Paul Krugman Embraces Fantasy
At City Journal, Guy Sorman reviews Krugman’s new book, End This Depression Now! (If that’s a personal cry for help, I hear they’re doing wonderful things these days with Prozac and polo mallets, as another denizen of Manhattan would say) and concludes “The Nobel-winning economist embraces fantasy:”
To be fair, Krugman acknowledges that he has become a “pundit,” an implicit admission that his book is informed by his liberal views as much as by his economic knowledge. End This Depression Now! is essentially a pamphlet pretending to offer scientific answers to the U.S. economic slump. Its argument is easy to summarize: we have the knowledge and tools to revive the economy and provide jobs to millions of unemployed Americans. Consequently, those in positions of power who refuse to put Krugman’s advice into practice, themselves motivated by ideology, are the enemies of the unemployed. They want Americans to suffer for their past sins of excessive borrowing and spending. As if to emphasize that he sees the economic debate as a morality play, Krugman dedicates his book to the unemployed.
“Ending the depression should be incredibly easy,” Krugman asserts. The government must simply spend more, because the American consumer is spending less. Borrowing from Keynes, Krugman argues that the crisis, having been provoked by a decline in private demand, can only be solved by an increase in public demand. This is “a moral imperative” (the book constantly zigzags between ethics and economics). Public spending would be not only efficient, Krugman contends, but ethical.
This inflationary solution, which Krugman calls “a feel-good experience,” has been tried before. It worked, he claims, during World War II, when arms-building programs lifted the U.S. economy out of the Great Depression. Half-jokingly, Krugman says that the threat of an alien invasion should suffice to motivate more government spending. But he knows well—or should—that President Obama has already tried to rekindle growth this way. He admits that the results were not impressive, but only because public spending didn’t go far enough and wasn’t sustained.
Krugman embracing fantasy? I just can’t see it myself:
Do you mean to tell me he’s been SERIOUS all this time?
C’mon! I wasn’t born yesterday! Isn’t an economist actually supposed to know kinda sorta how the economy works? Thomas Sowell certainly does. From his weekly tirades on NPR, I’ve always assumed Krugman was sorta, kinda the new Irwin Corey. No senscient being could possibly believe the idiocy he comes up with!
I hear he’s a Nobel Prize winner. I guess he fits right in with Yessir Yourafart, Al Gore and Obumbles.
What jokers those guys in Scandinavia are! It must be the wintertime boredom.
– tragedy to Roman farce.
(1) The US was in depression before World War II.
(2) The US fought World War II, an expensive and bloody war. It must have been a happy time, as production of tanks, fighter planes, and transport ships for war materiel went to unimagined highs, boosting GDP figures. We were busy, busy. What great times. (Don’t think about the food, clothing, and gasoline rationing, eggless recipes, and faux-appple pies during the war years.)
The government gave everyone a job at meager wages. They were happy peasants defending the kingdom, following the government plans of their educated superiors.
(3) The populace rejected big government plans after the war. I wonder why? Direct experience with government planning in he Army must have had some effect.
(4) The government reluctantly cut spending and relaxed bureaucratic control. 12 million men, trained to kill, returned to find work. This focused the political mind wonderfully on the possiblity that they might blame the government if the government screwed things up some more. Keynesians predicted unemployment disaster as those men returned to an economy tooled up to produce tanks, not washing machines.
(5) The economy boomed as a free market in planning and work proceeded to employ everyone at 5% unemployment.
Today’s Keynesians look back and insightfully conclude “It was the war that saved us”.
FDR’s spending did not end the Great Depression
Reduced taxes, spending, and bureaucracy did it, with a shift to a freer market.