Paul Krugman + Al Gore = The Way Forward

by: TheLFB November 12, 2008 | about stocks: DIA / OIH / PBW / PZD / QQQQ / SPY / USO / XLE    

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Nobel Laureates Paul Krugman (2008, Economics) and former Vice President Al Gore (co-recipient with the Intergovernmental Panel on Climate Change for the 2007 Peace Prize) contributed wonderful op-ed pieces in the New York Times (see here and here) which, taken together, provides a way forward out of the economic malaise along with solutions to America's energy problems and to the global climate crisis.

Their ideas, taken together, provide a radical change from the way the economy has been working if the idea of an economy is supposed to be about the efficient production of goods and services which improves the standard of living in a fair and equitable manner. The only thing our economy has been about recently is the creation of financial instruments designed to profit from debt and inflation, which produce nothing except profits for hedge funds and investment banks. They were purely exploitative and when they imploded, as they were bound to do, it created a disaster which everyone, except those who profited from them, must now deal with at a terrible cost.

Despite the revisionist history now being re-written by various right wing think-tanks, Dr. Krugman (along with most main-stream economists) is of the belief that FDR's New Deal brought real relief to most Americans. In Krugman's view the mistake Roosevelt made was a return at the wrong time to conservative budget principles when he cut spending and raised taxes after the '36 election, which precipitated another economic collapse that drove unemployment to double digits.

The economic lesson here "is the importance of doing enough," according to Dr. Krugman. "F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy."

Cleary, the government cannot risk not doing enough. The question is how best to apply the fiscal stimulus measures the Obama administration is sure to enact and here is where the contribution of Mr. Gore comes in.

According to Mr. Gore,

The bold steps that are needed to solve the climate crisis are exactly the same steps that ought to be taken in order to solve the economic crisis and the energy security crisis. Economists across the spectrum — including Martin Feldstein and Lawrence Summers — agree that large and rapid investments in a jobs-intensive infrastructure initiative is the best way to revive our economy in a quick and sustainable way. Many also agree that our economy will fall behind if we continue spending hundreds of billions of dollars on foreign oil every year. Moreover, national security experts in both parties agree that we face a dangerous strategic vulnerability if the world suddenly loses access to Middle Eastern oil.

Mr. Gore then goes on to describe his five-part plan "that would simultaneously move us toward solutions to the climate crisis and the economic crisis — and create millions of new jobs that cannot be outsourced."

Here then is the way forward. Dr. Krugman's liberal use of fiscal measures applied to Al Gore's plan to re-build America's energy infrastructure. It's the way to create an economy that will allow the efficient production of goods and services which improves the standard of living in a fair and equitable manner. It's a way to save the economy and the planet. It's the way forward.

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This article has 37 comments:

  •  
    Nov 12 07:06 AM
    I think you should be prepared for a real flame war. There are too many people here who just keep on railing about the national debt and monetary inflation, often at the same time (betraying ignorance of elementary macroeconomics).
    Reply | Link to Comment
  •  
    Nov 12 07:08 AM
    Indeed. Its the way forward. Therein lies the rub. The extremist-capitalist owning class will either reject it as a threat to their control or co-opt it in an effort to extract even more of the country's wealth. The Banksters have to be cut out of the plan from the start or they will, in their own special way, kill it.

    Reply | Link to Comment
  •  
    Nov 12 07:18 AM
    A far left writer (Krugman) and the vein-bulging speaker (Gore) whose global warming propoganda has so thoroughly been debunked, being advocated by a blog writer taking cheap shots at the "right wing". . .

    Well at least there is no question about your "objectivity"...
    Reply | Link to Comment
  •  
    Nov 12 07:28 AM
    Interesting how the owning class and their breif case carrying minions label any opinion that differs from the corporate line as less than "objective".
    Reply | Link to Comment
  •  
    Nov 12 07:30 AM
    It is not about caps, it is about finding an efficient alternative to fossil fuels. Capitalism will likely embrace something efficient, thus profitable. The trouble is that Gore is full of hot air, not solutions. The natural consequence of this rabid environmentalism, which is a hodge podge cocktail of snake oil, based on a repressed Malthusian and neoludite ideology is a a contraction of humanity. Not something that is acceptable to most. There is little chance of this seeing the light of day with Obama, simply because it is hogwash. Every time you turn on the light, it is reality check. It works. But I guess in some minds there is perpetual darkness.
    Reply | Link to Comment
  •  
    Nov 12 07:53 AM
    The Europeans who signed on to Kyoto did not make their emission goals. The only way to make those goals is with a great depression. I took over 10 decades to get to the oil consumption levels the world is at now (and growing) and it will take perhaps a decade just to get to zero growth let alone a reduction in use.

