I deeply respect what Paul Krugman accomplished as an economist. His work in new trade theory earned a Nobel Prize in economics. However, he has become so partisan in his editorials that he is quickly diminishing his reputation. He was on This Week with George Snuffleupagus… I mean Stephanopoulos… and he claimed that in the climate change debate “there is tremendously more money in being a skeptic than there is in being a supporter.” This ridiculous statement earned Krugman the Watts Up With That? quote of the week. I guess we can give Krugman a break since it appears climate change is not his area of expertise.
I wish that was the only problem with Krugman. Last week he wrote an article about the Tobin tax that was odd. It’s odd because for someone who is supposedly an intellectual giant in economics, he’s completely naïve when it comes to tax evasion. Greg Mankiw was left scratching his head after reading Krugman’s claim that financial transactions will not be moved if there’s a Tobin tax.
This is the danger of extreme partisanship, especially in regard to economics. Krugman is basically just endorsing whatever stupid new plan the Democrats come up with. From an economics perspective the Democrats don’t have many bright ideas right now. For Krugman I guess he’s decided to sheath the sword and just deal with the fallout. As long as the Democrats keep dreaming up new ways to tax productive people investors are going to quit investing. Until investors have confidence again the economy is going to stall. It seems like Krugman would understand this simple concept, but it appears he can’t see through his political blinders.
It appears as if the White House really starting to lose its grip of reality. If the following story is true Obama has no clue what he’s doing. Calling for populist nonsense isn’t the answer, and it’s certainly not good leadership.
One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.
The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving U.S. government bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.
I’ve purposely avoided this AIG bonus thing because frankly I could care less about $130 million dollars (the government authorized) when the government is wasting much more money every day. Other than upsetting Wall Street what does this piece of regulation accomplish? The current economic problems aren’t because executives received too many bonuses.
The past couple of months have been terrible for Capital Hill. The president is clearly adrift. He’s reacting to every political issue with reactionary policy and the Congress is a an unrestrained mess. The president seems more concerned about his cratering approval numbers than about being a leader.
Obama needs to concentrate on policy that will free up the investor class instead of alienating Wall Street. These are the people who will help the economy get back on its feet. Every time Obama attacks Wall Street his presidency moves one step closer to colossal failure. Obama has no real control on the economy; however, he can cause it to stagnate it by freezing the hands of investment. Investors aren’t stupid. If Obama makes it clear he’s going to try to tax and regulate every facet of business investors are going to wait until he’s out of office.
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