Krugman – too smart for the Obama team?

From the outside you can believe that too many Americans, please excuse the cliché, have a problem not if you are richer or wealthier than they are, it’s when you make clear that you are smarter as Europeans use to do it when they come together. You can be a preacher, behave like a messiah, that will not matter to a country that believes in the pursuit of happyness. Europeans have divided their land in endless, ongoing wars, when the Americans founded their nation in a wide and open land. In one of the luckiest moments (and eventually accidental) of mankind, educated (white) men came together to sign the declaration of independence. All of them may have not foreseen what challenges their nation would face in the beginning of the 21st century: Climate change, civil rights (again and propably always), inequality in wealth and education – some funnily add obesity to the list. Instead, the government has managed to become obsessed with comparatively small issues: A very few freaked out terrorists and Brangelina.

It is almost forgotten, that the natural inhabitants of this country where not slaved, the Indians were killed. The country was further too wide to enforce a government, the elite did not foresee the danger in a self governing population, that does believe in their right to defend themselves, not in a protective goverment that in a european way could surpress you.

What has been left as the single, unifying message of the Declaration of Independence is the Audacity of Hope as Obama calls it, the pursuit of happyness for all of the people that want to live their lives in the United States. It is this very message, he uses in his campaign to unify a nation. It is the only moral value that is truely shared among all americans, it is not the believe in equality. Those who understand that there inequality is a fact right now, they should not fight for their possessions, but be brave enough to fight for their interest in a democratic process.

The wild West was not endless and the civilization grew on the west and later east coast. They are now the centers of economic power and the money (power) of this part of the US will decide the presedential election if mobilized well. The country remembers well their greatest failure, the civil war and Lincoln won the war by the means of economic power and better organization, but he also unified the country later by offering the audacity of hope for everyone as all men are created equal (the main idea in the declaration of equality was propably to avoid monarchy, it was not thought about gender and race thoroughly). Equality of race was a late repair of the constituion if you like, that clever lawyers used to construct a new failure, to claim that a corporation is by law also equal to the interest of men, but only with limited liability. This enables todays corporation to act like criminals that cannot be hold accountable for their damages.

In consequence this helps to answer the question of the headline. Is smart Paul Krugman the right man to help the Obama team in the economic crisis? Unfortunately, he is not a consensus oriented man. There is an anecdote of Krugman having problems with a beamer in front of a highly acclaimed audience of scientists. He demanded that “anyone smarter than myself please get up here”. Nobody stood up. That is what he was educated to in his academic enviroment.

He believes that he is right until somebody will prove he is wrong and the problem is: Many people cannot and a scientist alone cannot prove that it is “true”, scientific results are only right or wrong, but a single view can never be true on it’s own (Popper, critical rationalism). It is not Krugmans fault that he is clever, but he lacks modesty and humbleness to become politically convincing personality in the United States. This is why he will continue to be a media phenomenon and media is not concerned about public good – news corporations are members of the society with limited liability. How can you expect criminals to be interested in a democratic discussion?

After decades of Milton Friedman being the most congent, convincing economic thinker who saw the regulation of interest rates as the most promising factor to improve the economy, the question is, why it failed. So now there Krugman as the ultimate weapon for those who believe that the state should take an interest. But isn’t that a fallback to Keynes? Krugman knows so well, but is unable to explain so in the public debate. He researched trade relations to understand, why there is not such a thing as a comparative advantage as Adam Smith thought to explain trade. Krugman is not offering domestic policies in his research. If Greenspan inflated the US economy with cheap money, why didn’t he raise them early enough? The Fed is relatively indepedent, he could have done so early enough. The explaination could be, that Greenspan was and Bernanke is far less powerful than you think. They have no failed to take influence on chinese or european banks to invest their savings in subprimes as the Fed thought building houses would help the economy. It did, but that did not stop the banks to fail and misinterpret their risks. There is a global financial system, but certainly the Fed is not a global control institution.

Still, Krugmans rise to fame could eventually help the american middle class as he advocates changes to taxation. However, it is unclear if this will help the american economy. Scientific discussion has not answered if Friedman or Krugman are “true”, but politicians claim they know what is right or wrong for the economy. Actually, both can only have a speculation and currently the financial crisis provides us with evidence, that some ideas of derregulation are leading to failure, that is not for the public good. That is, because the public good is different from the good of corporations, that is different. Economists should be humble enough to admit that stability in the world and equality is guaranteed by the state, not corporations. Surely we have to fix the economy, otherwise China will be able to dictate that their understanding of equality, that is in fact political surpression. And it is dangerous, that not diplomats create foreign policy, but coporate america. Corporate america will not discuss, it wants to gain influence and win so they are becoming more powerful.

Yet it seems to be a convincing argument, that economic initiative will not be reduced by taxing private persons differently. A growing middle class was the success recipe of the US and it helps to unify their country. And it make the Dollar more stabile, if it not financed by chinese loans as american consumers have their own savings. We know little about the right level of taxation of corporations except that it has to be competitive, which means that it should be similar in all countries. By that governments would find a way to avoid corporations taking power and destabilization of democracy. It will be extremely difficult to convince China or India to increase taxes. But China understood that they need to have an influence in their private sector to control it. The US should do the same by imposing rules that reduce the risk of failure for the middle class. This will not reduce the number of innovations created by americans that helped to increase wealth.

It cannot be seen negative that an economist like Krugman points his fingers not at the economy being the most important sector and that the US is wasting their energy and slow their reform process by being incredibly obsessed fighting their fears and a small bunch of freaked-out terrorists. Brangelina have become more important than Joe, the Plumber. Krugman really means that it is important to change the single major default in capitalism: that our enviroment can be damaged at no cost and we risk the foundation of our lives. There is not a price tag on a dead parrot, but it propably should if we we have to make capitalism green. This can only be done in a process that is lead by common sense. It is the biggest challenge since the economy was always built on growth and the exploitation and use of natural ressources. This you cannot do, if you divide the world by an axis of evil.

Krugman may lack the core capability of a politician – to find a majority for his politics. You do that well if you are powerful, but modest. The dumb know, that the pen is mightier than the sword. And too many americans have a bad education, but they still do not want to be governed and surpressed (as long as you are not God or pretending to be his son) – or do they?
That is the difficulty you have to solve if you promise the audacity of hope: You have to explain some of them later, why their hope is less important than the hope of others. And how to do so in America, where news corporations have a vital interest to strengthen their interest? Who controls the media?

After 8 years of Bushims and dividing a country by creating fear, it is vitally important that in the debate you have to use the correct words, you have to speak a unifying language. Speak about americans, not about the Blacks, the Whites, Liberals, Neocons and Terrorists. Name their names, invite them to discuss an issue and talk about the solution of a problem. Do not increase the distance and the emphasize the difference. Let them remember that there is a an art to discuss issues without pulling the trigger, that is the foundation of democracy, the reason why people emigrated to America. They wanted to learn their lesson from surpression that prevailed in Europe and elsewhere. They wanted a state of discussion. Discuss the issue without the will to surpress his opinion, agreeing to the fact that there has to be a solution both can live on with well. Then the country is still wide and open. P.S. We have to understand our economy better – good to have you Paul!

Leave a Comment