An encounter with a Krugman fanatic

Last night, a friend in facebook posted this in his status:

HIM: This post will become a classic. Very Krugman!

The Unwisdom of Elites
www.nytimes.com
The anatomy of a top-down disaster.

Unfortunately we do not have somebody like him in the Philippines who starts with data and gives original insight from a consistent perspective that, like a mirror or a lodestone, one can agree or disagree with clearly. Most well-known opinion leaders, sadly, start with ideology and offer opinions.

I commented and below are our exchanges. Notice how he quickly digress from his original posting.

Nonoy Oplas: Krugman "starts with data and gives original insight from a consistent perspective"? You're kidding. Here's my critique why he starts with conjecture, then assume that it is absolutely true even if there is zero data shown, then makes recommendations, http://funwithgovernment.blogspot.com/2011/02/when-krugman-becomes-climate-paranoid.html

HIM: Hi Nonoy, I quoted below from your post above and actually Krugman is correct and you are wrong from Physics 101. If I remember right the basic relationship is P1V1T1 = P2V2T2 for different conditions, with the 1 and 2 in subscripts in high school physics,

"More warming leads to more rains, more flooding, more snowstorms? The logic is simply wrong and idiotic. More warming, if true, should lead to less rains (drought), not more. Should lead to less snow, not more."

Global warming increases the variability of weather so that it results into more rain, more flooding, more snowstorms during the different seasons at different places. Global warming does not result in droughts all over the world at the same time. The reason is that higher temperatures in certain points create larger differences in barometric pressures hence a more stormy world.

I did not bother to read the rest of your post after the quote above. I am not kidding. I do not always agree with his extreme Keynesianim but, in this case, Krugman the amateur physicist is not idiotic.

Nonoy Oplas: Really? I or anyone can also say that "Global cooling increases the variability of weather so that it results into less rain, less flooding, less snowstorms during the different seasons at different places."

HIM: Nonoy, it is not based on an assertion but Physics. Unless, libertarianism overturns Physics then I give up.

Nonoy Oplas: If you bothered to check the Krugman article that I reviewed, he started with a conceptual graph, zero data. Check it again, http://krugman.blogs.nytimes.com/2011/02/08/gradual-trends-and-extreme-events/. That is why I reacted when you said that Krugman "starts with data and gives original insight from a consistent perspective".

HIM: With higher temperature, all places will experience higher variability at different times like night and day and across the four seasons. But many modern Libertarians are known to try to trump Science so I am not surprised. At least, Hayek used science (Psychology) at the state of the art when he made his contributions in the 1930s and adapted in 1976 when the data changed: http://bit.ly/lWnbm5.

Nonoy Oplas: it's obvious that (1) you did not check Krugman's article that I pointed out to you; pure conceptual graph, zero data; (2) you also did not check my article, I showed there that global temperatures were flat or declining, despite ever-rising trend in CO2 concentration. About physics, here's among the early critique of the same Krugman article, from Dr. Roger Pielke Jr., a Prof of Envl studies at U. of Colorado, http://rogerpielkejr.blogspot.com/2011/02/krugman-loses-perspective.html. See also the 70 comments after his paper.

Btway, why shift the debate to libertarianism when we were just talking about Krugman? Stick to your original posting pare. We debate on that issue, don't digress because I can also digress to any topic not related to your own original posting.

HIM: Haha! You are right. Here is what happened. Indeed, I did not get through to Krugman's post after visiting your own linked post out of which I grabbed the quote above.

You piqued my interest by telling me "You're kidding" and more when you called Krugman "idiotic." You must have been very sure about your assertion. So I read your post and got to the quote above that was clearly a mistake on science - not your field of expertise and neither Krugman's.

By poking me with the "you're kidding" comment and linking your post, I thought it was part of your assertion - and you did describe Krugman as idiotic....

Nonoy Oplas: I see. Back to the above exchanges, I just reacted to your statement or generalization that Krugman "starts with data and gives original insight..." because in the Krugman article that I reviewed, he did NOT start with data but with conjecture, an imagination.

And repeatedly saying that Krugman's "science" is correct, well, see this critique of the same Krugman article by a meteorologist from Florida State U, Dr. Ryan Maue, http://wattsupwiththat.com/2011/02/08/climate-professor-paul-krugman-destroys-deniers-with-his-knowledge/ Check the 141 comments, mostly from other scientists and academics. Krugman became a punching bag from those scientists and other professionals.

HIM: I did punch him a bit here on the science – he’s not a scientist though and in the Western world his Nobel prize in economics and math wizardry was no help- but his real failure was in philosophy (epistemology). My comment on modeling referred to economics.

Nonoy Oplas: Meanwhile, I keep hearing or reading comments like yours, "on science - not your field of expertise and neither Krugman's..." Typical ad hominem critique like "you're no scientist, what's your credibility to say someone is wrong or right on climate science?" But Al Gore is no scientist; Rajendra Pacharu (economist), the head of IPCC, is no scientist; Lord Stern of UK, Leonardo di Caprio, Arnie Schwarze, all the heads of WWF, Greenpeace, Oxfam, Haribon, etc., and all the climate negotiators of the Phils. and almost all other countries, are NO scientists. And yet people accept the pronouncements of those people on climate science. When someone who's no scientist will comment and criticize the subject, the usual ad hominem disqualification is invoked. Crazy world.

