Krugman the Political Operative

Paul Krugman is a True Believer in FEMA, or at least FEMA run by Democrats. Despite the many news stories of chaos and violence in New York and New Jersey following the ravages of Hurricane Sandy (which only was a Category 1 hurricane, whereas Katrina was a Category 3), Krugman insists that the True Believing Obama administration's version of FEMA has performed magnificently.

(One can hear Krugman telling Obama, "You've done a heckuva job.)

Not satisfied with assuming that the damage to the New York area was comparable to much of New Orleans being flooded after a canal levee collapsed (Sorry, Paul, not even close), he then tells an outright falsehood regarding the response to the tragedy in Hoboken:

I could do a point-by-point — and it’s definitely worth it, if you’re curious, to revisit the 2005 Katrina timeline to get a sense of just how bad the response really was. But for me the difference is summed up in two images. One is the nightmare at the New Orleans convention center, where thousands were stranded for days amid inconceivable squalor, an outrage that all of America watched live on TV, but to which top officials seemed oblivious. The other is the scene in flooded Hoboken, with the National Guard moving in the day after the storm struck to deliver food and water and rescue stranded residents.

In other words, the National Guard immediately took care of things. (By the way, the National Guard and even FEMA were on the ground quickly in New Orleans, but government agents there acted like government agents, telling Wal-Mart its deliveries of thousands of bottles of water was "not needed," and forcing rescue workers to undergo two days of "sexual harassment" prevention training. One would think Krugman would approve, given he hates Wal-Mart and loves government haranguing of private citizens.)

Notice that Krugman did not mention Staten Island, where apparently FEMA did not perform its Krugmanesque heroics and chaos reigns as people cannot find food or anything else. Nor does he mention the gas shortages created by price controls, but Krugman is not much for prices, anyway, unless they are part of an index.

His biggest howler comes with his lavish praise of Bill Clinton's FEMA. He writes:

...Bill Clinton came in, put FEMA under professional management, and saw the agency’s reputation restored.

James Bovard would beg to differ. In his outstanding book, Feeling Your Pain, in which he chronicles the abuses and exploits of Clinton's administration, Bovard devotes an entire chapter to FEMA, which, contra Krugman, had the largest percentage of political appointees of any federal agency and handed out post-disaster checks, whether people wanted them or not. An Amazon review says:

His chapter on disaster relief is especially good, showing how the Federal Emergency Management Agency is "determined to spend tax dollars to rescue citizens, regardless of how irresponsible or negligent they have been and regardless of whether they have requested help."

Krugman's column is not so much a piece about federal agencies but rather is just another partisan political screed. He also forgets something else, and that is the brunt of Katrina did not hit New Orleans but rather the Gulf Coast of Mississippi and Alabama. In those areas, the FEMA presence was not as noticeable and, not surprisingly, the Gulf Coast recovered more quickly than did New Orleans.

You see, huge numbers of private volunteers, church groups, and other citizens went to the Gulf Coast to help, something that Krugman ignores because, after all, these people were not in the employ of the government, which means they are irrelevant and useless. As for New Orleans, the government told volunteers to get lost.

Maybe Obama Doesn't Believe in Government, Either

In the aftermath of Hurricane Sandy, a storm that not only washed away New York and New Jersey neighborhoods but also dumped about three feet of snow where I live, cutting power lines and wreaking general havoc, I have come to a conclusion regarding the response of the U.S. Government and specifically the Federal Emergency Management Agency (FEMA): Barack Obama just does not have enough faith in government.

How would I draw that conclusion? Following the disaster in New Orleans from Hurricane Katrina (which was a Category 3 storm), Krugman said that the federal government's response was bad because the Bush administration was filled with people who don't believe in government:

... the federal government's lethal ineptitude wasn't just a consequence of Mr. Bush's personal inadequacy; it was a consequence of ideological hostility to the very idea of using government to serve the public good. For 25 years the right has been denigrating the public sector, telling us that government is always the problem, not the solution. Why should we be surprised that when we needed a government solution, it wasn't forthcoming?

