Egos and Economists Who Yearn for the Nonexistent Past

One of the constant themes of Paul Krugman's writings these days, other than shilling for Barack Obama and Democrats in general, is the walk down memory lane to the nation's idyllic past where tightly-regulated industries wisely governed by The Great Eye Of Washington grew and grew until those Bad And Greedy Ideologues Led By Ronald Reagan completely overturned the Perfect System and replaced it with Greed And Chaos.

Now, I always find it interesting that people like Krugman claim that "turning back the clock" is a foolish and reprehensible thing to do -- except when people Krugman do it. Progressivism, as they see it, means that ANY new government regulation or regulatory system ALWAYS is an improvement over the previous chaotic regime when Evil Private Enterprise was in charge. Thus, any attempt to change anything can be borne only from evil intentions, as each law, each regulation, each encroachment by the State is another step toward the Perfect Society.

In a recent column, Krugman once again takes us down memory lane, telling us that Mitt Romney must have been the Second Coming of Oliver Stone's fictional character Gordon Gekko, the takeover specialist who bought healthy, profitable firms, gutted them, drove them into the ground, and ultimately made a profit from destroying companies. Now, this is quite interesting, coming from an economist, given that the scenario, while nicely fitting for Hollywood, describes an impossible set of events.

In Krugman's Wonderland, it is entirely plausible that a corporate raider only can make money if he drives a profitable company into bankruptcy. After all, in the Real World, if the parts (i.e. physical assets) of a firm are more valuable than the firm itself, then we know that the firm already was headed for doom.

For example, the value of Apple does not rest in its physical assets such as inventory, parts, building, and the like. Instead, the value of that firm lies in the ability of its people to move factors of production from lower-valued to higher-valued uses, as ultimately determined by consumers. If a corporate raider or any other company were to try to purchase Apple, it would have to buy the "whole," not the "sum of its parts," something that would make Apple's purchase price prohibitively expensive.

All of this is lost in Wonderland, where life is static, and the capital that served companies in 1950 (when the rest of the world was recovering from the devastation of World War II, as the USA was not a physical battleground and did not have destroyed factories and bombed-out cities) is still working perfectly 30 years later and produces exactly the same returns. This is the state of mind that brought Krugman's mentor, Paul Samuelson, to claim that socialism in the Soviet Union was a "powerful engine for economic growth" that sooner or later would overtake the capitalist world in economic strength.

After all, in Wonderland, an economy is little more than a graph of aggregate supply and aggregate demand (with a Keynesian Cross thrown in for good measure) in which government stirs in new money and out of the mixture comes full employment (as long as the "right people" are in charge of the apparatus of the state). Anything that might upset this picture always is portrayed as evil.

Now, what I find interesting, beyond Krugman's partisan shilling, is the following statement, which tells me more about Krugman's grasp of the current economy than it does even about his politics:

In the wake of a devastating financial crisis, President Obama has enacted some modest and obviously needed regulation; he has proposed closing a few outrageous tax loopholes; and he has suggested that Mitt Romney’s history of buying and selling companies, often firing workers and gutting their pensions along the way, doesn’t make him the right man to run America’s economy.

First, I had no idea that presidents "run America's economy," but there it is. Second, I find it quite interesting that he uses Obama as his stellar example of attacking capitalism. As Kimberly Strassel recently noted:

President Obama is no fan of Mitt Romney-style "vulture" capitalism. So what's his alternative?

All those Republicans grousing about the president's attacks on private equity might instead be seizing on this beautiful point of contrast. Mr. Obama, after all, is no mere mortal president. Even as he's been busy with the day job, he's found time to moonlight as CEO-in-Chief of half the nation's industry. Detroit, the energy sector, health care—he's all over these guys like a cheap spreadsheet.

Like Mr. Romney, Mr. Obama has presided over bankruptcies, layoffs, lost pensions, run-ups in debt. Yet unlike Mr. Romney, Mr. Obama's C-suite required billions in taxpayer dollars and subsidies, as well as mandates, regulations, union payoffs and moral hazard. Don't like "vulture" capitalism? Check out the form the president's had on offer these past three years: "crony" capitalism.(Emphasis mine)

Strassel looks at Obama's record, and I find it quite interesting that Krugman refuses to apply the same standards to the President of the United States that he does private enterprise. Barack Obama as "Master of the Universe." Who would have thought it?

