All posts tagged "paul krugman"

Nobel Prize winner says 'bloody shambles' of Iran war raise 'one big question'

A Nobel Prize winner has suggested the war with Iran is a turning point for Donald Trump's administration for all the wrong reasons.

Paul Krugman believes the president has fully played his hand in the Middle East and revealed he has intentionally picked incompetent advisors and allies who would rarely, if ever, challenge his actions in office. This, the economist believes, is why Trump has received little pushback from the elites who funded his campaign, and how Trump will continue carrying out this war.

The economist wrote, "Amid the bloody shambles, one big question is, who put The Gang That Couldn’t Think Straight in power? In an immediate sense, Trump was put over the top by low-information voters — defined by G. Elliott Morris as voters who don’t know which party controls Congress.

"But the groundwork for the MAGA takeover was laid well before by the Roberts Supreme Court and by right-wing billionaires that the court enabled.

"There is, however, something that is still puzzling me: To a large extent billionaires bought themselves a government friendly to their interests. Trump and company have granted many items on the tech broligarchy wish list, from tax breaks to deregulation to promotion of crypto and unregulated AI.

"But why the abject incompetence? Couldn’t billionaires find political allies who wouldn’t plunge the country into a potentially disastrous and historically unpopular war without considering the risks?"

Krugman believes the decisions Trump made when picking allies can be broken down into two possible factors. The economist wrote, "One is that no, competent allies weren’t available. Money buys a lot of influence, but to actually take over the U.S. government requires more than money — it requires politicians who are utterly corrupt.

"In his first administration, Trump learned that hiring people who were even modestly competent eventually presented barriers to his authoritarian instincts – for example, his former Vice President Mike Pence. Hence Trump learned that in choosing his political hires the more incompetent, the more venal, the more bigoted, and the more cruel, the better."

There is also the plausible case for Trump to have intentionally selected people whose money makes them uncaring, and that is why they have not meddled with the president's plans in Iran or domestically.

"My second answer is that the vast wealth of tech billionaires has made many of them unconcerned with the little people’s lives — and deeply unpatriotic," Krugman claimed. "If Americans are being brutalized and murdered by rogue ICE agents…well, that’s not their problem."

"If the Justice Department and the FBI are totally subverted and operate as Trump’s enforcers, they know that vindictive, unlawful tactics will never touch their lives. If Republican budget cuts decimate rural hospitals and deprive hundreds of thousands of health insurance…well, they have their own private doctors and clinics.

"If Trump starts an ill-conceived war that doubles the price of oil…well, they can certainly afford the higher gasoline bills for their limousines and yachts. And it won’t be their kids hunkered down in a bunker in the Middle East."

Nobel Prize winner pinpoints 'seriously corrupt practice' going unnoticed in Trump admin

A Nobel Prize winner has pinpointed a concerning practice that is currently underway in part of Donald Trump's administration.

Between the cost of living crisis, war with Iran, and the slow release of convicted sex offender Jeffrey Epstein's files, the issues found in other parts of the admin have fallen through the cracks. But economist Paul Krugman says one move from the Defense Department is telling of how the Trump team will conduct themselves with businesses whose aims and views do not align with the current administration.

Writing in his Substack, Krugman suggested there is a particular worry over how government contracts are issued. He wrote, "Second, denying government contracts to a company because the administration doesn’t like that company’s politics is a seriously corrupt practice.

"Think of it as the flip side of crony capitalism: while throwing taxpayer dollars at companies it considers friends — especially because they personally enrich members of the administration or the president’s family — the administration is freezing out companies it considers enemies.

"If this practice becomes the norm, as it surely will if these people remain in power, it will waste money because the government is denying contracts to vendors who offer the best value but aren’t sufficiently MAGA. It will also further corrupt our politics, as businesses feel the need to be demonstratively pro-Trump if they want federal contracts."

Krugman went on to claim that admin heads, particularly Pete Hegseth, had caused undue trouble for the department. He wrote, "Finally, the Defense Department is now doing exactly what people like Hegseth have always accused supporters of DEI of doing — refusing to hire the best people for the job, refusing to give contracts to the best suppliers, in the name of political correctness.

