Devolution through Dumbness

Thanks to Michael for linking me to the great Glenn Greenwald piece, "American Priorities, by the Beltway Elite," which gets at the heart of why the U.S. is moving backwards and is no longer a model for aspiring countries anywhere.  The heart is simple antihumanism, directed at our own population, in this case by the editors of the Washington Post.

Universal health care, however desirable, is not "fundamental to the defense of our people." Nor is it a "necessity" that it be adopted this year: Mr. Obama chose to propose a massive new entitlement at a time of historic budget deficits. In contrast, Gen. McChrystal believes that if reinforcements are not sent to Afghanistan in the next year, the war may be lost, with catastrophic consequences for U.S. interests in South Asia. U.S. soldiers would continue to die, without the prospect of defeating the Taliban. And, as Mr. Obama put it, "if left unchecked, the Taliban insurgency will mean an even larger safe haven from which al-Qaeda would plot to kill more Americans."

As Greenwald points out,

We have absolutely no ability to pay for our Afghan adventure other than by expanding our ignominious status as the largest and most insatiable debtor nation which history has ever known.  That debt gravely bothers Beltway elites like the Post editors when it comes to providing ordinary Americans with basic services (which Post editors already enjoy), but it's totally irrelevant to them when it comes to re-fueling the vicarious joys of endless war.

There's some civilizational madness reflected in these beltway editorials - the death trip we keep trying to understand.

The Media's Quagmire

Mark Weisbrot's slam of the amazing establishment bias in the media was a nice end to my computer day.

Senator Carl Levin of Michigan, a Democrat, was apparently intended to represent the "other side" of the debate. Here is what he said: "Clearly we should keep the number of forces that we have. No one's talking about removing forces."

"No one" in the above sentence refers to the American people, whom Levin understandably sees as nobody in the eyes of the US media and political leaders.

And he goes on to make a crucial distinction between Obama catering to elite media and Obama catering to polls, which might lead him sometimes to do what large popular majorities actually want:

If you want to know why Obama has not fought for a public option for healthcare reform, why he has caved to Wall Street on financial reform, why he has been Awol on the most important labour law reform legislation in 75 years (despite his campaign promises), just look at the major media. Think for a moment of how they would treat him if he did what his voters wanted him to do. You can be sure that Obama has thought it through very carefully.

Obama's whole political persona is based on media strategy, and on not taking any risk that the major media would turn against him. That is how he got where he is today and how he hopes to be re-elected. Many analysts confuse this with a strategy based on public opinion polling. But as we can see, these are often two different things.

Inequality as Theft

Marcus Baram has this nice chart at Huffpo that compares the growth in financial sector bonuses to non-growth in salaries.

Back in 1985, the average annual salary for all workers across the country was actually a bit higher than the average bonus ($19,000 to $13,970). (Note: these numbers are not adjusted for inflation).  How times have changed - while the average bonus soared almost 14 times higher (by 2006), the average salary has essentially been stagnant sine the mid-1980s.

 Meanwhile, the Obama administration got pissed at the insurance industry for its open attack a couple of weeks ago on even the weak reform plan. Obama lit into them, and on This Week White House advisor David Axelrod repeated the basic argument:

we need these reforms. In the last year—in the last ten years, premiums have doubled. You’ve seen the insurance companies take—ten years ago, fifteen years ago, they spent 95 percent of their premiums on healthcare, now 80 percent. More of the money is going to bonuses, salaries, administrative costs. This is not a sustainable path for this country. So we need reform, and that’s what he is arguing for.

Turns out politicians can in fact discuss parasitism in America, but only when the deal with the newly proclaimed parasites has fallen apart. When will Axelrod substitute "insurance companies" with "banks" in the same phrase?

Sick of the Job

A new report confirms what we all know but aren't allowed to take too seriously: bad your job hurts your health. Workplace decline, inhumane treatment, bad psychological vibes affect you and then the whole country. The president of the Families and Work Institute, which sponsored the report, said, "You have to pay attention to the small things, the way people treat each other, whether there are opportunities to learn, whether people’s input is asked for and considered.’’ Obvious in theory and avoided in practice.

The theory is well understood.

