In which Paul Krugman and Ken Rogoff agree on many things, and Krugman displays the patience of a saint

Jeremy Paxman may have been disappointed by the extent to which Krugman and Rogoff agreed in tonight’s Newsnight programme, despite his having helpfully set up their conversation by asking Rogoff if the big problem was demand or debt. But the pro-austerity (or was that small government? and did they understand the difference?) pair at the end were straight out of central casting. Well worth watching, also for a reminder of just how utterly parochial and blinkered Irish debate on the eurozone crisis, and plausible solutions to that crisis, has been.

69 replies on “In which Paul Krugman and Ken Rogoff agree on many things, and Krugman displays the patience of a saint”

Sadly the reparations for eight hundred years of oppression do not include access to BBC iPlayer from the Republic of Ireland. Damn it!

Surely the sacking of Drogheda should get us access to BBC4 online?

We should at least have the pleasure of looking at George Osborn with mixed pity and contempt for his wrong headed focus on austerity and consequent economic failure but no, Ireland’s proxy Chancellor is every bit as head strong, ideologically extreme and deluded.

Also worth catching for seeing Jeremy Paxman describing Greece as a “bad kebab being vomited out [by the EuroZone?]” and then having the former Greek finance minister taking him to task.

If you catch the programme on the BBC iPlayer, you might have to fool the BBC that you live in the UK by changing your IP address. This free tool is recommended.

http://www.expatshield.com

It looks the BBCiPlayer contravenes the Good Friday Agreement – must have a chat with the Dublin Unionists, who adovocated a NO vote on the fiskal korset last week. Must get it on the agenda for Patricia the Irish_Sovereign_in_Exile for her next chat with HRH – probably this saturday ..

Bit like the battle that had to be fought with RTE to get it broadcast on satellite channels in the UK a few years ago.

@John Corcoran

Lovely bit of PR for Korky’s on Bloomberg this morning. Hope it doesn’t raise the rent (-;

@An Taoiseach on Bloomberg this morning

Taoiseach – you dropped the sliothar again – and you had the caman with the big boss! Lookit what this did to the bond yields! Just how many Tooreen_Tutorials do you need?

@all

Blind Biddy in real form this morning – she is sporting a shockingly short mini-skirt that leaves very little to the imagination – turning all heads roight now as we stroll to the hustings and what they observe from the rear are two neat larssonian dragon tatoos in the shape of an “N” and an “O” – and nair a stitch of a y-front or an angeline corset in sight! Wouldn’t put it past her to swing a shock result – either way I’m in for a long day.

@ Jagdip Singh: Thanks for the link. Nifty!

Best bit of straight talking in ages. Impossible A v Impossible B! I’m sure the pols have Impossible C lined up for us. 😎

@Kevin O’Rourke

It is that level of debate that we just don’t have in Ireland, RTE and certainly not TV3 don’t offer anything in the way of debate of the world view. I think there was some sensationalist elements in Paul Mason’s reports but even still we have nothing to match it.

Krugman’s view that one of two impossible things is going to happen is quite stark and that its a matter months in which it will play out is also disspiriting – but i think Rogoff is right, leadership and the lack thereof will and has been the biggest factor in this sad mess

@Jagdip Singh – did you notice that Paxman didn’t acknowledge the quip other than a ‘by all means’ – he’s good but can be quite condesending

It was slick. Krugman owned those two plebs at the end. Your man resorted to waving his pen and giving it the whole “what about estonia what about estonia”.

Which really annoys me.

Define success? Growth after a cumulative drop of 22% GDP and unemployment hovering abovee 11% – but down from 20%?

But oh wait, hasnt there been success in the last two years with GDP growth and unemployment drops? Oh yeah forgot to mention. 2011- Estonia’s budget increases spending by 5 percent – the largest increase being in the field of education, which rose by 8 percent of GDP. 2012 – increases in state investment of more than 9 percent and in social spending of about 10 percent.

Yeah growth strategies never work.

@kor

Krugman brushed off Jon Mouton (previously of Alchemy Partners) on Estonia’s progress a little too quickly. Unfortunately, the debate wound up then.

