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Sunday, April 6, 2014

Paul Krugman, "Oligarchs and Money": A Call for Class Warfare?

"Coincidentally," one day after Thomas Friedman launched into a tirade against Las Vegas casino magnate Sheldon Adelson (see: http://jgcaesarea.blogspot.co.il/2014/04/thomas-friedman-sheldon-irans-best.html), Paul Krugman informs us today, in a New York Times op-ed entitled "Oligarchs and Money" (http://www.nytimes.com/2014/04/07/opinion/krugman-oligarchs-and-money.html?hpw&rref=opinion&_r=1), of the advantages of moderate inflation. Krugman suggests, however, that the I.M.F.'s attitude regarding this matter is being influenced by "class bias" and "class interest":

"And behind this attitude, one suspects, lies class bias. Doing what America did after World War II — using low interest rates and inflation to erode the debt burden — is often referred to as 'financial repression,' which sounds bad. But who wouldn’t prefer modest inflation and a bit of asset erosion to mass unemployment? Well, you know who: the 0.1 percent, who receive 'only' 4 percent of wages but account for more than 20 percent of total wealth. Modestly higher inflation, say 4 percent, would be good for the vast majority of people, but it would be bad for the superelite. And guess who gets to define conventional wisdom.

Now, I don’t think that class interest is all-powerful. Good arguments and good policies sometimes prevail even if they hurt the 0.1 percent — otherwise we would never have gotten health reform. But we do need to make clear what’s going on, and realize that in monetary policy as in so much else, what’s good for oligarchs isn’t good for America."

Whoa! I'm confused. If inflation results in higher demand for goods and services, why wouldn't such demand benefit industrialists such as the Koch brothers? Moreover, higher inflation would also bring higher interest rates on funds deposited by "oligarchs."

Nice try, Paul.

But more worrisome is Krugman's references to "class bias" and "class interest," which some might claim are battle cries for class warfare.

Class warfare? We've seen it before. In 1789, many among the French "bourgeois" went headless as a result. During the 20th century, Stalin waged a bloody war against the "kulaks." Someone must always be to blame.

Yes, there are always bugaboos responsible for the economic ills of the masses, and as the 2014 midterm elections approach in the US, there are those who are desperate to explain away the Obama administration's failings.

"Class bias" and "class interest"? There is no need for such silly talk, although there certainly might be a place for higher estate taxes.

As history teaches us, words can prove dangerous.

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