Krugman: Eat your broccoli and shut up!

[Update]: I include commentary from David Henderson on Krugman's column. Henderson writes:

Well, guess what? I'm a health-care expert. In fact, I was employed as one for two years by the same boss who employed Paul Krugman, namely, Martin Feldstein. From 1982 to 1984, I was the senior economist for health policy with the Council of Economic Advisers. I don't find the comparison horrifying at all.

Here's why. If you don't buy health insurance until you're sick, then when you get sick, you drive up the price of health insurance for others. If you don't eat broccoli, and your not doing so makes you sick, you drive up the price of health insurance for others.

Now, there is a way around both conclusions: allow health insurance companies to sell insurance, as that term is generally understood. Let them price according to risk. Then, when people don't buy health insurance until they are sick, the price will be quite high and they will not be subsidized by others. Similarly with broccoli. If eating broccoli makes you healthier, and if that health can be measured, your insurance rates, all else equal, will be lower. Those who refuse to eat broccoli will have worse health and will pay higher rates.

 [End update]

Paul Krugman's recent column on the "broccoli" question reveals a number of things, including Krugman's insistence that government can create a wonderful medical system through coercion, and anyone who disagrees wants people to get sick and die. That is a pretty typical Krugman argument -- those who agree with him do so for the most evil of reasons -- and Don Boudreaux has his own rejoinder in his Cafe Hayek response:

Never mind that Mr. Krugman here implicitly demands that the Court do what all of a sudden horrifies so many “Progressives,” namely, ground its constitutional rulings on detailed analyses of facts and policy.  Such analysis would indeed expose several practical differences between commerce in vegetables and commerce in insurance.

Focus instead on Mr. Krugman’s failure to understand that there is indeed a relevant and looming similarity between broccoli and insurance – a similarity that likely sparked Justice Scalia’s question.  If my failure to buy health insurance puts upward pressure on health-care costs for other Americans – and thus justifies the government forcing me to buy insurance – doesn’t my failure to eat a healthy diet likewise put upward pressure on health-care costs for other Americans and, thus, justify the government forcing me to buy broccoli?  If not, why not?

Given government’s zeal to control ever-more aspects of private life, such questions are not Constitutionally trivial.

 With Michelle Obama jetting around the country telling people what they can and cannot eat, and the Food Police being ramped up, I find it interesting that Krugman attacks the whole "broccoli" issue. After all, the government that Krugman so lionizes is doing everything it can to force people to purchase and eat Obama-approved food and the Food Police are seeking and gaining more power every day.

As for insurance, I find it interesting that Krugman is so gung-ho about using coercion as a means to further what really are government schemes. The point is that if government can coerce you to purchase one thing -- semantics about products and taxes aside -- government can coerce you to purchase anything that Progressives believe is "good for society."

In the end, Paul Krugman is all about Rule of Force. Progressives like himself determine what is good for everyone else, and then others are forced to obey -- or go to prison. That is the reality of Krugman's Progressivism.

Krugman's New Gig: He's a Comedian!

Once upon a time, I thought Paul Krugman was at least a semi-serious economist, as opposed to being just another political operative. (The difference is that I actually read Krugman's stuff, in part because of this blog and also in part because I do hope -- against hope, I'm afraid -- that he will give some of the economic wisdom that he used to give. No, I don't read anything on the Wall Street Journal editorial page by either Karl Rove or Peggy Noonan, as pure political operative material is not worth the time spent reading it.)

In his semi-weekly anti-Republican screed masquerading as a column, Krugman decides to delve into comedy. After attacking the Republican budget proposals which actually may cut a tiny sliver of spending (don't hold your breath, however), Krugman then gives us this gem:

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.

Yes, talk to people in the healthcare business who actually have to deal with the new law and all of its new regulations. Talk to people who have to fork out huge amounts of money to comply with these new rules, the restrictions on care, and the like.

This is "cost-cutting" in its most bureaucratic and Orwellian sense. One does not and CANNOT cut "costs" by forcing people to bear new costs. (Don't forget that Krugman himself used "death panels" in a positive way on national television, and he sees governmental denial of care as a legitimate tool for "cost-cutting.")

The fundamental concept in economics is opportunity cost. The Keynesian notion that government can simply create money to bring about new spending and thus reclaim "idle resources" is one way that Keynesians like Krugman like to claim that they can create the "free lunch." (Don't forget that Krugman himself makes that very claim in his Depression Economics book.)

So now we have Krugman claiming that forcing up real costs and passing laws somehow can circumvent the very real and immutable laws of economics. It's official; he no longer is an economist; he is a political operative, and maybe a comedian. Maybe both.

Say What? on the Debt

I have read bizarre stuff from Paul Krugman before -- heck, here is a guy who believes prosperity is created by the government printing press -- but I must admit this latest blog post of his comes close to being the most bizarre of all. First, and most important, he declares that the gargantuan public debt really is not much of a big deal.

