Poor Paul Krugman. An Internet troll stole the economist and New York Times columnist’s identity this week and posted this comment on the Internet after Tuesday’s earthquake in Washington: “People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.”
Krugman didn’t say that, but he has made the same fallacious argument so many times that neither his detractors nor his online fans could tell immediately that it wasn’t him. Days after the 9/11 terror attacks, Krugman actually did write that the attack “could even do some economic good.” More recently, he wrote this of the Japanese nuclear disaster: “And yes, this does mean that the nuclear catastrophe could end up being expansionary, if not for Japan then at least for the world as a whole.”
— to interject here, another Krugman “argument” of late? Hope for a space alien invasion to fix the economy.
Just so you know where the Nobel Prizes are going these days.
But I digress.
These true Krugman quotations express a Keynesian orthodoxy that reigns in the White House today. Such thinking inspired the “Cash for Clunkers” program, which paid citizens to participate in economic sabotage by destroying perfectly good cars. Through President Obama’s stimulus package, this theory drove the government to subsidize products no one wants (“green” energy and high-speed rail) and to solve problems that don’t exist, all in the name of creating make-work jobs that don’t meet any real market demand.
— but wait: Fareed Zakaria took a break from telling us that we need a Twitter contest to rewrite and modernize the Constitution to explain that should the government hire people to dig ditches, then fill the ditches back in, this would be productive work in terms of economic stimulus.
Are you right wing hacks at the Examiner telling me that Zakaria got it wrong? Or is what’s really going on here that you fear his Otherness, and are trying to marginalize his genius by running his arguments through your own outmoded Enlightenment epistemology in order to suggest a horizontal illogicality that was only ever intended to make sense in the vertical logic of his Otherness, which you (not being him or of him / like him) can’t possibly be expected to understand, nor have any claim to criticize?
Racists.
The stimulus has failed. Its millions of expected jobs never materialized. Obama’s promise that “many middle class families will see their incomes go up by about $3,000 because of the Recovery Act” has been forgotten. But sadly, the wrongheaded assumption that government can jump-start economic activity by destroying wealth, or by conjuring up mere busy work for the unemployed, lives on.
French economist Frederic Bastiat is credited with identifying the “broken window fallacy” — the mistaken belief that the destruction of a good asset (a window in his example) stimulates the economy by creating more work for someone. The belief is mistaken because it fails to account for the hidden costs. Yes, the glassmaker gets some business, but the baker who is forced to fix the window could have otherwise invested in his business or put his money to some other use more beneficial to society. To ignore Bastiat’s point and embrace the broken window fallacy is to suggest that wealth can be created without constructive effort — in other words, that you can get something for nothing. So as you set about fixing the damaged masonry and drywall in your house, think of the broken window, and of all the things you’d rather be doing with your time and money. And even if you fell for that other Krugman hoax, don’t fall for this one.
To listen to people like Krugman, we can expect England to go through a huge economic boom in the wake of the rioting. And in fact, if the dead-eyed welfare staters would get serious and burn the whole damn thing to the ground, that’s the best possible scenario for the country — as the rebuilding would galvanize communities and make work for everyone!
To be paid for by, well, you know, wealth. Gotten from somewhere. And handed out by the paternalistic government.
Profit!
Honestly, people. It’s like we’re living in a global Stoppard play — and somewhere, an audience is watching and laughing at the surreal comedy unfolding before them.
If there’s a God, and he has a sense of humor, that audience would consist entirely of space aliens.
Seen and unseen: Flanny apparently committed suicide. Wealth lost. Life incomprehensible.
“To be paid for by, well, you know, wealth. Gotten from somewhere. And handed out by the paternalistic government.”
As Ric Locke used to point out – the Left seem to think wealth just appears. It simply is – and it is up to THEM to make sure it does not end up in vaults of the White Male Rich, but is instead handed out properly.
How wealth is created is as beyond them as quantum physics is from my dog.
If Krugman were pelted with copies of the Broken Window fallacy bound in concrete with rebar spines, it would make more work for paramedics, ambulance drivers, and hospital workers! We have to injure Krugman to save the economy, Bastiat be damned!
Rich people get rich the same way Superman got strong: the rays of our yellow sun.
The “Irene” Renaissance is coming round the bend.
Stay safe Bob Reed and family.
Link.
So I read a couple of comments by Krugman and suddenly I have oily rectal discharge. Could there be a connection?
so what if you tear up someone food stamps how much wealth does that create?
*someone’s* food stamps I mean
I don’t really like to defend Krugman, but when he talks about a liquidity trap being remedied by a catastrophe, he’s not quite making a broken windows fallacy.
I’m dubious about the truth-value of the Keynesian concept of the liquidity trap, but I do recognize that the idea Krugman is proposing is not quite the same as the broken windows fallacy.
