In advocating for a new "jobs program," Krugman first gives his pat answer for funding the whole affair:
(D)espite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.In other words, we should not worry about it, as the government can inflate away the debt, and that is a good thing. But there is another issue that Krugman ignores, and that is why there would be the need for a "job" at all. (In other words, just borrow the money and give it directly to anyone who is unemployed.) Hear me out on this.
(L)ong-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.
When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.
There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.
He is correct in his assessment of the human tragedy, but simple spending with government "creating new jobs" is pretty meaningless. First and most important, to a Keynesian, a "job" is important because it is a source of income. People work in order to earn money so that they can consume. Yet, in the real world, a job is a mechanism through which someone produces something that meets the needs of others, and for which that person is compensated.
Keynesian theory separates production and consumption, as though they were two separate and unrelated things. Goods are randomly produced and then one only can hope there is enough money floating around to allow people to purchase those goods and clear the shelves so the circular process can continue. There is nothing purposeful about it; this is just a description of a big production/consumption circle with the chief end of consumption being the creation of an opportunity for more production (so that people can earn incomes and buy more goods so they can support their jobs).
Second, a real economy (as opposed to what Peter Schiff calls our "phony economy") creates employment opportunities out of the natural progression of economic growth. People in a real economy do not have to implore politicians to borrow a few hundred billion dollars to employ people in a new bureaucracy and call it "job creation" or "putting America back to work."
If Krugman is going to write about the "forgotten millions," perhaps he needs to recall those millions of tax-and-borrowed dollars that were spent yesterday to employ people for a while so that the president could be seen as enabling a fake recovery. For that matter, the mirage of recovery continues. At the present time, the government is borrowing 46 cents of every dollar spent (according to the Congressional Budget Office), and the upshot has been a huge increase in...government jobs.
What Krugman apparently wants is for that rate of borrowing to increase so that we can turn more and more Americans into bureaucrats. Not that bureaucrats produce anything, but I guess they can spend and spend. So, if this is going to be our "employment" future, why not just print a bunch of money, load it into helicopters and dump it. The effect on the economy would be about the same as "creating" fake government occupations.
So now Krugman has evolved his argument for printing and spending to combat “millions of human tragedies.” If only there was a wise central banker in charge in the 1300’s. He could have printed and spent to combat the human tragedy of the Bubonic Plague.
I try my best to understand what Krugman is talking about, but I come up empty-handed. I think your reductio ad absurdum is correct: he's really suggesting that the Federal Reserve should simply "quantitatively ease" all Americans to prosperity by electronic transfer of "money" to their bank accounts. But he thinks what he's saying is different from that. In some way that he never articulates, Krugman has uncoupled the idea of "money" from its representational form (standing in for underlying true wealth) and sees simply the electronic form of Fed money creation as equivalent in all respects to representational money. It doesn't matter which it is, and that's why the Treasury cannot "run out of cash." It's a little like the redneck joke about being broke; how can I be broke if I still have checks in my checkbook? I think Krugman, in his extreme way, has gone the MMT people one better and is now a firm believer in "virtual money" and its power to command goods and services in the real world. They were too kind on CNBC when they called him a "unicorn." He's a fabulist.
What Krugman wants is to sell his books and keep people reading his columns and blogs.
Krugman makes a great living peddling his nonsense.
If he stopped telling his cult-like followers what they want to hear, they would simply stop buying his books and find someone else to tell them what they want to hear.
"Not that bureaucrats produce anything, but I guess they can spend and spend. So, if this is going to be our "employment" future, why not just print a bunch of money, load it into helicopters and dump it. The effect on the economy would be about the same as "creating" fake government occupations."
That's the thing. Helicopter money is a one shot deal, But make work jobs last forever. When the worker retires and new employee can step right in and line up for his "paycheck."
(My plan was for FEDGOV to print up 300 million credit cards with unlimited limits and give them to every man and woman in the nation. There, that'll stimulate things!)
Ah Krugman, the man that looked at the North Dakota oil boom and said oil had little to do with it.
A US industry finally finds a way to create lots of high paying/low qualification jobs and the first thing he yells is "Stop!"
This is the guy who is going to get people back to work?
I wonder Keynes ever factored in industrial suppression into his models. Sure you can hand out cash to boost spending, but what if there is nothing to buy? (Example: USSR)
I am starting to read Joseph Stiglitz's book The Price of Inequality. It seems simple to Joe: Since any economic system is a social (and legal) construct, then we can re-distribute, regulate, to our hearts content to obtain egalitarian outcomes. Kill the rent seekers!
If only there was a wise central banker in charge in the 1300’s. He could have printed and spent to combat the human tragedy of the Bubonic Plague. Well, if there had been the knowledge to combat the Bubonic Plague back then, it would have been crazy for governments back then to not combat it. And they did, do the best of their meager abilities.
It's a pretty good parallel. Do-nothingers like some Austrians are much like those during the Plague who argued that it was divine punishement and that any effort to combat it was impious evasion of the divine punishment.
It stems from a religious belief, which makes most religions look sensible. That governments cannot produce, cannot organize or guide the production of, cannot increase the production of wealth.
That human beings organized together calling themselves "the government" cannot work to benefit these same human beings. Only human beings organized together calling themselves "profit-making business" can work to produce and benefit.
But where did these profits come from? Partly from businesses and banks lending, spending, producing and trading with each other. But where did this "money" that measures the profits come from? Money and monetary economies and markets came from the state. Money & "the market" worshiped by the pious is a government intervention, the same government that pious do-nothingers insist cannot do anything (good).
A "real economy" isn't hamstrung by thousands of pages of government regulations, the US is very remote from any kind of free market system and proposing to remedy its problems with even more regulations is an example of insanity, if the goal is prosperity. Bertrand de Jouevenel points out in his "The Art of Conjecture" that attempting to predict the future when the plans of authorities can't be discerned means that investments won't be made and people won't be hired. The deeper the government digs into the economy, the worse things will get. Look at Spain.
It's all redistribution of wealth. One side gives it to corporations such as GM, cities and states creating subsidies and huge tax breaks for the corporation effectively buying jobs--hell, it might be cheaper to hand out money directly to the people. I don't really see how your argument is all that different.
And your free market is really just anarchy by another name. Money equals speech and all that. Roads, schools, parks all privatized to the highest bidder.
What about the commons? There has to be common goals that benefit society, otherwise government breaks down and we have the current system of obstructionism. But hey, all for the mighty dollar, right?
“…huge tax breaks for the corporation”
Corporations don’t pay taxes, people do. Corporate taxes are a cost of doing business and paid for by either consumers, shareholders, employees or a combination thereof.
“What about the commons?”
The faulty premise in your statement is that it assumes that only government can provide the whole list of commons.
And your free market is really just anarchy by another name.
Wouldn't want too much of that freedom stuff, like freedom of speech, for instance. Who knows what logical concepts the plebs might embrace without state guidance? Or religion, anarchy in the spiritual world could cause all kinds of problems, better to just forget about it.
would the helicopter cash dump not distort the economy some what
"Money and monetary economies and markets came from the state. Money & "the market" worshiped by the pious is a government intervention,"
Whatever-Keynesians are mind-blowingly hilarious. The proof lies just above.
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