Krugman Unlearns for Us by Distorting Learnings about Europe and Its Failing Economies.

Abstract: Paul Krugman gives us a rosy picture of how well Europe is doing as they begin to crash in multiple debt-driven sovereign defaults following the path that Iceland just showed us on the way down to financial oblivion and we are invited to join them. Here, the usual propaganda tricks of cherry-picking only the positive elements of a disaster while glossing over the ugly parts are displayed in song and verse with all the magic and artistry we have come to love from our Economics Nobel Prize winner. Krugman convinces us, very unconvincingly, that Europe does not have much of an unemployment problem and that although their taxes are 8 to 16% higher than ours that their system is better and we ought to emulate them. He fails to mention that a major part of their employment is government subsidized and that several EC members are set to default on their debts. He ignores their debt to GDP ratios that are soaring like ours as if we can ignore this crushing debt sometime soon in the future. As usual, the solution to all economic problems is taxation and spending to achieve social justice.

One way to play the political game when the topic is the success of some program or idea, or perhaps the lack thereof, is to select a cluster of entities that displays some composite character and then to be choosy in sorting out the attributes thus presenting the bright side for approval and applause and ignoring the worst parts.  The selections, forced by the subsequent ‘analysis’ must produce some proven fact or trend that can be used as analogy our government to focus upon so we will all enjoy egalitarianism or something better. We could expect that an ant colony or perhaps the NFL or even organized crime families might be analyzed in various ways where only the positive elements of such groups are publicly exhausted, splashed in glitter as their signal achievements are displayed boldly on the doors of taxi cabs, or in more cryptic latrinalia in lesser public places such as university textbooks and thus serve as sterling examples of success. Europe is offered up to us as a prize using this logic and process today.

The New York Times sports a cadre of ‘journalists’ [1][2][3][4][5][6][7][8] and staff[9] that sift through the news to angrily force an alignment of selected observations with grand ideological visions much in the manner of their honored Pulitzer Prize winner Walter Duranty.[10] Paul Krugman[11] is one of these gifted players in the ideological propaganda games, specializing in Keynesian economics, whatever that means,  and has been given a special warrant from the Peace Loving Swedes [read dirty, third world  gun peddlers and mass murderers in cahoots with their inbred lackeys the Norwegians—now known as  EcoQuislings]. This majestic endorsement brightens the view of the New York skyline with iridescent tinsel and other illuminations driven by the fame and fortune of the Nobel Prize[12] so he can continue to turn the old rusty Marxist crank and generate new nostrums with license [avec le permis d'almagest] and fluff [guirlandes] that amplify and define his economics in a strictly political manner. A swami[13] adorned with purple pantaloons and a magic turban could do nothing better.

Today, Paul Krugman guides us through the economic mysteries of Europe and demonstrates how this collection of worn out, pathetic ensemble of socialist losers is actually successful. Keep in mind that this is a little game we play with him where we need to count the number of times he advocates taxation and spending and watch out for the elusive notions of either smaller government or the horrible case of tax cuts.  I am confident we shall learn of the splendor of more taxation and bigger government as we plough through this fluff and resist the temptation to unlearn some basic economics and finance and tax cuts or smaller government will not be mentioned.

The First Lesson:

“As health care reform nears the finish line, there is much wailing and rending of garments among conservatives. And I’m not just talking about the tea partiers. Even calmer conservatives have been issuing dire warnings that Obamacare will turn America into a European-style social democracy. And everyone knows that Europe has lost all its economic dynamism.”[14]--Learning From Europe By Paul Krugman Op-Ed Columnist Published: January 10, 2010 [Emphasis is mine in all quotes.]

There are two major problems at this junction professor: [1] we have no clue what this healthcare reform is all about or will cost and [2] whatever it is it is unlikely that it will be financed in the US like it is in Europe with taxes imposed early and benefits delayed a few years so that it will be appear to be a deficit neutral program. It is an economy killer. A side corollary here is that the US government has never produced any successful social program[15] of any sort and has only wrecked Social Security, Medicare, Amtrak, the Post Office and numerous other entities with their bungling. The cynical comment, in jest, about Europe’s economic dynamism will no doubt be corrected in the next few paragraphs.

So, professor, we start with nothing but fluff.

