Buffett vs Krugman: Economic Optimist vs Pessimist


When I hear Paul Krugman -brilliant nobel laureate economist – fret about the economy and global warming I’m always confused by what seem to me to be grossly overstated concerns about both the health of capitalism and the health of the planet in general.    Krugman’s views – to me – seem poisoned by the tendency of smart people to “overthink” problems and “understate” the potential for innovation and technology to rescue people from our foolishness.

A good example of this intellectual defect were the grossly overstated concerns back in the 70s that the earth simply could not sustain the inevitable population increase, and we’d have massive starvation and horrors … by now.       Although it’s VERY important to note how poor many people are in the world, this is NOT at all a function of carrying capacity of the planet and does NOT lead one to the conclusion “don’t feed or they will breed” which is nonsense.  That view is fundamentally naive and misguided and I’m amazed how many people still cling to it – extensive research now makes it crystal clear that the best path to lower birth rates and better quality of life is poverty reduction, education, and health initiatives in the developing world.

But let’s go back to the health of the economy.   Buffet’s the man to listen to, not Krugman: Buffet on Economy

Obviously these are still perilous times, but fretting isn’t called for.    It’s time to fret less and innovate more.   Let’s GO.

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About JoeDuck

Internet Travel Guy, Father of 2, small town Oregon life. BS Botany from UW Madison Wisconsin, MS Social Sciences from Southern Oregon. Top interests outside of my family's well being are: Internet Technology, Online Travel, Globalization, China, Table Tennis, Real Estate, The Singularity.
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17 Responses to Buffett vs Krugman: Economic Optimist vs Pessimist

  1. horatiox says:

    Au contraire, JD. Krugman may be a typical academic cynic (cynicism tends to irritate management…), but he has a keener understanding of economic dysfunction than does Buffett the billionaire. K-man understands that at some point…intervention of various types–including “stimulus” deals (which K-man thinks were inadequate) may be required. Actually, for some people Krugman’s neo-Keynesian approach seems a bit too moderate, or…booj-wah, as they say

  2. JoeDuck says:

    It’s definitely uncomfortable to challenge Krugman’s economic … laurels …. but I think we should assume that Buffet’s billions are a sign he’s got a pretty good understanding of the big economic picture.

    So why do you think these two have such different levels of optimism about the economy? I think academic folks … fret too much. It’s a way to get attention. This is also an interesting testable hypothesis – take a random survey of quotes from academics about the economy and compare them to biz folks and see who lines up better with reality….

  3. horatiox says:

    Being a shrewd investor–or lucky one–does not imply one’s a great economist, does it, Duck. Like Buffett or Bill Gates, Hugh Hefner has millions of shekels, while Krugman or DeLong or any academic economists live on professors’ salaries (tho’ probably investing as well). But Hefner probably knows as much about the causes of recessions or depressions as one of his centerfold models do. Ooo Mr Hefner, stagflation…

    Hitting it big in the laissez-faire casino doesn’t really count for much and doesn’t usually require Einstein-like smarts, but connections, being in the right place at right time, and..shall we say shark-ness (ie, the career of Gates, Jobs, Ellison, etc).

  4. JoeDuck says:

    It’s a really interesting issue, but I think you are underestimating Buffet’s history of good predictions. If I was investing on the basis of advice from Krugman or Buffett I’d pick Buffett.

    I would have more faith in academics-as-prediction gurus if we’d seen more of them railing against the bubble and railing against the massive debt, some of which is the product of overspending by the hands that feed them. It’s conspicuous to me how many in academia favor high taxes rather than austerity plans, and I can’t help but think self-interest may play at least something of a role in that.

  5. horatiox says:

    Economics–and economic planning–includes a lot more than investment advice, JD. When a Krugman discusses the problems of the BO Admin. he’s not generally discussing say how wealthy or upper middle class people can make better investments, or the Dow Jones. He’s concerned with middle class and poor, or unemployed. For the wealthy, that’s depressing and ugly (or just doesn’t compute for like the Tea party types). But for middle class, poor, even say public employees, teachers, etc sort of relevant–in SoCal the defense people and IT types are hurting as much as the public employees…even GOPers are applying for unemp. benes…or at times even welfare.

    At the same time we should not mistake Krugman’s …pragmatic somewhat liberal reforms for the …hysteria of some lefty Emo-crats (like… Byronia, now doing his weekly righteous indignation schtick…note that according to B., conservative econ. policies …resulted in the BP disaster itself!: Eventually, oil volcanoes explode in pristine gulfs, because The Wealthy needed a fifteenth house . Now, that’s a Non Sequitur with a capital N., not to say hyperbolic BS)

  6. horatiox says:

    Wow, Duck. You commented on the NWs gang site! Scary. And of course Byronia responds, in predictable fallacy-ridden, flunky hick-freshman style…(he failed his RN program at ASU his first year before turning to a life of crime). No need to argue or even refer to the actual economic data (which does show that middle class have advanced, however slightly compared to the very wealthy). You’re a Beck! And some mistake that mental patient for a democrat.

    • JoeDuck says:

      I forgot to check back over there! What have you gotten me into? 😆

      • horatiox says:

        It’s rather pointless to attempt rational discussions with the irrational or mentally ill, Mr. Duck (apologies for linking.,..but a contrast to Krugman’s cool analyses). Nurse Byro will, I suspect, be back soon mistaking Ad hominems and generalizations for discussion, and reminding you…that you never had an Abbie Hoffman t-shirt (tho he has one to sell, cheap) . For that matter, he’s a capitalist, anti-tax type and Schwarzenegger supporter anyway.

