Recently, Nobel Prize winning economist and New York Times columnist, appeared on The Colbert Show for an interview. Listening to a comedian reduce Krugman to a blubbering fool was matched only by his hypocritical arguments when compared against many of his columns- recent and past. First, just because you win the Nobel Prize does not make you an authoratative voice on a subject, especially in an inexact social science like economics. Remember that Al Gore won a Nobel Prize for spreading fallacies born of the fact that he lost an election in 2000. Eight years after his defeat, Barack Obama won a Nobel Prize for... what exactly did he do? So, I look with skepticism when Krugman is introduced "Nobel Prize winning economist." In short, who cares?
Take, for example, his take on spending. According to Krugman and his ilk who label themselves Keynesians (read: morons), the Obama stimulus was not large enough. When pressed on the issue, he says that spending on the order of over $1.5 trillion is what is needed to spur the economy. That, he claims, is the reason unemployment has stayed at a nagging 9.5% or higher. What Krugman conveniently forgets is the reality of the original stimulus. No one denies the fact that our transportation infrastructure needs upgrades and, in some sense, would justify Federal spending in that area. But what percentage of the $800 billion stimulus was dedicated to this? Krugman reminds us that it was a massive public works project under FDR that helped lift this country out of the Depression. As Colbert sarcastically pointed out, that "massive public works project" was called World War II. Look at the hypocrisy of Obama's logic which Krugman wholeheartedly endorses. If there is such a great need for infrastructure upgrades (and there arguably is) and you allocate x amount of dollars towards those ends, wouldn't it make sense to start as soon as possible to get as much as possible done with those dollars? First, why would you wait a year when you have these alleged "shovel ready" projects in the works? Krugman ignores political reality. While Democrats and Obama run around the country touting these projects with big signs behind them, why weren't these projects started a year ago? Perhaps the timing is to demonstrate something in an election year? Second, if there were/are so many projects, why not get as much done at the least cost? Why would Obama, by Executive Order, require union wages for workers on stimulus-funded projects thus effectively limiting or eliminating cheaper competition for those JOBS in the process? Krugman conveniently ignores these realities.
When it comes to extending unemployment benefits, Krugman trots out the same old lies that Democrats espouse- that it is the uncaring, mean-spirited Republicans who are holding up the process. Several Republican proposals for extending unemployment benefits have been put forth and they have all been dismissed. Because the "budget" would take a $34 billion hit, all Republicans are asking is that those benefits be paid for. The response has been that this is emergency spending and thus by-passes the "pay-go" rules. There are ways to pay for both unemployment benefits and the infrastructure improvements and that is by diverting already allocated stimulus funds from dubious programs with minimal results to the allegedly more emergency situations. That's right; Krugman wants us to double down on stimulus spending. That is stimulus spending that thus far has added exactly practically nothing to job creation unless you are a public worker union member or census taker.
Ah! But Krugman, when pressed by Colbert and in his articles in the paper, has a plan. And we don't have to go to China, India, or Saudi Arabia for "loans" or just print money for this. According to Krugman, corporations are sitting on massive amounts of capital. He cites the increase in the stock market as evidence that corporate profits are up. So where is the money? It is being parked in money market funds instead of going to business expansion and job creation. Hence, Krugman's solution is to "borrow" that money from these money market funds to create jobs since the corporations will not do their "socially responsible" duty. Put another way, let's penalize corporations for being profitable. Again, Krugman ignores the fact that businesses work best in a zone of certainty. Given the proposals and 2,500-page pieces of legislation that our elected leaders don't even read before passing, it creates anything but certainty. Why would a business consider hiring anyone until the nuances and details of Obamacare, for example, play out in the real world? Regarding the pending financial regulatory reform, even Christopher Dodd, one of the authors of the bill, recently said he was unsure how several provisions would play out. In this uncertain atmosphere, why would businesses consider hiring anyone or investing in their businesses or even financing new projects? So why even consider these things according to Krugman when ignorance and hypocrisy can suffice? The government can just "borrow" money from these evil corporations.
When Colbert noted that at the recent G-20 summit in Toronto even the European welfare states rebuked him on additional spending, Krugman responded that the politicians, not the bankers, of Europe rebuked Obama. Therefore, when it is to Krugman's liking, he becomes a friend of the banking industry. Compare this with his newspaper articles where he advocates not financial regulatory reform, but retaliation and punishment against the banking industry with a "so what" attitude if banks fail. As long as the customer with deposits under $250,000 are not affected, everyone else can go to hell.
Keynesian Nobel Prize-winning economists and their allies in the Democratic Party do not have a monopoly on "feeling" for the average Joe looking for a job and cannot find one. Others understand the problem also. Krugman conveniently glosses over and ignores two of the greatest post-War economic booms in history and the reason for them. John Kennedy's across-the-board tax cuts as well as Reagan's tax cuts ushered in some of the most impressive periods of GDP growth in American fiscal history. The Reagan tax cut alone created GDP growth of 9% yearly, well above the historical averages. So did the Kennedy tax cuts. Instead, he advances theories where he wins either way. If stimulus funding failed to create its desired effects, then the spending wasn't enough. If it did create its intended effects, then "I told you so" they'll say.
Krugman, who considers the recent regulatory reforms of the financial industry a good start, conveniently fails to mention that in over 2,500 pages, you will not find a single thing about Fannie Mae or Freddie Mac. These two entities, currently in federal conservatorship, are perhaps the two biggest culprits in the housing/financial meltdown of 2007-2008. While he and Obama can point to Bush as the reason for this meltdown, they both conveniently fail to mention that in 2004 it was the Bush Treasury Department that sought major reform of these entities. Publications like even the New York Times spoke in glowing terms of the reforms sought. Unfortunately, it was the likes of Chuck Schumer, Chris Dodd, and Barney Frank who stood in the way of these reforms. Why? Because they would have reformed a convenient vehicle of social engineering, especially as concerned subprime borrowers and minorities. By extension, given his silence on the issue, one can conclude that Krugman would have disapproved of the reforms sought by Bush.
The Nobel Prize committee can award prizes to losing U.S. presidential candidates who try to reinvent themselves under an environmental banner based upon falsehoods and untested mathematical models. They can award prizes to Keynesian economists who argue on the one hand that only the government possesses the resources to solve financial problems while stating that corporations are doing quite well. They can award prizes to actual Presidents of the U.S. who are leading the country unknowingly (I hope) down the path to socialism. They should all end the hypocrisy, but they cannot. To do so would to would be to embrace an economic and political philosophy- socialism- so incredibly discredited in the real world.
Fortunately, considering recent public opinion polls, the beliefs of Krugman and his minions- Obama and Democrats- are falling on an increasing number of deaf ears. We can start the process of nailing a spike in the heart of Krugman's policies in 2010 in the midterm elections. We can finish the job in 2012 by putting an exclamation mark on America's repudiation on our march towards socialism. We can start the job of using commonsense in the real world, not the socialist utopia Krugman, Obama, Pelosi, Frank, Reid, Dodd and others envision for America.