Nearly 40 percent of employees in a highly “effective’’ workplace - where people are trusted and supported - report being in excellent health, double the number of those who say they’re in the best health at less effective companies. The institute defines an effective workplace as one offering a climate of trust and respect, learning opportunities, worker autonomy, work-life fit, supervisor support, and economic security. High work-life support and flexibility are especially linked to good health outcomes.

Rehumanizing US society will build from a lot of places, and one is fixing the workplace, which has slid into barbarism and authoritarianism for way too many people.

Inequality as Policy

This is the title of a CEPR report that is clearer than most that inequality has not been an accidental byproduct of high-tech growth and the "service economy" but has been a deliberate strategy.  I elaborate on this in a book on the decline of the paramount middle-class institution, the public university, and am very glad to have this company.

Privatizing Baseball

Baseball has always been a sport dominated by club owners and business goals, but Bob Herbert has a nice piece on the meaning of the replacement of affordable old stadiums with new corporate parks, all publicly-supported at some point in their construction.  Yankee season tickets for a family of 4 were initially priced at $800,000.  Herbert note a familiar pattern of absolutely upside-down priorities: "the auto industry is on its knees and we’ve got school buildings in sorry shape and we can’t even rebuild a public hospital in New Orleans. But the Dallas Cowboys have a brand new billion-dollar-plus domed stadium that looks like something out of “Star Wars.”

Banker Noir

First it's Dean Baker (see his good links), and now the mainstream press is going noir on this banker business.  "Bailout Helps Fuel a New Era of Wall Street Wealth" says on NYT headline, which makes for a decent summary of where we are right now.

• The banks' new big money comes from Washington - the taxpayers, in the form of direct cash, loans, loan guarantees, and zero-percent interest that they can loan back at 5% or so. 
• They are making money now doing exactly what they were doing before the crash 14 months ago - "making fortunes . . .  trading stocks and bonds, rather than in the ho-hum business of lending people money."  That is putting speed-trading, currency speculation, commodities arbitrage, and a bunch of much more clever stuff euphemistically.
• No new regulation has taken place: "So even as big banks fight efforts in Congress to subject their industry to greater regulation — and to impose some restrictions on executive pay — Wall Street has Washington to thank in part for its latest bonanza." or: “'They are able to charge more for all kinds of services because companies need banks and investment banks more now, and there are fewer strong ones to help them,'” said Douglas J. Elliott of the Brookings Institution."
• Surviving banks are making monster profits on monster spreads: "Banks that have waded back into the markets have been able to exploit large gaps in the prices of various investments, a feature of the postcrisis financial markets. The so-called bid-ask spreads — the difference between the price at which banks are willing to buy things like bonds, and the price at which they are willing to sell — are roughly twice what they were two years ago.
  

The noir reading is this: 9/08 was banker 9/11.  They didn't do it on purpose, but they used it to increase financial power over the economy.  US economic leaders, having stopped being able to generate 1950s-1960s profit margins by making better products and beating the global competition head-to-head, squeezed wages, benefits, and social investments of every kind. These elites made up for the damage done to the general incomes of their own customers with a combo of lootings and bubbles - S&L pillaging in the 1980s, dot-com bubble of the 1990s, real estate bubble of the 2000s, that maintained consumption and middle-class living through easy borrowing against inflated assets.  Now there are no more bubbles. The "green economy" of Van Jones and others would help the environment but also raise wages by rebuilding industries that pay decent wages, and that cost finance money!  If there's no bubble for Main Street, cut Main Street loose. That's what we have now: the barnacled ship has been cut loose from the government tugboat, and is sinking steadily, while the finance sector is being towed ahead even faster than before.

The new cover story is the V-shaped recovery.

Finance is supposedly helping the gigantic resilient rebound.  But in fact it is not putting money into the economy with lending and is taking money out with enormous trading profits for which some losing party pays.   All the faltering Vs are aspiring to ideal V-ness. The ones who will succeed - like China - are the ones whose banks are most completely under political control.
 The government money not being spent on banks is being spent on our two unwinnable wars, which are also financed by banks.  Depressing dumbness floods in from everywhere, as in the McChrystal folly in Afghanistan, which assumes the power of a rich kid country that has in spite of its self-image failed repeatedly at military control, and will spend whatever we have left failing again.
That's noir. It signals the moment where the rotten foundations of the most powerful forms of success become visible to pretty much everybody.

