Krugmans juvenile Sinophobia
By Tino
The text is almost completely devoid of any economic analyses, and could as well have been written by some college freshman student playing too much “Civilization III”. Once he educated the public, now he is now adding to misconceptions by repeating to the 'blood for oil' myth and playing on the public’s unenlightened (but in their case understandable) fear of outsiders.
http://www.nytimes.com/2005/06/27/opinion/27krugman.html?oref=login
1. Oil conspiracies
First of all, there is no such thing as a great game “in which major economic powers scramble for access to far-flung oil and natural gas reserves.” This is just a childish fantasy among those who still have a feudal view of the world.
Oil is traded in a single global market, with in practice a single world price. Control of oil may have been important in WWII, but it simply means nothing today. To suggest that Iraq was invaded in order to gain “control” of oil is just nonsensical.
As there is an integrated work market in oil there are really only two things you can do with it: sell it or don’t sell it. And if you want to obtain oil you do not need “control”, you only need cash. America uses some 1-1.5% of it GDP annually to import all the oil she needs without needing to control any of it.
As I doubt even Krugmans thinks the US is planning to steal Iraqs oil the occupation has absolutely no bearing on American access to Iraqi oil, which is sold on the world market to anyone and everyone.
Control of oil would only be relevant in the extremely unlikely situation of a prolonged global war. But in that case a Chinese company having legal ownership of an American oil company is completely meaningless!!! The beauty of knowing economics is that you will not make these kind of simple logical errors.
Krugman seems to have been influenced by fellow economist moonbat Lyndon Larouche on the impending collapse of the US economy, so maybe he really fears War is coming. In that case he should instead be advocating the US develop strategic oil reserves in Alaska and elsewhere instead of preaching protectionism.
2. The Manchurian candidate (Sinatra version)
Throughout the article he is exploiting the fear of China, suggesting that FDI by Chinese is somehow menacing, and that the purpose of their investments it to take control of America “After all, there's no natural law that says Americans will always be in charge”.
This is again complete nonsense, and almost has a racist feel to it. I do not remember Krugman protesting Brittish or Canadians investments, which are tens of times the size of Chinese investments. BP paid some 90 billion $ for American firms AMCO and ARCO without Krugman whining about it. Why write in such dark tone about China, even calling to block one of the deals?
The evidence is annecdotal, and the sums are un-impressing (and never mentioned!) The Maytag bid is 1.3 billion dollars. Is slightly more for Unocal, 19 billion $.
In comparison the value of the US capital Stock is worth 45 Trillion dollars. Foreigners (mostly white people, so I guess it is OK) already own some 10-11 trillion of US assets, while Americans own 7-8 trillion of foreign assets.
According to the OECD In 2004 Americans outflow of foreign investments was 252 billion $, whereas inflow was 107 billion $. Since this week it is bad in Krugmans book that foreigners invest in your economy, should the rest of the world complain that the US is ‘taking charge’ of their countries?
With Maytag he seems to acknowledge that the deal is beneficial for both sides, but cannot help himself by ending on a ominous note. “Still, the deal won't be as one-sided as the deals with the Japanese often were.” Que? He said himself the deal will help America, why would we want it to be “one-sided”? Trade is not war or conflict, it is meant to help both sides. One of the biggest misconceptions among the public is that exchange is a zero sum game. From once brilliantly debunking such myths Krugman is now ready to promoting them to suit his short term political agenda. Principled guy.
It is never explained why he would block the sale of Uncial. He seems to hint it is because the price of oil is high right now. But any moron understands that the high price is already reflected in the price the one has to pay for Uncials. We should just take his word for it I guess.
3. Michel Moore with a college degree?
The most amusing side of it is the game Krugman has to play, dealing with two audiences. One is the non-economists readers, to that crowd it is just partisan politics, playing on their worst fears and using emotional arguments. But he probably also wants to be able to look his fellow Princeton Economics professors in the eyes next day.
He didn’t solve the dilemma by intellectual honesty or logical coherence. Instead he uses the Michel Moore technique; when you are playing to emotional side don’t use actual arguments, instead rely on a vague language and innuendo. So he never actually said we invaded Iraq for oil, only implied it. Never repeated the Unocal-Taliban-9/11 conspiracy theories that are so popular among the hard core left, just hinted at it.
In my personal experience he still has a lot of respect among people outside the US, i.e. those who haven’t read his NYT columns. But a common reaction among American economist upon mentioning Krugman is them smiling slightly, shaking hteir heads or rolling their eyes. The price he had to pay to become the darling of Howard Dean and the like was loosing the respect of most his peers. Hope it was worth it.
K. Brancato adds: See also Alex Tabarrok on Krugman's illiberalism.
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