HIM: I have posted on Lord Stern (I have his book report) and he had a large team of scientists and specialists behind him - as I think all the others you mentioned - so he was standing on sound footing. Regardless, when they make statements as team leaders they take the risk of all kinds of reactions including ad hominems and use their teams/perspectives for rebuttals. They are careful not to make mistakes which is why there was a big to-do about evidence tampering in a British lab used by people you classify "alarmists" that was subsequently proven unfounded. If you dish out ad hominems like 'alarmist', 'you're kidding' or 'idiotic' then you must not be too sensitive when a proportional dose is sent your way and discount for such 'cliches.'

Nonoy Oplas: The use of "alarmist" and "deniers", "idiotic" and lunatic", etc. terms are used by both sides, so it's fair game. It's the use of "you're no scientist..." that attempts to shut out the debate and its wrong. Because if that is the case, then Al Gore, Pachauri, Krugman, etc. should all shut up too.
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See how defensive some followers of Krugman (and other warming alarmist) can be? When you criticize the papers of the Lords of the (warming) Rings, ie, you criticize the idea, not the person, they attack you and your philosophical leaning. A typical attitude of shooting the messenger, not the message. They simply do not like the idea that their religion of man-made warming, based on faith and belief, based on political science and not hard data, is being criticized.

Welfarism 10: Spanish Problem, the Euro or the State?

Spain is being watched now by many people if it will also follow Greece and Ireland's debt crisis, which will necessitate large-scale bail-outs. A friend posted in one of my discussion yahoogroups, an article by NYT columnist Paul Krugram, "The Spanish Prisoner" on November 28, 2010. In that article, Krugram wrote,

Why is Spain in so much trouble? In a word, it’s the euro.

Spain was among the most enthusiastic adopters of the euro back in 1999, when the currency was introduced. And for a while things seemed to go swimmingly: European funds poured into Spain, powering private-sector spending, and the Spanish economy experienced rapid growth.

...During the boom, prices and wages rose more rapidly in Spain than in the rest of Europe, helping to feed a large trade deficit. And when the bubble burst, Spanish industry was left with costs that made it uncompetitive with other nations.

Now what? If Spain still had its own currency, like the United States — or like Britain, which shares some of the same characteristics — it could have let that currency fall, making its industry competitive again. But with Spain on the euro, that option isn’t available. Instead, Spain must achieve “internal devaluation”: it must cut wages and prices until its costs are back in line with its neighbors.

And internal devaluation is an ugly affair. For one thing, it’s slow: it normally take years of high unemployment to push wages down. Beyond that, falling wages mean falling incomes, while debt stays the same. So internal devaluation worsens the private sector’s debt problems.

This article is one more reason why I'm no fan of Paul Krugman.

He says the main culprit of Spain's woes is the Euro. That if Spain has its own currency, say a Spanish peso or a Krugman dollar, then it would be easy for Spain to get out of its current economic problems because a big state can manipulate the local currency -- devalue or revalue, depreciate or appreciate -- and wages and prices will follow.

Why would wages and prices need government manipulation of the currency so that they will adjust upwards or downwards? Aren't wages and prices a function of supply and demand?

Demand for labor is high relative to supply, wages will rise. Supply of labor is high relative to demand, say there is an influx of foreign workers, legal or illegal, wages will decline. Why can't Spain's wages follow that simply and spontaneous adjustment of the cost of labor?

Prices. Supply of paella and tapas increases relative to demand, their price will decline. Their supply cannot cope with sudden increase in demand, say there is a big fiesta or big celebration -- like Fernando Alonso winning again the F1 championship, or Alberto Contador winning the Tour de France, or Rafael Nadal winning the Wimbledon or the US or French Open -- the price of paella and tapas will increase.

So now Krugman is saying that Spain will need the big State's manipulation of its local currency -- assuming it has its own aside from the Euro -- so that the price of tapas and paella will move up or down?

Krugman misses the point. It is big State and its heavy intervention -- rigid labor laws and heavy protection of workers "against capitalist exploitation", that disallows the labor market to spontaneously adjust to high unemployment and artificial high wages.

If I am an entrepreneur, or simply a profit-hungry capitalist, and I have 3 employees for my restaurant, my customers are increasing but still I won't hire a 4th or 5th worker, even if national unemployment rate is close to 21 percent. It's too costly to add additional worker, the marginal cost is much higher than the marginal revenue (MC > MR) as there are lots of mandatory contributions, obligatory social security payments by employers. I'd rather keep the 3 workers and give them higher pay for higher productivity, more bonuses for longer working hours, or I'd rather work as the 4th worker myself and cut my siesta and partying with friends.

Perhaps if I become richer this way, I can hire a nanny for my children and that's one job creation already. Or I can keep high personal or company savings -- for the rainy days. The point is that I will not hire extra worker as much as possible, thanks to heavy state regulation of the labor market and over-protection against "capitalist exploitation."

About capitalist exploitation, a favorite topic by statists and socialists that's why they push for ever stricter labor regulations, for more mandatory social security payments, who is the exploited one -- the employed worker or the jobless?
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See also:
Welfarism 4: Italy's Fiscal Woes, Kid Glove to Criminals, May 29, 2006
Welfarism 5: Germany's Tax Hikes, June 28, 2006
Welfarism 6: Obama and US Entitlement, November 11, 2008
Welfarism 8: Send All Monthly Salary to UK Govt First, September 21, 2010