Second, he wants us to take the word of the Obama administration on the budget numbers up to 2020. Yes, now that the profligate politicians he likes are in power, we are supposed to believe whatever the administration tells us. Right.

However, it gets better. After mentioning that other "independent sources are moderately more pessimistic" (they believe the federal deficit will be five or six percent of GDP instead of the Obama prediction of 3-4 percent), he writes this:

That’s not, in economic terms, a huge number. We could raise taxes that much and still be one of the lowest-tax nations in the advanced world. Or we could save a significant share of that total by not being totally prepared for the day when Soviet tanks sweep across the North German plain.

And it gets better:

The only reason to doubt our ability to get things under control a decade from now is politics: if we’re still deadlocked, if sane Republicans are cowed by the Tea Party, then sure, we can have a fiscal crisis. And longer term, we’ll be in a mess unless we get health care costs under control — which is exactly what we’re trying to do, in the face of cries about death panels.

Yeah, it is those dastardly tea-partiers that are going to cause a fiscal crisis. Why? Well, they oppose "healthcare reform," and everyone knows that a huge combination of new taxes, draconian regulations, mandates and subsidies are going to vastly cut medical costs and help revive the economy.

I will agree that the "War on Terror" has eaten a portion of our nation's production that is equal or greater than any set of costs associated with medical care, and there seems to be no end in sight. What is just as bizarre to me as Krugman's assertion that the Obama numbers are honest is the campaign of the Heritage Foundation, "Four Percent for Freedom," that claims we are not adventurous enough when it comes to military spending and wars abroad.

You see, it never has occurred to the people at Heritage that the financial ruin that has come about in large part because of the "War on Terror" and the vaunted "Ownership Society" initiative of the Bush administration (pushed by Heritage and the Cato Institute) which deteriorated into "let's put everyone into home ownership whether or not they can afford it." Because the Bush administration was profligate, it created a crisis that helped lead to the current political situation, and ultimately to, yes, the real ascension of Krugman to his current "superstar" status. By creating a fiscal crisis, the "conservatives" gave credibility to Krugman, who became well-known in large part because of his public criticism of the Bush administration.

So, we have few voices for fiscal sanity, anymore. On the one hand, Krugman claims that we are supposed to believe Obama's budget numbers as though they came from God, and the "conservatives" want even more war and military spending abroad. Neither side can come to grips with the fact that this government is broke, broke, broke.

Don't kid yourselves. We are on the same path as was Argentina in the mid-20th Century, when a rich and proud nation morphed into poverty and political chaos. Those "advanced" countries of Europe Krugman so praises are headed in the same direction, brought down by the cold hard reality that in order to have a high standard of living, a country must produce something other than paper money. It is unfortunate that the USA is being destroyed by a tag team of the Left and the Right, but here it is.

How DARE Anyone Protest This Bill!

In the days before the vote on the allegedly "historic" Obamacare bill in the House of Representatives, recalcitrant Democrats were receiving threats overt and covert from constituents, unions, and others. A number of them had to deal with obscenity-laden threats from Rahm Emmanuel, courtesy of the Obama White House.

However, such actions were not extremism. No, they were statesmanship, or at least in the Wonderland inhabited by the likes of Paul Krugman.

However, whatever rumors or even lies about the protests of those who were against this monstrosity of a bill are being told, Krugman is there to repeat them, and he does so again in his column today, "Going to Extreme."

Before taking on today's missive, I want to deal with a Big Lie that Krugman was helping to spread. Remember the supposed screaming of the "N-word" at black members of Congress last week? Krugman and all of the others in the media made hay of it. However, it turns out that the account was a fabrication, made up by a reporter from the McClatchy newspaper chain.

(In case you are not familiar with the leftist McClatchy chain, one of its newspapers, the News & Observer of Raleigh, North Carolina, started off the infamous Duke Lacrosse Hoax with a fabricated account written by a female reporter who now works for a Marxist publication. More than any other media outlet, the McClatchy chain was responsible for this patently-false hoax and subsequent attempted frame of three young men by the prosecution and police of Durham. That McClatchy would promote another Big Lie does not surprise me in the least.)

That it turns out that no one -- not one person -- has been able to pick up any of those supposed slurs on the numerous videos made of that moment. This was a fabrication, pure and simple, yet Krugman gleefully jumped on it because it was "proof" that anyone who opposed Obamacare is a racist.

Ironically, Krugman's employer put a correction in his "Fear Strikes Out" column because Krugman had falsely claimed that Newt Gingrich was saying that "civil rights" damaged the Democratic Party. So, Krugman himself is not above promoting fabrications when it suits him. (Of course, Keynesian economics is a fabrication, but that is a discussion for another time and post.)

