Wednesday, January 28, 2009

Paul Krugman is Smarter than You


On January the 25th, 2009, Mr. Paul Krugman graced the world with a brilliant op-ed piece published (appropriately) in The New York Times. This piece is a "refutation" of the critics of Obama's massive government spending plan. I'd call it a "New Deal" plan but of course there is nothing new about it - logarithmic spending increase is the standard practice in Washington. When Obama speaks of "change," the size of government is certainly not up for consideration.

Paul Krugman is a very famous columnist, and recently he won the "Nobel Memorial Prize in Economic Sciences," an award just slightly more worthless than the US dollar would be if he were to be President. Fortunately for him, Obama will enact just about every policy Krugman lusts after, so maybe his next Nobel prize can cost-effectively be written on an actual dollar bill.

This article is called "Bad Faith Economics," which I think is a completely accurate title. The essence of the article is Krugman introducing arguments made by "conservatives," who are "reaching for any stick they can find with which to beat proposals for increased government spending." Making their job easier, however, Krugman provides a sufficiently large stick with which to beat himself. Whether conservatives choose to exploit the opportunity or not, I figure I'll take the first swing at the pinata.

So, let's analyze his article bit by bit. First paragraph:

"Some of these arguments are obvious cheap shots. John Boehner, the House minority leader, has already made headlines with one such shot: looking at an $825 billion plan to rebuild infrastructure, sustain essential services and more, he derided a minor provision that would expand Medicaid family-planning services — and called it a plan to “spend hundreds of millions of dollars on contraceptives.”

I'm not going to comment on Boehner's criticism, (the money shouldn't be spent period, regardless of whether it's buying condoms or a 5-month bankruptcy referral for GM) but understand how Krugman sets up his first point. First of all, he mentions that Obama's spending program is going to "rebuild infrastructure." Well, might one ask why, if government is so effective at everything, is the infrastructure in need of repair? Why do our roads need rebuilding? Why do bridges need new steel replacement? Why does the powergrid suffer? Interesting that the organization which has allowed infrastructure to decay is now being granted almost a trillion dollars to continue managing it. Second, Krugman speculates that the money will "sustain essential services." What services is he talking about? Roads? Electricity? Bridges? Weren't those covered in his previous remark about infrastructure? He must be referring to different services, like subsidization programs, wealth redistribution programs, pet-projects for the politically-connected, and school monopoly rackets. Whatever he's referring to as "essential services," if they were really essential then people would pay for them and no bailout would be needed. Krugman is, of course, referring to extremely expensive programs which, in a liberty-oriented, market-based society, would probably not exist. Whether or not one supports these programs, they are the kinds of non-profitable endeavors which sap wealth out of society. I wonder why Krugman then seeks to spend money on them in a time of "economic crisis." The reason is that Krugman, and most other incompetents in Washington, believe that a group of people can consume their way out of a recession. Perhaps I'm not smart enough to understand how a nation can spend it's way out of debt. But, Krugman won a Nobel prize! Well, so did Milton Friedman a long time ago. One of them is wrong.

Krugman's next paragraph has little substance, except for this great recommendation, "any time you hear someone reciting one of these arguments, write him or her off as a dishonest flack." Does that sound like an intellectually honest, truth-seeking, scientific economist? This sounds similar to what the religious do... whenever someone disagrees with them, they write them off to hell.

Moving along, Krugman has one legitimate point:

"First, there’s the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.
It’s as if an opponent of the school lunch program were to take an estimate of the cost of that program over the next five years, then divide it by the number of lunches provided in just one of those years, and assert that the program was hugely wasteful, because it cost $13 per lunch. (The actual cost of a free school lunch, by the way, is $2.57.)"

Well done, Krugman, you can do math better than the Republican spin-doctor who crafted that misinterpreted statistic. Now you've convinced me that spending $800 billion of other people's money on roads, healthcare, and schools which your beloved monopoly has crippled beyond repair is legitimate and proper. And nice manipulation of children and their lunch money to pretend that you're actually helping people.

Now let's get to the REAL absurdities of the article:

"The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 — and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts."

Why is this absurd? Because Krugman is saying that a $100,000 price tag is actually only $60,000 because the government expects to be able to steal most of that money back again by re-taxing it. Of course, the real cost of the $100,000 is borne by the taxpayer, and when the mystical $40,000 is recuperated, not a penny will be going back into their hands. So, yes Krugman, the real price tag IS $100,000 and even if the price were just $10,000, I'd rather keep my money and hire an employee at my own company. What Krugman, and so many others, just don't get is that what the government gives, it must first take away. Maybe Obama can create thousands of jobs, but the wealth paying for those jobs was removed from somewhere else and the jobs that would've been created naturally will never exist.

Here we go again:

"Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money."

Write me off, Krugman! I understand that putting my money into ANY sort of savings account will bring me better yields than sacrificing it to the jaws of "Social Security." The fact that Krugman openly states that bureaucrats spend peoples' money better than themselves is appalling, but completely telling of why American is in such a mess.

But wait... it gets better:

"Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens."

Okay, this is the portion of Krugman's article that compelled me to write this essay. What Krugman is saying is that, if the government wasn't here to set up airport watchtowers, all the airplanes would crash into each other and we'd all die. Planes would just run into each other because government wouldn't be here to tell them not to!! How unbelievable is this guy!?!? Did he not consider the more likely scenario in which privately run airports would organize their own watchtowers??? Are private individuals so incompetant as to spend a billion dollars on an airport, billions on airplanes, billions on logistics, and then not build a watchtower and traffic control system to ensure those billions don't collide in midair? This guy is a Nobel Prize winner!!!

Feel free to read the remainder of Krugman's article, it attempts to counter a couple more paltry arguments against Obama's massive spending. This may be the best Krugman can muster to defend the government, and to be honest I think it falls short.
Article page