“Strange to say, however, what everyone knows isn’t true. Europe has its economic troubles; who doesn’t? But the story you hear all the time — of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation — bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.”--Learning from Europe By Paul Krugman

We wonder what this means and if we should look at the EU or just Europe excluding the United Kingdom or what here. If we elect to look at Spain and Greece we can see some major problems with their economies and astronomical unemployment levels that sort of tarnish the idea that there might be “surprisingly positive facts.” We should also inject some history here and mention, casually, that Europe had two world wars that killed a mere 100 million people and a Communist revolution that wiped out another 40 million and they wasted their best people in this war process that somehow defied diplomacy and the survivors competed with the rats in the rubble of bombed cities to form some government that offered ‘peace and security’ first among all things and the pitiful survivors were willing to lick any boot or kiss any backside for this chance. And, they did. It is interesting that we would copy the Europeans on any measures other than winemaking and cooking.

Some comments are extracted from the text here to focus on his metrics:

“In any case, the statistics confirm what the eyes see.

[1] America’s real G.D.P. has grown, on average, 3 percent per year.

[2] European Union before it was enlarged to include a number of former Communist nations — has grown only 2.2 percent a year. America rules!”

[3] And what about jobs? Here America arguably does better: European unemployment rates are usually substantially higher than the rate here, and the employed fraction of the population lower.

[4] In 2008, 80 percent of adults aged 25 to 54 in the E.U. 15 were employed (and 83 percent in France). That’s about the same as in the United States. -- Learning From Europe By Paul Krugman

Let us pause here and review some facts:[16] The EU is experiencing a monstrous increase in sovereign debt. France, for instance will see its national debt to GDP ratio increase from 63.6% in 2006 to 89.7% in 2014. The numbers for the U.K. shoot up from 43.3 to 87.8 in this time span while the US will go from 61.9 to 106.7 by 2014 or sooner. Germany’s debt will rise from 66% to 91%.  This means that this ‘prosperity’ we learn about in Europe is just temporary until the time comes to repay the debt and then we shall see unemployment soaring beyond 10% or massive sovereign defaults or both. High debt ratios also lead to much lower growth as we learn from Reinhart and Rogoff in their new book.[17] The EU is in a downward spiral and are capping off their future with massive costs and inefficiency of the novel EcoNazi [18]Cap and Trade scam. Their real problem now is competition and they want the US to fall in their latrine while they beg India and China to step in too. Europe is a social and economic leper colony.

On this employment record, Krugman fails to tell us that Germany has a social program called  Kurzarbeitergeld [19]that pays workers part of their salaries  for not working full time.[20] In economics, we call this government-subsidized excess capacity and this keeps costs high and burdens businesses and the entire economy. Krugman fails to tell us that Greece[21] is probably collapsing because their debt is 98% of their 2009 GDP[22] [Jan 19, 2009 report] so the IMF is sending a team on Jan 12, 2010 to look at this mess.[23] They talk about control but there is no accounting for Greece’s military on their public books, an interesting way to share economic and financial information in the EU. Another major problem is Spain while Iceland is completely finished as a functioning state.  Spain’s unemployment rate for young people is a staggering 43.8%[24] and 19.4% overall with riots and social unrest ongoing for months. Iceland has just defaulted[25]so their credit rating is worthless, but, they did have great employment? Or did they? Unemployment is now 10% in the Eurozone we find and probably rising.[26] Paris is famous for burning 500 cars per night[27] and seems to tolerate bands of Islamo-Fascists preaching hate and recruiting jihadists on numerous streets by howling mullahs that are on welfare as the French copy the London Model of Social Cowardice. We are expected to extract some useful information or guidance from this pack of fools?

Krugman withholds all of this and fails to tell us that this spate of prosperity from the socialist world is being paid for in near term debt. A good socialist only looks at the next election and will scrounge every last ducat to sprinkle around his podium so as to convince the polis that they are in good hands and vote for him again. England is being destroyed by debt by their one-eyed monster Gordon Brown who seeks some supreme form of state capitalism[28] [this is the definition of Fascism] and is spending the state into bankruptcy.