So, in today's column, we read more of the same:

But back to the main theme. What has been really striking has been the eliminationist rhetoric of the G.O.P., coming not from some radical fringe but from the party’s leaders. John Boehner, the House minority leader, declared that the passage of health reform was “Armageddon.” The Republican National Committee put out a fund-raising appeal that included a picture of Nancy Pelosi, the speaker of the House, surrounded by flames, while the committee’s chairman declared that it was time to put Ms. Pelosi on “the firing line.” And Sarah Palin put out a map literally putting Democratic lawmakers in the cross hairs of a rifle sight.

All of this goes far beyond politics as usual. Democrats had a lot of harsh things to say about former President George W. Bush — but you’ll search in vain for anything comparably menacing, anything that even hinted at an appeal to violence, from members of Congress, let alone senior party officials.

So, we are back to the same partisan vitriol: We Democrats are nice people, those Republicans are a bunch of violent kooks. Now, to me, both parties are full of people who have advocated violence against Americans and much of the rest of the world, and currently are carrying out those threats at home and abroad.

Krugman then makes this astonishing claim:

Mr. Obama seems to have sincerely believed that he would face a different reception. And he made a real try at bipartisanship, nearly losing his chance at health reform by frittering away months in a vain attempt to get a few Republicans on board. At this point, however, it’s clear that any Democratic president will face total opposition from a Republican Party that is completely dominated by right-wing extremists.

For today’s G.O.P. is, fully and finally, the party of Ronald Reagan — not Reagan the pragmatic politician, who could and did strike deals with Democrats, but Reagan the antigovernment fanatic, who warned that Medicare would destroy American freedom. It’s a party that sees modest efforts to improve Americans’ economic and health security not merely as unwise, but as monstrous. It’s a party in which paranoid fantasies about the other side — Obama is a socialist, Democrats have totalitarian ambitions — are mainstream. And, as a result, it’s a party that fundamentally doesn’t accept anyone else’s right to govern.

Please. This is a president who made the hyper-partisan Emmanuel his chief of staff, and who made it clear that he had the votes, and he was going to do whatever he pleased. Obama told Republicans that if they were not going to go along with what he wanted, then it didn't matter, anyway. Furthermore, the Democrats quickly have turned these alleged "threats" of which Krugman speaks into fundraising opportunities, which always makes me a bit suspicious. That Krugman tries to paint a picture of a naive, trusting Obama who was stabbed in the back by those mean, nasty, vicious, racist Republicans is junk that at best is saved for the Daily Kos or Media Matters.

Paul Krugman represents the Eastern, secular, urban Democrat who absolutely cannot understand nor tolerate anything other than the culture in which he lives. Should anyone be different, well, that person really needs at best to pay taxes, and bend over and take whatever the Krugman-approved government gives him or her. Any opposition to his ideas can be motivated only by racism, and whatever "ism" he pulls out of his hat.

Only in Wonderland Will "Healthcare Reform" Reduce the Deficit

Paul Krugman is at it again, trying to convince us that this monstrosity of a bill is going to produce all sorts of financial "savings" for Americans, and he claims to have brought out the heavy intellectual artillery. Krugman pulls out a figure from that great economic soothsayer, Ezra Klein of the Washington Post which "proves" that revenues from this new bill will well-outstrip expenses:

Lest one be a doubter, the Center on Budget and Policy Priorities makes similar claims, and we know that the Left never is wrong on economic policy. However, before we sit back and cheer the good fortune we have before us (you know, "world-class" healthcare and those rich people will pay for all of it), perhaps some wise words from Robert Higgs, an economist whom I respect infinitely more than Krugman or Klein, might be in order:

What has this gargantuan statute wrought? To this question, there can be only one answer: Nobody knows.

I am being quite serious: no single human being knows ― no one can know ― what provisions the statute’s more than 2,000 pages contain. Even if someone had the power to read and remember everything in this massive legislative enactment, he would still harbor a multitude of uncertainties about: how the courts will interpret the law’s general provisions; how the various administrative agencies will flesh out the statute with new regulations; the precise way in which each provision will be implemented; how, when, and in what amounts funds will be made available for carrying out the law’s many stipulated actions; how much resistance the law will meet, both in the courts and among the public, and how these conflicts will be resolved; and countless other matters of critical importance to those directly and indirectly affected by the massive statute ― which is to say, virtually everybody in the United States and a considerable number of people elsewhere, as well.

Already, however, we can say a few things with certainty. One is that this statute, like any other of comparable size, amounts to a Christmas tree for politically favored interests. For months, maybe for years, people will be discovering little provisions tucked into the bill, each of which provides some sort of privilege, protection, subsidy, or other benefit to a particular firm, industry, profession, or other beneficiary. Anyone who has ever toiled through the pages of statutes of comparable length and complexity, as I have for a number of defense authorization and appropriation acts, knows that each such law comprises a host of special-interest provisions.

