Conffederate
Confederate

July 05, 2010

Paul Krugman...

... is an economic genius?


Today, American workers face the worst job market since the Great Depression, with five job seekers for every job opening, with the average spell of unemployment now at 35 weeks. Yet the Senate went home for the holiday weekend without extending benefits. How was that possible?

The answer is that weíre facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe itís possible to clear up some of the confusion.

By the heartless, I mean Republicans who have made the cynical calculation that blocking anything President Obama tries to do ó including, or perhaps especially, anything that might alleviate the nationís economic pain ó improves their chances in the midterm elections. Donít pretend to be shocked: you know theyíre out there, and make up a large share of the G.O.P. caucus.

In Krugman's world, money does grow on trees. Otherwise, how could he responsibly advocate the government going ever deeper in debt, spending money it does not have at a time when experts are predicting that the policies of Congress and the President are plunging us from recession into depression?

I'm not an economist myself, and so I'm sure Mr. Krugman could come up with dazzling explanations full of expensive language to explain his position, but I'll simply counter him by pointing out some inescapable truths:

  • growing the size of government at the expense of the private sector is bad for the economy
  • increasing government control over specific industries makes it more difficult for new companies to penetrate that market sector, protects large incumbent companies in that sector, and stifles innovation
  • you cannot spend your way out of debt
  • poor people, dumb people, and lazy people don't create jobs
  • if government gets out of the way, wealth can be made from thin air

Let's look at those simply claims in a little more detail.

Growing the size of government at the expense of the private sector is bad for the economy.
Government does not create wealth. Government does not pay taxes. It is easy for even the simple layman to understand that when government job creation approaches private sector job creation, bells and whistles should go off in warning. You can never have parity between government and private sector jobs, and once the percentage of government jobs grows too high, there are not enough private sector dollars generating taxes to support the government.

At the present time, only government hiring is growing, along with government salaries in some areas. Why should we trust Democrats who want to grow the size of the government, when that position is entirely self serving?

Increasing government control over specific industries makes it more difficult for new companies to penetrate that market sector, protects large incumbent companies in that sector, and stifles innovation.
Recent regulations proposed to "save" or "regulate" the financial sector have no intention of protecting the people from the avarice of bankers. Quite to the contrary, Democrats are creating "reform" that rewards their campaign donors at the banks by making it harder for upstart banks to establish themselves or grow. With decreased competition, these existing large banks can grow ever more predatory, and borrowers will payer higher fees and penalties for declining levels of service.

You cannot spend your way out of debt.
Seems simple right? Many of us learned this the hard way in college, financing our nightlife on promises of easy credit. By the time we graduated, we have mountains of credit card debit that had nothing to do with the cost of tuition and textbooks. Faced with hard choices, we quit spending money and paid off out debts.

So why is the response of Democrats, including Mr. Krugman, to keep spending money we don't have, to sustain a lifestyle we can't afford?

Poor people, dumb people, and lazy people don't create jobs.
I've never been employed by someone who made minimum wage, and no company survives without intelligent and hard-working leadership. Democrats love to build up a strawman of the evils of the rich, but forget to address an obvious truth: the rich are rich because they seize opportunities to make money and work very hard to do the work others will not or cannot do. Their skills are in short supply, and so they come at a premium. On the other hand, the poor, unintelligent and lazy are guilty of perpetuating behaviors that ensure they remain poor. They have poor saving, investing and spending habits, tend to be impulsive, and think little about the long term impact of today's excess spending.

Sound like any political party you know?

If government gets out of the way, wealth can be made from thin air.
Bill Whittle of PJTV has made this point so eloquently on his show Afterburner many times. Ideas initiative and hard work has made men like Warren Buffett and Jay Z wealthy. They used their talents to make wealth from nothing.

But back to the point of Krugman's accusation that "heartless, the clueless and the confused" Republicans are acting irresponsibly. Republicans have simply asked for Democrats to stop extending unemployment benefits without paying for it, and even went so far as to find a way of paying for the extensions, using unspent stimulus money.

Krugman's friends in the Democratic majority refuse to pay for the benefit extensions with the unspent stimulus money they have in pocket. Instead, they attempt to add to our already out of control debt.

