2/16/09

Times' Krugman: He's Just Mad About Madoff Metaphors

Yes, Paul Krugman is correct. We are hardly better off than we were 8 years ago. But he is incorrect to use Madoff as a metaphor to teach us this sad fact of life. The comparison between the ponzi creep and world commerce is clever but not at all illuminating.

What we want to hear from Nobel Laureate Krugman is less carping on more constructive analysis. He talks at the end of his column about the way WW II got us out of the Great Depression. We say the obvious. Wars that you win - that's where you take other peoples' money. It is an adventure in claiming the value that once belonged to your neighbors.

We want to hear from Genius Professor Krugman that some eras of fertility and growth are based on actually creating new value in the world. The 1990s that saw the revolutionary advances in electronic commerce was one such time.

We understand that the model of the bully predator taking other peoples' pie does get the bully more pie. We also understand that the paradigm of baking more pies gets everyone more pie.

What troubles me is that it sounds like Krugman is saying today that to get out of our slump we need to go looking for other peoples' pies. I hope I read this wrong.
Decade at Bernie’s
By PAUL KRUGMAN

By now everyone knows the sad tale of Bernard Madoff’s duped investors. They looked at their statements and thought they were rich. But then, one day, they discovered to their horror that their supposed wealth was a figment of someone else’s imagination.

Unfortunately, that’s a pretty good metaphor for what happened to America as a whole in the first decade of the 21st century.

Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001. ..more...

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