The Twilight Zone Prize in Economics

Ed Morrissey at Hot Air draws our attention to this jaw-dropping video segment of Nobel Prize-winning economist Paul Krugman citing the plot of a Twilight Zone episode to explain how we could solve our fiscal problems:

Fareed Zakaria: Wouldn’t John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that’s fine, they’re being productively employed, they pay taxes, so maybe Boston’s Big Dig was just fine after all.

Paul Krugman: Think about WWII, right? That was not, that was actually negative social product spending, and yet it brought us out [of the Depression]. I mean partly because you want to put these things together, you say, ‘Look, we could use some inflation,’ Ken and I are both saying that, which is of course anathema to a lot of people in Washington, but it’s in fact what the basic logic says.

It’s very hard to get inflation in a depressed economy, but if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So that if you think about using all of these things together, you could accomplish a great deal.

If we discovered that space aliens were planning to attack, and we needed a massive buildup to counter the space alien threat, and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months.

And then if we discovered, ‘Whoops! We made a mistake. There aren’t actually any space aliens,’ we’d be in better —

Ken Rogoff: So we need Orson Welles is what you’re saying.

Paul Krugman: No. There was a Twilight Zone episode like this, in which scientists fake an alien threat in order to achieve world peace. Well, this time we don’t need it [to achieve world peace]; we need it in order to get some fiscal stimulus.

And I thought to myself: This guy Krugman may be on to something! Could it be that all the solutions to America’s financial woes can be found in Twilight Zone plots?

Say, for example, if we genetically engineered an evil little boy with telekinetic super-powers (played by Billy Mumy, of course) — then could he just wish all the Tea Partiers “to the cornfield” if they didn’t stop yammering about taxes?

Or maybe we could build a fortune-telling machine that accurately predicted what the stock market was going to do tomorrow, and then make a fortune by betting on all the right stocks?

Or how about this: We create a huge government optician monopoly to manufacture millions of coke-bottle eyeglasses, and then made a profit selling them to all the Burgess Meredith lookalikes who break their lenses after the upcoming nuclear holocaust?

Think of the possibilities!

Readers are invited to devise their own Twilight-Zone-inspired economic theories.

Paul Krugman, you genius! Your brilliant ideas might save this country after all!

UPDATE: Drat! Turns out Paul Krugman blundered spectacularly — the plot he’s thinking of actually comes from an Outer Limits episode called “Architects of Fear.” So it could be that America’s salvation may not necessarily be found in The Twilight Zone exclusively, but in The Outer Limits as well. Economic theorists, take note!