Now, one might remember the Solyndra debacle, and when one combines Solyndra's $500 million implosion with the other bankruptcies that Obama-financed firms have contributed (along with their millions in political contributions to Obama), the numbers are greater than J.P. Morgan's $2 billion trading loss, that has sent Krugman into apoplexy.Then there is General Motors, Obama's economic centerpiece:

Speaking of cars, Detroit is the business venture Mr. Obama's team has been most flogging as a success. True, General Motors and Chrysler are still turning their lights on, though they'd have arguably been doing the same had they been left to go through normal, orderly bankruptcies like those that helped the steel and airline industries restructure to become more competitive.

To get to the same place, Mr. Obama's crony capitalism handed $82 billion in taxpayer dollars to the two firms. That bailout money went to make sure the unions that helped drive GM to bankruptcy (and helped elect Mr. Obama) did not have to give up pay or pension benefits for current workers. They were instead rewarded with a share of the new firm. The UAW at GM meanwhile used the government-run bankruptcy to bar some 2,500 nonunion workers who had been laid off from transferring to other plants. How truly vulture-like.

Contract law was shredded, as unions were given preference over other creditors, such as pension funds for retired teachers and police officers. Congressmen used political sway to keep open their weak auto dealerships, forcing layoffs at stronger ones (vulture . . . vulture . . . vulture). Political masters obliged the industry to pour resources into unpopular green cars. The political masters were obliged to offer $10,000 tax credits to convince Americans to buy them. (They still won't.) And the message to every big industry? Go ahead, run your business into the ground. The Capitalist-in-Chief has your back (especially if you are unionized).

I have my doubts that Krugman's future columns will deal with any of these sticky issues. (The Washington Post has an interesting column about Obama's "Public Equity" record.) He already is on the record as supporting the vast "green energy" subsidies in part because he believes coal is evil and in part because subsidies mean spending, and every Keynesian knows that spending, even if for financial turkeys, is the lifeblood of an economy.

As for GM and Chrysler, Krugman also has thrown in with the Obama administration on its action, yet in the "restructuring" of GM, the government pretty much forced massive layoffs and the like, the very things that Krugman claims make private equity to be the Very Spawn of Satan. The difference is that when private equity firms are in charge of layoffs, they tend to be done for economic reasons.

In the case of GM and Chrysler, however, it was quite clear from the start that the purpose of the bailout was to reward political contributors to the president and Democrats and to punish anyone who had the temerity not to bow down to Obama and his White House gang. This is what the ancients once called "Crony Capitalism," but when the cronies are Obama and company, then suddenly what was once a scourge now becomes an asset.

None of this is should be read as a defense for the current presidential candidacy of Mitt Romney. He has provided nothing in his campaign that tells me he has a clue of what is happening to this country and what needs to be done. Instead, he simply claims that he will "manage" the economy better than Obama has done.

The idea that Romney is running as a "Manager-in-Chief" should give anyone pause, and I don't think he will have any more economic success than did Richard Nixon, who presided over price controls, inflation, and economic stagnation. However, it seems that Krugman is clueless as to what Romney's real weaknesses might be. Instead, he shills for Obama because he believes that the president is the Right Man to lead us back to that era when government created cartels in banking, telecommunications, cartels, and energy and all was perfect and right with the world. Except that it wasn't.

Krugman, "National Greatness," and Boondoggles

One of the mantras for the Neo-Conservatives has been "national greatness," which means that America ought to be producing huge, expensive public works projects. (One gets the sense that William Kristol and David Brooks wistfully see the Pyramids in Egypt and wish that we could leave something similar for future generations.)

