Paul Krugman Pulls the Race Card from the Deck's Bottom

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For those who follow economic commentary, New York Times columnist Paul Krugman is known as the most prominent advocate of big government solutions to almost any economic malady, real or perceived. Whatever bad, historically discredited economic concept exists, from "stimulus" spending to currency devaluation to tax rate increases to reduce the deficits caused by all the government spending he supports, Krugman is always there to defend each as public intellectualism's walking, talking embodiment of that which won't, and hasn't worked.

The conspiratorially minded among us might say that Krugman is a Republican mole, placed inside the upper reaches of American liberalism's foremost cathedral to destroy the movement from within, but if true, Republicans themselves wouldn't so frequently pursue Krugman-lite policies (the George W. Bush years, most notably) on the way to economic hardship. Instead, it should be said that Krugman is a thoroughgoing statist, one who actually believes all that he does with great conviction despite an historical record that would logically give any rational human being pause.

But last week it's fair to say that Krugman truly stepped over the line. While his droolings are always worth an uneasy laugh combined with horror that some actually take him seriously, his assertion that there's a racial element behind the drive to achieve a strong, stable dollar was just too much. Krugman should be ashamed, though that ascribes to him a level of self-awareness that he apparently doesn't possess.

In suggesting that stable-dollar advocates are racists eager to "seek votes from Southerners angered by the end of legal segegration" as a way of returning to "the antebellum era", Krugman unsheathed the proverbial race card from the deck's bottom, and this is despicable even by his already gutter-level standards.

For background, during Fed Chairman Ben Bernanke's testimony before Congress last week, Rep. Paul Ryan made the perfectly reasonable and economically tautological assertion that "There is nothing more insidious that a country can do to its people than to debase its currency." From Ryan's utterly harmless, though very correct statement, Krugman sickeningly derived racist overtones; his argument being that Abraham Lincoln devalued the dollar during the Civil War, and with Republicans (according to Krugman) no longer embracing Lincoln, any criticism of devaluationist policy is not just anti-Lincoln, but also racist for Lincoln's Civil War having sped the end of wrongheaded secessionist policies in the U.S.

To bolster his shockingly obtuse line of reasoning, Krugman cited one of the witnesses Rep. Ron Paul called before his subcommittee to discuss the Fed, Loyola University professor and Ludwig von Mises Institute senior fellow Thomas DiLorenzo. According to Krugman, DiLorenzo's not-so-glowing account of Lincoln in his book "Lincoln Unmasked: What You're Not Supposed to Know About Dishonest Abe", signals that he is a racist, and by extension so are the stable-dollar Republicans seeking his testimony on the Fed.

About DiLorenzo, while I've not read his book, I'm somewhat familiar with the more libertarian criticisms of Lincoln, and none have to do with race. That Krugman would suggest otherwise is the height of dishonesty, and quite simply wrong.

Libertarian objections to Lincoln and the Civil War have to do with the tariffs imposed by northern manufacturing interests on imports that made it difficult for southern agricultural interests to export their goods.  One can't export without importing, and the libertarian view is that absent the tariffs, the war is less likely.

And while the Civil War was also of course about slavery, individuals such as Ron Paul certainly don't decry it for ending slavery; rather they correctly point out that slavery was already dying around the world without shots being fired.  How unfortunate then that the U.S. needed to suffer the death and destruction of war to rid itself of a tragic institution that would have disappeared soon enough based on its own, anti-human contradictions.

From an economic perspective, Lincoln's decision to suspend the dollar's convertibility to gold was on its face a bad idea, and to ascribe racial motives to those who question it, is to reveal a Paul Krugman misunderstanding of economics. To fight wars, countries need strong economies and devaluation works against just that.

Devaluation hardly made the Civil War cheaper; rather the devalued dollar simply meant that the cost of arming, feeding and paying the Union's troops increased in concert with the dollar's decline. Simple logic tells us that devaluation was superfluous at best, though more likely economically crippling.

Furthermore, DiLorenzo, and Paul are libertarians, and to know libertarians is to know that they viscerally despise the notion of slavery for it violating our basic rights as human beings. Libertarians then take it further in noting that those who enslave others develop within themselves indolent qualities that reduce their own productivity, not to mention that work without reward (something lost on Krugman given his support for nosebleed rates of taxation) always leads to reduced output. To ascribe racism to libertarians is to reveal an impressive misunderstanding of the philosophy.

After inserting racial motives into a monetary discussion happily free of them, Krugman's "proof" that the dollar isn't weak centered on the dim point that its "value in terms of other currencies is about the same now as it was three years ago." Nice try there, but that's the equivalent of two 5'9" women in heels removing those same heels on the way to suggesting they've both not declined in height. Relative to each other they haven't, but to any objective observer they've shrunk.

In the case of the dollar, whenever we devalue, our devaluations frequently cause global monetary authorities to mimic our devaluation. Over the last three years, there's been a run on paper currencies of all shapes and sizes, and gold's spike in all currencies has revealed just that. Considering the consumer price measure that Krugman cites, it's only "low" insofar as monetary authorities in the U.S. have removed the food and energy inputs most sensitive to monetary error. Krugman should know better.

More to the point, it must be asked how devaluationist policies help black people. If it's true as we're constantly reminded that blacks aren't as rich as white people are, how can a self-proclaimed non-racist such as Krugman support a policy (devaluation) that reduces the value of every dollar in our pockets, including the pockets of black individuals?

All jobs are the result of investment first, and policies in favor of devaluation by definition raise the price of delaying consumption. In that case, given high levels of unemployment within the black community, and the clear correlation between investment and job creation, how once again can a supposed non-racist such as Krugman support policies that are anti-investment, and as such, work against job creation?

Of course it's through investment in the stock market that savers can grow their wealth while shrinking the wealth gap between the rich and poor, but as the Nixon/Ford/Carter and Bush Jr. years reveal, policies in favor of a weak dollar correlate with flat to negative stock-market returns. Derivative strategies can to some degree mitigate the cruelty of devaluationist policies, but since access to derivative products is mostly the preserve of the rich, how can an alleged non-racist such as Krugman defend policies that harm the economic chances of the defenseless?

As I don't know Krugman, it would be improper to ascribe racist leanings to him as he freely does to others, but given the economic pain that devaluation brings to society's poorest, one has to wonder. Indeed, it would be hard to find a more anti-black, and better than that, anti-human policy than one meant to decrease the value of the dollars that so many work so desperately hard to earn.

But Krugman being Krugman, he attaches defense of the dollar to a desire among white people to "build a bridge to the 19th century"; meaning the "grand" old days of slavery. Shame on Paul Krugman for taking such a vicious and unfounded stance, and shame on the New York Times for giving a truly unhinged man such an influential perch from which he can spew such nonsense.


John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading ( He's the author of Who Needs the Fed?: What Taylor Swift, Uber and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank (Encounter Books, 2016), along with Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics (Regnery, 2015). 

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