Paul Krugman Has Won

Michael Schaus
|
Posted: Apr 30, 2013 12:01 AM

The economic argument has been had, and Paul Krugman – the Liberal Keynesian “economist” – has won. At least that is what Henry Blodget asserted on the Daily Ticker. Yeah. . . Krugman won. Nothing spells victory like 20-some-odd million people out of work, a declining workforce, record deficits, anemic economic growth, record dependency on government programs and a heightened sense of volatility in the broad economy. Of course, this claim is coming from a man who was permanently barred from the Securities industry by the SEC, so take it for what it’s worth.

Blodget, the man who “issued fraudulent research under Merrill Lynch's name,” and “aided and abetted violations of antifraud provisions of the federal securities laws,” is telling the world that Paul Krugman has won the economic debate of our time. And with the same fantastical exuberance he displayed while telling people to invest in every dotcom company they could get their hands on, he suggests we lay down our free-market concepts and bow before the alter of Government-centric economic orchestration. (AKA: Liberal economic concepts.)

His personal failures aside, Blodget may have a point. Krugman has won . . . in a way. Of course, I’m using the Liberal, and progressive, notion of “winning.”  After all, these are the same people that want to give every child on the baseball diamond a trophy. Believing in yourself is what “winning” really means to the American left. And by that rational, sure. . . Give Krugman his honorary mention. He’s worked hard for it.

In part, here’s what Blodget asserts:

Over the course of this debate, evidence has gradually piled up that the "Austerians" were wrong. Japan, for example, has continued to increase its debt-to-GDP ratio well beyond the supposed collapse threshold, and its interest rates have remained stubbornly low. More notably, in Europe, countries that embraced (or were forced to adopt) austerity, like the U.K. and Greece, have endured multiple recessions (and, in the case of Greece, a depression). Moreover, because smaller economies produced less tax revenue, the countries' deficits also remained strikingly high.

Um. . . Why were they in trouble in the first place? Did it have something to do with their adoption of socialist/ Keynesian concepts? And, would now be a good time to mention that interest rates are no longer a phenomenon of free market forces? They have remained low because the central banks, run mostly by Keynesians themselves, have kept them low? It might also be appropriate to point out that “austerity” in Europe rarely means reeling in unnecessary government spending while peeling back layers of regulation and taxation. More often than not European “austerity” is a mix of increased taxation and more perverse “wealth redistribution.”

It should be unsettling to hear anyone (even a man barred from the security industry by the SEC) claim the last five years have been those of austerity. Under President Barack Obama, we have seen a stubbornly high deficit, record numbers of Americans exiting the workforce – while suddenly accepting government assistance – and unprecedented quantitative easing. “Stimulus” has been tried on every level. . . And the fundamentals of the economy are worse than before. (Even the arbitrary unemployment rate is just now, after five years, returning to where it was under the worst of the Bush Presidency.)

If food stamp spending and unemployment had the simulative effect Krugman suggests, we’d be paving our roads with reinforced gum drops and diamonds. We’d be rich. . . Instead we’re crawling along at an anemic rate of growth while we hope the economy does not suddenly slip back into recession.

Then. . . There is the coup degrâce:

Yes, at some point, the American government needs to come together and figure out a smart long-term plan for containing healthcare and military costs, which are the real budget-busters in our government spending.

Well, this should do it for you. This is proof that Krugman’s champion is hardly a referee. He is a cheerleader for the liberal left. Over the course of the last 50 years, the economic burden of defense (arguably the most important role of Government) has been cut almost in half. And, if Healthcare is such a burden, why are we preparing the government to absorb an ever larger portion of that cost through Obamacare?

We haven’t even mentioned the $125 trillion of unfunded future liabilities we have on our books thanks to welfare programs, social security, Medicare, disability, etc. Our current entitlement spending is already straining our budget. According to Heritage “in 2012 entitlements were nearly 62 percent of total spending, while defense dropped to less than one-fifth (18.7 percent) of the budget.”

 

But. . . Yeah. . . Krugman won. And Henry Blodget calls the current economy a success story for Keynes.

 

If that is true, I think I’ll take the failed experiment of Reaganism, Thatcherism, Capitalism, Austrian economics or Laissez-faire. At least under those systems failure came with low tax rates, improving unemployment and more robust economic growth.