Now Paul Krugman is taking that one step further, arguing that big public transportation projects are a sign of "national greatness," and that people like Gov. Chris Christie are cheating us of a future by engaging in "cannibalism." Yes, the same Paul Krugman who is calling for big increases in inflation, the same Paul Krugman who demands that the Obama government increase its rate of borrowing, the same Paul Krugman who has called for the Federal Reserve System to engage in the worst kind of financial trickery by buying short-term Treasuries, is now complaining that Christie's refusal to commit future generations of New Jersey taxpayers to massive cost overruns via a rail tunnel actually is an example of "cannibalizing the future."

I must admit that Krugman's audacity is breathtaking. Not building the rail tunnel, according to Krugman will "strangle the state's economy" as though all of New Jersey depends upon one rail tunnel to be operated by a government agency. Krugman writes:

America used to be a country that thought big about the future. Major public projects, from the Erie Canal to the interstate highway system, used to be a well-understood component of our national greatness. Nowadays, however, the only big projects politicians are willing to undertake — with expense no object — seem to be wars. Funny how that works.(Emphasis mine)

Throughout the column today, Krugman goes on and on about how passenger rail projects present a wonderful future and that anyone who is against them must be evil. He declares:

One answer is that the governor is widely assumed to have national ambitions, and the Republican base hates government spending in general (unless it’s on weapons). And it hates public transportation in particular. Indeed, three other Republican governors — in Florida, Ohio and Wisconsin — have also canceled public transportation projects supported by federal funds.

 What Krugman does not tell us is that projections of the Florida rail project from Orlando to Tampa (for which the feds promised the state $3 billion) were such that Florida taxpayers would be stuck paying billions of dollars more for the project that would have become a high-cost boondoggle. The non-Krugman account is found here.

Then there is California, something Krugman has not mentioned. In that situation, the Holy Democrats, which run the state and are engaging in fiscal cannibalism of their own in propping up the state's government employee unions, have engaged in utter financial nonsense in promoting the "Bullet Train" from San Francisco to San Diego. The report is here. Steven Greenhut has more on the California rail rip-offs. (And even Slate gets into the act.)

My guess is that Krugman is like many Progressives in that he has a wonderful future planned for the Great Unwashed who now commit the sin of driving cars and shopping at Wal-Mart. Granted, he has no plans to take part in that future, which is reserved for the ignorant mundanes who need to be saddled with massive and unpayable debts, which would cannibalize their own futures.

But, why should the mundanes be permitted at all to plan for themselves? No, they need Paul Krugman and the Progressives to do that for them.

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 "caste" nonsense

Paul Krugman really does not seem to understand the effect of third-party payments, and he especially does not understand when it comes to the government and the cost of higher education. In a recent post, he implies that anyone who does not favor massive increases in Pell Grants does so because he does not want the "less fortunate" to have educational opportunities.

Of course, I have a solution: places like Princeton, Harvard, Yale and Stanford have huge endowments. Why not just offer free tuition at these places to students who are "less fortunate" and have admissions policies that will guarantee that people from poor schools can be accepted, no matter what their academic performance might be.

You see, Krugman both claims to be against a stratified caste system, and yet he demands that the USA become like Europe which is heavily stratified and where one's location in the higher-education hierarchy determines ones future. For that matter, the old Soviet Union had the same kind of system.

However, once upon a time, the USA was not stratified in this manner, back before the Progressives gained power and decided that "credentials" were more important than real qualifications. If Krugman really wished to get rid of this "caste" system he claims exists, then he would be in favor of giving entrepreneurs the freedom to produce and end the various regulatory policies of licensing and the like that serve to hold back deserving people.

Were we in paradise, but failed to realize it?

Progressives have a narrative that just won't quit, even when the facts contradict them. Whether it is Paul Krugman or Robert Reich or an editorial writer of the New York Times, the narrative goes like this: From the New Deal to 1981, America was a virtuous, prosperous country that flourished on unionized industries and high tax rates, with many key industries heavily regulated by government.

The economy was in perpetual motion, jobs were easy to find, and life was good. Then the ideologues somehow managed to convince prosperous Americans that they really were bad off and that perhaps we needed to change the tax rates and regulatory structure. That was the beginning of the end, and from 1981, the economy continually spiraled into Hell, with a brief respite coming in the Bill Clinton administration, with the economy booming because the top tax rates were raised from 33 percent to 39.6 percent.