"The Pentagon’s managers and tech experts clearly believe that Claude is the best tool for many purposes, but they have been ordered not to use it because their political masters don’t like the company’s politics.

"Imagine the reaction if the roles of the parties were reversed — if a Democratic administration were denying the U.S. military the tools it wants to use because it considered the company supplying those tools too conservative. Republicans wouldn’t just be protesting; they’d be screaming 'treason.'"

Trump was blindsided by what all experts already knew about Iran: Nobel Prize winner

A growing problem caused by the strikes on Iran should have been noted before military action was taken, a Nobel Prize winner has claimed.

Paul Krugman suggested the impact of Donald Trump's bombing in the country should have factored into the decision-making, but it does not appear to have had much effect on the choices made by the administration. The economist believes that, had cooler heads prevailed, then the government would have at least prepared for the aftershock of an economic crisis which shows no signs of stopping.

Writing in his Substack, Krugman suggested the Trump admin should have been aware that oil prices would surge following the first strike. He wrote, "The people who decided to begin this war should have seen this coming. All the evidence, however, suggests that they didn’t."

Krugman pointed to Trump's economic gamble as a reason for the worsening oil prices. He added, "Although we import some oil, mainly from Canada and Mexico, while exporting even more oil, mainly from Texas, we buy hardly any oil from the Persian Gulf.

"Yet the closure of the Strait of Hormuz has caused U.S. prices of oil products to soar. Self-sufficiency in oil has done nothing at all to insulate the U.S. economy from Middle East chaos.

"Now, we should have expected that. Oil is traded on world markets, so the price is more or less the same everywhere. The two most widely watched barometers of oil prices are the West Texas Intermediate price in the United States and Brent crude in Europe.

"America exports more oil than it imports, while Europe is a massive net importer. Yet the two prices have moved in tandem over the years."

While some may be surprised by the price hike, the economist believes there is no insulation that would have prevented the US from being affected by the Strait of Hormuz closure, or the strikes on Iran.

"Some people have been shocked at the way U.S. gasoline, diesel and heating oil prices have soared over the past few days," Krugman wrote, "But they shouldn’t have been surprised.

"In the 1970s the U.S. imposed price controls on domestically produced oil and partially insulated consumers from global oil shocks. Over time, however, these price controls led to shortages — the infamous gasoline lines.

"When price controls were lifted, they were replaced by a windfall profits tax intended to capture part of the gains experienced by oil companies. This tax was repealed after prices plunged in the mid-1980s.

"Whatever you think of these past policies, however, they took place in a political environment in which corporations and moneyed interests in general had far less power than they do now.

"It’s almost inconceivable that 1970s-type price controls or excess profits taxes would be imposed today. So US prices of gasoline and other oil products reflect world crude prices, and the fact that America produces a lot of oil doesn’t matter at all."

Trump just plunged world into 'worst-case scenario': Nobel Prize-winning economist

The war in Iran is the worst-case scenario for the entire world, according to a Nobel Prize winner, highlighting a worrying economic development.

Paul Krugman believes the strikes carried out by Donald Trump's administration on the Middle Eastern country will have consequences the world over. Not only will the bombing, which has killed 500 civilians as well as Ayatollah Ali Khamenei, strain relations with the West and Middle East, but the rising energy price is looming and may cause real trouble in the long-term.

Krugman wrote, "But now we know that there is another reason for nations to reduce their dependence on fossil fuels: security. In a dangerous world, it’s infinitely safer to rely on the sun and the wind than to depend on fossil fuels that must be transported long distances, from nations that are untrustworthy, often exploitative and located in regions that frequently devolve into war zones.

"The current situation in the Middle East is essentially the worst-case scenario for world energy supplies. Normally around 20 percent of the world’s oil supply transits through the Strait of Hormuz.

"It’s also a crucial route for shipment of liquefied natural gas and fertilizer. That passage is now effectively closed and there are no good alternatives."

Krugman went on to say the claim Trump made regarding the re-opening of the Strait of Hormuz is unachievable, and will lead to further problems in the Middle East, and therefore the world.

