Ep. 3 Trump Is Right About Economics, Says Krugman

30 September 2015     |     Tom Woods     |     25


Paul Krugman says Donald Trump is right to question supply-side orthodoxy about taxation of the wealthy. And Krugman says it’s a myth that cutting those taxes helps the economy.

Lots of great stuff in today’s episode: even Keynesian researchers disagree with Krugman; it’s not true that the job creation numbers under Obama are better than in the 1980s; and how Krugman can claim to be right no matter what happens.

Krugman Column

Trump Is Right on Economics” (Sept. 7, 2015)

Contra Columns

The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,” by Christina D. Romer and David H. Romer
Paul Krugman: Three Wrongs Don’t Make a Right,” by Bob Murphy
Paul ‘Orwell’ Krugman Touts Job Growth in the Obama Recovery,” by Bob Murphy

Graph: Employment-Population Ratio: Men


Related Episodes, Tom Woods Show

Ep. 473 Does the Economy Do Better Under the Democrats, and Has Obama Been Better Than Reagan?
Ep. 331 No, Progressives, Lower Taxes Rates on the Rich Don’t Wreck the Economy

Need More Episodes?

Check out the Tom Woods Show, which releases a new episode every weekday. Become a smarter libertarian in just 30 minutes a day!

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  • Dale Holmgren

    While I agree that on some hypothetical basis I “don’t want Trump”, that would only be the case if I could actually choose the president among anyone. Since we only have a limited number of people to choose from, I support Trump far more than any of the other candidates – I mean, it’s not even close. So let’s not emphasize how much we disagree with him, and instead support him despite our distaste for his positions. Sure, his arguments for tariffs would be harmful to consumers; on the other hand, our current situation is harmful for those who are unemployed.

    One of the things I’m frustrated at is the failure of Austrian followers to advocate how the US should resolve our $19 trillion debt. I advocate actually defaulting on a portion of the debt immediately, but I don’t see anyone else either supporting it or coming up with a different solution. Instead, we just complain about the situation we’re in.

    Also, on 7/25/15 Krugman did a triple-dip; he criticized Ron Paul, caucasians, and gold. I would like to see you guys attack this column at some point. I’m especially enraged that he denies that we have had inflation, while we are staring at record stock markets, record bond-markets, record junk-bond markets, record derivative markets, and booming real estate markets in some parts of the country.

    • http://principialibertatis.com/ Tyler Kubik

      That was what Murray Rothbard advocated. https://mises.org/library/repudiating-national-debt. But I’d suspect that it is not advocated very often because the root problem is not solved by repudiation as long as there is a central bank still around.

    • http://TheInterventionistParadox.wordpress.com/ Bharat

      They can speak for themselves, but I’d actually assume Woods and Murphy agree with you and Rothbard on that point.

    • Luke Perkins

      “One of the things I’m frustrated at is the failure of Austrian followers
      to advocate how the US should resolve our $19 trillion debt”

      I have noticed, and maybe it’s just me, that Austrians typically do not make specific policy recommendations as economists. Rather, Austrian economics usually deals with the broader theoretical questions and leaves people to decide what to do based thereupon.

      As Mises explained, the economics itself is “value free.” Therefore, what policy a person should adopt is based on that person’s values and as such the economist has very little to say about policy without knowing the person’s values.

      To put this in the context of the US debt, as an example, let us suppose we were asking two separate Austrian economists what should be done about the debt. Let us further suppose one of these two was invested heavily in the US debt, and also hates the poor, and wishes to see as much suffering heaped upon future generations as possible. Such a person, though an Austrian economist, would naturally argue for increasing the debt.

      Meanwhile, let us suppose our other Austrian economist is a more normal person who is not invested heavily in the US debt, wishes to have a prosperous economy, and wishes to see future generations protected. Such a person may well advocate any number of policies ranging from balanced budgets to outright repudiation.

      Clearly, then, we can see both these people, though “Austrians,” would have wildly different policy prescriptions, but may very well agree completely on the underlying economic science.

      To my mind, being frustrated that more Austrian economists do not express personal opinions from their economic pulpits seems to miss the point of Austrian economics. I also suspect, though you would have to ask them to be sure, that these economists have their own personal opinion on where to go and how to get there, they just keep the spheres of economics and personal goals separate.