Alas, the Evil People took over in 2001, after stealing the presidential election, and the proceeded to lower the top rates from 39.6 percent to 35 percent, and that caused the economy to collapse, first in 2001, and then in 2008, and now it is tanking further because the Evil People don't want high rates of inflation and are against raising the top tax rates to 70 percent.

Thus, if one receives a steady diet of the NYT, the solution to our problems is as follows:

• Raise the top income tax rates at least to 40 percent and preferably back to 70 percent;

• Unionize all American industries, and if workers don't want a union, force one on them, anyway;

• Get the Federal Reserve System to manipulate the monetary transmissions until the rate of inflation reaches at least 6 to 8 percent, with goals of pushing it into double-digits;

•  Create more highway-building schemes with the hopes that middle-class people will be employed, which will enable them to get more money, which means they can spend us into that "virtuous circle" of job creation.

Lest anyone think I am kidding, read the latest op-ed in the NYT from Robert Reich, the former U.S. Labor Secretary and full-time crank. Declares Reich:

Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.

During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.

Starting in the late 1970s, the middle class began to weaken. Although productivity continued to grow and the economy continued to expand, wages began flattening in the 1970s because new technologies — container ships, satellite communications, eventually computers and the Internet — started to undermine any American job that could be automated or done more cheaply abroad. The same technologies bestowed ever larger rewards on people who could use them to innovate and solve problems. Some were product entrepreneurs; a growing number were financial entrepreneurs.

Yes, ladies and gentlemen, blame cutting tax rates and...Steven Jobs. That's right, read what Reich says. He actually blames the entrepreneurs for increasing wealth through new capital.

So, it seems that economically speaking, we have come full circle. The Golden Age of which Reich speaks was one in which post-World War II, the USA had the capital advantages, but as other countries began to rebuild their economies, like Japan, and also adopt superior capital and production methods, the U.S. advantage began to wane.

The big warning should have been the currency crisis of 1971, but notice that people like Reich consider this to have been a triumph, since the 1970s was a decade of inflation, and Reich and his fellow Keynesians are champions of destroying the value of money. An economy, in their view, is nothing more than a big circle in which people spend and spending creates jobs and jobs allow us to spend, and the circle continues.

So, if all it takes is spending, I have a better idea, one that I am sure that Reich, Krugman, and the NYT would support: Just give everyone lots of money. Don't worry about jobs at all. Just give people money, and since production is automatic, the goods will be there as long as the government puts money into the hands of everyone.

Such a scheme should not be difficult, and we need not worry about the costly monetary transmission mechanism of "the job." Why bother when all that is needed is more spending?

So, why don't we see Reich, Krugman, and others promoting this scheme? After all, it is consistent with what they are demanding whenever they take to print or the airwaves. I mean, jobs are dangerous, bosses can be mean, and they are so, so unnecessary when all that is needed is spending.

And please don't pull a "work ethic" line on me. Progressives for years have denigrated the world of work, speaking of "dead-end-jobs" and accusing employers and business owners of exploitation of workers -- and worse. Krugman, Reich, and the NYT editorial writers and other Progressives see "jobs" mainly as transmission devices for providing incomes to the middle class, so that those people can spend us back into prosperity.

Apparently, that is what they wanted us to believe was the case in post-war America. The government taxed the rich at very high rates, unions forced up wages, and people spent like crazy, creating Reich's "virtuous circle." As one who was working in the late 1970s, I don't remember the U.S. economy being in the great shape that Krugman and Reich claim it was.

Furthermore, for all of the talk about ideology and deregulation, it was the liberal Democrats like Ted Kennedy, Jimmy Carter, and Alfred Kahn that were at the forefront of those initiatives. However, that narrative doesn't fit the current set of false facts, so like everything else, it must be shoved into the Orwellian Memory Hole so that Americans can be told by Progressives that giving the state more regulatory powers, high tax rates, and lots of inflation will bring back prosperity.

Who pays for "the kind of society we want"?

If anyone believes that Paul Krugman is nothing more than a shill for the Democratic Party, I think today's column would provide needed ammunition for that point of view. Furthermore, I believe that we also better understand Krugman's "vision" for the rest of us, or should I say the "vision" of the life he wants to have imposed on us.