Rig off made the point that some amount of debt write down is required. Ireland has gone done that route to an extent with NAMA. However, for as long as the debt discounting is confined to institutions and big players (rember the Siteserv write down of 110 million?) rather than the citizens, the crisis will continue in my opinion as the smallest and weakest sectors are required to bear the most burden in relative terms.

BTW: Dukes on Bloomberg a few moments ago opining that Ireland will need a second bailout (to be described as a ‘continuation’).

Martin Wolf has a very interesting lunch with Paul Krugman

http://www.ft.com/intl/cms/s/2/022acf50-a4d1-11e1-9a94-00144feabdc0.html#axzz1wRBvr6j7

This is a great excerpt

“What’s interesting is that the euro itself created the asymmetric shocks that are now destroying it [via the capital flows it engendered]. Not only have they created something incapable of dealing with shocks but the creation engendered the shocks that are destroying it.”

There was a quote in the New York Review last autumn that links in to the O’Rourke/Krugman worldview

http://www.nybooks.com/articles/archives/2011/oct/27/cure-sick-country/

Understanding the world of today still requires knowing the past that has shaped this world and how its different cultures have interpreted it. Nor can such historical experience be grasped without the kind of intensive reading that is becoming obsolete.

@Kevin or

“But the pro-austerity (or was that small government? and did they understand the difference?) pair at the end were straight out of central casting.”

Maybe you’ve not been over there long enough yet or are being sarcastic, but the problem for the debate in the UK, as in the US, is that that pair are representative of the public face of economic and financial wisdom. The bloke in particular (‘Better Capital’ formerly as the Alch says of ‘Alchemy Partners’ – any relation?) is a private equity guy most famous for attempting to buy Rover very controversially – it was eventually bought out by a crowd of local managers who looted it. Oddly, he along with such economic oddballs as Norman Lamont and Nigel Lawson (inventor of the ‘Lawson Boom’) that are regularly trotted out to arbitrate on Newsnight about all matters economic. The right wing US economist with a regular column in the Sunday Times is another font of economic wisdom. The team know it is not exactly balanced, but they have to get people on who the public recognise and they end up with the same crowd.

It wouldn’t matter but for the fact that Newsnight is the big hitter in the UK current affairs scene. Some of the guests have been in stark contrast to the journalists who, with the exception of Paxman’s refusal to read up on economics and finance, have done excellent work – Paul Mason especially.

K-dude left the field of play to Stigllitz who made an unimpressive appearance or two as an adviser to the Greek government. He might eventually realise that the GOP and Tory approach to economics is sufficiently mutually reinforcing to make it worthwhile appearing rather more often in the UK media.

Have a word will you.

@Seamus

It is that level of debate that we just don’t have in Ireland, RTE and certainly not TV3 don’t offer anything in the way of debate of the world view.

To be fair to RTE (not something I often feel inclined to do, establishment schills) their current affairs budget must be at least an order of magnitude smaller than the BBC’s – Ireland is after all less than a twelfth a size of the UK (the BBC’s 2010 budget was 4.26 billion pounds).

Of course even allowing for Ireland’s small size there would be problems with RTE, there is a clear conservative bias as well as the general Irish problem of excessive deference to authority and the culture of extreme collegiality among the political classes.

That excessive collegiality has shaped our response to the Fiscal Compact, the Irish establishments first priority in Europe has been not to make enemies rather than to forge alliances to protect Irish interests (or Reason forbid, principles).

@Jagdip Singh

Thanks for the pointer, I will try that this evening, though a little guiltily.

The BBC should set up a micro payments system for the iPlayer for current affairs and documentaries. I for one would pay – the UK has the best current affairs, culture and natural history output in the anglophone world and they should capitalize on it.

Has BBC done a bulk purchase of Krugman? R4 Today programme, Newsnight and now Hardtalk. There’s no escaping him. It’s a pity he doesn’t have time for TV3; Krugman v Whelan on the referendum would liven things up a bit.

Please join Paul krugman and John Corcoran,both distinguished former students of the London School of Economics, in ensuring a massive No vote today. Stop listening to Fianna Fail and the Professors of soft landings.

If you stand for nothing you will fall for anything. Lets get the message to Angela, and join with Paul and John in ensuring a No vote today.

@Kevin Donoghue

Krugman v Whelan on the referendum would liven things up a bit.