Higgs makes another point that is well-taken, for Krugman, Klein, and the other cheerleaders for this monstrosity are trying to tell us that a decade from now, no new expenses will be tacked onto this legislation. Right. Higgs says:

We also know that this statute will not be the end of the story of health-care politics in this country. It is, for the current phase, only the end of the beginning. The ink will scarcely be dry in the revised U.S. Code when political factions will undertake to alter or to overturn the provisions just enacted. Thus, within the act’s great expanse, hundreds of little sub-conflicts will rage, as competing interests struggle for control of the state’s coercive power in their area of contention. Politics, in general, is an endless struggle, and the politics of the federal government’s health-care intervention is no exception. Stay tuned.

Finally, because health-care-related economic activity is such a huge part of the overall economy, what happens in this sector will have significant consequences for the operation of other sectors. For example, when Obamacare turns out to be much more costly than the government has claimed it will be, the government’s demand for loanable funds will be greatly increased, with far-reaching effects on interest rates, investment spending, economic growth, and even the U.S. Treasury’s creditworthiness. It is not inconceivable that the burden of supporting this health-care monstrosity will prove to be the (load of) straw that breaks the back of the government camel in the credit markets, where the U.S. Treasury has long been able to borrow the greatest amounts at the lowest rates of interest because its bonds were considered virtually riskless. Indeed, that status as the lowest-risk borrower seems already to be approaching the breaking point, even before the new health-care legislation has taken effect. Implementation of this law can only worsen the Treasury’s plight.

I think that if credibility is an issue, the person with the most in this situation is Professor Higgs.

Krugman's Dishonesty Strikes Out

In Monday's post, I pointed out that Paul Krugman was putting words into the mouth of Newt Gingrich to claim that he was openly being a racist. Well, in Krugman's defense, he was quoting the Washington Post.

Here is the offending quote:

And on the other side, here’s what Newt Gingrich, the Republican former speaker of the House — a man celebrated by many in his party as an intellectual leader — had to say: If Democrats pass health reform, “They will have destroyed their party much as Lyndon Johnson shattered the Democratic Party for 40 years” by passing civil rights legislation. (Emphasis mine)

Like a lot of readers, I was suspicious of whether or not Gingrich even had said "civil rights," and it turns out our suspicions were well-founded. Krugman's employer adds this editor's note to the current version of Krugman's column:

The Paul Krugman column on Monday, about the health care bill, quoted Newt Gingrich as saying that “Lyndon Johnson shattered the Democratic Party for 40 years” by passing civil rights legislation. The quotation originally appeared in The Washington Post, which reported after the column went to press that Mr. Gingrich said it referred to Johnson’s Great Society policies, not to the 1964 Civil Rights Act.

In other words, it looks as though the WP is as dishonest as Krugman. But they are dishonest.

Is The Health Care Bill a Political Liability for Democrats?

Now that the Democrats have passed a "healthcare reform" bill that neither reforms nor provides healthcare, what is going to be the political fallout. According to Paul Krugman, it will benefit the Democrats. I have no idea, and I don't care, given that Republicans have not exactly been fiscal stalwarts when in power.

In his blog post, "A Thin Line Between Hate and Love," Krugman contrasts a Wall Street Journal editorial with the results of a Gallup poll in which nearly 50 percent of those polled approved of the plan and only 40 percent said they were against it.

As I see it, the plan will provide whatever "good" results it will bring first, in the short term, but the hammer will come down later -- and it will come down. Americans are going to find out that this "cost-cutting" reform is going to make it more difficult for them to see doctors, and the overall costs they will bear for their medical care will be higher than they are now. That I can guarantee.

So, I suspect that Krugman might be correct regarding the political fallout, although to Krugman, if the Democrats win, that will "prove" that "reform" was a good thing. But, then, his world is so thoroughly politicized that I doubt he can have even a simple conversation without politics entering into it.

Krugman on Freedom

In dealing with Paul Krugman's last column, I concentrated on his accusation that the only possible motivation one could have to question ObamaCare was racism. Yet, there is a paragraph in Krugman's column that points to another issue: freedom itself. He writes:

I’d argue that Mr. Gingrich is wrong about that: proposals to guarantee health insurance are often controversial before they go into effect — Ronald Reagan famously argued that Medicare would mean the end of American freedom — but always popular once enacted.

Krugman's point is that if an entitlement is "popular," then any argument about "freedom" is irrelevant. Now, I can understand why a Medicare benefit might be popular, since it involves people receiving care for which they do not pay. To give an extreme but pertinent example, I am sure that when Hitler's regime stole the property of wealthy Jews and gave it to politically-connected Nazis, that the program was popular with those who received the benefits, yet no one is going to accuse Hitler's regime of enhancing freedom.

Let us look at the statement that Reagan made in 1961 and see whether or not Krugman has fairly characterized it:

One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project. . . . Now, the American people, if you put it to them about socialized medicine and gave them a chance to choose, would unhesitatingly vote against it. We have an example of this. Under the Truman administration it was proposed that we have a compulsory health insurance program for all people in the United States, and, of course, the American people unhesitatingly rejected this.

