Paul Krugman Quotes

First, most of the speculation about the superiority of the communist system - including the popular view that Western economies could painlessly accelerate their own growth by borrowing some aspects of that system - was off base. Rapid growth was based entirely on one attribute: the willingness to save, to sacrifice current consumption for the sake of future production. The communist example offered no hint of a free lunch.
Second, the economic analysis of communist countries' growth implied some future limits to their industrial expansion - in other words, implied that a naive projection of their past growth rates into the future was likely to greatly overstate their real prospects. Economic growth that is based on expansion of inputs, rather than on growth in output per unit of input, is inevitably subject to diminishing returns. It was simply not possible for the Soviet economies to sustain the rates of growth of labor force participation, average education levels, and above all the physical capital stock that had prevailed in previous years. Communist growth would predictably slow down, perhaps drastically.

So why did spatial issues remain a blind spot for the economic profession? It was not a historical accident: there was something about spatial economics that made it inherently unfriendly terrain for the kind of modeling mainstream economists know how to do. That something was, as you might well guess, the problem of in the face of increasing returns, a problem that is even more acute in than in . In development the crucial role that high assigned to increasing returns was a hypothesis crucial to that doctrine, but not necessarily crucial to understanding development in general. One could do meaningful theorizing about developing countries, albeit not in the grand tradition, without sacrificing the convenient assumptions of constant returns and perfect competition. In spatial economics, however, you really cannot get started at all without finding a way to deal with scale economies and oligopolistic firms.

What does Alexandria Ocasio-Cortez know about tax policy? A lot.

There is no economic policy. That's really important to say. The general of the Bushies is that they don't make policies to deal with problems. They use problems to justify things they wanted to do anyway. So there is no policy to deal with the lack of jobs. There really isn't even a policy to deal with terrorism. It's all about how can we spin what's happening out there to do what we want to do.

Were the Asian economies more vulnerable to financial panic in 1997 than they had been, say, five or ten years before? Yes, surely—but not because of crony capitalism, or indeed what would usually be considered bad government policies. Rather, they had become more vulnerable partly because they had opened up their financial markets—because they had, in fact, become better free-market economies, not worse. And they had also grown vulnerable because they had taken advantage of their new popularity with international lenders to run up substantial debts to the outside world. These debts intensified the feedback from loss of confidence to financial collapse and back again, making the vicious circle of crisis more intense. It wasn’t that the money was badly spent; some of it was, some of it wasn’t. It was that the new debts, unlike the old ones, were in dollars—and that turned out to be the economies’ undoing.

The best you can say about economic policy in this slump is that we have for the most part avoided a full repeat of the Great Depression. I say “for the most part” because we actually are seeing a Depression-level slump in Greece, and very bad slumps elsewhere in the European periphery. Still, the overall downturn hasn’t been a full 1930s replay. But all of that, I think, can be attributed to the financial rescue of 2008-2009 and automatic stabilizers. Deliberate policy to offset the crash in private spending has been largely absent.

But this warning was ignored, and there was no move to extend regulation. On the contrary, the spirit of the times—and the ideology of the George W. Bush administration—was deeply antiregulation. This attitude was symbolized by a photo-op held in 2003, in which representatives of the various agencies that play roles in bank oversight used pruning shears and a chainsaw to cut up stacks of regulations. More concretely, the Bush administration used federal power, including obscure powers of the Office of the Comptroller of the Currency, to block state-level efforts to impose some oversight on subprime lending.

In a way, the worst sin of the conservatives was that of hypocrisy. They proclaimed growth as their objective, offered it as the answer to all problems, all while following policies that actually inhibited that growth at least a bit. At the end of the day, however, the most striking fact is how little happened to U.S. long-term growth, good or bad, on their watch.

The irony... is that high development theory was right. By this I do not mean that the Big Push is really the right story of how development takes place, or even that the issues raised in high development theory are necessarily the key ones for making poor countries rich. What I do mean is that the unconventional themes put forth by the high development theorists—their emphasis on strategic complementarity in investment decisions and on the problem of coordination failure—did... identify important possibilities that are neglected in models. But the high development theorists failed to convince their colleagues of the importance of those possibilities. Worse, they failed even to communicate clearly what they were talking about. And so good ideas, important ideas, were ignored for a generation...

The fact is that Democrats have already been pursuing policies that are much better for the white working class than anything the other party has to offer. Yet this has brought no political reward.

Piketty ends Capital in the Twenty-First Century with a call to arms — a call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth. It’s easy to be cynical about the prospects for anything of the kind. But surely Piketty’s masterly diagnosis of where we are and where we’re heading makes such a thing considerably more likely. So Capital in the Twenty-First Century is an extremely important book on all fronts. Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.

I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty. I believe in democracy, civil liberties, and the rule of law. That makes me a liberal, and I’m proud of it.

In the world of politics, however, the actual content of an academic movement may be less important than the way it affects the tone of the discussion. During the 1970s there was a growing public sense of disillusionment with government, which first fed grass-roots tax revolts in California and , then helped elect Ronald Reagan. And there was also a determined effort by a few extremely conservative journalists and politicians to promote radical tax-cutting plans. No matter how careful the research of conservative public finance theorists like Martin Feldstein might be, in that political climate it was inevitable that it would be widely seen as basically confirming popular prejudices. There was a huge intellectual gulf between Feldstein or Boskin and the sweeping claims of Arthur Laffer; but in the public mind, they were in effect allies.

You can’t explain the votes of places like Clay County as a response to disagreements about trade policy. The only way to make sense of what happened is to see the vote as an expression of, well, identity politics — some combination of white resentment at what voters see as favoritism toward nonwhites (even though it isn’t) and anger on the part of the less educated at liberal elites whom they imagine look down on them.

With great wealth comes great pettiness.