Rest assured that if Saint K showed up and locked world views with the collected pro Fiscal Compact Irish economics community (and I love you guys, wrong as you are) that the main attacks on him would be outside the field of economics and relating to how he needed to understand he political and institutional framework that economics in the EU has to conform to and how insignificant little Ireland’s needed to keep its head low and do what it was told to,

That might test his patience some.

As a reminder, he has a tin ear ear as to how the EU works you know.

Apologies. Punctuation fail.

he needed to understand he political and institutional framework that economics in the EU has to conform to and how insignificant little Ireland needed to keep its head low and do what it was told to.

Why can there not be an editing function?

@Shay, in my comments to Indecon, which were quoted in part (you can perhaps guess who I was), I said that in my view, the argument for voting ‘no’ was basically an argument to the effect that Ireland is too small for our voters’ opinions to have an impact in Europe (which, if true, is itself a major problem). I also said that this is an argument which economists are not particularly well-equipped to pronounce on.

By Post Author

Is it my imagination or have the major Irish news sites pulled that story about the FR saying our banks would need a further 3-4 billion?

Surely they aren’t worried about upsetting people vis the banks getting even more taxpayer monies before they go out and cast their vote today? Surely the media cannot be manipulated so….

….hahahahaha

@Kevin O’Rourke

Is there a typo in your reply to Shay? In the Indecon paper I see: “The argument for voting yes thus boils down to an argument that we are irrelevant to what happens in Europe.”

@All

Is Krugman right that it’s between two impossibilities?

1. Greece leave Euro
2. Germany pays

As far as I could tell he reckons the former is more likely. If Ireland votes No (it’s a wet day in Dublin!) and the impossible ‘Grexit’ happens – is that the crisis that is needed to get some real leadership or is that also an impossibility?

@PR Guy
You have to go to the foreign press to get Real News. Who said…not a penny more for banks….I think it was Eamon or maybe Leo.
From the guardian…
“Where the money will come from is anybody’s guess. Some suspect the billions could come from a second international bail out, others fear the state may have to raise the cash elsewhere to keep the Irish banking system functioning.

“Either way the prospect of Irish High Street banks getting more largesse from the taxpayer, whether they be Irish, German or whoever, will enrage most people in the state. The question is: willl this focus minds further on the necessity to stay in the eurozone because of the need for a potential second loan from Ireland’s EU partners and thus boost the Yes camp or will it only compound the growing resentment against the entire financial system and provide more late ammunition for the No side?”

Where will the money come from? I looks like Alan Dukes answered that on Bloomberg.

We won’t need a second bailout…hold on…maybe we will…let’s buy insurance.

Ciaran mMulooley reporting less than 3% turnout in rural areas at 11am
Get the news via the telegraph.

Austerity bites…..

“Bank loans to households continued to decline in April, with all lending down 4% compared with a year earlier.

Central Bank figures show that mortgage lending continues to fall
Figures from the Central Bank show that mortgage lending was down 2.5% on an annual basis, while other loans were down by 8.4% over the same period.”

Er, what was that bit about getting the banks lending again.

No wonder they need a second or third bailout.

@ Shay

“Why can there not be an editing function?”

The blog is linked to the Euro. Fixed exchange rates,
fixed comments

@Kevin O’Rourke

I said that in my view, the argument for voting ‘no’ was basically an argument to the effect that Ireland is too small for our voters’ opinions to have an impact in Europe (which, if true, is itself a major problem).

Like Kevin Donoghue I suspect that your ‘no’ is a typo.

I think that if you are an Irish “EU firster” with class interests that align with those of the average mittleleuropean conservative the position that Ireland’s voters should not be able to alter European policy makes a certain kind of sense, we are less than 1% of the population after all. It might be easy to pretend that our current policy of subservience and pliability is one of partnership and nimbleness.

However if you hold views that are a little to left on issues of social justice or are invested generally in the idea of governments being exclusively beholden to popular democratic opinion then the current direction of Europe has to be halted.

There must be a polis and a mechanism for accountability before there can be the start of a real political union and legitimacy for centrally made policy in the European Union, what we have instead is executive policy set by an increasingly small set of governments and explicitly undemocratic institutions. The EU has gone from government in line with the wishes of all the governments to government by QMV of governments to a situation where Germany, the ECB and junior partner France are in effective control of the whole direction of the EU.

