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21 Feb, 4 tweets, 1 min read
Cancun Man declares that the entire premise of the deregulated Texas energy market was a gigantic mistake 1/
The whole idea was that utilities would take precautions so that they could profit from price spikes during shortages 2/
It was a bad theory on multiple grounds, which I'll write about more. But if even the least likable man in America says that we can't let prices spike, the whole thing becomes complete nonsense 3/
Here's the architect of the plan explaining the theory that Ted Cruz — Ted Cruz! — just declared unworkable 4/ yahoo.com/now/architect-…

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Paul Krugman Profile picture
20 Feb
It's too bad that the Republicans who run Texas are now committed to the canard that renewable energy somehow caused the blackout; once you've gone with a Big Lie, there's no going back. Because they really should be reflecting on the failure of a theory 1/
The idea behind Texas energy policy was that a deregulated market didn't require any oversight to protect the system from crisis, because profit-maximizing utilities would build in robust excess capacity to take advantage of possible price spikes 2/
But they didn't, even though the price spike has been incredible 3/ Image
Read 6 tweets
Paul Krugman Profile picture
19 Feb
Let me do a brief thread that's both wonky and hand-waving about the numbers, and why I don't believe that we're facing drastic overheating despite a big relief package 1/
First, where are we now (or rather where were we at the end of 2020)? We were about 4.5% below where we would have been if normal growth had continued from 2019 Q4. But I'm in the camp that says that even in late 2019 we were somewhat below capacity 2/
Goldman puts the "output gap" (slightly problematic concept in a pandemic, but OK for this purpose) at ~6% in late 2020. They also predict 7% growth over the course of this year, with the Biden package. 3/
Read 7 tweets
Paul Krugman Profile picture
14 Feb
The next time someone tells you that the parties are the same, or worse, that the GOP represents the working class, compare the distributional impact of Trump's main economic policy and Biden's (so far) 1/
Here's the Tax Policy Center estimate for the Trump tax cut (in 2018) 2/ taxpolicycenter.org/publications/d…
And here's TPC on the American Rescue Plan 2/ taxpolicycenter.org/taxvox/tpc-fin…
Read 4 tweets
Paul Krugman Profile picture
10 Feb
Exactly right. And important to say given the controversy. 1/
Also important to realize that the data suggest that "fuell employment" as conventionally estimated ... isn't 2/
Quick and dirty comparison of CBO "output gaps" with inflation. Suggests that economy can run maybe 1.5% above "full employment" with only 2% inflation, and ... 3/
Read 4 tweets
Paul Krugman Profile picture
7 Feb
My long form defense of going big on pandemic rescue. IT'S NOT ABOUT STIMULUS. It's like fighting a war (on pandemic fallout.) And you spend what you need to win a war, not just enough to close the output gap 1/ nytimes.com/2021/02/07/opi…
Fear of inflation are greatly exaggerated: the economy can probably run hotter than CBO thinks, the multipliers on a lot of the spending probably aren't that high, and the Fed is well able to contain inflation if it becomes a problem 2/
And the idea that we need to save fiscal ammunition for future programs is completely backwards. Remember 2009! The constraint is political, not financial; what we need is a program that delivers tangible benefits to voters, showing them that govt can do good. 3/
Read 4 tweets
Paul Krugman Profile picture
6 Feb
So is the Biden plan too big? We need to be clear about what it's for. IT'S NOT STIMULUS. This isn't at all like the ARRA, which was all about boosting demand; this is disaster relief. Or maybe it will help if we think of it as being like fighting a war against Covid fallout 1/
When you're budgeting for a war, you don't decide how much to spend by estimating what it would take to fill the output gap; you estimate what it would take to win the war. 2/
Is everything in the Biden plan well-targeted on our needs? No. But the controversial part, checks to most of the population, is just a fraction of the plan 3/
Read 8 tweets

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