    Any country that unilaterally decides to scale back will face enormous economic difficulties if done the Gore way. In Japan oil imports actually decreased from the late nineties to now. How did they do it? They built dozens of nuclear plants and stopped burning oil for electricity. Here in the US it takes 3 to 4 years to get a permit to move rocks in a lake from point a to b to form a breakwater.

    The massive economic efforts required to make dubious environmental goals will be a disaster. Franky I hope they get implemented because its failure is the only way to snap you guys out of the CO2 is bad religion.
    Reply | Link to Comment
  •  
    Nov 12 07:54 AM
    Fat, ignorant Al Gore who spreads nonsense about so-called global warming and a socialist economist......yeah that's the ticket. Whoever wrote this blog is a complete idiot.
    Reply | Link to Comment
  •  
    Nov 12 08:05 AM
    Interest Rates [Credit] are the Cause and Consequence of
    the Explosion of Income/Wealth Disparities and,
    Hence, of the Inherent Instability of this Economy:

    The Ominous Keynes' Liquidity Trap.
    Origin of Economic Chaos.

    As Far as we Know, As of Today No Other Economist Has Yet Discovered
    The Link Between Income Distribution and the Liquidity Trap.

    None of the Traditional Tools of Governements Will Work:
    The Helpless Leaders of The G20 Countries Are Pathetic, Aren't They?


    DIE ZEIT: Can the right monetary and fiscal policy keep the US out of a recession?

    Alan Greenspan:

    "Probably not. Global forces can now override most anything that monetary and fiscal policy can do.
    Long-term real interest rates have significantly more impact on the core of economic activity than the individual
    actions of nations. Central banks have increasingly lost their capacity to influence the longer end of the market.
    Two to three decades, ago central banks were dominant throughout the maturity schedule.
    Thus, the more important question is the direction of long-term real interest rates."

    Chairman Sir Alan "El Maestro" Greenspan
    The Great Irony of Success
    © ZEIT online, 30.1.2008

    Chart of Long-Term Interest Rates

    When Long-Term Interest Rates Ar So Low As Not to Reward the Risk
    People Stop to Invest. Wouldn't You? Who Can Coerce Them to Lose Money?

    Because It Is Through Investments That Money Is Created.

    The Blood of the Economy Stops to Flow,
    It is the Ominous Keynes' Liquidity Trap, The Root of Economic Chaos.

    The Crash Will Be Brutal, With NO Prior Warning...
    You Need to Be Prepared.

    1776- Annuit Cœptis Can't Avoid the Crash
    it Can Shield You From Its Consequences

    Everyone Need an Economy, Don't You?

    There Is One Solution That Works:

    A Credit Free, Free Market Economy:

    What Else?... What Is Exactly the Other Option?

    No One Will Chose the Chaos, Will You?

    The Only Goal of 1776- Annuit Cœptis is to Implement It.

    Anyone Can Join But Still Needs to Be Prepared. Shouldn't You?

    www.17-76.net/

    "At the present moment people are unusually expectant of a more fundamental diagnosis;
    more particularly ready to receive it; eager to try it out, if it should be even plausible.

    But apart from this contemporary mood, the ideas of economists and political philosophers,
    both when they are right and when they are wrong, are more powerful than is commonly understood.

    Indeed the world is ruled by little else. Practical men, who believe themselves to be quite
    exempt from any intellectual influences, are usually the slaves of some defunct economist.

    Madmen in authority, who hear voices in the air, are distilling their frenzy
    from some academic scribbler of a few years back. Emperors and armies come and go;
    but unless they leave new ideas in their wake, they are of passing historic consequence.

    I am sure that the power of vested interests is vastly exaggerated compared with the
    gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval;

    for in the field of economic and political philosophy there are not many who are influenced by new theories
    after they are twenty-five or thirty years of age, so that the ideas which civil servants
    and politicians and even agitators apply to current events are not likely to be the newest.
    But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."

    John Maynard "Invisible Hand" Keynes,
    The General Theory of Employment, Interest, and Money,
    13 December 1935, p. 383.
    Quoted by Chairman Sir Alan "El Maestro" Greenspan
    Adam "Defunct Economist" Smith
    At the Adam Smith Memorial Lecture, Kirkcaldy, Scotland
    February 6, 2005

    The Purpose Is to Provide Both a New Deal and a New Game.

