Will The Real Paul Krugman Please Stand Up???

Minimum Wage and Unemployment

"...the belief that lower wages would raise overall employment rests on a fallacy of composition. In reality, reducing wages would at best do nothing for employment; more likely it would actually be contractionary."

-  Would cutting the minimum wage raise employment? - New York Times, 16 December 2009

"Stanford University economist Paul Krugman, however, said raising the minimum wage and lowering barriers to union organization would carry a trade-off --- increased unemployment."

- Training touted to close widening wage gap - Milwaukee Journal Sentinel, page 8A - 6 February 1996



Institutional Finance: Bad Banks

"Close the weak banks and impose serious capital requirements on the strong ones...You see, it may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs. There can be a huge amount of damage a bad bank can create. There is a cruelty to our market system, but that cruelty cannot be eliminated. The alternative is fraught with danger, that of carrying on with the weak banks."

- 1998 interview of Krugman - Business Standard (India)


"Letting Lehman fail-letting the market work, as some people said-basically brought the entire world capital market down."

- Depression Economics [Paul Krugman interview] - Newsweek, 3 December 2008

Bailouts


"Many on Wall Street are clamoring for a bailout -- for Fannie Mae or the Federal Reserve or someone to step in and buy mortgage-backed securities from troubled hedge funds. But that would be like having the taxpayers bail out Enron or WorldCom when they went bust -- it would be saving bad actors from the consequences of their misdeeds... Say no to bailouts - but let's help borrowers work things out." 

- Workouts, Not Bailouts - New York Times, 17 August 2007


"The just-announced federal takeover of Fannie Mae and Freddie Mac, the giant mortgage lenders, was certainly the right thing to do - and it was done fairly well, too... So Fannie and Freddie had to be rescued..." 

- Is saving our Fannie enough? - Seattle Times, 9 September 2008 

Deficits and Interest Rates

"It turns out that there's a strong correlation between budget deficits and interest rates - namely, when deficits are high, interest rates are low ... On reflection, it's obvious why..." 

- Deficits and interest rates - New York Times, 14 August 2009

"But we're looking at a fiscal crisis that will drive interest rates sky-high. A leading economist recently summed up one reason why: ''When the government reduces saving by running a budget deficit, the interest rate rises.'' 

- A fiscal train wreck - New York Times, 11 March 2003

National Debt


"It's a very good deal for those close to retirement who will never see the taxes that will have to be levied to pay it (the national debt), but it's a very bad deal for people early in their careers. A 30-year old, if she understood it, should be pretty upset, because when she hits peak earnings at age 50, she will be paying for spending now through higher taxes then." 

-- Paul Krugman, an economist at the Massachusetts Institute of Technology, commenting on the national debt climbing to the $2 trillion mark, Quote Without Comment - Lakeland Register, 18 October 1985

"And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush will pass along to other Congresses, other presidents and other generations."

- In 2003, Krugman held the same view that debts would affect future generations when he wrote in his article titled Passing it Along in New York Times on 18 July 2003

"How, then, did America pay down its debt? Actually, it didn't... But the economy grew, so the ratio of debt to GDP fell, and everything worked out fiscally... Which brings me to a question a number of people have raised: maybe we can pay the interest, but what about repaying the principal? ...But why would we have to do that? Again, the lesson of the 1950s - or, if you like, the lesson of Belgium and Italy, which brought their debt-GDP ratios down from early 90s levels - is that you need to stabilize debt, not pay it off; economic growth will do the rest." 

- The burden of debt - New York Times, 28 August 2009

Debt to GDP Ratio

"Dear Alan Greenspan:  ...Moreover, since you advocate accrual accounting, you obviously realize that the ratio of debt to G.D.P. is a highly misleading number."

- On the Second Day, Atlas Waffled - New York Times, 14 February 2003

"I think they're missing the point - if even Italy can handle debt/GDP ratios of 100 percent, we should be able to do it too." 

- A couple of notes on the 40s and 50s - New York Times, 30 August 2009

Impact of Governments on Recessions

"The fact is, all these promises are silly: Administrations don't cause recession and recoveries--if anyone is in charge of the business cycle, it's the nonpartisan technocrats at the Federal Reserve."

- Two Cheers For The Welfare State.  Sure, It's Got Problems, But Despite What They Want, The Vast Majority of Americans Would Be Sorry To See It Go, Fortune, 1 May 1995

"Mr. Obama could have done the same - with, I'd argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America's economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration's refusal to regulate the banks."