Addendum: noir also assumes the permanent ignorance of the little people. Fr. Frank hits this note on Goldman Sachs in his Sunday sermon

there is one other significant way that our 21st-century vampire squid differs from Rockefeller’s 20th-century octopus. Americans knew what oil was, and they understood how Standard Oil’s manipulations directly affected their pocketbooks. Even now many Americans don’t know what Goldman’s products are or how it makes its money. The less we know, the easier it is for reckless gambling to return to capitalism’s casino, and for Washington to look the other way as a new financial bubble inflates.

Another one of my Capitalist Pals has a good piece on the new order's new big winners ("three sets of players look positioned to do the same in the US today, mostly based on the amazing set of “carry trades” available if you have access to large amounts of cheap short-term funding").  The piece starts by describing US equities as an "emerging market":

The US increasingly displays characteristics that we have seen many times in middle-income “emerging markets” – new dimensions of vast inequality, forms of financial instability that benefit the best connected, and consistently easy credit for the privileged. But this raises the question: who exactly is going to dominate our economic and political landscape moving forward?

Noir as a genre flourished historically as the U.S. transited from a banana republic to a more routinized industrial one, while keeping many of the banana features.  Now Simon Johnson concludes, "Many states have been taken over by bankers; there is no shame in fighting and losing against what Jefferson called the “monied aristocracy. But few governments, even the weakest, have handed over the keys as quietly as we did. "

The noir conditions flourish again.

Love is Worth It

Democracy Now had a great sequence yesterday on the Gay Rights March in DC, starting with Lt. Dan Choi's speech about coming out, "love is worth it."  He's facing discharge for telling even though he wasn't asked, and his crescendo in DC can be seen on the website:

But when we’re telling the truth about our love, our country slaps us in the face and orders us, “Don’t ask,” and orders us, “Don’t tell.” Well, I am telling you that the era and the time for asking is over. I am not asking anymore! I am telling! I am telling! I am telling! Will you tell with me?

On the show, he talked about coming out to his parents.

Well, when I came back from Iraq, I finally understood what love was when I started a relationship, my very first one. And I didn’t want to lie about that anymore. I didn’t feel that if I respected my parents—and I respect and love them—that that kind of a relationship should be based on anything other than integrity and full disclosure. They should be a part of it.

The principle here is crucial: respect means you tell the truth even or especially when it will produce disagreement and conflict.  The same holds for politics and economics as well: the continuous lying we face as part of the growing orbital divergence of our two economies, finance and everything else, is an exercise of continuous disrespect. It paralyzes us, but only in the short run. As Lt Choi proves, when the paralysis ends, the truth-teller activates not only himself but everyone he or she touches.  That process of upheaval in both love and finance is slowing turning its bow towards the way out of the harbor.

This Year's Nobels: Better than Usual

The Swedish Bank's "Nobel Prize" has gone to two more Americans, including what I believe is the first woman ever to get a "Nobel" in Economics, Elinor Ostrom, of Indiana University. Her work was honored for its contribution to the possibility of "governing the commons" and of inputting user knowledge into the rule-making process.  Good. UC Berkeley's Oliver Williamson was co-winner for his work on non-market economic activity, which is of course grossly underappreciated in the neoclassical tradition that the Swedish Bank has generally recognized, and that has lopsidedly dominated US economic theory for decades.  The public write-up is pretty good. It would be too much to say that these are anti-Chicago School economists, but in the Swedish "Nobel" context, they are.  It's a good sign.

Bubble Brains

Robert Schiller has some interesting evidence that people haven't given up on huge coming profits on buying and selling houses. It confirms that pathetic story about Arizonans bankrupted by house flipping  trying to make it back by buying foreclosed houses in the hope of future flips.  As Schiller says in his understated way, "At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game," still hoping they can win by timing the market.

I would only add that people is dumb because a) dumbness used to pay, but also b) they don't have anywhere else to turn. Are they supposed to invest in the green economy?  Look for solid annual pay increases by reskilling for a job in the big new American industries that are coming on line? Take heart in the solid new economic strategies pondered in Washington? Trust their retirement to Wal-Mart?  

People don't in reality have any of these things to turn to, especially not new economic policy.  Bank regulation hasn't happened, and won't, as the foxes still manage the chicken coop, and policymakers, timidly caught by conventiontional deficit worries, are going to tighten money rather than dynamite their way to recovery with a stimulus so big it will actually allow the paying down of the future deficit.

