The Amazing Kreskin...er...Krugman
You really have to hand it to Paul Krugman. The man is persistent. There has rarely, if ever, been an argument for government expansion that he hasn't advanced or embraced. Remember, this is the savant who thought the $787 billion Keynesian-style "stimulus" was only one half to one third the size it needed to be, despite voluminous historical evidence as to the ineffectiveness of such programs.
In his latest New York Times missive, Krugman extols the virtues of European social democracy. He says that, "what everyone knows isn't true." Adding, "Europe is an economic success, and that success shows that social democracy works." Really?
Of course, as per usual, the supporting evidence he cites is only visible to those looking at a rose-colored fun house mirror through a pin hole in a piece of cardboard. And, in typical Krugman fashion, it's not so much his unique interpretation of data points as it is what he conveniently, or cluelessly, leaves out.
It's apparent from the beginning that the column is yet another exercise in obfuscation. Remarkably, he says, "Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it."
Just imagine his reaction if an assertion of American prosperity/economic justice were made by pointing to visible signs of wealth in Beverly Hills, or Park Avenue, or Beacon Hill? Was it not he and other liberal economists/politicians who constantly preached that the boom years were more of a kaboom for the many who fell behind and/or slipped through the cracks?
Apparently he missed the contradiction in such an observation. Not content to simply mangle the qualitative, Krugman goes on to demonstrate his facility for twisting and rationalizing the quantitative.
He notes that since 1980 America's real GDP has outgrown that in the European Union (EU) 3.0% to 2.2%. But, he neglects to highlight the significance of the disparity. Allow me. If average U.S. GDP over a similar time period were instead equal to the EU figure, we would incur, given today's GDP, upwards of $3 trillion in additional debt. But what's $3 trillion in the name of social democracy?
Moreover, he claims that EU and U.S. per capita GDP, a more important measure (in his estimation), has risen at about the same rate, with the U.S. enjoying a slight advantage. My research, however, shows the United States 10th ($46,300) in worldwide per capita GDP, and the EU 38th ($33,000)—quite a non-trivial delta.
Krugman also says that Europe has caught up in its use of technology; that its productivity is close to that in the U.S.; and that European unemployment rates are substantially higher than those in the United States, but their citizens are not much more likely to be on the dole than people in the U.S. Hmmm.
So, in making his case for European social democracy, Krugman admits that the U.S. is ahead in virtually all the economic indices, but he expains away our various advantages as relatively meaningless.
Krugman forgets, or chooses not to mention, the many material benefits the EU derives from a U.S. not drug down by social democratic policies. Imagine how uncompetitive Europe would be if it wasn't able to draft behind the United States?
Where do you think European productivity numbers would be if it wasn't for U.S. and Asian innovation/technology? How much greater would their already enormous tax burden be if they had to provide for their own national defense? How much worse would their GDP be if the U.S. was not the number one customer for their luxury cars and other items? How much more significantly would their population be declining if it were not for the overall positive economic impact of a non-socially-democratic United States?
Turn the U.S. into a social democracy—throwing a wrench into the catalytic engine of worldwide growth, innovation, freedom, and defense—and see just how fast an already fragile EU economy would spiral downward toward total collapse.
The Amazing Krugman...all the clairvoyance of a boardwalk psychic with a migraine.
In his latest New York Times missive, Krugman extols the virtues of European social democracy. He says that, "what everyone knows isn't true." Adding, "Europe is an economic success, and that success shows that social democracy works." Really?
Of course, as per usual, the supporting evidence he cites is only visible to those looking at a rose-colored fun house mirror through a pin hole in a piece of cardboard. And, in typical Krugman fashion, it's not so much his unique interpretation of data points as it is what he conveniently, or cluelessly, leaves out.
It's apparent from the beginning that the column is yet another exercise in obfuscation. Remarkably, he says, "Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it."
Just imagine his reaction if an assertion of American prosperity/economic justice were made by pointing to visible signs of wealth in Beverly Hills, or Park Avenue, or Beacon Hill? Was it not he and other liberal economists/politicians who constantly preached that the boom years were more of a kaboom for the many who fell behind and/or slipped through the cracks?
Apparently he missed the contradiction in such an observation. Not content to simply mangle the qualitative, Krugman goes on to demonstrate his facility for twisting and rationalizing the quantitative.