First, however, let me say that NEITHER party in Washington is "serious" about the federal budget. For all of Krugman's claims that the Congressional Budget Office actually consists of "people who actually understand budget numbers" (at least when they write something Krugman likes), the latest stuff from the CBO is based upon pure fantasy.

As the CBO has been doing for as long as I can remember, it frontloads the revenues from tax increases and backloads the costs, and even then it is not honest about the real costs that will come about because of federal policies. That Krugman would be shilling for this nonsense tells us more about Krugman than it does about the CBO numbers. (I also suspect Krugman watches "Animal House" once a week in a belief that the band at the end of the movie finally will be successful in marching through the wall in the alley. The chance that the band will break through is about as likely as the chance that the CBO is going to give us an accurate depiction of the future.)

Second, as I read through this, I realize that Krugman really is not interested in budget numbers or whose plan actually will get spending under control and cut the federal deficit. No, Krugman gives away his viewpoint with the following:

The president’s proposal isn’t perfect, by a long shot. My own view is that while the spending controls on Medicare he proposed are exactly the right way to go, he’s probably expecting too much payoff in the near term. And over the longer run, I believe that we’ll need modestly higher taxes on the middle class as well as the rich to pay for the kind of society we want. (Emphasis added)

What is the "kind of society we want"? Or, perhaps, I should ask, "Who is 'we'?" Furthermore, who pays for this kind of society, and what if one has a different viewpoint?

As I read that statement, I recalled a recent column by Thomas Sowell (who, unlike Krugman, actually invokes real economic terms in his writings, like "opportunity cost" and Law of Scarcity). In writing on the effects of higher tax rates, Sowell points out that the issue with people like Krugman is not the actual revenues raised, but rather the economic and social vision that these people have -- and have for the rest of us, whether or not we want that "vision" imposed upon us. Sowell writes:

For more than 80 years, the political left has opposed what they call "tax cuts for the rich." But big cuts in very high tax rates ended up bringing in more revenue to the government in the Coolidge, Kennedy, Reagan and Bush 43 After all, "the rich" paid that larger sum of taxes only because their incomes had risen. Their paying a higher share of all taxes doesn't matter to the "progressives," who see high tax rates as a way to take a bigger bite out of the incomes of higher-income people, not just provide more revenue to the government.

However, he further notes:

Tax rates are meant to make an ideological statement and promote class-warfare politics, not just bring in revenue.

There has been much indignation on the left over the recent news that General Electric paid no taxes, despite its large amounts of profit. But another way of looking at this is that high tax rates on paper do not mean high tax revenues for the government.

The liberal answer to budget deficits is almost always to raise tax rates on "the rich," in order to bring in more revenue. The fact that higher tax rates have often brought in less revenue than before is simply ignored.

Our corporate tax rates are higher than in many other countries. That may have something to do with the fact that many American corporations (including General Electric) expand their operations in many other countries, providing jobs – and tax revenues – in those other countries.

But high-tax ideologues don't see it that way. They would be horrified at the idea that we ought to lower our corporate tax rates, just so that more American businesses would do more of their business at home, providing more Americans with much-needed jobs.

To ideologues, that is just a cop-out from the class-warfare battle. It is far more important to them to score their political points against "the rich" or "Wall Street" than that a few million more Americans out of work would be able to find jobs.

The idealism of the left is a very selfish idealism. In their war against "the rich" and big business, they don't care how much collateral damage there is to workers who end up unemployed.administrations. This included more – repeat, more – tax revenue from people in the highest income brackets than before.

You see, the "vision" that Krugman has for us is of a society in which everything is provided administratively. The government plans our lives, tells us what we should eat, what we should wear, what we should use for transportation, and, frankly, what we should believe.

An economy, in Krugman's view, is nothing more than a mass of stuff that just happens. The mines, the factories, the capital, the farms, and the stores just appear, and they will operate just fine as long as the government manages to throw enough money at them to keep the "spending" machine in operation.