    It is NOT to Fix This Economy Which is Already Beyond Repair.

    The Intention Is to Create a New Economy
    With the Assets of the Old One Without its Liabilities.

    1776- Annuit Cœptis Will Jump Start Its Economy When:

    It Declares the State of Systemic Economic Collapse (Market Crash)

    AND

    The Number of Its Registred Participants Reaches 100,000,000

    Why Not Insure Against the Worst Case Scenario?

    It Is the Age of Turbulence: Adventures in a New World Economic Order.


    ✔ Introduction

    ✔ Numbered Account

    ✔ A Credit Free Currency

    ✔ Assets Transfer

    ✔ A Specific Practice of Employment, Interest and Money


    "Even apart from the instability due to speculation, there is the instability due to the characteristic of human
    nature that a large proportion of our positive activities depend on spontaneous optimism rather than on
    a mathematical expectation, whether moral or hedonistic or economic.

    Most, probably, of our decisions to do something positive, the full consequences of which will be drawn
    out over many days to come, can only be taken as a result of animal spirits—of
    a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of
    quantitative benefits multiplied by quantitative probabilities.

    Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere.
    Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come.
    Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing
    but a mathematical expectation, enterprise will fade and die;—
    though fears of loss may have a basis no more reasonable than hopes of profit had before."

    Sir John Maynard "Invisible Hand" Keynes
    The General Theory of Employment, Interest and Money,
    Chapter 12: The State of Long Term Expectation, VII
    December 13, 1935


    1776- Annuit Cœptis
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  •  
    Nov 12 08:14 AM
    Paul Krugman?? Give me a break. The economic adviser to Enron!

    Krugman, like Arafat and Jimmy Carter (known for bring terrorists to Iran) won the Nobel Peace Prize - the badge for those who have done most to destroy Freedom.
    Reply | Link to Comment
  •  
    Nov 12 08:24 AM
    The best way to "create" jobs is to remove regulatory barriers, and the best two places to remove those barriers is drilling and nuclear. Open drilling in California, Florida and the Northeast. Streamline approval for construction of nuclear power. Just those two changes alone would create hundreds of thousands of jobs and lower fuel costs and lower the trade deficit and require no new government spending. How can you beat that?

    Furthermore, the government should directly tax high pollution fuels and high pollution users. Coal has to go, unless the process is clean coal.

    Also, the time is ripe for a government sponsored health care system for those who wish to participate. This would remove an enormously expensive burden on businesses, allowing them to be more competitive with foreign business.

    Lastly, the government should restructure the EPA from a watch-dog agency to a service agency. The EPA should be responsible for hazardous waste disposal. This would remove another enormous burden from business.

    The solution is to take some of what Krugman/Gore/OBAMA says regarding coal, pollution, wind, CAFE standards etc PLUS some of what McCain said regarding new drilling, nuclear, and CAFE standards. The fix is in the middle.

    Have a great day,
    Jolly Rancher
    Reply | Link to Comment
  •  
    Nov 12 08:45 AM
    I have to question Al Gore's real motives.

    His global warming crusade is making a lot of green for him. He gets a minimum of $100,000 for every 90 minute talk his gives on global warming. No wonder he did not want to run again for president in 2004 nor in 2008 and get only a measely $200,000 / year salary.

    www.thesmokinggun.com/...

    You would think someone worth $100 million would do these talks for free, especially if he really believes in climate change.

    A report by the Nashville Electric Service that showed Gore used an average 16,000 kilowatt hours a month for an average monthly bill of $1,206 in 2006. The typical Nashville home uses about 1,300 kilowatt hours. So much for leading by example !

    Furthermore, look at Gore’s accomplishments with Clinton from 1993-2001. The CAFE standard was in good hands with Ford, Carter, Reagan and Bush 41. It rose from 15 to 27 mpg during1975-1992. Clinton and Gore (Mr. Climate change) were pandering for UAW votes in the 1990's and they introduced the light truck exemption that killed CAFE and it is now flat at 27 mpg.

    The real motive for Gore’s five point plan is to make more money for himself. He is the Chairman at GIM (General Investment Management) a company that stands to benefit from its investments in alternative energy technologies.

    www.generationim.com
    Reply | Link to Comment
  •  
    Nov 12 08:48 AM
    I'm not sure how cheap money and easy credit is going to solve the problem created by cheap money, easy credit, trade deficits, and fiscal deficits.
    Reply | Link to Comment
  •  
    Nov 12 08:57 AM
    Your entitled to your own opinions, your not entitled to your own realities. Carbon dioxide and other gases is not right wing or left wing. Gore is listening to the majority of scientists, not political ideology. Bush and most major oil companies have realized that global warming is real.
    Some of the "solutions" are not conventional green politics (ie nuclear, clean coal). Shooting a hole in your part of the row boat is not defensible. Melting icecaps don't care about the economy. Not working towards a global warming solution is not sane.