Reagan added:

The doctor begins to lose freedom. . . . First you decide that the doctor can have so many patients. They are equally divided among the various doctors by the government. But then doctors aren’t equally divided geographically. So a doctor decides he wants to practice in one town and the government has to say to him, you can't live in that town. They already have enough doctors. You have to go someplace else. And from here it's only a short step to dictating where he will go. . . . All of us can see what happens once you establish the precedent that the government can determine a man's working place and his working methods, determine his employment. From here it's a short step to all the rest of socialism, to determining his pay. And pretty soon your son won't decide, when he's in school, where he will go or what he will do for a living. He will wait for the government to tell him where he will go to work and what he will do.

Indeed, what we have seen in the last four decades has been the disconnect between doctor and patient, as the doctor is governed by federal oversight, the Drug Enforcement Agency, Medicare "cost controls" from Medicare, insurer oversight, and the trial lawyers. Second, the nature of taxation is this: if government provides benefits to one group of people by taxing another group of people, then the people who are taxed do lose some of their freedom.

Am I exaggerating? Has any reader ever been subjected to an Internal Revenue Service audit, or known anyone who has gone through that experience? Who is the master and who is the servant? Does this relationship enhance or diminish freedom?

Don't kid yourselves. We are less free today, as the government has ordered everyone to have health insurance, or else face the wrath of the IRS. Krugman may call that freedom, but I call it coercion and yet another example of the master-servant relationship we have with our government.

Granted, Krugman is speaking of what "Progressives" call "Positive Freedom" in which government forces others to provide a benefit to someone, when then does not have to pay directly for the largess. According to Krugman and others, that person if "more free" because he or she now can direct income elsewhere. However, that is "freedom" gained at the expense of other people, who now are less free.

Guy Rexford Tugwell, one of the most important advisers to President Franklin Roosevelt, acknowledged in a 1968 article in The Center Magazine:

The Constitution was a negative document, meant mostly to protect citizens from their government.... Above all, men were to be free to do as they liked, and since the government was likely to intervene and because prosperity was to be found in the free management of their affairs, a constitution was needed to prevent such intervention.... The laws would maintain order, but would not touch the individual who behaved reasonably.

To the extent that these new social virtues developed [in the New Deal], they were tortured interpretations of a document intended to prevent them. The government did accept responsibility for individuals’ well-being, and it did interfere to make secure. But it really had to be admitted that it was done irregularly and according to doctrines the framers would have rejected. Organization for these purposes was very inefficient because they were not acknowledged intentions. Much of the lagging and reluctance was owed to constantly reiterated intention that what was being done was in pursuit of the aims embodied in the Constitution of 1787, when obviously it was done in contravention of them. [Emphasis mine.]

Now, to be fair, Krugman is not writing about the U.S. Constitution, but instead is claiming that expansion of the tax-funded welfare state enhances freedom. Yet, it also is clear that such "Progressive" notions also clash with the idea of freedom as the Founders of the United States saw it. (My guess is that Krugman would call them "racists" and say whatever they believed is not relevant in the 21st Century.)

As I see it, Krugman's definition of freedom is like saying that a situation in which bullies steal the lunch money of schoolchildren increases freedom because the bullies now are free to spend their other income on whatever they please instead of buying food. Unfortunately, like most "Progressives," Krugman believes that the master-servant relationship of government to the people promotes the Good Society. I look at it and see the expansion of outright slavery.

It Ain't a Joke, Paul

Paul Krugman trots out his "five-year plan" and tells us it really is a joke:

It turns out to be almost exactly five years since I began crusading for health reform. At the time, all the buzz was about privatizing Social Security, and many people still thought it would happen; meanwhile, I wrote that

serious health care reform isn’t on the table, and in the current political climate it probably can’t be. You see, the health care crisis is ideologically inconvenient.

And here we are: Social Security still stands, and health reform — imperfect, compromised, but real — has happened.

Update: The title of this post, with its evocation of the Soviet Union, was what is known in the trade as a “joke.”

Actually, the only "joke" is the false belief that Krugman and others are promoting that Congress has repealed the Law of Scarcity. Furthermore, don't forget that Lenin himself declared that government-provided medical care would be at the heart of the new communist utopia.

Krugman Strikes Out

I have come to expect wooly-headed partisanship from Paul Krugman instead of economic analysis, and that is one reason I started this blog. The other reason was that I want to have another source that attacks and exposes the Keynesian fallacies for what they are: dangerous nonsense.

Nonetheless, even Krugman has managed to go where few economists have gone before: into total partisan fantasyland. I figured he would be crowing in his Monday column, and I am correct. Krugman's utterings in the aftermath of the passage of the healthcare nationalization legislation are not worthy of anyone who has a doctorate from one of the most prestigious economics programs in the world. He has given talking points that I would expect to read on the Daily Kos or in one of the ubiquitous emails I receive from the Democratic Party.

