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September 03, 2010
The End Of Krugmanomics?
Is Krugman-style Keynesianism dead? This sure sounds like a funeral for the kind of massive government spending the left's premier Nobel prizewinner has been arguing for. (I've lately become increasingly skeptical of this quasi-superstitious notion shiny pieces of metal conferred by leftish Swedish officials really grant one particular perspicacity anyways.) Is the administration tuning him out? Krugman, of course, had been saying we actually needed a much bigger stimulus, something in the multi-trillion range. The problem with this argument is that government isn't very good at efficiently allocating resources, and gov't spending is already at 45% of GDP. It seems unlikely that the amount of government spending we have now is healthy (studies suggest optimal gov't spending rates for growth are about half the current rate), and so the notion gov't can efficiently spend another 10% of GDP seems wildly fantastic, especially when a recent Harvard study found pork spending actually hurts the private sector. Really, I don't know why anyone familiar with the 20th century thinks we can centrally plan prosperity -- had every major country embraced good free-market policy rather than experimenting with unhealthy levels of government control, the increased growth rate might have us enjoying a per capita GDP of around $100K today. We need private enterprises developing productivity improvements and innovative products and services, not politicians sending their political buddies taxpayer money. Of course, the good people at CATO (and a couple hundred economists) have known this all along. posted by Dave on 09.03.10 at 09:22 AM
Comments
To be fair to Krugman, he won his Nobel for his work on international trade, which according to even economists hostile to his domestic politics was good stuff. Krugman's problem is not that he's a bad economist as such, but that his work as a commenter at the Times is political rather than economic - it's just disguised as the latter, abusing using his well-earned authority as a real economist in the service of a partisan political goal. (That and his area of expertise, again, is not domestic economics and economics-related-to-employment.) Sigivald · September 3, 2010 01:41 PM How many decades of advocating failed ideas does it take before people understand failure is the idea? Maybe it's a coincidence that the people that turn to the same plans that made East Germany the economic powerhouse of the last century, and the people that give aid and comfort to virtually any enemy they can find are also the people that rush to deny an irrational love of country or its history. The truth is the liberals aren't interested in American success, economic cultural or military, and they are perfectly happy to be in charge of the smoking ruins of a country than to be out of power in a successful country. The liberals don't advocate higher taxes and more regulation during a great recession because that has ever worked. They also aren't interested in improving the country enough to look for ideas that work before taking action. Like addicts or terrorists, liberals want what they want without regard to the consequences for the rest of us. But many people would rather pretend everyone wants the same things than admit the ugly truth. Scott M · September 5, 2010 06:00 AM The truth is the liberals aren't interested in American success, economic cultural or military, and they are perfectly happy to be in charge of the smoking ruins of a country than to be out of power in a successful country. The liberals don't advocate higher taxes and more regulation during a great recession because that has ever worked. They also aren't interested in improving the country enough to look for ideas that work before taking action. Like addicts or terrorists, liberals want what they want without regard to the consequences for the rest of us." You are sclerotic solipsist whose barbs come from mirrors, not glass. Dean Smith · September 5, 2010 11:26 PM Post a comment
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I would suggest it's not that they think he's wrong, it's that they know ignorant American voters are all uptight about gov't spending and deficits so they have to keep a low profile or lose their cushy jobs.
But then, I'm kind of a jerk.