    Reply | Link to Comment
  •  
    Nov 12 09:21 AM
    The beauty of capitalism is it minimizes government and political picks and shovels. Follow the money and the solution will be found. With 7 trillion on the side - how is building a bridge or highway going to entice the money in to the economy except to start a canteen business for the workers. Didn't we just get through bashing Alaska for the bridge to nowhere. Now the bridge miraculously goes somewhere. Look at the big dig in Boston - did adding an extra highway lane and putting a highway under the city - entice investment or did it just reroute truckers throught the city increasing a carbon print. The original 2 billion bid turned to 18 billion and now ceiling tiles are falling down.

    Construction unions are the beneficiaries along with the typical political hacks who havent' been voted out of office for 20 years.

    What do you do when expanded commercial construction cannibalizes the rents and destroys the banks and reits AGAIN!

    Gore preaches global warming but how many miles of interstate infrastructure did he push through and help create this asphalt jungle dependant upon autos?

    Public infrastructure projects does not restore confidence to any sector. A liberal politician from England just the unthinkable to attract capital back in the system - reduce taxes and govern spending. When was the last time govern spending was cut?
    Reply | Link to Comment
  •  
    Nov 12 09:36 AM
    Folks, this is just plain silliness spilling over into a formerly great "Seeking Alpha". Just like the cable news, they have to keep something "interesting"... "provacative", "polarizing" to keep the eyeballs on this site. Getting to be like the "Yahoo" sites' caustic slug fests... except without the filthy descriptors.
    Many people on this site now just shout palaver from the right and left over and over. No basis in fact... just assertions and shoutdowns.

    AGW is a theory debated by the EARTH SCIENTISTS, a relatively small and select group of MSs and Phds. Let them collectively debate the issues without interference form polititians and writers. I venture that if there were as much interest in the "Theory of Relativity" as there is in the "Theory of Anthropogenic Global Warming" we might be less distracted by "SCIENTIFIC THEORIES".
    Maybe we could concentrate on human basic needs right now..... like getting rid of air pollution, assuring a minimal level of medical care for those who are in greatest need, caring for the young disowned street kids and unowned orphans, here and around the world.

    Such displaced energy. What a waste of human resource.

    Rikiki
    Reply | Link to Comment
  •  
    Nov 12 09:36 AM
    Got to remember that Krugman considers the 1950's to be the economic nirvana, not because the typical family only owned one car, but because a high school graduate could work in a union job and be solidly in the middle class. Unfortunately, that time period is over due to global competition. So trying to build an economy based upon government infrastructure projects... yea, right.
    Reply | Link to Comment
  •  
    Nov 12 09:37 AM
    Gore and Krugman--two retards--enough said.
    Reply | Link to Comment
  •  
    Nov 12 09:59 AM
    To TheLFB:

    Why have you posted this? I have read both op ed pieces; interesting, but not very scintillating, and they are completely unrelated to each other.

    Your post offers no critical thought, no particular insight, no original ideas...IN THE FUTURE, DON'T WASTE YOUR AND OUR TIME! And save a few green electrons in the process...Al needs them all to run his house.
    Reply | Link to Comment
  •  
    Nov 12 10:24 AM
    Let's remove the argument regarding global warming for a minute and make this strictly an economic and strategic argument.

    There's no question that our energy infrastructure needs to be made more efficient, and there's no question that it's strategically dangerous for the U.S. to continuously send billions to governments which are not our friends (run huge current account deficits).

    There's also no question that the economy will require a major stimulus package going forward.

    If we can improve our energy infrastructure while at the same time we improve our current account and strategic positions, how is that bad?

    Where else would you want the stimulus to go to?

    What alternatives do you propose that will accomplish all three objectives?
    Reply | Link to Comment
  •  
    Nov 12 10:51 AM
    Anyone saying that Paul Krugman is a socialist is deliberately distorting the truth.

    Those (in the political spectrum to the right of Atila the Hun) also deny climate change and the role their ideology played in creating the financial mess in the first place. Markets cannot function without proper regulation, if anything, that should be the lesson learned. Some, like Krugman, have said so way before the mess happened. Proper regulation reinforces the power of markets, it has nothing to do with socialism.