People rely on bubbles because the American economy and its backward leaders still, over 2 years into the surfacing of the crisis in August of 2007, have nothing else to offer them.

Why Obama Got the Nobel Peace Prize

My friend Ricki has the best one-sentence explanation: Europe wanted to say thank you for beating Bush.

Maureen Dowd is funny in a mock comiseration session between Clinton and Bush.
Fr. Frank's wrangling with the propaganda war on Afghanistan positively reeks of Vietnam

Whiffs of Doom

In France, the only story about the U.S. right now is its fragility.  There's generally incredulous coverage of the health care debates, with marvelling at Obama's inability to either defend or get support for a "public option" variant on the universal public coverage that Europe takes for granted.

There's the relentless transformation of Afghanistan into Vietnam, the pouring of resources down a rathole that will do nothing but create more enemies, suffering, and poverty. There will be one difference from Vietnam. This time the poverty will also be America's.

Then there's the pitiful dollar.  As I've noted before, the world hates the dollar. Currency traders are as contemptuous of US economic conditions and policy as the Taliban are of our Afghani statebuilding, and at the first sign of recovery this spring they began to sell the dollar.  Some of the reason is that rock-bottom interest rates encourage the carry-trade (borrowing a low-interest currency to buy assets in a higher-interest currency), and some is just sheer fear of the US's infinite deficit funding.  I would add that the real problem is not deficits as such but deficits with no "real economy" revival or reindustrialization anywhere in sight. Hence daily stories like the Financial Times - "Asia steps in to support dollar."  And hence the daily fretting of my Capitalist Pals - "Is the United States on Sale?"

The issue is the absence of bottom-up vitality in the U.S. The cliche summary is that Wall Street thrives while Main Street dies. That's pretty close to the truth, as my university blog is documenting with sickening ease. 

I thought about this on a trip to Florence, Italy has weekend.  The L.A. boy in me always remembers the dismal intersection of Normandie and Florence, ground zero for the 1992 Rodney King revolt, an image of the U.S. borrowing with names a cultural capacity it lacks in fact.  Florence Italy was an unruly republic that in the 1200s started to build a palace for its elected officials. The officials lived there for 2 months day and night while they did the job of governing. Afte 2 months they no longer had the job, and were replaced by other citizens.

The republic was replaced by the rule of great families, the Medicis being the most important of these. By the mid-1500s, Cosmo I had anointed himself grand duke of Tuscany over all, and moved his court into the formerly-republican palace.  The English-language tours don't even mention this fact, as though  the distinction between republic and art-loving tyranny would be lost on us.

Florence's wealth had been established through the combination of mass creativity and an early Medici's financial brilliance - usurious lending to various royal families and creative financing that supported trade.  In other words, its wealth rested in large part on the massive upgrading of craft expertise in the arts and the trades - the invention of perspective is the most famous, but there were countless other improvements devised and developed by thousands of unsung heroes of technico-artistic transformation.  This is where the Duomo comes from, as well as everything else - not from the Medici sponsorship as such, though that was crucial, but from consistent craft innovation widely distributed through the general population of Florence and beyond. 

Cosmo had a couple of tiny studies where he supposedly kept in touch with higher things, including his own thoughts.  I was struck by one painting and looked it up later.  This is a version of Alexandre the Great meeting the philosopher Diogenes, who supposedly lived in a tub.

The solider-king approaches the philosopher and asks, "is there anything that I can do for you?"  Diogenes supposedly replies, "yes.  You can move. You're blocking the sun."


Florence was flooded with competing philosopher-kings and yet the spirit of the place is the tacit immunity of the artists and artisans and philosophers to royal power.  The solider-kings tore up one beautiful city or another on a regular basis.  The artists and artisans put them back together, better than before.

In the US, the whiff of doom comes from the absence of this artistic-artisinal counterpower in political practice, and also in political theory.  It's a series of powers that lie in wait everywhere, but that in general don't recognize themselves as counterpowers at all. 

Then there are my artist friends Cora, Erik, and Ines, who do.