(In short: He proposes that Japan (to use his example) was/is stuck in a liquidity trap; people and institutions have money but are too wary to invest it (expecting deflation, for instance), thus it’s not creating economic growth, because it really is “just sitting there”.
Some devastation, in this hypothesis, causes the implacable need to spend some of that money, as well as a lot of demand for rebuilding, which may well remove the expectation that investment is unwise [eg. if all that spending creates infaltionary or monetarily-stable expectation, rather than deflationary], and thus escape the “trap”.
The argument, while I don’t really buy it at a high level, is nevertheless different from the idea that “it’s making wealth simply because it’s spending on something“, which is the broken windows fallacy.)
So Hurricane Irene is actually the God King’s new jobs plan?
I think a better way to handle the liquidity trap, such as it is (because honestly, that money is not stuffed in mattresses), is to deregulate and lower taxes, creating an atmosphere where business and industry isn’t punished or demonized or scapegoated.
That beats space alien attacks or digging ditches to refill them. In my mind.
I think LTC’s dog actually has a better chance of understanding quantum physics than the left does wealth creation.
Jeff (and all the rest of the posters here) need to keep noting that he is “Former Enron adviser Paul Krugman”; that should remind people of how BRILLIANT! (and corrupt) Krugman really is….
To my mind, your mind is right.
What’s a liquidity trap? An unwillingness to spend. Why is that happening? Partially, the answer is government. Large pieces of legislation have been passed that are almost impossible to fully comprehend, yet, to the degree they can be comprehended they contain little encouragement to expand and active warnings against even continuing business in this nation. Further, speech after speech has given wherein the wealthy and businesses are hearing that they’re somehow going to pay their share and balance these absurd budgets.
To the degree that someone would contend that an expansionary fiscal policy could free us from a liquidity trap or fire up those elusive Keynesian animal spirits they’d first have to explain how our current massive deficit spending has been so ineffective for anything but debt creation.
speech after speech has been given
(Probably another dozen mistakes as well but fixing this one gives the appearance that I at least care about my declining mental state.)
Btw, Krugman mentions how hard it is to create inflation in a deflationary environment. He’s right on that, of course. But, look at the numbers. Bernanke has done it. We’re above the generally accepted Fed target.
So, where’s the economic growth? This argues that governmental friction and harm (and global economic problems like Europe) are either to blame or the entire theory has some intrinsic problem.
Or both.
ot some jen the rube wisdumb
Link
Jen Rubin doesn’t understand the meaning of governing, evidently. So much the worse for her.
Jen must not be old enough to remember Reagan’s contempt for DC.
I probably haven’t read her for a half year now outside of links here and by email. I might stop reading even that much.
Life’s too short and I haven’t read enough serious material from serious thinkers to be wasting my time so frivolously.
Pethokoukis asks whether Irene mayn’t be the 50,000 pound straw that breaks the economic growth-camel’s back, depending on where it hits of course. Sure looks plausible to me.
i read jen the rube to see what the rinosaurs(h/t aceoshq) are “thinking”
Hey, that’s refreshing, sdferr. Someone contending that it’s actually a net negative when assets are destroyed and business disrupted. I don’t think that’s a contrarian view just yet but the other side sure is loud with its strange proclamations.
Wasn’t busting your balls there, nr. I do much of the same. I’m just rethinking that. Everyday I read someone referencing something that I should finally get around to reading and thinking about but it’s just not going to get done if I continue to retain my vulgar curiosity about Snooki, chicks Tiger Woods fucked or Jen Rubin’s ramblings. When I was younger I buckled down from time to time and got my shit right in the name of learning but I’ve somewhat lost that.
Hey, I work long weeks, I’ve earned the right to be a highly functional retard. This is a thing I say to myself with every bad choice I make.
Man, I suck.
So Irene will be added to Obama’s excuse list and being real will help him get re-elected?
Yep geoffb, it’ll be Obama’s slippery elm tablet, but only useful to the extent he knows how to throw a spitter, which, ain’t quite as easy as watermelon seed shooters make it out to be.
“watermelon seed shooters”
racist 11!!!11!
If the timing is tweaked just right he can throw the Irene excuse out in a speech in NYC at Ground Zero on 9/11/11 and compare Irene to that day of “man caused disasters.”
What’s the emoticon for “looking askance”? You might be 1/4 evil, Geoff. On your father’s side or something. That scenario is strangely believable.
Completely off topic, this.
“timing is tweaked just right he can throw the Irene excuse out in a speech in NYC at Ground Zero on 9/11/11”
the people who give 2 shats about 9/11 ain’t buying no baracky
Distantly related to off-topicity. Less so.
The man caused disaster that is any and all Democrat governance moons us again.