"Donald Trump may say that he will reopen the strait," Trump wrote. "But short of regime change in Iran, it’s very hard to see how he can. Oil tankers are extremely vulnerable targets while drones, anti-ship missiles and mines are cheap. Moreover, the Iranian regime surely still has thousands of them in stock, in readiness for an attack just like this.

"While we are in the midst of a worsening crisis, many – including myself – are surprised that oil prices haven’t risen even more than they have, although they took another leg up yesterday. I guess speculators still expect the disruption to end quickly. Why is anyone’s guess. However, consumers across the world are already feeling the effects.

"While it is surprising that crude oil prices haven’t increased more, it’s also surprising how quickly retail gasoline prices have surged."

The economist also suggested the war with Iran could prompt other countries to pursue renewable energy sources, something Trump had attempted to dismantle in the past.

Krugman wrote, "I’d add that the problem with U.S. demands that nations burn, baby, burn isn’t just American adventurism. It’s also the fact that relying on the United States for LNG, which is what doing things Trump’s way would amount to, is itself unsafe.

"Are you sure that Trump or a Trump-like future president won’t cut off energy supplies to nations that annoy him? I’m not.

"So the U.S. war against Iran is making a strong case for nations around the world to seek energy independence. And for those nations that don’t have large fossil fuel reserves, that means wind and solar (and, yes, nuclear.)"

Nobel Prize-winning expert issues grim prediction for Iran war's impact on US economy

A Nobel Prize-winning economist has warned that the war with Iran will spike the price of a US commodity in the next few days.

It all depends on whether the Strait of Hormuz remains closed, with many financial analysts hoping to see the passage for the Persian Gulf to open in the next few days. If it does not, Paul Krugman believes there will be a skyrocket in the price of oil in the US. This comes after Donald Trump's order to strike Iran, with a bombing campaign on the Middle Eastern country set to affect prices at home.

Krugman, writing in his Substack, warned there may be too much optimism placed in the price stabilizing over the next few days. "Indeed, it’s hard to understand why oil prices haven’t risen even more," he wrote. 'Why has oil not hit $100 a barrel?' asks the Financial Times."

"The best answer seems to be that even now traders are betting that the Strait of Hormuz won’t stay closed for more than a few days. I hope I’m wrong, but I expect the strait to remain closed for weeks despite Trump’s assurances."

There is some good to be taken from the oil prices though, and that is it will not be likely to cause a complete economic crisis - not yet.

Krugman predicted, "Even if oil prices go much higher, to $100 a barrel and beyond, it won’t necessarily trigger an economic crisis. I explained why on Monday: The United States and other advanced nations are far less oil-dependent than they were in the 1970s, when oil shocks did cause major economic disruption."

He then added, "Now we’ve added a fresh level of massive uncertainty. Bear in mind that this isn’t even a war of choice; it’s a war of whim, marked by a near-total lack of planning... One shouldn’t exaggerate the economic fallout from this war. But it isn’t occurring in isolation: There are many stresses on our economy, and this could be the straw that breaks the camel’s back — a straw that becomes heavier the longer the war goes on. Furthermore, if Trump is this erratic now, what will he do as the midterms get even closer?"

Nobel-winning economist breaks down 'vicious circle' US must break 'before it's too late'

An award-winning economist has broken down what the US must do to course-correct on the economy before it is too late.

Nobel Prize winner Paul Krugman believes it may not be too late to steady the US economy and wrest it from the hands of the ultra-rich. His message appeared in a Substack column published today (February 20), by the economist, who suggested the problem is not the change itself but entrusting it to people who do not want it.

He wrote, "It’s clear that by any reasonable standard the extremely rich pay much less than their share in taxes. Why doesn’t the U.S. government try to close the loopholes that allow the extremely rich to pay so little? Don’t say that it would be technically difficult or that it would hurt the economy.

"We were able to tax the rich for a generation after World War II, a generation during which the U.S. achieved the best growth in its history. In general, governments in advanced nations have enormous ability to achieve their goals, if they want to.