Corporate Suicides in France

About 24 employees of France Télécom have killed themselves in the past 18 months, and most of them have been tied directly to the workplace environment, and particularly insecurity and stress. The story has been well-covered in France, and the NYT has a piece in English on what has become a huge story about the effects of workplace unhappiness that underlies the bollocks about "lifetime employment" and how good everybody with a job really has it.

Productivity gains are often attributed to technology, but the are more likely to come from overwork and other conditions that cause stress.  The U.S. professional workforce has more or less abandoned the 40 hour week - and they don't get paid for extra hours.  The toll on quality of life is basically ignored, because in the post-Cold War period quality of life has taken a back seat to sheer production, growth, and wealth as the measures of all things, drowning out peoples' voices and actual experiences that should be making the rules and not the other way around.

Inequality Takes Another Bow

forever on the rise, now fueled by the recession near you, and with predictable effects on the middle: 

Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.

Future of Housing?

At Calitics, Robet Cruickshank has a nice piece on boomer housing fortunes and looming failures - the housing boom as a short-cut to wealth that has helped wreck California and that won't save their retirement either.  It's more  relearning of the old lessons we stuipidly forgot, and maybe too late . . .

Here's his summary of the dumbness:

After having spent 30 years steadfastly refusing to pay higher taxes to help provide to younger generations the affordable education, health care, and other benefits [boomers] themselves enjoyed when they were younger, they have now created a situation where they'll either have to live in their paid-off houses without the ability to provide for their own needs, or will have to sell for cash at fire sale prices in a marketplace without enough buyers.

thanks to Michael M for the link

Why Must We Relearn the Obvious?

Fr. Frank's piece today on Obama's Afghanistan-Vietnam made me sad.  It's a typically learned and perceptive reflection on the historical parallels for Obama's increasingly obvious quagmire in foreign policy.  By why does he have to work so hard to lay out what any 8-year old outside the beltway can see? The US in Afghanistan is a way to kill innocent people, piss off absolutely everyone, block economic recovery, throw away whatever money the public has left, destroy his own presidency, and revert the Dims to an imitation of Republican hawkishness that will lose in 2012. 

I felt compelled to write a whole book about failing cultural capacity in the US - the reduced ability to learn quickly, retain what we learn, and apply knowledge when it is actually relevant.  Afghanistan.  Just say the word.  How stupid can we really be?  Where's the bottom of our stupidity?

"White House Near Chosing U.S. Location to Hold Gitmo Detainees" Am I really reading this headline today, and not three years ago when Cheney was Prez and we were winning the war for hearts and minds in Iraq?

I heard multiple interviews this week in English and French from leaders trumpeting the G20 reforms.  But the best analyses were first, from Lori Wallach of Global Trade Watch, who pointed out the contradictions between reigning in finance and letting do whatever the hell it wants, i.e. more of what we have; and then a citation in a  John Authers column in the Financial Times, this of one David Bowers of Absolute Strategy Research in London, describing the equity markets right now:

It’s the last game of pass the parcel. When the tech bubble burst, balance sheet problems were passed to the household sector [through mortgages]. This time they are being passed to the public sector [through governments’ assumption of banks’ debts]. There’s nobody left to pass it to in the future.

That's where we are now, with no plan from the top, except for pointless military interventions and additional threats, which utterly undermine Obama One's promises of an era of rebuilding. 

We are going to have to start that work by ourselves.

Reforms that Weren't, Reforms to Come

President Obama's speech about reforms in the financial sector was disappointing, to put it mildly.  There were no plans for implementation and no ongoing developments that might actually change the system that blew things up. The consumer agency has nothing to do with stopping problems with overleveraging, opacity, internal fragility, and the unbelievable social costs of the extreme profits involved in financial speculation. Obama appears to be assuming a trickle-down recovery, although evidence at the state level is very much to the contrary. See California's tax revenue stream, for example:

I assume folks who track spreads in lending rates, loan volume and the like could clarify the "two economies" divergence that is crushing a lot of regular folks. You'd think Obama would at least have figured out that the backlash against his health care reforms are fueled by very reasonable economic fear and panic enabled by his non-existent financial reforms.

There's more hope in the report of the Stiglitz commission to the French government on moving from narrowly economic to broader measures of social progress.   See also the interesting papers on the commission's website.

It would be nice to be able to say at some point in my lifetime that the US was back on the front lines of economic thinking. That time still looks a long way off.

