Friday, March 15, 2013

Who is Flimflaming Whom?

Folks, things are getting serious. Paul Krugman and the Progressives have found the solution to all of our problems: spend money now, borrow, print, and then tax the rich (even higher) in the future and stick it to business. We'll all get rich!

You see, this is what Krugman calls a "serious" proposal. Anything that is grounded in reality -- you know, that fact-based world -- is what The Great One calls a "flimflam." First, however, he had to take his usual shot at Paul Ryan and the budget Krugman attacks. (Not that such things are news. While I have no plans to shill for Ryan, nonetheless I would say that what Ryan does is much more serious than Krugman's fantasy of spending ourselves into prosperity.)

However, one has to realize what Krugman calls a "serious" proposal: the budget plan recently released by the Congressional Progressive Caucus, which is a nice way of describing a group of people who believe in near-total State control of every aspect of your life. (Except abortion on demand, of course, as only that should be left out of any governmental regulation, according to "Progressives.")

Called "Back to Work," Krugman describes the plan in his own words:
But there’s a plan that does: the proposal from the Congressional Progressive Caucus, titled “Back to Work,” which calls for substantial new spending now, temporarily widening the deficit, offset by major deficit reduction later in the next decade, largely though not entirely through higher taxes on the wealthy, corporations and pollution.
Yes, we are supposed to believe that after the government spends trillions more on "job creation" (which is yet another euphemism for "massive public works" that socialists are fond of demanding), sometime in the next decade Congress will get around to trying to figure out how to pay for all of this. This "serious" proposal has the usual stuff about public works, "green energy," and all of the things that Obama has been pushing already. And there is yet another promise that socialist medical care will both lower costs and improve delivery.

What I do find interesting is that Krugman declares the following when describing another budget proposal, this one by Senate Democrats who apparently are not "Progressive" enough for Krugman:
...the Senate plan calls for further deficit reduction, through a mix of modest tax increases and spending cuts. (Incidentally, the tax increases still fall well short of those called for in the Bowles-Simpson plan, which Washington, for some reason, treats as something close to holy scripture.) But it avoids large short-run spending cuts, which would hobble our recovery at a time when unemployment is still disastrously high, and it even includes a modest amount of stimulus spending.
If unemployment is "disastrously high," then one would have to say that President Obama's programs then have had "disastrous" results. However, Krugman has been shilling for Obama for the past five years and continues to shill for him. Yet, he describes the results of what Obama has done to lower unemployment as "disastrous"? Very interesting.

In other words, this is more of Krugman's "heads I win, tails you lose" reasoning. And when it comes to "serious" budget proposals (as though Congress and the president are going to agree on a budget when that has not occurred for many years), the most serious is the one that spends and borrows now and then 10 years from now leaves to a future Congress as how to pay for all of it. No doubt, the Inflation Fairy is going to have to do a lot of work to pay for this one.


Dinero said...

Hi Mr Anderson , recently your posts have been dismissing Krugmans ideas with a wry comment when there is a premise of government spending creating prosperity, without giving an analysis based on economic processes, is that youre intention.

William L. Anderson said...

You are correct. Part of it is that I don't have the time to write out something as long as would be required to explain that position. Intuitively, Austrians understand that government spending (1) goes to specific, politically-connected entities as opposed to equally affecting everyone, which means the benefits are temporary for those who are lucky enough to be in the right political circles; (2) government "stimulus" spending drives resources down paths that are not economically sustainable unless infused with another burst of government spending. So, we still have the same problem, government perpetuating malinvestments.

Hope that gives a small picture of my point.

Anonymous said...

Are you an anarcho-capitalist by any chance?

William L. Anderson said...

Keep in mind that social democracy still is a form of dictatorship. Under the rules, the country has socialism and the people are not free to get rid of it.

Instead, they get to choose through elections who will receive the state-sponsored economic rents.

Unknown said...

Keynesian utopia:
The government (the most inefficient organism) keeps running huge deficits in effort to create prosperity. In an effort to provide the appearance of debt control -Taxes are increased on every part of the economy where resources are being used efficiently. The transfer actually causes the debt gap to widen due to slower private industry growth that leads to lower tax revenues than projected. At some point the Fed due to the huge debt loses the ability to keep interest rates low. Now real interest rates cause the debt to multiply and more tax increases stifle growth even further. The economy implodes and the narrative develops that the cause was deregulation

Alex said...

Take a look at our most successful industries - automobiles, metalworks, high technology. How much private vs public investment? There is your answer.