He notes that since 1980 America's real GDP has outgrown that in the European Union (EU) 3.0% to 2.2%. But, he neglects to highlight the significance of the disparity. Allow me. If average U.S. GDP over a similar time period were instead equal to the EU figure, we would incur, given today's GDP, upwards of $3 trillion in additional debt. But what's $3 trillion in the name of social democracy?
Moreover, he claims that EU and U.S. per capita GDP, a more important measure (in his estimation), has risen at about the same rate, with the U.S. enjoying a slight advantage. My research, however, shows the United States 10th ($46,300) in worldwide per capita GDP, and the EU 38th ($33,000)—quite a non-trivial delta.
Krugman also says that Europe has caught up in its use of technology; that its productivity is close to that in the U.S.; and that European unemployment rates are substantially higher than those in the United States, but their citizens are not much more likely to be on the dole than people in the U.S. Hmmm.
So, in making his case for European social democracy, Krugman admits that the U.S. is ahead in virtually all the economic indices, but he expains away our various advantages as relatively meaningless.
Krugman forgets, or chooses not to mention, the many material benefits the EU derives from a U.S. not drug down by social democratic policies. Imagine how uncompetitive Europe would be if it wasn't able to draft behind the United States?
Where do you think European productivity numbers would be if it wasn't for U.S. and Asian innovation/technology? How much greater would their already enormous tax burden be if they had to provide for their own national defense? How much worse would their GDP be if the U.S. was not the number one customer for their luxury cars and other items? How much more significantly would their population be declining if it were not for the overall positive economic impact of a non-socially-democratic United States?
Turn the U.S. into a social democracy—throwing a wrench into the catalytic engine of worldwide growth, innovation, freedom, and defense—and see just how fast an already fragile EU economy would spiral downward toward total collapse.
The Amazing Krugman...all the clairvoyance of a boardwalk psychic with a migraine.
"voluminous historical evidence as to the ineffectiveness of such programs". Really ? I bet you can find a ton of data which tracks back to Government stimulus (in some form or fashion ie. military industrial build up, infrastructure investment, deficit spending coming not only out of progressive administrations but in fact much more aggressive out of so called 'conservative administrations' Check the new debt to GPD statistics during the Reagan, Bush W. years) being very near the center of every economic growth spurt or recovery from recession over the past 100 years. Also claiming a correlation in your argument between Beverly Hills and London as fair indicator of prosperity is a bit of stretch. One is a street, the other is a city with a population of 8 million people. Social democracy probably isn't an answer but i'm not so sure fictious "free market" capitalism is an automatic slam dunk either. (you may want to consult your history books on the structure of the US economy during the first 25 years of the last century ). As for the autocratically ruled Asian economies... time will tell. Thought you'd like a little push back
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Michael, I always welcome your push back.
First, let me point out that I'm not a free market purist. I've made that point over and over in past blogs. In fact, I rarely use the term "free market" without the "quasi" prefix. Markets can and do get out of balance, and intelligent government action, whether it be in the form of regulation or tax policy or something else can be helpful. Second, Republican governments/politicians are not immune to the use of ill-formed and ill-advised stimulus--see Bush 43's February 2008 stimulus as but one example (which I've pointed out in previous entries). Third, you may want to examine the difference between transfer payments (to which I'm referring) which have nothing but a transitory impact, and spending that spurs real, sustainable economic growth, and may be impractical or impossible for the private sector (e.g. very early stage research; some infrastructure spending; defense spending and its concomitant residue of innovation; etc.). Fourth, my use of Beverly Hills is no more inappropriate than Krugman's (and I assume your) assertion that one can look at London superficially and judge it a success story. It's largely liberals after all who have become so adept at encouraging us to peel the onion. And finally, I do consult the history books...so much so, that I doubt Doris Kearns Goodwin has read as much history. But I digress.
I've provided a lot of supporting empirical evidence in dozens of previous entries, but check out my 12/13/2009 blog entry, titled, "An Inconvenient Economic Truth," for the results of an interesting study. Here's an excerpt:
"My Harvard colleagues Alberto Alesina and Silvia Ardagna have recently conducted a comprehensive analysis of the issue. In an October study, they looked at large changes in fiscal policy in 21 nations in the Organization for Economic Cooperation and Development. They identified 91 episodes since 1970 in which policy moved to stimulate the economy. They then compared the policy interventions that succeeded — that is, those that were actually followed by robust growth — with those that failed."
"The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending."
Thanks for sharing your opinions.
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