Krugman on the U.S. Partisan Divide

Republicans and Democrats don’t just have different priorities; they live in different intellectual and moral universes. In Democrat-world, up is up and down is down. Raising taxes increases revenue, and cutting spending while the economy is still depressed reduces employment. But in Republican-world, down is up. The way to increase revenue is to cut taxes on corporations and the wealthy, and slashing government spending is a job-creation strategy.

It’s Paul Krugman at his best. Read the whole piece here.

Rediscovering the Big Picture

The NYT Sunday Review has a nice piece that highlights a point I’ve been thinking about for a while (and which is one of the reasons I don’t wanna do grad school in economics): the economics profession has lost track of the big picture! It’s nice and maybe even illuminating to think about things like price determinacy in an infinite horizon rational expectations framework. Yet it’s not all there is. By the virtue of their profession economists seem to be among the more qualified people to think about the nature of capitalism and what exactly we want it to look like (by comparing systems like the one of Japan, Germany, the U.S. and Sweden it becomes clear that a shortage of alternatives is not the problem).

One of the consequences of the rather narrow focus of the profession is what Raghuram Rajan argues here – it’s not so much that (most) economists didn’t see the current crisis coming, it’s that they didn’t even pay attention.

Maybe the recent crisis is a wake up call and there is, in fact, no shortage of people making the point (see, for instance, here and here).

Controlling The Future

who controls the past controls the future. who controls the present controls the past.

Is it the market’s fault?

Paul Krugman has an interesting post today where he backs up with numbers part of the point I was trying to make in my last post: It’s not all the market’s fault! Go have a look.