It is profoundly against the ideas of popular democratic control and in its current incarnation defiantly anti-progressive.

As a small and peripheral nation Ireland has much more to lose in this EU of the currently dominant creditors and institutions , we should be opposing it by any means necessary.

Not to stick on a comedy moustache, affect a head injury and get all Thomas Friedman about it but when buying my morning coffee the owner of the cafe volunteered that in our leafy, central, white collar area of Dublin her informal polling showed that No voters were in a majority among customers.

The obvious conclusion is that pro-treaty voters are more likely to be tea drinkers.

@seafoid

Indeed, and comments that are sufficiently irritating to the core do get expelled from the blog…

@Shay,

Since Kevin O’Rourke may have to give priority to paying students, here’s the quotation (from the Indecon report) which I’m attributing to him:

The fiscal treaty is bad for Europe. While to a large extent irrelevant, it symbolizes a policy which if pursued for much longer will destroy the euro. As a European, I am thus opposed to it. ….The argument for voting yes thus boils down to an argument that we are irrelevant to what happens in Europe. I believe strongly that we should postpone the vote.

He generally wants to see Ireland take a more assertive line so it seems fair to say that he and Krugman are on the same page. But you’re right that the consensus among Irish economists is more “sit down you’re rockin’ the boat.”

The Krug and the Kork say
Dont be stupid
Be a smartie
Come and join the No party.

@Shay Begorrah

“…but when buying my morning coffee the owner of the cafe volunteered that in our leafy, central, white collar area of Dublin her informal polling showed that No voters were in a majority among customers.”

Just did a straw poll myself in a ‘well known life assurance company’ this morning. The vast majority aren’t going to even bother voting. The rest seem evenly split. I have posted here previously that I thought the turnout would be under 50% – but could we be heading for sub-35% ?

Which more or less confirms all of the opinion polls I’ve seen over the past couple of years (across Europe, not just Ireland) – and I’ve seen a lot – most people have a big disconnect with the power centres of the EU. The two strong and consistent messages are that the people there are completely out of touch and living in a totally different world designed to simply feather their own nest and any EU/EZ agenda has simply been hijacked by federalists, bankers and various other powerful/vested interests.

Everyone thinks that as a ‘common market’ it was a great idea (and even the concept of a common currency is well received) but that it has become a machine that is ‘out of’ control and has far too much say and influence in our lives and different cultures…. and lots of money gets wasted.

It has become a monster.

@John Corcoran

That is a truly dreadful poem.

Have you ever thought of going into copywriting? 🙂

Yes, that was a typo. I think in my response to Indecon I said that I would be voting as a European, and hence voting no — if I were voting, that is, which I can’t, being at work in the UK today.

By Post Author

@Kevin Donoghue

Since Kevin O’Rourke may have to give priority to paying students, here’s the quotation (from the Indecon report) which I’m attributing to him:

I did read the introduction of the Indecon report where the crypto-O’Rourkish bit was, I could not face the whole thing.

We have gone over the weaknesses here of the the Fiscal Compact to the point where it will be a relief to have it out of the way but two major sets of issues appear to be missing from most analyses.

The Fiscal Compact viewed as Strengthening Existing Commitments – the six pack with a suicide vest:

Have the six pack or preceding Masstricht rules been successful enough to require that they made a part of law at the constitutional level?

Is is appropriate that any laws relating to economic policy with a strong political element be put into constitutional law in EU countries in this way? (is the EU permanently supply side?)

Is there an institutional mechanism in the EU for backing out for failed policies or is our commitment to commitment (also know as “strong determination“)?

The Fiscal Compact as an example of EU policy formation:

The Fiscal Compact represents a less collective and more coercive attitude to policy formation and implementation than before, does the EU have sufficient legitimacy and accountability to start going in this direction as regards domestic economic policy?

Are Ireland’s political interests in the medium term compromised by submitting to arrangements made in the way the Fiscal Compact was?

A substantial body of opinion views the Fiscal Compact as a way of avoiding the issues most relevant to the European component of the global financial crisis as they were politically unpalatable for Germany and European institutions: Do we want to set the example that this kind of tangential incrementalism is an acceptable response by the agents of EU policy making to a major crisis?

