” When the disciples heard this, they were greatly astonished and asked, “Who then can be saved?” Jesus looked at them and said, “With man this is impossible, but with God all things are possible.” Peter answered him, “We have left everything to follow you! What then will there be for us?” Jesus said to them, “I tell you the truth, at the renewal of all things, when the Son of Man sits on his glorious throne, you who have followed me will also sit on twelve thrones, judging the twelve tribes of Israel. And everyone who has left houses or brothers or sisters or father or mother or children or fields for my sake will receive a hundred times as much and will inherit eternal life. But many who are first will be last, and many who are last will be first

    For more, see here.

  • Gene Epstein

    Krugman’s reference in this column to the “wild irresponsibility of Mr. Trump’s policy pronouncements” inspires me to cite two of Krugman’s wildly irresponsible pronouncements in “Remembrance of Booms Past,” the target of the previous episode of ContraKrugman in which I participated. I actually had these two points in my notes, but there was so much to say, I left these out. So allow me to relieve my frustration by mention them here. What Tom called “Our Most Brutal Takedown Yet” was not quite brutal enough.

    First, in “Remembrance of Booms Past,” Krugman urges more federal borrowing, citing the fact that “the federal government can borrow money incredibly cheaply.” But the federal government’s debt is never retired; it always gets rolled over. So Krugman is in effect proposing that the government load up on debt at current teaser rates, while ignoring what might happen when rollover-time arrives.

    Right now, the government can borrow at an average rate of a little over 2%. But as recently as 2000, the average borrowing rate was more than 6%, and in 1990, more than 8%. If the soaring debt has to be refinanced at triple or quadruple current rates, the fiscal crisis that the Congressional Budget Office keeps warning about will happen much sooner than expected.

    Second, Krugman endorses Hillary Clinton’s proposal for a trillion dollars worth of taxes on the top 1 percent, all in the context of promoting investment and job creation. But in the link Krugman provides to an analysis of this proposal by the mainstream Urban Institute & Brookings Institution, we read the following in the summary: “Marginal tax rates would increase, reducing incentives to work, save, and invest, and the tax code would become more complex.” Does Krugman even bother to read what he links to?