    But some prefer to look the other way, sticking to stick to their fixed beliefs and textbook notions of how markets function. We largely thank them for the mess we're in. It's not time for them to point fingers and having cheap shots at people who actually foresaw what was going to happen
    Reply | Link to Comment
  •  
    Nov 12 11:02 AM
    What absolute garbage, produced by complete idiots.
    Reply | Link to Comment
  •  
    Nov 12 11:59 AM
    Al Gore has an excuse, he talks about things outside his area of expertise. Krugman, the so called economist, has not done any economy work for eons, and just kept writting political invective every week that made him popular with the socialist crowd in the scandinavic countries deciding who to pick for Nobel. Next year laureate probably will be Moore folowed by Franken. Krugman's book could be bought for 1$ until his Nobel Prize, but of course the kind of economist he is would not believe in the relation between price and value in a free market, which according to his views should be eliminated in favor of central planning.
    Reply | Link to Comment
  •  
    Nov 12 12:33 PM
    "Nobel" laureate Al Gore shares this prize with IPCC scientists who say Gore is WRONG....he got his award winning documentary graph BACKWARDS!

    This is an hour video with scientists from MIT, etc, who show Gore is wrong.

    video.google.fr/videop...

    OH, those rising sea levels Gore warns about? The rise is the thickness of a paper clip.

    We need to educate ourselves against this propaganda and spread the facts.
    Reply | Link to Comment
  •  
    Nov 12 12:35 PM
    The only true way out of this poor economy is the fair tax. The government has power and control of the citizens through the current tax system. This system creates class warfare that politicians use to get re-elected. The fair tax is a type of consumption tax, therefore no income tax. People would feel wealthier and prices on goods would decrease.
    Plus our current tax system violates the equal protection clause. Our current tax laws are not applied equally to everyone. For example: If you make 100,000 and are single, your rate is different vs. a married person making 100,000 vs. a person making 50,000. This violates our constitution.
    Global warming has apparently stopped over the last 5-7 years. So, Al Gore can rest. Somehow, he single-handedly stop global warming. Thank God he won the Nobel Prize for his brave work.
    Reply | Link to Comment
  •  
    Nov 12 12:49 PM
    Crossroad
    USA consumption of overseas energy has stripped our cupboards bare, BOT(700 Billion US$ in oil 12 month period). Just because Saudi Oil may be cheaper(again) does not mean we should utilize, we will do so at our peril, and ultimately our decline(demise). T.Boone Pickens plan must be enacted post haste. United States transfer of wealth for energy , combined with Gov. budget debacle, and Real Estate implosion has brought serious danger to OUR ability to decide OUR future. To climb out of this hole we need to transform our Energy usage, developing new uses for energy resources that we in the USA have in abundance. This will create NEW Focus, NEW Technology, and New Jobs for Americans.

    --this transcends politics people--get real !
    Reply | Link to Comment
  •  
    Nov 12 02:26 PM
    I'll pose the same question again since it hasn't yet been answered.

    Let's put the issues of global warming and who may or may not be a socialist aside for now.

    How is it wrong to use the fiscal stimulus which nearly every economist believes we need to modernize our energy infrastructure, especially when the benefits will be more jobs, less pollution, a reduced current account deficit, less dependence on foreign oil and a better strategic position?
    Reply | Link to Comment
  •  
    Nov 12 02:37 PM
    So much invective. How can so many of us (choose your favorite side) be so angry and/or misinformed?
    Reply | Link to Comment
  •  
    Nov 12 02:49 PM
    It's nice to have a "government of the people, by the people, for the people" for a change.

    How refreshing after nearly twelve years of neoCON Repug misrule,
    Reply | Link to Comment
  •  
    Nov 12 02:51 PM
    "OH, those rising sea levels Gore warns about? The rise is the thickness of a paper clip"

    Been to Venice lately?


    On Nov 12 12:33 PM sdcougar wrote:

    > "Nobel" laureate Al Gore shares this prize with IPCC scientists who
    > say Gore is WRONG....he got his award winning documentary graph BACKWARDS!
    >
    >
    > This is an hour video with scientists from MIT, etc, who show Gore
    > is wrong.
    >
    > video.google.fr/videop...
    >
    > OH, those rising sea levels Gore warns about? The rise is the thickness
    > of a paper clip.
    >
    > We need to educate ourselves against this propaganda and spread the
    > facts.
    Reply | Link to Comment
  •  
    Nov 12 04:20 PM
    Well, I am pretty sure this isn't The Onion, but this article has to be satire.
    Reply |