These are bigger questions than whether the Fiscal Compact will have a short term positive effect on Irish business confidence, whether we can afford to annoy Merkel while still in power.

Would you buy a second-hand car from a Fine Gael politician?

21st February 2011

Dear Mr Corcoran

I am very aware of the strength of feeling on the subject of commercial rents and Fine Gael has addressed this subject in our manifesto as part of a drive to cut business costs by strengthing competition in sheltered sectors.

Specifically, in our manifesto we have committed to pass legislation to give all tenants the right to have their commercial rents reviewed in 2011 irrespective of any upward-only or other review clause.
Please do not not hesitate to contact me if you have any queries in this regard.

Best wishes
Yours sincerely

Sean Barrett TD

@PR Guy
Talking of opinion polls… I see today another poll in Greece gives ND a 2 point lead over Syriza. Yesterday it was the opposite. Are they accurate?

re- PR Guy: ”Which more or less confirms all of the opinion polls I’ve seen over the past couple of years (across Europe, not just Ireland) – and I’ve seen a lot – most people have a big disconnect with the power centres of the EU”

I’ve been hoping for an ‘abstentionist’ candidate for the commission to put themselves forward for some time.
Reading the rest of your post was eerie – I never realised I was a ‘type’ before.

Re- Ceterisparibus;
Polls ? Ninety-eight repondents found Pantene reduced wrinkles, just choose your respondents with discrimination.

@Ceterisparibus

The thing with polls in places like Greece is no consistent method between different pollsters. Best bet to see trends is to stick with just one company – but even then they may not be reflecting accurately (just reflecting trend movement).

My guess is the leading two are neck and neck. The devil you know may win by a slight margin.

As somebody who’s recently returned to work in Ireland (from London), have been struck by how, with a few honourable exceptions, the quality of the analysis in newspapers, RTE etc is so poor. Ironic that it’s the BBC and papers like The FT, Times and Telegraph that are producing the insightful analysis of this crisis.
The nature and tone of the recent treaty debate here confirmed the paucity of the coverage.

@ CP

Sampling is very difficult when opinion is split down the middle.
8 out of 10 cats prefer whiskas. That is much easier to poll.

I don’t think the Irish will vote no as quite understandably many don’t understand the nature of the euro given the bankers abuse of language over the centuries.

But I was watching Stormont the other day and Martin Mcguinness seems to be engaging in a interesting dance with Lizie of the Sterling Note.

There is something Monetary in all this me thinks.

Watching Hollyrood live now(indepdence debate) and I must say its a much better ding dong then our sorry forum – if we have a fiscally independent Caledonia with more power then that sad little whore Hibernia where will that leave us ?

PS McGuiness must have experience in many things monetary as I guess the BoE cleaned the money.

Whatever about the Krugman/Rogoff debate, the Newsnight item on the Irish referendum was dire. An interview that was edited to make Brian Hayes look like a fool, the reporter taking to the stage at the comedy club, continued references to the funny Irish and their funny referendums, all in the space of about four minutes. About par for the course for the increasingly Eurosceptic Brits across all media outlets.

@ Ceterisparibus Says:
May 31st, 2012 at 1:32 pm

Well at least somethings are working and adding value.

Future export opportunity? 😉

@ Ceterisparibus Says:
May 31st, 2012 at 1:32 pm

Well at least something is working, adding value and giving the customers that ‘Feel good’ factor!

Future export opportunity? 😉

Sorry all.

Appears I am developing an electronic stammer or digital dyslexia …… maybe just too old!

Well lads, it’s always exciting when some big name guys validate one’s position and also gratifying when the ball is in the court of dilatory, behind the curve, slow motion, slow boat to China, long-fingered, buck stops nowhere, what crisis? foreign leaders.

Unbelievable that these foreign electorates would tolerate this carry-on.

With the drama of the campaign about to end, for those who find local issues a bit boring, the Greek drama should dominate most of June.

It sure beats getting addled about wondering where 200,000 local jobs could be created.

Junior Minister Sherlock issued a press release the other day to add to an earlier one from the IDA, welcoming 35 new jobs for Cork.

Every stone counts of course when filling the well and it maybe time again for a national ideas competition? Look forward — don’t ask what happened with the past ones!

The big conundrum of our times is how to monetise actionless actions.