      As for my position, with my limited understanding of economics, I tend to fall on the moral side of a question. From that perspective, I actually argue for full repudiation of all government debt immediately (obviously I don’t expect such a thing to happen… but hey, it’s my goals we’re talking about here). As Bob points out, the debt is purchased by those who wish a guarantee of return from the government at the expense of their fellow human beings. As such, the purchasers of government debt are thieves and deserve nothing. But obviously, we are not talking Austrian economics here as I have implicitly added my personal preferences and objectives into the conversation. For the Austrian economist, what would happen if we did full repudiation would be the question of interest. Hence why Austrians typically wait until someone else makes a policy statement and then “complain” about the situation.

      For whatever that’s worth.

      • whateverdude

        “As Bob points out, the debt is purchased by those who wish a guarantee of return from the government at the expense of their fellow human beings”

        There is always the question of criminal intent. Does a retiree who was snookered into buying Govt bonds for her retirement account deserve your “fire and brimstone” treatment? The resolution of this GIANT govt debt scam will be very tricky due to this – it will, at minimum, require a credible scheme for not creating additional misery for such retirees… and that needs to be done by the private sector, otherwise we are back to square zero.

        • Luke Perkins

          “There is always the question of criminal intent.”
          – True, which is why I said nothing about jail time. However, negligent theft, while not criminal, is still a tort. Technically, under tort law, all those elderly (and all other US creditors) would be required to repay what they have stolen.

          “Does a retiree who was snookered into buying Govt bonds for her retirement account deserve your “fire and brimstone” treatment?”
          – You will, of course, notice my comment said such people deserve *nothing* rather than going as far as the lawful requirements for the situation (the repayment of the interest). Obviously, I cannot be “fire and brimstoning” these people by saying “let bygones be bygones.”

          Meanwhile, you talk about the “innocent” retiree, but I notice no comment about the truly innocent taxpayer. I understand the elderly make a great poster and tug at the heartstrings, but such people negligently made their choice to rob the tax payers while the tax payers were given no choice about being robbed. So, at a minimum, any solution to the problem must cease the forcible collection of taxes to pay for the debt immediately. In other words, only bygones can be let go; the future harm of innocents to alleviate the suffering of the negligent must cease or the solution is no solution but only a change in who wields power.

          Now, I do agree this is a sticky wicket, especially since sorting out who stole what from whom would be virtually impossible, and therefore it seems to me the aggrieved parties (taxpayers) should forego their lawful right to remuneration. From there, I am certainly open to suggestions as to how to care for the mass of people trapped by the government lies. One suggestion might be to liquidate the state and give some of the money to the retirees, and to the wrongfully imprisoned, and the rest back to the tax payers. Another would be a kickstarter to pay for retirements. Another would be for families, churches, and charities to get involved again. Obviously, there are a number of ways of dealing with this problem.

          However, one thing I do know, continuing the use of violence to solve the problem will not solve the problem. So I absolutely agree the free market, and not the state, needs to deal with this problem. Hence my saying the debt, which is inherently part of the state, should be repudiated.

      • Dale Holmgren

        Luke, I agree with you that Austrian economists should not discuss their recommendations while mixing it in with Austrian economics; that’s why I was careful to say Austrian “followers”, like you and I; since we understand the economics, we then can come up with the moral justification for doing something like debt repudiation, which non-Austrians would think of as “unfair” or worse.

        The beauty of defaulting regardless of the innocence of the owner of the US debt is that people SHOULD be aware of the risk of defaulting when they invest. They may think it’s unlikely, but that’s their own internal calculation. If we get rid of a central bank, people who deposit money in banks will then have to be very diligent about that bank’s operations, so that they don’t lose their deposit money by the bank going under. That may require much more additional work, but that’s a good thing; the fewer people that stupidly put their deposits into a risky bank, the less money lost when such bank fails.

        We have a financial services industry that has created a whole series of investment choices that is designed to get people to NOT look too closely. People now put money in a bank with no examination of the bank, buy mutual funds sometimes based only on a cool name (e.g. “The New Perspectives Fund” is marketed by the Capital Group). Whether people are buying gold and getting money out of the system is one thing; but people SHOULD be doing that, and I can’t feel too sorry for those who don’t.

  • Layla Godey

    “Oh boy, is this Great!”

  • martinbrock

    I sometimes identify with “supply side economics”, usually in the context of a progressive consumption tax, but I wouldn’t say that “supply siders” are particularly libertarian.

    I enjoyed the first day of the podcast. Keep storming the barricades.

    • Philly0312

      Supply side economics is extremely libertarian. The idea that supply side economics = tax cuts for the rich is a misnomer. That is simply a way liberals attack libertarians and conservatives with libertarian views on the economy.