-  What didn't happen - New York Times, 17 January 2010

Sustainability of Social Security

"So by all means, let's have a vigorous national debate about reforming Social Security; it can't be sustained in its present form."

- Two Cheers For The Welfare State.  Sure, It's Got Problems, But Despite What They Want, The Vast Majority of Americans Would Be Sorry To See It Go, Fortune, 1 May 1995


"But the privatizers won't take yes for an answer when it comes to the sustainability of Social Security... Social Security, with its own dedicated tax, has been run responsibly; the rest of the government has not. So why are we talking about a Social Security crisis?" 

- About the Social Security trust fund - New York Times, 28 March 2008

Investment of Social Security Funds

"The outlines of a plan that would sustain Social Security without destroying it are clear: Allow the system to invest some of its surplus in private assets, and close the system's modest long-run financial shortfall by making minor adjustments to benefits and rescinding part of the recent tax cut." 

- Fabricating a Crisis - New York Times, 21 August 2001

 "A few weeks ago I tried to explain the logic of Bush-style Social Security privatization... you should borrow a lot of money, buy stocks and hope for capital gains... So people are expected to take a loan from the government and use it to buy stocks, and if that turns out to have been a mistake -- well, too bad...Do you believe that we should replace America's most successful government program with a system in which workers engage in speculation that no financial adviser would recommend? Do you believe that we should do this even though it will do nothing to improve the program's finances?" 

- Gambling with your Retirement - New York Times, 4 February 2005

Privatisation of Social Security

"None of this says that privatizing Social Security is necessarily a bad idea."

-  Notes on Social Security from Personal website of Paul Krugman

"Privatizing Social Security - replacing the current system, in whole or in part, with personal investment accounts - won't do anything to strengthen the system's finances. If anything, it will make things worse." 

- Inventing a crisis - New York Times, 7 December 2004

Labour Unions

"The actions of labor unions can have effects similar to those of minimum wages, leading to structural unemployment."

- Macroeconomics, 2nd ed., by Paul Krugman and Robin Wells, Worth Publishers, 2009, p 210


"Once upon a time, back when America had a strong middle class, it also had a strong union movement. These two facts were connected." 

- State of the Unions - New York Times, 24 December 2007

Globalisation

Lecture: Paul Krugman rankles many when he refuses to blame this nation's woes on the global economy.

"Yes, thousands of Americans have lost jobs in some industrial sectors, Krugman says. But global competition isn't to blame... "A lot of what people say about these issues is just dead wrong and silly." 

- Maverick Economist debunks theories - Eugene Register-Guard, 18 April 1996


"The accelerated pace of globalization means more losers as well as more winners; workers' fears that they will lose their jobs to Chinese factories and Indian call centers aren't irrational."

- The Trade Tightrope - New York Times, 27 February 2004

Healthcare

"That means that, while I believe in free trade and have no sympathy with the sort of liberalism that wants to centralize economic decision-making in Washington (cases in point: Jimmy Carter's energy planners and Bill Clinton's health planners)..." 

 - Two Cheers For The Welfare State.  Sure, It's Got Problems, But Despite What They Want, The Vast Majority of Americans Would Be Sorry To See It Go, Fortune, 1 May 1995

"True "socialized medicine" would undoubtedly cost less, and a straightforward extension of Medicare-type coverage to all Americans would probably be cheaper than a Swiss-style system. That's why I and others believe that a true public option competing with private insurers is extremely important: otherwise, rising costs could all too easily undermine the whole effort."

- The Swiss Menace - New York Times, 16 August 2009

Role of the Government in the Economy

 ''Nothing Government has done -- for good or evil -- seems to have mattered it's like using a water pistol to shoot an elephant.''

- Benefit of Dole Tax Plan is Hotly Debated - New York Times, 24 August 1996

 "What saved us? The answer, basically, is big government."

-  Saved by Big Government - Guardian, 10 August 2009

 "Huge" Economic Stimulus of $600 Billion

"All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion."

- Depression Era Economics Returns, New York Times, 14 November 2008

 

"Some years down the pike, we’re going to get the real solution, which is going to be a combination of death panels and sales taxes.”

- Paul Krugman, This Week with Christine Amanpour, 15 November 2010

 

“Compare me . . . compare me, uh, with anyone else, and I think you’ll see that my forecasting record is not great.”

- Paul Krugman, "Tim Russert" on CNBC, 7 August 2004

 

"I’m not sure that the current value of the Nasdaq is justified, but I’m not sure that it isn’t.”

- Paul Krugman, The Great Unraveling: Losing Our Way in the New Century, 2004