"The problem, of course, is that too many politicians don’t want to collect taxes on the superrich, because the ultra-wealthy have used their wealth to achieve immense political power. And the failure to tax them effectively is reinforcing the vast accumulation of wealth at the top.

"It’s a vicious circle. And whatever you think of specific proposals for wealth taxes and other approaches toward reining in America’s billionaire class, we had better take action before it’s too late."

Krugman also explained how the ultrarich had pulled away economically from the rest of the country, saying it is a simple matter of taxation.

He wrote, "Why are the ultra-rich pulling away from everyone else? Partly because they pay much lower taxes than the little people. Some manage a full Leona Helmsley, paying no taxes at all. On average, according to recent estimates by Balkin, Saez, Yagan, and Zucman, they pay a total tax rate — federal, state, and local — of only 24 percent.

"That’s less than the average for the whole population, around 30 percent. And it’s much less than the tax rate for 'top labor income earners.' That means people who receive big paychecks — but who do receive paychecks. In contrast, the incomes of the ultra-rich flow largely from or through businesses they own."

This is 'clear sign' Trump will not accept midterm loss: Nobel Prize winner

Donald Trump has given a clear sign he will not accept the outcome of the midterm elections should he lose, a Nobel Prize winner has warned.

Paul Krugman believes the president will flat out refuse to accept the results of the midterms should the Democratic Party find themselves with a majority in the House and Senate. The economist, writing in his Substack, suggested Trump is already making statements that make it clear he will try to shift against the election results should they not turn out in his favor.

Krugman wrote, "Trump is now calling for 'nationalizing' the midterms, meaning to put voting and the counting of votes under his administration’s control. He can’t do that, but his demand is a clear sign that he will not accept the public’s verdict in November.

"So it’s just being realistic to say that MAGA will try, somehow, to prevent voters from having their say. Will ICE try to prevent blue districts from voting? If that fails, will they reject the results, in a midterm version of Jan. 6? Call me alarmist, but remember: The alarmists have been right, and the people telling us to calm down have been wrong, every step of the way."

Krugman went on to question whether the Trump administration had a firmer plan in mind for what ICE agents were doing in Minneapolis.

He wrote, "How do Trump, Stephen Miller, etc. think this is going to work for them? Maybe their initial belief was that a display of force would shock and awe their opponents into submission. It’s not happening, yet they just keep ramping up the threats and violence, apparently not knowing how to do anything else.

"The obvious answer is that there isn’t any strategy. These people aren’t evil masterminds — evil, yes, but masterminds, no. They’re just thugs too crude and undisciplined to control their own thuggishness.

"They were caught off guard by the strength of the resistance because the very concept of citizens standing up for their principles is alien to them, and they still can’t believe it’s real."

One Trump move will 'make Americans measurably poorer': Nobel Prize-winning economist

Donald Trump's economic policies will leave Americans poorer in the long term, a Nobel Prize winner has claimed.

Paul Krugman believes there is a measured decline unfolding in the US, with many set to feel the burden of the president's policy. Writing in his Substack, the award-winning economist suggested the longer-term economic traditions are at risk, and as such, the spending power of the American people.

He wrote, "The world trading system as we knew it lasted for three generations after World War II. It was a rules-based system, in which everyone considered the U.S. a reliable, trustworthy partner. But now US economic relations with other nations have turned abusive, and the world is moving toward divorce. And this will make Americans measurably poorer."

Krugman went on to suggest the rest of the world doesn't need the US economy as much as it needs the European Union or other countries they do trade with.

He wrote, "Unlike Donald Trump, who thinks of international trade as a zero-sum game, the Europeans and the Indians understand that a free trade agreement between them is a very good deal for both parties.

"They are two very big economies. Although Trump administration officials like to sneer at European economic performance, the economy of the European Union is roughly the same size as ours," he further added.

"At the time of writing Trump hadn’t reacted to the EU-India deal. Maybe nobody in his administration told him because they are in crisis over the Pretti murder fall-out."