      • martinbrock

        Advocates sold “supply side economics”, with the laughable “Laffer Curve”, on the grounds that marginal income tax rate cuts would increase tax revenue. As a libertarian, I don’t want increased tax revenue. If we’re engineering investment with tax policy, a progressive consumption tax also encourages investors to decrease tax revenue. The Reagan tax cuts only engineered an increased entitlement of “private sector” rentiers to increased consumption in exchange for an increased entitlement of public sector rentiers to increased consumption.

        • whateverdude

          “As a libertarian, I don’t want increased tax revenue.”

          As an intelligent person, you don’t want to pay for shit that you don’t need or use. You don’t want to pay for the murder of innocent people. You don’t want to pay for the destruction of your liberties, your community and your country.

          OK, makes sense. But what are you going to do about it? The lowest risk strategy (for your own well being) is to focus on providing value to others directly, i.e. implement your own “supply side” scheme instead of relying on Govt redistributive schemes orchestrated via the Tax Code. That tax garbage is un-American in spirit anyways.

  • http://truthbeforedishonor.wordpress.com John Hitchcock

    I like this. Thank you, Patterico, for pointing this site out.

  • http://tklist.us TKList

    Trump can not make America great again. Trump is a billionaire because he has mastered crony capitalism not free market capitalism.

    Trump wants his own version of big government.

    Trump says anything that is beneficial to his goals at the moment in time that he says it. Which means what he says will always be changing to fit his current wants and needs.

    Trump’s next book should be titled “The Art of BS.”

    We can not have a thin-skinned, hot headed, narcissistic, egomaniac in charge of our military, foreign policy and nuclear codes.

    Choose limited federal government. Stop making millionaires out of our politicians and lobbyists. Stop increasing the power of connected corporations.

    • http://www.waarheiddelen.nl/index.html Intuïtie Trainer

      === Wie is de MystiKus? ===


      D66-burgemeester Letty Demmers van Vlissingen wil gaan discrimineren tussen ‘gelukzoekers’ en ‘criminelen’.

      Om de burgers te informeren (onderdeel van ‘recht op waarheid’) welke persoons- of gedragsgegevens door (semie)-overheidsdiensten worden gebruikt, krijgt iedereen een usb-stick met daarop alle informatie die de @Secret_SiT kan achterhalen.


      Dit staat niet in het wetsvoorstel dat door minister Stef Blok (Wonen) naar de Tweede Kamer is gestuurd. Al zal die wet voor sommige leden van de Tweede en Eerste Kamer wel het signaal zijn dat de jacht op de MystiKus is geopend. Gemeenten krijgen namelijk de mogelijkheid (net als de MystiKus vroeger) om gelukzoekers te toetsen op sociaal gedrag.


      Volgens de AANDACHT=LIEFDE-richtlijnen van het ministerie van ‘waarheidsvinding en verzoening’ is de Nationale Politie verantwoordelijk dat alle politiemannen gaan waarheiddelen in lijn met de ‘Logica van de 1’. Om het publiek te informeren over de ParadigmaCHANGE komen de mooiste voorbeelden van ‘het ParadigmaConflict tussen de gelukzoeker en de overheid’ in het tv-programma ‘Wat vindt de advocaat?’. De Tweede en Eerste Kamer hebben al een paar aanwijzingen gekregen om ‘een debat’ aan te vragen.

      Het OM liet al op 9 oktober 2009 weten dat de MystiKus in volledige beperking zit (discreet informeren van de @RaadvanState en voorbereiding op het tv-programma). De MystiKus maakte deel uit van de @*IVD en opereerde vooral in de regio Oost-Brabant. Zeg maar de regio waar de ‘Logica van de 1’ wordt gebruikt om (illegaal) te waarheiddelen over het systeem ‘Leven en Laten Leven’. De MystiKus zit sinds 2 oktober 2015 zogenaamd vast ‘op verdenking van illegaal waarheiddelen met SchoppenTeam’. Dat zijn delicten die een gevaar zijn voor de werking van het systeem ‘Liegen om te Leven’. De MystiKus moest van de @*IVD zich verdiepen in de spelonken van de organisatie van @SuperWil. Het (illegaal) waarheiddelen tussen de @*IVD, de Nationale Recherche en @GuusjA ging de MystiKus goed af. Als dekmantel had hij de rol van ‘een teruggetrokken agent met een drankprobleem’.

  • Cory Brickner

    Tim Ferriss has a podcast episode with Scott Adams of Dilbert fame. Scott goes into his opinion that Trump has awareness and possibly real training on hypnosis and persuasion (48:30 in the podcast) based on his formal education in it. Specifically, NLP (Neural Linguistic Programming) of Tony Robbins fame, who just happens to be a business associate of Donald Trump.