The entrepreneur, in Krugman's view, is not someone who moves resources from lower-valued to higher-valued uses while in search of a profit. No, the entrepreneur is a parasite, someone who works outside the Vision of the Anointed Ones (like Krugman) who are working to create the society that we should have.

I have come to believe that Krugman thinks that incentives really don't matter, and that one can have a great economy if the government just uses enough coercion, throws enough "uncooperative" people into prison, and confiscates enough wealth from "parasites" who actually create something. Here is someone who really thinks that price controls are an effective way to lower real costs, and that price controls and the like have no negative effects at all.

This is not economics, and it certainly is not the economics of a free society. However, people like Krugman believe that "freedom" is nothing more than government provision of everything -- and government attacks on the liberty of anyone who might disagree with what Sowell calls, "The Vision of the Anointed."

In the end, Krugman's "kind of society we want" is one in which everyone works for the state, whether or not one actually is a government employee. Like all Progressives, he believes that the highest measure of one's being is to support the "progressive" state, and if you don't like it, well, there is a nice jail cell waiting for you.

Just Who is Funding What?

In today's column, Paul Krugman derides what he calls a Republican "witch hunt" because, well, politics has become a pretty ugly thing. If he were to do what I do -- not watch TV or listen to talk radio -- then perhaps his poor life would be a bit more peaceful.

At one level, I can agree with him. I am not enamored with Glenn Beck's antics, I don't listen to Limbaugh, am sick of the "Ground Zero Mosque" nonsense, and I don't believe that President Obama is a closet (or even open) Muslim, nor am I on a grand search for his birth certificate. Furthermore, I don't believe that Mexicans and Central Americans slipping into our border states is a "threat to national security," and I fear that conservatives are going to be pushing the dreaded "Your papers, please," regime upon us -- something that Democrats ultimately would embrace too, given that it would give them more power over those dreaded Republicans traveling about the country.

I am watching more and more Republicans making these things their central talking points, which is why I stay away from party politics. However, in reading Krugman's list of bogeymen, I think that he is also being his usual dishonest self. We read:

...powerful forces are promoting and exploiting this rage. Jane Mayer’s new article in The New Yorker about the superrich Koch brothers and their war against Mr. Obama has generated much-justified attention, but as Ms. Mayer herself points out, only the scale of their effort is new: billionaires like Richard Mellon Scaife waged a similar war against Bill Clinton.

Since I don't receive money from any of these folks nor work for their organizations (although I have published some articles in Cato's magazine, Regulation), I'm not beholden to any of them. But, for all of the hoopla about those dreaded rich people funding things Krugman doesn't like, let us not forget that Krugman and the Democrats have their own billionaire benefactors, led by George Soros.

Yes, if you look at huge numbers of organizations -- including those organizations that Mayer used to gain her "facts" against the dreaded "Kochtopus" -- you will find that they are funded by...Soros. In fact, a number of organizations that Krugman likes to use as his own fact gatherers are funded by Soros and his Open Society Institute. Furthermore, we often see the NY Times editorial page using Soros-funded outfits as their sources.

However, I don't ever recall Krugman mentioning the OSI in any of his columns or blogs, yet Soros is far wealthier and more active than even the Koch brothers. For that matter, Soros was every bit as active against George W. Bush's presidency as was the right against Bill Clinton when he was in the White House.

One does not have to like any of this to recognize what is going on. As the executive branch gets more powerful -- and more reckless (which is what "Progressives" like Krugman want, to be frank) -- the stakes get higher. More and more, it is the executive branch and its regulatory agencies calling the shots, and when that happens, huge amounts of wealth are transferred without a single vote from Congress.

Yet, this kind of unaccountable government, with its symbiotic ties to "private" organizations and "think tanks" funded by billionaires, is precisely the very dream of "Progressivism," and Krugman is squarely in that mix. So, given that Soros began his OSI antics in 1979 -- long before the Koch brothers were funding groups on the Right -- I would say that this process first started on the Left.

But to read Krugman, we are supposed to believe that these poor Democrats are poor little babes in the woods, cowering before the Billionaire-Funded Republican Attack Machine. Give me a break, people. This is politics on all sides, and it is ugly and destructive, and Paul Krugman is an integral part of the ugliness.

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.