US data today ain’t very good– Q1 GDP lower than first thought and jobless benefit claims up. India also on the slide.

@Cathal Coleman

The British media have always been very cruel to the Irish – some worse than others.

Some would argue that the EC/ECB are even worse.

Looks like a serious run on Spanish banks with the telegraph reporting 66b. Departed in the last month.

Thanks to NEL for the youtube link. Both Krugman and Rogoff, and to be fair the two British austerity advocates, spoke well. The Greek former minister seemed to me less convincing. Krugman makes a good case that there is no conceivable way forward for Greece within the Euro, but the EU and ECB can continue throwing money down the drain pretending otherwise for a bit longer if they wish.
Rogoff and Krugman seem to agree that we need some moderate inflation particularly in Germany to use money illusion as a means of imposing wage/benefits cuts in real terms in peripheral nations. That seems very sensible — also some unexpected inflation will help to reallocate wealth resources from savers to borrowers. Basicallly using medium-term inflation as a stealth method of income transfer from savers to borrowers. Putting it clearly like that makes it less politically palatable but still it is a probably necessary step, even if not entirely “fair” in a Germanic sense of that term.

“and to be fair the two British austerity advocates, spoke well.”

I really wouldnt agree with you, they were abysmal. As was the Irish CEO. (I cant remember for which company – ‘we’re not looking at tomorrow, we’re looking 2 years down the line. Or fourty’)
If the last four years has shown us anything, its that those at the top end of academia are far more impressive than their counterparts in business, in this country and globally.
I mean why should anyone care what a CityBoy or MP from Oldham have to say?
Paxman and the Newsnight team would do well to try and hide their little Englander prejudices once in a while

@Ceterisparibus

“Looks like a serious run on Spanish banks with the telegraph reporting 66b.”

ft.com reporting 100bn tonight. Spain IMF story being denied (believe nothing until it has been officially denied!) – which is no surprise given the bank run it would cause, 100bn would be about what was left behind.

Never believe anything until it has been officially denied.

Out here in Dun Laoghaire voting has been in line with Prez & locals. Turnout relatively strong in Gilmore/Boyd Barrett heartlands.

Krugman was very good especially identifying the ideology. The Tory spin about entrepreneurialism doesn’t tally when companies like Mothercare and French Connection are in the knackers yard due to a collapse in demand.
It’s like the miners strike gone national. Even the South East gets it this time.

Half-serious question:

Given that the position of Krugman is more or less standard macro (paradox of thrift, IS-LM, liquidity trap etc.) presumably many of Ireland’s “celebrity economists” share many of his points of view.

Notwithstanding the fact that Ireland is in a tricky situation with regards to its official funding sources, but said economists could do the state a vast amount of service by using some of their media air time/column space to advance some of these arguments, particularly in refuting the half-baked and one-dimensional policies advocated by Germany and deployed at the Eurozone level.

So, my question is, why do we not hear these points more often from Ireland’s celebrity economists?

In particular, why is Angela Merkel allowed to repeatedly compare a state to a household without a whimper of criticism from the Irish establishment? (Check out her interview with Gavin Esthler).

@bazza

In particular, why is Angela Merkel allowed to repeatedly compare a state to a household without a whimper of criticism from the Irish establishment? (Check out her interview with Gavin Esthler).

No, that is a leading question, and unfortunately our resident wing nuts are wise to it. If the economic surrender referendum goes through expect heads to disappear below the parapets for a while while they rub their hands at another notable victory against social democracy.

We all know that the part of the Irish economic community closest to the establishment is politically right wing, and not only they do not challenge right wing tropes they actively promote them.

Whether its the balance of virtue between greedy lenders and foolish borrowers (or rich vs poor as we used to call them), the possibility of expansionary austerity, the “fact” that the public are not bright enough to participate in economic policy making and it is best left to “independent” institutions and technocrats or the idiotic (sorry, “sensible”) comparison between a household budget and a national economy, Ireland’s economists (and the wider European establishment it has to be said) are committed to upper class solidarity with their European partners – if that means a few “simplifications” to keep the hoi-polloi quiet, well then so be it.

It is no mystery.

@bazza

I think Kevin O’Rourke answered your question. The consensus view, which he does not share, is that Ireland has no influence; hence must do the best it can within the constraints of a policy dictated by the powerful.

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