    Aside from feeding off of the public sentiment that is anti-establishment, this is also one reason that Trump is blowing the others out of the water. As a business negotiator, he knows he’s not going to get everything he’s asking for, but he shoots for the moon regardless, knowing that there will be some meeting in the middle. However, he’s using key anchor words that diffuse potential issues and resonate with people.

    • http://www.waarheiddelen.nl/index.html Intuïtie Trainer

      In de periode van 23 februari 2010 tot 14 oktober 2010 werd de StatenGeneraal van Nederland discreet geïnformeerd over de verwachtte impact van het verspreiden van de blauwdruk van het systeem ‘Leven en Laten Leven’ in netwerk WitteGejT.

      SchoppenKoning: “Het onlangs opgerichte moslimforum in Duitsland vertegenwoordigt alle stromingen en staat voor universele mensenrechten en de kernwaarden van de cultuur van waarheiddelen”.


      CDA, PvdA en ChristenUnie kochten allround verzekeraar ASR in 2008 als onderdeel van Fortis voor 3,6 miljard euro, om een gecontroleerde paradigmaCHANGE in de EU mogelijk te maken.


      Met het uitrollen van het GELD=ZUURSTOF-paradigma zal blijken dat dit weggegooid geld was.


      Kabinet-Balkenende IV (2007-2010) werd gevormd na de verkiezingen van 22 november 2006 uit de coalitie CDA, PvdA en ChristenUnie. Na 23 februari 2010 maakte de PvdA geen deel meer uit van dit kabinet, omdat het niet eens was met de toenmalige script van de 3e SpinozaGolf. Het motto van EzelsReet was ‘samen waarheiddelen, samen leven’ en het streven naar ‘grotere sociale samenhang, veiligheid en respect, innovatie, duurzaamheid en de actieve internationale en Europese rol’ werd gekenmerkt door het (illegaal) uitrollen van de ‘Logica van de 1’.

      Tijdens deze kabinetsperiode koos netwerk @MinPres om niet meteen het systeem ‘Leven en Laten Leven’ in het publieke domein te behandelen, maar nam maatregelen om de financiële sector te steunen!?!??

  • Pat Gilbert

    I want to bring something up.

    The graph showing the employment for men is misleading.

    Part of the reason for this is that the population has grown but the growth is people below the work age. This graph from the Census bureau shows that the working age population declined in a lot in 2007. Professor Bob brings this up at about 21 minutes.

  • JimD

    Contra Krugman seems like a cute idea for a podcast. Krugman’s biases and distortions are infuriating and predictable. It would be interesting to push back with an informed policy commentary, pointing out where his assertions are questionable or not economically sound.

    Unfortunately, after listening to the first 3 episodes of the podcast, I don’t think CK does this. Rather it looks to score cheap points against Krugman using the same kind of tactical biases and distortions he employs in his column. The discussion is often shallow or off target.

    Krugman has some fun poking at Rand Paul’s tweet about lack of debt in 1830. It is a silly tweet and Krugman just makes a quick jab back and moves on. The podcast insists on a full dissection of a very unimportant and minor exchange. The more important issue is what is the correct role and size of public debt. We never really get this (although there is some good observations). Instead Murphy concludes the discussion with I guess what is supposed to be a facetious argument that more debt would be ok if it translated into tax cuts. Does Murphy agree? Not clear. More useful would be a discussion of whether fiscal policy has been too conservative since 2008. Bernanke’s recent comments are interesting in this regard: Congress did not approve a big enough recovery package.

    The discussion of Trump’s “ideas” in the 3rd podcast are mostly off target or irrelevant. The discussion of supply side ideas in Reagan economic policy is distorted. Be interesting to hear David Stockman on the Laffer Curve. Woods’ description of Trump’s foreign policy ideas is totally irrelevant – and also makes Trump sound very much like Obama: stay out of Syria, wind down or don’t start wars in Iraq or Afghanistan, etc. What does any of this have to do with Krugman’s take on Trump’s tax proposals?

    Bottom line is that this could be a much better podcast. Woods/Murphy need to step up their game.

    • http://earthsociety.org/ Philosopher Rex

      I say give them some slack, they’ve only done four episodes and it takes time to get into the groove with something new.

  • whateverdude

    Today’s episode promises to demonstrate “how Krugman can claim to be right no matter what happens.”

    This is, of course, completely different from how the claims made by Austrian economics are apodictically true, no matter what happens.

    • http://earthsociety.org/ Philosopher Rex

      So if the FED permanently froze rates and fractional reserve banking was made illegal and yet the business cycle continued as it does today, you’re saying that Austrian’s would be able to claim they were right?