"At some point, however, I expect him to rage-tweet about it, he did about Canada’s more modest trade deal with China. In general, we can expect Trump to threaten to put tariffs on everyone trying to pivot away from dependence on a nation whose policies are, well, driven by rage tweets."

"But more U.S. economic intimidation isn’t going to work, because Trump doesn’t have the cards. Access to the U.S. market just isn’t as important to other countries as he imagines."

Nobel Prize winner says Trump shot himself in foot at Davos: 'They humiliated him'

A Nobel Prize winner believes Donald Trump was left looking much less confident after his Davos speech.

The president's speech at the World Economic Forum in Switzerland did not go as planned according to Paul Krugman, who says Trump failed in his aims to threaten Europe with financial sanctions. The economist, writing in his Substack, says the plan from Trump's administration went about as well as could be expected.

He wrote, "Donald Trump and his team clearly went to Davos determined to demean and insult their hosts. It was, one might say, a novel approach to diplomacy: 'You’re pathetic, your societies and economies are falling apart, now give us Greenland.'

"And it worked about as well as you’d expect. Trump may have imagined that the Europeans would cower in the face of his wrath. Instead, they humiliated him. He dropped his latest tariff threats in return for a 'framework' that gave the United States essentially nothing it didn’t already have — and left behind a Europe that is finally united in resistance to his bullying.

"The Trump team went to Europe in a state of malign ignorance, exemplified by Trump saying during his Davos harangue that 'without us, you’d all be speaking German.' Most Swiss speak … German."

Trump's rhetoric at the World Economic Forum drew ridicule from European leaders, with Krugman calling on those in power to take on board a lesson from the president's speech.

He wrote, "But even Eurocrats have their limits. Operation Arctic Endurance, the deployment of European military forces to Greenland, might equally well have been called Operation Rising Gorge. There was rational calculation behind that deployment, but it was also a way for European leaders to say that enough is enough, that they’re done with trying to make nice."

"And when Trump threatened to put tariffs on the exports of nations that have sent troops to Greenland, Europe didn’t cower in submission — it got ready to strike back at U.S. businesses."

"Appeasing a bully doesn’t work, especially when, as anyone watching Trump’s Davos rant could see, that bully is experiencing rapid cognitive decline. But standing up to him does work. The question now is whether and when enough influential people here at home will learn the same lesson."

Minneapolis made into 'laboratory of destruction' — and it may be 'for the better': expert

The recent ICE shooting in Minneapolis and Donald Trump's response to the killing of Renee Good has turned the city into a "laboratory of destruction," according to an economist.

Nobel Prize winner Paul Krugman believes the president, his administration, and the Immigration and Customs Enforcement team are dismantling democracy in the city. In a post to his Substack, the economist warned there were failures in both institutions and the elite, ruling class which made the situation in Minneapolis untenable.

He wrote, "So now we have Minneapolis, America’s laboratory of democratic destruction, where ICE agents have gone full Sturmabteilung, terrorizing and even killing not only people with brown skin, but anyone who protests or gets in their way. And the irony is that this may be for the better."

"For a gradual destruction of democracy would have been hard to resist. After all, who wants to rock the boat when there’s money to be made, jobs to keep, perks to be had, convenient bothsideism to be upheld, if you will just be silent and keep your head down?"

Krugman went on to praise those protesting ICE agents and the government as outrage continued over the death of Good. The 37-year-old mother was shot and killed by an ICE agent earlier this month.

The Nobel Prize winner added, "Instead, however, the assault on freedom and civil liberties is open, lurid, and impossible to deny. While our institutions and our elites have failed us, ordinary Americans are rising to the occasion."

"If Minneapolis is a laboratory of democratic destruction, it has also become a laboratory of civil resistance — organized civil resistance, of a kind we haven’t seen since the civil rights movement. When ICE is on the rampage, crowds of brave Americans, summoned by texts and whistles, quickly gather to stand against the masked men with guns."

"As the outrage grows, people of common decency — like the federal prosecutors in Minnesota who chose to resign rather than pervert justice by going after Renee Nicole Good’s wife — are taking a stand."

Krugman went on to suggest those protesting would be responsible for a democracy "forged anew" against Trump and his cabinet.