Krugman wanders around these hard facts above with this little ensemble of blather and cavalier rhetoric:

“The point isn’t that Europe is utopia. Like the United States, it’s having trouble grappling with the current financial crisis. Like the United States, Europe’s big nations face serious long-run fiscal issues — and like some individual U.S. states, some European countries are teetering on the edge of fiscal crisis. (Sacramento is now the Athens of America — in a bad way.) But taking the longer view, the European economy works; it grows; it’s as dynamic, all in all, as our own.” -- Learning From Europe By Paul Krugman

Forced to discuss some glaring problems and dealing with  some probable sovereign  defaults like Iceland and probably Greece and Spain,  Krugman chooses to push this off to the future with the  implied assumption that this debt is manageable and the EU can return to its ‘dynamic’ status.  We can just ‘tax the rich’ he thinks and pay all that back.

What this guy fails to tell us in all his assaults on the rich is that, for tax calculations, this ‘rich group starts off at a mere $50,233 on a household basis[29] but for the case of individual incomes at the median is right at $32,140[30] and that our current tax liability for persons who pay federal taxes [only those above the median] is thus about $192,000 for the individual. You can certainly double that amount for a household with two incomes above the median. There is no way a person making $32,000 a year can handle a debt of $192,000 on average. To pay this off in 30 years would require a monthly payment of $1,030 or a 38% additional tax rate.  Who can handle this? If you exclude those who make less than Joe Biden’s [Plugs[31] the Buffoon[32]] famous $250, 000 income cutoff[33] we find that there are only 13,215,000 of these people who would have to pay off 12 trillion dollars at the rate of $908,059 per person. Such a mortgage at 5% would mean payments of $4,874.66 per month.[34] Note that this is 12 x $4,874.66 or $58,495.92 per year that that is a constant tax of 23% for debt repayment alone and excludes other taxes state and local and federal income taxes. It is easy to see that for a person making $250,000 this debt repayment service piled on top of other taxes may exceed 100% or matching the Soviet Dream. It is easier to imagine that these people will flee the country to seek lower tax rates as many are doing in California[35][36][37] and New York, now cesspools of boiling caustic taxes.

There is no way we can pay off this debt but Krugman plunges forward into an ocean of debt to buy some socialism for us at least for a while:

“So why do we get such a different picture from many pundits? Because according to the prevailing economic dogma in this country — and I’m talking here about many Democrats as well as essentially all Republicans — European-style social democracy should be an utter disaster. And people tend to see what they want to see.” -- Learning From Europe By Paul Krugman

It is an utter disaster and we can see that.  Krugman apparently sees what he wants to see.”

“Europe is often held up as a cautionary tale, a demonstration that if you try to make the economy less brutal, to take better care of your fellow citizens when they’re down on their luck, you end up killing economic progress. But what European experience actually demonstrates is the opposite: social justice and progress can go hand in hand.” -- Learning From Europe By Paul Krugman

Have we forgotten about the ‘social justice’ they got from the USSR? The EU is being crushed by debt and Portugal Ireland, Greece and Spain [The PIGS[38]] and probably Latvia and Rumania will probably join Iceland in defaults. The taxes are already astronomical:

“Taxes in major European nations range from 36 to 44 percent of G.D.P., compared with 28 in the United States. Universal health care is, well, universal. Social expenditure is vastly higher than it is here.”-- Learning From Europe

And what happens when the debt has to be repaid? Here we see a difference of 8 to 16% lower taxes in the US with comparable debt and better healthcare now.

This is a terminal episode where the only outcome is currency debasement, massive inflation or worse. Export income will suddenly vanish for countries like Iceland that just defaulted yesterday and that fraction of their GDP will be LOST!

But, to be fair, we have to acknowledge that socialism, even for a while, is better than watching the leftists face the daunting horrors of capitalism where only about 85% of the people can enjoy the fruits of their work. [39] So, we can all rejoice that we can go broke for Krugman and his liberals to ‘save’ the 15% from the lousy lives they lead until we all go broke, the world economy collapses and we are all poor. This is a fair price for the successful parts of our society to pay according to a dedicated liberal as he commits nothing to the game expect criticism, spite and sophistry.  This is the social theory of a parasite: Let us all be poor so we can become equal and enjoy, at par, social justice.

With Krugman it is always tax and spend or, to be novel, spend and then tax.

rycK

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