Krugman has entitled his column, "Fear Strikes Out," but in reality, Krugman has struck out, demonstrating not only his outright partisanship, but also his dishonesty. Let me begin.

He begins the column with a long quote from President Obama. Now, I generally don't like to begin any of my articles with quotes from politicians unless I am taking the scalpel to their words, as we can figure that however lofty the rhetoric might be, there is an iron fist inside a velvet glove, and this is no exception.

However, after quoting Obama, he then turns to Newt Gingrich:

And on the other side, here’s what Newt Gingrich, the Republican former speaker of the House — a man celebrated by many in his party as an intellectual leader — had to say: If Democrats pass health reform, “They will have destroyed their party much as Lyndon Johnson shattered the Democratic Party for 40 years” by passing civil rights legislation.

Notice that "passing civil rights legislation" was not what Gingrich said. No, Krugman inserted those words to imply that anyone who opposed the legislation was a racist.

Now, I don't like to defend the loathsome Gingrich, and I don't forget that for all of his lofty "limited government" rhetoric, he was just another politician grabbing what he could from the till. However, one has to understand the tactics that Krugman is using, and they are absolutely despicable.

He points out that someone from the Tea Party protests called John Lewis the "N-word," which is "proof" that opposition to the medical care legislation was undergirded with racism. While I also condemn the use of such language, nonetheless, Krugman uses the incident in a way that promotes a non sequitur. Do you have difficulties with the legislation? Do you think that it is going to pile on trillions of dollars of unfunded liabilities on our present and future generations at a time when the government of this country is essentially bankrupt?

Well, if you believe that, or even think it, then you also are a racist. Lest you think I am exaggerating, read on:

Instead, I want you to consider the contrast: on one side, the closing argument was an appeal to our better angels, urging politicians to do what is right, even if it hurts their careers; on the other side, callous cynicism. Think about what it means to condemn health reform by comparing it to the Civil Rights Act. Who in modern America would say that L.B.J. did the wrong thing by pushing for racial equality? (Actually, we know who: the people at the Tea Party protest who hurled racial epithets at Democratic members of Congress on the eve of the vote.

However, what if you are someone who says that the Law of Scarcity was not repealed, no matter what Krugman says? Well, you, too, are a cynical racist. Why? The Congressional Budget Office has declared this legislation to be fiscally sound, and we know that the CBO always gets it right, and that it is "nonpartisan" and never affected by politics:

Yes, a few conservative policy intellectuals, after making a show of thinking hard about the issues, claimed to be disturbed by reform’s fiscal implications (but were strangely unmoved by the clean bill of fiscal health from the Congressional Budget Office) or to want stronger action on costs (even though this reform does more to tackle health care costs than any previous legislation). For the most part, however, opponents of reform didn’t even pretend to engage with the reality either of the existing health care system or of the moderate, centrist plan — very close in outline to the reform Mitt Romney introduced in Massachusetts — that Democrats were proposing.

Ah! We have proof! Mitt Romney pushed what Krugman claims is a similar plan in Massachusetts, and Romney is a Republican, so any opposition to the government's newest edict can only be made on the basis of racism! Don't you see the logic? It is all there!

Krugman, however, is not done. He finishes with this benediction:

This is, of course, a political victory for President Obama, and a triumph for Nancy Pelosi, the House speaker. But it is also a victory for America’s soul. In the end, a vicious, unprincipled fear offensive failed to block reform. This time, fear struck out.

Yes, if you think that legislation that essentially nationalizes medical care, promises price controls, has new provisions that will criminalize actions that once fell into the category of voluntary, peaceful trade, and imposes coercive measures along with empowering the Internal Revenue Service, then you are on the side of the demons. You are a vicious, lying racist who wants everyone to get sick and not have healthcare.

Am I exaggerating? Read the column and see for yourself. You cannot both take a hard look at the fiscal provisions of this legislation and ask questions about it, for if you do, then you are a vicious racist.

There is more in this column and I will take a future look at some other points he makes, but for now, I leave readers with this sobering thought: The 2008 Nobel laureate in economics has declared that questioning this legislation through the lens of the simple laws of economics is an act of racism.

Paul Krugman: Spreading Economic Myths to Debunk What He Calls "Health Reform Myths"

Economists like to debunk what we call economic myths. For example, I have used this blog to debunk Paul Krugman's Herbert Hoover myths about the Great Depression. However, I must admit that Krugman does all of us one better when he employs economic myths in an attempt to "debunk" what he says are "Health Reform Myths."

...reform still has to run a gantlet of misinformation and outright lies. So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.

OK, fair enough. What are these myths?