Tell us again Mr. Krugman... who is clueless and confused?

Posted by Confederate Yankee at July 5, 2010 03:55 PM
Comments

In Krugman's world, money does grow on trees.

Well, it is made of paper, y'know...

Krugman is like a lot of liberals: he thinks "money" and "wealth" are synonyms. They aren't. He also thinks that wealth-as-measured-by-money is a natural right and should be distributed as evenly as life and liberty.

He is, of course, mistaken. Wealth is not evenly distributed any more than talent is.

Posted by: wolfwalker at July 5, 2010 06:34 PM

I am an economist with a Ph.D. from a top 20 institution and all that. Given this post, I feel safe saying that you have a better grasp of real world economics than Paul Krugman.

Posted by: Swampleg at July 5, 2010 08:21 PM

I didn't know it was possible, but it seems that Mr. Krugman is an Ex-economist.

Posted by: RicardoVerde at July 5, 2010 09:46 PM

I think you have it wrong. Paul Krugman is simply a partisan Democrat. He will say whatever helps the Democrats and/or hurts the Republicans. He doesn't really believe it.

He sees this as a great opportunity, because the media will always refer to him as a Nobel prize winning economist, and so any lie he tells will carry some weight.

He's not clueless and confused at all.

Posted by: John at July 5, 2010 11:25 PM

Indeed, Mr. Krugman knows exactly what he is advocating. That it has nothing whatever to do with rational economic policies that will reduce debt and increase employment, and stimulate economic growth is secondary, if something that is at all within the universe of Mr. Krugman's concerns.

Surely Mr. Krugman knows that only citizens who are productively employed can pay the taxes that pay unemployment benefits for those who are not employed. Surely he knows--at least intellectually--that government does not create wealth and that any jobs it conjures into being must be paid for by the same, ever dwindling pool of productive, tax paying citizens. Surely he realizes that there are not enough rich people in the world to pay all the taxes necessary to prop up a European style welfare state in the United States and that if that was ever tried in earnest, the rich would simply move someplace else. Surely he knows that the United States is essentially broke. So how then can Mr. Krugman advocate for that which manifestly makes no practical or economic sense?

Easy. He's a doctrinaire socialist espousing socialist doctrine. He, like our President, wishes to destroy the economic system of America the better to create the conditions where it will be easy to impose a European social welfare state with most citizens utterly dependent on governmental largess, thus, a huge pool of Democrat voters and a permanent Democrat voting majority, hence a worker's paradise with the enlightened elite--such as himself--handing out the ever dwindling crumbs shaken from the pockets of an ever dwindling number of working, productive Americans.

He may--and I emphasize may--be thwarted however, because Americans are not Frenchmen or Swedes. Not only are we far more independent and culturally different, we are, to the horror of liberals, statists and communists everywhere, armed and capable and willing to use those arms if necessary. In addition, Europeans understand, for the first time in decades (witness the recent G20 meeting where they told Obama where to go when he begged them to continue spending money they don't have) that the world cannot afford America to be like them, and in fact, they can't afford to be like them anymore. And yet, Mr Krugman, Obama and the other true believers want us to plunge madly down the socialist commode.

We're beginning to wake up. Perhaps, after November, we can limit the damage to some degree until we can throw out those who hate America. Bizarre, is it not, that we're talking about our President and those who follow him?

Posted by: mikemcdaniel at July 5, 2010 11:55 PM

The dems didn't force it like the budget or other quasi-illegal legislation for one simple reason...
letting it lapse kept the Unemployed at under 10%if they had extended it then the rate would be somewhere around 11%. They really don't want that, so they claim Rep blocks, and go home with a "lowered" rate of 9.5% down from 9.6% even though they lost more jobs last month.....see Dem math is fun!

Posted by: JP at July 6, 2010 01:21 AM

"By the heartless, I mean Republicans who have made the cynical calculation that blocking anything President Obama tries to do ó including, or perhaps especially, anything that might alleviate the nationís economic pain"

Since Obama hasn't actually tried to do anything of the sort, what exactly is Mr. Krugman basing this on?

Posted by: alanstorm at July 6, 2010 01:15 PM