        Also note that the little factoid-chart (assuming it’s accurate…) spammed in by Byro shows that Bill Clinton was the best republican of the last few administrations, economically speaking (a point overlooked by the NWs homies).

      • horatiox says:

        Ah Senor Duck–your new pal Byronius has returned after his usual sunday spent in sunday-school (hushhush–) and says…you’re not Glenn Beck–he is!

        Besides, Duck, given your own stated secular non-belief system (and the NWs’ gang, except when B-ron’s at church), what is ethics anyway?? Strike while the iron’s hot, survival of the fittest, etc. Or merely utiltarian….ie whatever policy economic or political is voted in, subject to change, whim, subjective desire, etc

        Warren Buffett’s just very successful economic predator as it were, given secular-Darwinian premises (and many conservatives and robber barons made use of Darwin’s ideas…including B-ron’s hero Winston Churchill, occasional supporter of eugenics).

    • horatiox says:

      Looks like some of McKinnon’s aka “Max” and Nurse Byro’s street palsies stopped by old New Worlds as well: the “sky-harbor” person like a seattle transient-musician. Get that GED, Sky-harbor! And alas Miss Cat eyes has yet to figure out how basic incremental-growth charts operate. Holy Pie Chart Catgirl.

      In other words, the NWs blog is not about taking on capitalist excess, but sort of a…ruse, a daily deception. Have people, at least gullible liberals, believe you are “one of them”, attacking the greedy and powerful, whilst keeping your racket runnin.’ Sort of La Cosa Nostra tactics (tho’ Max’s gang hardly as classy–or successful– as LCN).

  7. frances Harper says:

    Supply equals Demand–the most basic principal of economics.
    The Bush theory and practice was to increase the money, through tax cuts to business (supply). Bush believed that
    putting money in the pockets of business would lead to increase in production and jobs. But Bush also cut demand–
    raising payroll taxes etc.,initiating a period of stagnate
    or falling demand. Supply equals demand. Businesses produce
    to sell. If demand falls they stop producing. The result
    of the Bush tax policy was that production fell and the
    top 2% took the tax savings and invested it–not in jobs
    and production–but it speculation. This always leads to
    depression as Supply and Demand must return to equalibrium.

    Ferguson would have us continue this policy. Krugman
    would have us raise demand.An increase in demand will result
    in an increase in supply, not the other way around.

    Saving the jobs of police and teachers and putting 1/2 the
    unemployed back to work would raise tax collection and
    start a virtuous cycle of economic growth. That tax collection would pay back the stimulous in 2 to 3 years.

    • JoeDuck says:

      Frances thanks for the thoughtful comment, but the “2 to 3 year payback” seems wildly optimistic to me. How in the world are you calculating that number? To generate 700 billion in extra taxes you need (I’m guessing) about 3-5 billion in extra economic activity [obviously the taxes are dependent on what type of activity – higher incomes pay a lot more taxes, so if you help the poor a lot with stimulus as we’d agree should be the case, I’m not clear you get all that much in extra taxes unless this activity “trickles up” in the form of profits a way it usually will not) , The economy is 14 trillion so is seems to me you are talking about a very unrealistic rate of economic growth from the stimulus – a stimulus that has yet to even show it’s done more than stem the troubled tide by pushing the problems to the future.

      Also, if stimulating economies was this easy why not have the Gov spend 10 trillion

  8. horatiox says:

    Krugman in fact argues for more stimulus (a typical Keynesian strategy). Any reasonable stimulus plan would also require raising taxes on the wealthy brackets, even back to say Reagan’s first term levels…around 50%. Tea-party types forget that tax levels are still low, historically speaking like 45%, about the same under Clinton–70% under Nixon.

    That should not be welfare handouts, but as Fergie says used to save jobs of public employees. But those sorts of simple reforms don’t generally appeal to the corporate execs who control the demopublicans–change will probably have to wait until unionists and communists are marching in the streets (with the tea baggers a few blocks away flying swazis)–that’s how the dialectic works.

  9. horatiox says:

    Not to interrupt the travel-blog marketing, but some rational people following this conversation (especially the part dealing with the clowns of New Worlds) might note that, well, Byronia has put down the ebonics Economics and turned a bit macho…AND moralist (sort of code switching between the two), and now refers to “Darwin dorks” (more evidence that he’s anti-scientific and a creationist as many of his rants suggest), and “moral fiber”. A few comments later in Byro-land, he threatens to beat up “clowns” (a rather typical behavior actually) who don’t appreciate his latest plagiarized Archies’ comic. In other words, Duck, you’ve been warned re Byro: one of Blogdom’s most ridiculous yet violent creatures.

  10. horatiox says:

    Have you noted that most middle class and wealthy people, especially WASPs don’t care to discuss economics, Duck? Even moderates such as Krugmans are ..mostly ignored. Economic topics, unlike entertainment or casino-related phunn or European travel plans just don’t move much product, online or elsewhere–why, an egghead like Krugman might even recommend raising your taxes.

  11. Guido Hanly says:

    Care to revise this post? World economy tracking about par with Krugman’s concerns.

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