The first "myth" is that government is taking over a sixth of the U.S. Economy. Krugman says that government already controls much of the healthcare sector, and THAT sector runs very, very well. The "failing" healthcare sector, he says is the so-called private part:

The only part of health care in which there isn’t already a lot of federal intervention is the market in which individuals who can’t get employment-based coverage buy their own insurance. And that market, in case you hadn’t noticed, is a disaster — no coverage for people with pre-existing medical conditions, coverage dropped when you get sick, and huge premium increases in the middle of an economic crisis. It’s this sector, plus the plight of Americans with no insurance at all, that reform aims to fix. What’s wrong with that?

The next "myth" is that the proposed law "does nothing to control costs." According to Krugman, "Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest."

Krugman's third "myth" is that this reform is "fiscally irresponsible." He defends the pending legislation:

How can people say this given Congressional Budget Office predictions — which, as I’ve already argued, are probably too pessimistic — that reform would actually reduce the deficit?

I will try to answer Krugman by concentrating on one item: the notion that this bill will "cut costs" and, thus, reduce the federal deficit.

Perhaps the most charitable thing I can say is that Paul Krugman, being a "macroeconomist," really does not understand costs. To the economist (that is, an economist who actually has real economics training), a cost is an opportunity cost, which is the subjective value of the next-highest-valued alternative. THAT is a cost. Krugman, however, continues to insist that a cost is nothing more than an arbitrary monetary outlay.

Cost ruduction, then, according to Krugman, is nothing more than slapping down price controls. If government decrees lower prices for medical care, then like magic, prices will fall, and there will be ample care for all. Now,I have no idea what Krugman was doing the day price theory was discussed in his graduate micro class, but I doubt he was listening.

No competent economist will endorse such cost controls. For that matter, most pricing in medical care (and especially in hospitals) already is heavily regulated by federal authorities. So, if regulated prices already are spiraling out of control, how does Krugman get away with claiming that another layer of the same stuff is going to do the trick?

Economists like Krugman who do nothing but deal in aggregates have no understanding whatsoever about prices. None. To Krugman, a price is just a number, an arbitrary number, and if government lays down new sets of numbers, then there will be no dislocations whatsoever.

That is nonsense, and dangerous nonsense at that. We know from thousands of years (yes, thousands) of government price controls that such controls are followed by dislocations, economic chaos, and stunted economic growth. If Krugman cannot understand that fact, then he is not an economist, but rather just another political operative.

Is the ObamaCare plan irreponsible? Of course, it is! Anyone who believes that Congress and the Executive Branch can construct by fiat a plan that centrally directs medical care that replaces the voluntary choices of the millions of individuals involved in this industry and not create real problems does not understand economics at all. Why am I not surprised that Krugman cannot and will not understand this simple point?

NOTE: At a session of the Austrian Scholars Conference, economist Lowell Gallaway, a co-author with Richard Vedder of the excellent book, Out of Work, noted sarcastically that Krugman has been vocal in peddling the same high-wage theories that Herbert Hoover promoted during the Great Depression. In other words, far from being the opposite of Hoover, Krugman is his intellectual soul mate!

Healthcare Q&A on Back Burner -- Apologies

I know that I have promised to address the healthcare questions straight on, but right now I admit that is on the back burner, as much as I wish it were not. First, I have to write a paper to present at the Austrian Scholars Conference in less than two weeks, and, second, I am writing the Fifth-Year Maintenance Accreditation Report for the Frostburg State College of Business for AACSB. (Yeah, they are paying me for it, and I think my employer wants something from me.)

However, I have not forgotten the healthcare issues and I think I will put my article into a Q&A format. If any of you have any suggestions on what form would be best, let me know. I do appreciate the comments and the debate that goes on, as that was one of the goals I had for this blog.

Oh, and I am a happy camper. My alma mater, the University of Tennessee, beat Kentucky today, 74-65. Granted, we will not beat UK in either the SEC or NCAA tournament, and I would not be surprised to see UK make the Final Four. Nonetheless, I like beating the Cats, even if it is in a regular-season game!

Is the Senate Bill the "Right" Thing?

In his column today, Paul Krugman implores the House to pass the Senate's "health care" bill because it is the "right thing." With the improbable victory of Republican Scott Brown in last Tuesday's Massachusetts special election, the Senate Democrats no longer have the 60 votes to ram anything they want down the legislative channel, which endangers the entirety of ObamaCare.

Krugman understands that point, and I don't disagree with his political analysis. Yet, the guy is so partisan that he does not pick up on the obvious issue, and that is why the Democrats, with overwhelming numbers in both the House and Senate, have not been able to do whatever they wanted. Instead, we get the "Goldstein is responsible for our ills" nonsense, the Republicans playing the role of the alleged villain of Oceania.

Where the guy is clueless is in economics. Krugman belongs to that school of though that says that government can make anything happen, provided there is enough coercion. Thus, we get to the main point of the Senate plan, which is an attempt to create a product that lots of people do not want at all, and never would buy if they were not put at the point of a gun. He writes:

Think of health care reform as being like a three-legged stool. You would, rightly, ridicule anyone who proposed saving money by leaving off one or two of the legs. Well, those who propose doing only the popular pieces of health care reform deserve the same kind of ridicule. Reform won’t work unless all the essential pieces are in place.

