Doubleplus Doomed

And you thought it was bad enough when you thought Obama, or at least one of his pet Keynesian economists, was running GM:

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

But now, according to those who joined him in the middle of his crash course about the automakers’ downward spiral, he has emerged as one of the most influential voices in what may become President Obama’s biggest experiment yet in federal economic intervention. While far more prominent members of the administration are making the big decisions about Detroit, it is Mr. Deese who is often narrowing their options.

A month ago, when the administration was divided over whether to support Fiat’s bid to take over much of Chrysler, it was Mr. Deese who spoke out strongly against simply letting the company go into liquidation, according to several people who were present for the debate.

Now this is fabulous! We actually have a wannabe lawyer with a poli-sci degree from Middlebury and no absolutely experience in the real world handed directly responsibility for making important economic policy decisions. I’m going to go out on a real limb here and predict that this automotive experiment isn’t going to end well.

Better yet, he was the top economic staffer for Hillary Clinton’s campaign. Remember, that was the campaign that didn’t know how the nomination rules worked. What are the odds he knows the first thing about malinvestment or realizes that he’s following the Japanese zombie model? One in one quintillion against or one in one megabazillion? I’d have more confidence in Paul Krugman. Actually, come to think of it, I’d have more confidence in the decomposed corpse of John Maynard Keynes.

Liberal Fascism: the paperback

This is just a reminder that Voxiversity III will be kicking off with the first quiz on June 13th. The paperback is now available, so if you don’t already have the hardcover, pick up a copy and start reading the introduction, “Everything You Know About Fascism is Wrong”. Even if you’ve already read the book, as many here have, you may want to consider re-reading it next week since you have to know your stuff fairly well if you’re going to score highly on the weekly quizzes.

It is not enough for the gorilla to read Nietzsche. The gorilla must grok Nietzsche.

He still believes

My new publisher was kind enough to supply me with a number of books I needed for reference while working on the current project, so I now possess more Paul Krugman books in multiple editions than I would have imagined one year ago. Having read the 1999 edition of The Return of Depression Economics as well as a few of his self-serving attempts to pretend that he saw the housing and financial crises coming – sorry, Paul, but spotting the housing boom in 2005, one year before it ended, is not exactly impressive – I was curious to see how he would deal with two rather glaring statements that had appeared in that original edition in the 2008 re-release, titled The Return of Depression Economics and the Crisis of 2008.

“On the whole, I have an easy conscience about the problems of the advanced countries. What I mean by that statement is that the solution for these problems do not seem to involve any especially painful tradeoffs…. the things advanced countries need to do to counter depression economics any compromise of the commitment to free markets.” (1999, p. 162)

“The world economy is not in depression; it probably will not be in depression anytime soon.” (1999, p. 154)

I haven’t found any reference to the former quote yet, in fact, the section of the title essay to which it belongs, “Protecting the Rich”, appears to have been excised entirely. Apparently Krugman isn’t eager to remind everyone how he declared that keeping interest rates low and maintaining inflation around two percent would be sufficient for the USA to avoid a Japanese-style liquidity trap. Surprisingly, however, he repeats the second quote twice in the space of two pages in the new edition.

“We’re not in a depression now, and despite everything, I don’t think we’re headed into one (although I’m not as sure of that as I’d like to be).” (2009, p. 180)

“The world economy is not in depression; it probably won’t fall into depression, despite the magnitude of the current crisis (although I wish I was completely sure about that).” (2009, p. 181)

It should be interesting to see how those statements continue to evolve in future books and/or revised editions. Unsurprisingly, his proposed solution involves increasing the size of the next fiscal stimulus equivalent to 4 percent of US GDP. But since this is only $560 billion, his published proposal is smaller than the $787 billion stimulus package that Obama has proposed as part of the 2010 budget.