Monday, December 29, 2008

Krugman Loses It

In his NYT op-ed today, "Fifty Herbert Hoovers", Prof. Krugman has demonstrated that receipt of a Nobel Prize can addle a brain.

He believes that it is not enough that the Federal Government is financially imprudent. Somehow 50 states are governed by
"Herbert Hoovers"- whatever that means- because they are following their Constitutions and recognize that in general, expenses need to be cut when revenues fall.

The number of misstatements is almost too many to catalog. California is going to run out of money by February. Somehow it is a giant act of panic to halt construction outlays. Earth to Krugman: the contractors can't be paid with scrip!

He then sets up a straw man and even gets that wrong. He asks: "Is America less able to afford help to (society) than it was one or two years ago? Of course not."

When you ask and answer a question, it should be a no-brainer that you get it right. News flash: America is in fact less able to help whomever or whatever than 1 and 2 years ago. Clearly Dr. K believes that America can borrow vast amounts of money and print the rest, and that this will "help" the infinite number of needy recipients. No matter that when America needs help and money-printing fails and lenders won't readily lend, those recipients won't bail the US out.

He plaintively asks, "Why can't we keep doing good things?" Right ought of the Woodstock generation. And Kumbaya.

He then goes on to use the usual inflammatory language: "shredding the social safety net"; "plunging" state revenues, etc. He should check his facts about 2008 GDP vs 2007 GDP, and 2008 state revenues vs. 2007 revenues. And he's wrong that investors "are refusing to buy anything except federal debt". Investors are reacting to overspending by the governments that can't print money and buying the debt at lower prices than a year ago. That they are likely overpaying for federal debt is a different problem.

The rest of the post is an impassioned plea for the apparently omnipotent central government to take on more and more unfunded liabilities- Medicaid, education, infrastructure.

He forgets that the US is a Federal system. The States created the Federal Government, not the other way round.

What you realize when you read this op-ed is the true face of Obama-ism. With essentially total control of the Executive and legislative branches, there's no more need to pretend. The liberal conscience leads to an authoritarian central government that will do "good things" that the nasty (and sometimes "stupid") state governors just won't do for their citizens. He doesn't realize that out amongst the People, the phrase "We're the Government and we're here to help you" is a derisive one. He really believes it. Hold on to your wallets, you fifty state governors. The Feds are so determined to borrow and spend our way to prosperity that you should redouble your efforts to be fiscally responsible. And let Dr. Krugman know that you won't call him "Nowhere Man" (i.e., a Utopian) if he won't call you all Hoovers.

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