Suppose, for example, that Congress took the advice of those who want to ban insurance discrimination on the basis of medical history, and stopped there. What would happen next? The answer, as any health care economist will tell you, is that if Congress didn’t simultaneously require that healthy people buy insurance, there would be a “death spiral”: healthier Americans would choose not to buy insurance, leading to high premiums for those who remain, driving out more people, and so on.

And if Congress tried to avoid the death spiral by requiring that healthy Americans buy insurance, it would have to offer financial aid to lower-income families to make that insurance affordable — aid at least as generous as that in the Senate bill. There just isn’t any way to do reform on a smaller scale.

In other words, all paths lead back to the Senate's bill. However, there are some things that Krugman ignores here, and they are worth mentioning. First, despite Krugman's contention in his book (which I am having my MBA students read) The Return of Depression Economics, that governments can find an economic "free lunch," in reality opportunity cost rules. (It is hardly unusual to see Krugman ignore opportunity cost, given he is a True-Believing Keynesian, but, as I have written elsewhere, the guy is not an economist; he is a political operative.)

Krugman ignores the opportunity cost issues here or only pays lip service to the fundamental precepts of economic analysis, which is like a doctor claiming that one can cure a fever by bleeding someone. Regarding the Senate bill, we have a body of government creating a "good" that most people never would purchase in a free market, given their own choices.

Now, to Krugman, that is irrelevant. This is another version of scene in an old "Our Gang" episode in which Spanky's father tells his complaining son at the breakfast table, "You will eat your mush, and you will like it." Krugman is telling us, in effect, that the government must "break eggs" in order "to make an omelet," and we are supposed to think that the government's omelet is a good thing.

In fact, the Senate version, with its tax on the "cadillac plans" is telling a lot of Americans that they are going to have to do with inferior care in order to make this whole boondoggle work, as the government tries to force those people to take plans they don't want. Thus, Obama's promise not to raise taxes on families making less than $250K a year goes up in smoke.

Second, the idea that this whole mess will "lower costs" is a joke, a very sick joke. What Krugman means is that the government is going to try to do the impossible: increase the overall demand for medical care but hold down costs by, well, ordering those costs to be lower. If the reader thinks this is reminiscent of King Canute sitting on the shore and ordering the tide not to rise, well, go to the head of the class.

To a Keynesian, costs are nothing more than numbers to be manipulated through coercion. To an economist, however, costs reflect real conditions of scarcity and opportunities elsewhere. For Krugman, higher costs are reflective of "greed" in the system; force doctors and other professionals to receive less compensation (or tax away their "excess" pay) and that takes care of everything.

This, of course, is like saying that the wall facing the band at the end of "Animal House" really was an imaginary barrier. Just keep marching, and eventually the band would break through. In the case of medical care, at some point people are going to stop providing the services, especially when government creates the perverse conditions in which it orders fees that do not even cover what physicians have to pay in order to make sure the procedures occur at all. (That already is the case in many medical cases, and doctors are responding by cutting back.)

What the Senate bill really does is to turn private insurance carriers into something akin to regulated utilities. Even Krugman understands that the actions taken by the Senate are going to place upward pressures on premiums, but the Keynesian True Believer thinks that if the government orders prices not to rise (enforced by prison terms, of course), that will be the end of it.

So, you have the scenario in which insurance companies are forbidden to deny coverage to anyone for health reasons, but somehow, this will result in lower costs. Economist Walter Williams of George Mason University (Walter is a real economist, infinitely better than Krugman) likens this to someone walking into an insurance agent's office wanting to buy fire insurance because his house currently is burning down.

No, I think that Krugman -- even Krugman -- understands this basic issue. He understands that this will result in all sorts of economic dislocations which ultimately will lead Congress to implement the plan he has wanted all along: the government "single-payer" system. That is no solution, economically or medically speaking, but it does empower the state, and for a statist like Krugman, that is nirvana.

Krugman's Magic Bullet: Coercion

Paul Krugman calls himself a "liberal," but it certainly is not of the "government-leave-us-alone" liberalism. Instead, it is a belief that no one should be able to be left alone, especially in the area of medical care.

In his January 21 posting, Krugman rightly (yes, I give him some credit) notes that by itself banning discrimination on purchasing insurance will create "an adverse-selection death spiral, in which healthy people opt out and premiums soar." Krugman's solution? Coercion, of course:

You can’t solve that without both requiring that healthy people buy insurance and helping those with lower incomes afford the premiums.

I think this is something the ancients once called "rule of force." Remember, the government wanted to send you to prison for a few years if your refused.

Once upon a time, liberalism meant something else other than having the government force you to purchase a product you did not want. That liberalism is dead today. Perhaps Krugman should name his blog, "A liberal with no conscience."