John Buell

Krugman Annotated

Paul Krugman is the voice of liberalism in America. From that position he has made many positive contributions to our political discourse. Krugman’s attacks on the limitations and fallacies of the austerity and balanced budget agendas as pursued in Great Britain, the European Union, and the United States have been especially prescient. Had policy makers listened to his advices, much suffering could have been avoided.

Nonetheless, during the current presidential campaign Krugman has continually attacked the one candidate who seemingly most represents the liberal agenda his column once endorsed. Krugman has apparently decided that not only is an ambitious liberal agenda not attainable, activists should not even advocate it now. They should instead settle for modest incremental reforms. How he arrives at that place exposes limitations in Krugman as a political thinker. Because he is so widely read in both liberal and left camps I will provide a brief annotated presentation of Krugman as political campaigner.

Krugman on Clinton’s unpopularity: “Maybe Clinton is a much better candidate than she’s given credit for — her main problem is not lack of ‘authenticity’ or whatever, but the unremitting hostility of the media, which have given her far more negative coverage than they’re given anyone else.” Does authenticity here serve as a euphemism for lying? Clinton’s long political career has been marked by sharp partisan attacks and invented conspiracy theories’ but also by serial lies. Regarding the recent email controversy, Nathan Robinson, writing in Current Affairs, points to a disturbing “recurrent Clinton trait: responding to criticisms that she has lied by telling … even more lies, thus causing the whole thing to degenerate further down into disaster. It’s the same tactic Clinton thought would work when she was called out on her claim about ducking sniper fire in Bosnia.”

As for the attacks of the media, Krugman conveniently omits another key part of the story, one that would force him to question his disdain for Sanders. The analysis Krugman cites regarding unfavorable coverage of Clinton also points out: “while the press has hit Clinton more frequently, [we] also found that it’s paid much more attention to her than to Bernie Sanders. And, by design, this kind of analysis may overlook other ways the press can hurt a candidate — like Sanders — by downplaying or dismissing his or her chances. … If you are portrayed as not having much of a chance to win, studies show voters tend to pick up on that. “

Clinton and Pragmatism:

Krugman: “For sure, quite a few Sanders supporters dream of a better society, and for whatever reason – maybe just because they’re very young – are ready to dismiss practical arguments about why all their dreams can’t be accomplished in a day.” Are these our only choices, a kind of technocratic and incremental reform agenda or consequences-be-damned revolution? Some of the enduring changes in our political economy, the union movement, civil rights and anti-war initiatives reflected a democratic politics that pushed for fundamental change. At its best this politics eschewed violence and was attentive to the unintended consequences major reform movements entail.

Krugman’s idealists, who are not all young, know that basic change won’t come tomorrow but could point out to him that a politics that from the very start aims only for what appears immediately attainable, ends up seeing the center of American politics shift ever more to the right.

Bank Reform and Campaign Contributions.

Clinton has defended her many contributions from banks and her obscene lecture fees on the grounds that Obama received more and still stood up to the banks. She, and Krugman, too easily soft pedal the role of banks both today and in the recent past. Krugman gets both the politics and the economics of this issue wrong.

In a recent post attacking Sanders, Krugman implies that Sanders’ call for breaking up the big banks may be politically astute but reveals his ignorance of the real causes of the world financial crisis. U Mass economist Gerald Epstein, an expert on banks and economic development, provides a devastating critique of Krugman’s analysis: Krugman asserts: “Predatory lending was largely carried out by smaller, non-Wall Street institutions like Countrywide Financial.” Epstein: “But, you don’t have to have seen The Big Short to know that the sub-prime lenders like Countrywide Financial were just one set of players along a powerful supply-chain that contained multiple links. This chain was geared toward creating and selling structured, securitized financial products like collateralized debt obligation (CDOs) and CDO-squareds, mostly produced, financed and sold by the largest (now former) investment banks … In the face of this crisis and enjoying large majorities in both the House and Senate. Obama …essentially continued the Bush bailouts of the big banks and Wall Street instead of undertaking serious bank restructuring, re-regulation, and implementing a massive infrastructure rebuilding program”

As banking scholar Bill Black has argued, Obama is a perfect illustration of political scientist Tom Ferguson’s Golden Rule, that he or she who has the gold rules: “Tom Ferguson’s Golden Rule is supported by all the research. Contributions, massive speech fees, and revolving doors all matter. They are not decisive with every politician on every vote, but overall they strongly warp policy against the public interest and in favor of Wall Street.”

Black reminds us: “The pinnacle of Obama’s denunciation, in eight years, was that he opposed some unspecified actions by some unidentified “fat cat bankers.”

The next president may well face comparable or worse economic crises. If he or she remains wedded to big money and small steps at best our economy and our democracy may both take further hits. Contrary to Krugman, viewing political change as always linear and incremental is just as simplistic in its own way as purists’ faith in rapid revolutionary change. Obama had an opportunity to enact reforms that might have made finance better serve the interests of Main Street. When Paul Krugman uses his lofty perch to admonish readers that Sanders’ supporters are dreamers, he only serves to make the possible even further from fruition.

John Buell lives in Southwest Harbor, Maine and writes on labor and environmental issues. His books include Politics, Religion, and Culture in an Anxious Age (Palgrave MacMillan, 2011). Email Jbuell@acadia.net.

From The Progressive Populist, July 1-15, 2016

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