Dumbest Health Care in the World

Thank you Matt Taibbi for this opener:

Let's start with the obvious: America has not only the worst but the dumbest health care system in the developed world. It's become a black leprosy eating away at the American experiment — a bureaucracy so insipid and mean and illogical that even our darkest criminal minds wouldn't be equal to dreaming it up on purpose.

 Keep reading.  Taibbi combines a certain gonzo directness with lots of lucid detail on political processes that people really need to know in order to understand what is happening in their government.

We are still so screwed

Thus spaketh the Congressional Budget Office's projections, in which ballooning deficits don't buy us lower unemployment.   When are policymakers going to get really upset about this and actually do some New Deal public works and general rebuilding of the kind our decrepit public infrastrucure actually needs?

Republicans have absolutely nothing to offer on the economy, health care, education, you name it, as Arnold proves every day in California.  Their operatives are making Americans insane. The president of the US wants to give a speech to children about how school is important.  In the Insane Country, saying school is good becomes controversial. Hundreds or thousands of people spend their working day considering what to do about this.

In Florida's Indian River County, the superintendent met with local officials up to the 11th hour to determine how to treat the broadcast. According to the Press Journal, school officials last week decided that the speech had to be taped and reviewed before showing students, meaning it would not be shown live.

And these people are allowed to run schools for children?  They are completely dumb.

Obama rose to the occasion with this crescendo:  "I expect great things from each of you," he said. "So don't let us down -- don't let your family or your country or yourself down. Make us all proud. I know you can do it."

"we" can. they can't.

Krugman Softpedals the Woes of Economics

Paul Krugman has a lot of good moments in his big think piece on the many failures of the field of economics.  He sums up his thesis early on:

Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.

The blindness of a whole field was possible because of a wholesale "retreat from Keynesianism and a return to neoclassicism."  

There's some handy simplified intellectual history here, but the best feature of the piece is Krugman's linking of even those liberal economists who rejected hard core neoclassicism (and its key mathematical axiom, the efficient market hypothesis) to a debilitating consensus.

But the self-described New Keynesian economists weren’t immune to the charms of rational individuals and perfect markets. They tried to keep their deviations from neoclassical orthodoxy as limited as possible. This meant that there was no room in the prevailing models for such things as bubbles and banking-system collapse. The fact that such things continued to happen in the real world — there was a terrible financial and macroeconomic crisis in much of Asia in 1997-8 and a depression-level slump in Argentina in 2002 — wasn’t reflected in the mainstream of New Keynesian thinking.

The lesson here is that moderation is blindness.  Moderation enforces the intellectual limits of the consensus.  In this case, "the New Keynesians, unlike the original Keynesians, didn’t think fiscal policy — changes in government spending or taxes — was needed to fight recessions. They believed that monetary policy, administered by the technocrats at the Fed, could provide whatever remedies the economy needed."

Then there's the not so good. The first weakness is the total lack of novelty in the critique of economics as delusionally neoclassical.  People outside economics have been saying this for years or decades.  They are often called sociologists or anthropologists, and have always thought that the models had lost touch with institutions, people, and also of course power and coercion, which played huge roles in setting up actual economies.  In addition to the recent book by Curious Capitalist Justin Fox, there is also Doug Henwood, longtime editor of Left Business Observer, whose classic 1996 book Wall Street offered a much more thorough intellectual history and critique than Krugman even hints at here. 

More importantly, Krugman blames "beauty" for leading economics astray.  He offers the philistine tag line, "As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth."  In reality, economists mistook money for truth.   Models that made important people lots of money had to be true.  Krugman only superficially considers the possibility that financial incentives corrupted the heart and soul of the economics profession.  Some of this corruption was personal and some was collective - it's hard to argue with what seems to be success.  But economists are like all scholars in being paid to look past the surface of things to the real forces at work. They have flopped big time, and they

Finally, Krugman's cure is little more than a weaker form of the disease:

So here’s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit — and this will be very hard for the people who giggled and whispered over Keynes — that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they’ll have to do their best to incorporate the realities of finance into macroeconomics.

These are three ways of saying that economists have to admit that markets aren't perfect. This may well get them into a freshman sociology or culture or history course, but it won't get them to the point of explaining how our economies actually work or how to keep them from being giant factories of social inequality and environmental destruction.  Moderation is blindness, even when it comes from Krugman.