Skip to comments.No Dr. Krugman, Government Debt Matters Because It's Ours
Posted on 01/11/2012 7:12:59 AM PST by SeekAndFind
When Nobel laureate Paul Krugman began a recent New York Times column by showing concern about disastrously high unemployment, we could sympathize with his assertion that too much attention is focused on the allegedly urgent issue of reducing the budget deficit. After all, there are many other factors that prevent us from employing our resources in the most productive uses. We are overregulated, overtaxed, overinflated, and the government spends wastefully and too much.
If we were to prioritize any of those policies, such as cutting tax rates, then we could justify tolerating high deficits a little longer. The brighter prospects for higher growth and improved resource employment would increase our future debt-service capacity.
But this is not what Professor Krugman is talking about. He believes that we need more government spending, not less. Drawing inspiration from John Maynard Keynes, he remarks that Keynes wrote about the need to spend our way out of the depression when Britain was deeper in debt than any advanced nation today, with the exception of Japan.
Krugman supports his argument by noting that Britain has had debt exceeding 100 percent of GDP for 81 of the last 170 years. We could be forgiven for rather doubting that this supports his argument.
The root of Krugmans confusion on debt lies in adherence to what my old professor James Buchanan (also a Nobel laureate) once called the New Orthodoxy. Krugman believes that governments differ from families in that they dont have to pay back their debt. From this, he can deny that debt burden is shifted on to future generations. Krugman also believes that when Americans lend to the U.S. government there is very little burden because we owe it to ourselves.
(Excerpt) Read more at forbes.com ...
Seems obvious to me...
And Grant doesn’t even have a Nobel Prize!
Krugman and Cheney, birds of deficits don’t matter feather.
Bottom line: Krugman believes there is such a thing as a free lunch.
Higher government spending today means higher taxes and a worse economy tomorrow.
Ask the Russians, it took them over 70 years to learn the lesson - Krugman is so dim that he will be dead before he learns it.
Krugman’s writing pales in comparison to the “wash me!” found written in the dust on cars.
1) this changes the pattern of production from production of goods and services that are actually wanted to those that are not valued enough for people to actually buy them.
2) it requires confiscatory taxation which decreases the incentive to work and produce.Confiscatory taxation also drains savings and investment, and decreases any growth in production.