Tuesday, June 11, 2013

Forget guns, the rightwing is coming for your paycheck

RtO has had a little fun with Kenneth Rogoff, the spreadsheet-challenged rightwing Harvard economist, but that doesn't mean he is not worth reading. Not worth trusting, yes.

From the New Straits Times, a think piece about deflation actually comes to the same mantra that RtO has preached since its start in 2008 -- deflation is the baddest of the bad, because nobody knows how to counteract it, while inflation can be dealt with by using methods that are by now fairly well developed.

However, RtO is not interested in having Rogoff making like-minded statements. Just the opposite, if anything.

No, the reason his screed is worth a few moments of your time is the (unintentional I'm sure) revelation of what rightwing Teaconomists are really all about: This:

Back then, against a backdrop of government reluctance to force debt write-downs, along with massively over-valued real housing prices and excessive real wages in some sectors, moderate inflation would have been extremely helpful.

Wages are too high. Got it.

Later he returns to the scene of the crime:

 There is still a need for huge relative wage adjustments between Europe's periphery and its core.

He means the poor are not yet poor enough. Still later, he waves the magic wand in the invisible hand:

 But higher inflation would help to accelerate desperately needed adjustment in Europe’s commercial banks, where many loans remain on the books at far above market value. It would also provide a backdrop against which wages in Germany could rise without necessarily having to fall in the periphery.
Apparently, we are to worry more about paying well-paid, socialist Germans more than about paying Romanians enough to eat.

If you excised the quoted lines from Rogoff, a reader could be led to think that the piece had been written by Professor Krugman.

There is yet one more line from Rogoff that RtO rolls over on the tongue and savors:

 Weighed against the political, social and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about.

Well, it wasn't "once-in-a-century." It was twice in a century. The big gap between 1929 and 2008 was occupied by the New Deal. 


  1. "He means the poor are not yet poor enough."

    Always fun to put words into people's mouths when they're not there to defend themselves.

  2. You are, of course, entitled to your opinion, but if you read the whole piece you will find that he considers eastern Europeans overpaid.

    His ideal world: Eastern Europeans maintain their wages in an inflationary context. That is, get poorer.

  3. ... , but if you read the whole piece you will find that he considers eastern Europeans overpaid.

    It would have been nice if you at least summarized his reasons for thinking so.

    Sometimes, like it or not, reality bites.