Paul Krugman: “Zombie Economics”

Paul Krugman, in his most recent column, asks why failed conservative economic theories, which should now be thoroughly discredited, continue to dominate politics.

And why does Obama open the door to these zombie ideas?

“When you do that,” Krugman says, “the zombies end up eating your brain — and quite possibly your economy too.”

Krugman calls these failed ideas “zombie economics” (John Quiggin, author of a new book on the same subject, may have borrowed Krugman’s term for his title).

Krugman explains:

“When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.

“How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says “I don’t think we need regulators,” about to take over a key House panel overseeing the Fed? How, after the experiences of the Clinton and Bush administrations — the first raised taxes and presided over spectacular job growth; the second cut taxes and presided over anemic growth even before the crisis — did we end up with bipartisan agreement on even more tax cuts?

“The answer from the right is that the economic failures of the Obama administration show that big-government policies don’t work. But the response should be, what big-government policies?

“For the fact is that the Obama stimulus — which itself was almost 40 percent tax cuts — was far too cautious to turn the economy around. And that’s not 20-20 hindsight: many economists, myself included, warned from the beginning that the plan was grossly inadequate. Put it this way: A policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.

“Now, maybe it wasn’t possible for President Obama to get more in the face of Congressional skepticism about government. But even if that’s true, it only demonstrates the continuing hold of a failed doctrine over our politics.”

Krugman raises the question, “Why do these failed ideas continue to dominate?” But he doesn’t answer it.

Here’s my answer: concentrated corporate media are very effective manufacturers of opinion.

Despite the fact that sane and sensible people mock Fox News, for instance, the truth is that Fox News is very successful, not in making money, which is not their prime goal, but in promoting radical conservative (GOP) propaganda, which includes all of zombie economics.

Read Krugman’s full article.

Comments

8 Responses to “Paul Krugman: “Zombie Economics””
  1. RL Crabb says:

    I was watching Glenn Beck today. Glenn had his trademark blackboard and chalk out to illustrate how the media is undermining the authority of the government, mainly from a rich foreigner who is buying up media outlets to promote his fiendish plot to destroy America. At the end of his expose , he reveals the source of his displeasure as… George Soros!

    And here all along I thought he was talking about Rupert Murdoch.

    As far as Krugman is concerned, I still contend that the reason the Clinton years were prosperous despite his massive tax increases was the explosion of computer technology. In the 80’s the only people who had one were geeks and nerds, by the end of the nineties everybody had to have one or be consigned to irrelevance. And even that bubble exploded as Clinton was making his exit.

    If we’re ever going to see that kind of growth again, it will no doubt be due to the next great leap forward. Whether it will be some miraculous advance in cheap energy or something yet unseen is beyond the sight of my crystal ball. I just hope it happens soon.

  2. depelton says:

    Bob:

    I admire your courage in watching Glenn Beck. I haven’t had the stomach. 🙂

  3. SaulOhio says:

    I’d like to see where these “Zombie Ideas” have been implemented. Krugman asks “What big government policies?”. I can name a few.

    GSE’s like Fannie and Freddie buying up almost half the mortgages in America, and backig about 90% of the rest.
    The Federal Reserve lowering interest rates to 1% in 2002-2004, pumping a couple trillion dollars into the economy.
    Social Security, Medicare and Medicaid
    Clinton’s National Homeownership Strategy.
    Bush’s American Dream Downpayment Act.
    Sarbanes oxley.
    The bailouts, such as TARP
    A history of past bailouts going back to the 1970’s, including the Crystler bailout
    Record deficits under both Bush and Obama.
    The Fed trying to regulate the business cycle.
    Two big wars on the other side of the planet.
    Environmentalists in Congress threatening to pass Cap & Trade
    Subsidies for alternative energy.
    Bush’s steel tariffs.

    I could go on and on and on.

    The only free market policies that people like Krugman can name are Glass Steagal and temporary tax cuts. Compared to everything I listed above, which is not an exhaustive list, this is not even peanuts.

    And he blames Ron Paul, who was a lone voice railing against all those interventions, a minority of one against a congress which was a bipartisan big government coalition. Blaming him is insane, since it wasn’t his policies which were followed.

    It might make sense for Krugman to argue that the stimulus and deficts weren’t big enough. It does not make sense for him to blame free market policies.

  4. depelton says:

    Ron Paul: “I don’t think we need regulators.”

    Huh?

    Regulation saves capitalism.

    Deregulation destroys it. The fantasy of the “free market” destroys it. This is the lesson of the last 30 years.

  5. SaulOhio says:

    depelton: And please show me one time when regulation has “saved” capitalism.

    Great Depression: Caused by the Fed’s monkeying with the money supply and turned into a depression by Hoover’s labor policies, public works projects, the Smoot-Hawley Tarrif Act, and government spending.

    California’s electric utilities crisis: Price controls on the wholesale market, environmentalist regulation that prevented the building of new power plants, a “deregulation” bill that made it illegal to own both distribution grids and generating capacity while forcing grid owners to buy on an articifially created spot market.

    The blame deregulation and free markets crowd evades any evidence of government policies actually causing the problems that their additional government policies are supposed to solve.

  6. depelton says:

    We had decades of relative economic and financial stability from the forties through the early seventies, and this during an era of persistent New Deal regulations and high marginal tax rates.

    The happy (regulated) market during those decades can hardly be called a free market.

  7. SaulOhio says:

    depletion: The 50’s and 60’s had a stable and falling level of government interference. And we had the Brenton Woods agreement which gave us a relatively stable money supply. What we have had since the 70’s is more and more regulation, more and more government spending, and bigger and bigger deficits. What we had during those decades was much closer to a free market than what we have now.

    After those “happy decades”, we had Lyndon Johnson’s “Great Society” and a huge expansion of the welfare state. Nixon broke with Brenton Woods and abandoned the gold standard, and on top of that gave us price controls. Those “happy decades” were, I admit, not fully laissez-faire, but they were closer to it than what we have had in the last 40 years.

  8. Don Pelton says:

    SaulOhio:

    Thanks for your interesting comments. Always nice to get the contrarian point-of-view. 🙂

    BTW … Bretton Woods (not Brenton Woods).

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