 So, Krugman had an explanation as to why FEMA was incompetent in New Orleans. However, now that the Obama administration's response to the aftermath of Hurricane Sandy (a Category 1 that quickly weakened into a tropical storm) has been exposed as utterly inept, so far there is silence from the Great Man at Princeton. After all, there is no ideological barrier keeping FEMA from being the Super Agency Krugman has claimed it should be (and allegedly was under Bill Clinton), so why the failure?

While it should be logical to an economist (except Krugman, who is not an economist, but rather a political operative who can do math), centralized government planning in which agents from Washington dictate policy to people who actually have more information is a loser from the beginning. Furthermore, the so-called price-gouging laws are responsible not only for horrific shortages but also discourage entrepreneurs from bringing supplies into the stricken areas, which means the recovery takes longer.

(Krugman is a Keynesian, and Keynesians really don't worry about price controls since everyone knows that prices really don't matter, except when they can be put into indices so that Keynesians can put them on the vertical axis of the Aggregate Demand--Aggregate Supply graphs.)

So, we can say that governments at all levels are involved in the aftermath of the storm, with FEMA taking the lead. And we can see how this is working. Not very well. I guess Obama just doesn't believe enough in the power of the State to work miracles. He needs to make a call to Princeton -- if the lines are not still down.

Krugman the Extremist (and Distorian to Boot)

Goldstein might win! Goldstein might win! He wants to destroy our economy, deny us healthcare, and put all of us into misery!

So rants Paul Krugman today. And to go along with his rant that taxes might be too low, he gives us some bad history. He writes:

During the first two years of Mr. Obama’s presidency, when Democrats controlled both houses of Congress, Republicans offered scorched-earth opposition to anything and everything he proposed. Among other things, they engaged in an unprecedented number of filibusters, turning the Senate — for the first time — into a chamber in which nothing can pass without 60 votes.

 There is a problem with this bit of history, however: the Democrats had a huge majority in the House and a filibuster-proof majority in the Senate, or at least from June, 2009, until early January, 2011. (The 60th Democrat came after Al Franken stole, er, won the election in Minnesota.)

So, there essentially was no Republican opposition in the first two years of Obama's presidency, contra Krugman and nothing in the way of Obama imposing his agenda, which he did with a vengeance. Furthermore, his regulatory agencies, and especially the EPA, engaged in a "Crucify Them" strategy against business owners, or at least that is what one of the key EPA regulators bragged to a friendly group before his speech found its way onto the Internet and the public outcry cost him his job.

But Krugman is not satisfied with giving a dishonest political history of the Obama years. No, he also adds this gem:

If President Obama is re-elected, health care coverage will expand dramatically, taxes on the wealthy will go up and Wall Street will face tougher regulation. If Mitt Romney wins instead, health coverage will shrink substantially, taxes on the wealthy will fall to levels not seen in 80 years and financial regulation will be rolled back.

 Now, I am not exactly sure how a medical program with what Krugman admitted contained the infamous "death panels" and piles on the government paperwork -- complete with draconian criminal penalties for doctors who don't properly dot every "i" and cross every "t" -- is going to "dramatically" expand healthcare coverage. Yes, it might on paper, but in the real world -- where people have to see doctors and actually get care -- that is not going to happen. ObamaCare has not magically altered the production function, nor has it lowered opportunity costs, which means that this new set of laws is not going to do what Krugman claims.

A real economist would know that instinctively. A real economist also would know instinctively that making it more difficult to invest, making it more difficult to build something, and moving factors of production from higher-valued to lower-valued uses through political subsidies and outright intimidation is not going to result in a better economy.

I am not a Mitt Romney supporter and if he is elected, neither he nor Congress will be willing to do what is necessary to bring this economy back to real growth mode. Instead, President Romney (unlike Candidate Romney) will lean on Ben Bernanke to have the Fed try to inflate us into recovery, which is not going to happen.

But, then, Paul Krugman is not an economist. He is a political operative, period.

Will Sandy Revive the Economy? Yeah, Right

OK, Paul Krugman has not claimed that Hurricane Sandy will make us rich or revive the economy, but at least one other mainstream economist has done something of that sort. Peter Morici, an economist at the University of Maryland, has written that disasters such as Sandy ultimately might prove net economic benefits because of all the cleanup and construction (or re-construction) work that follows.

One does not know whether to laugh or cry at this nonsense. Frederic Bastiat effectively destroyed this "Broken Window" fallacy nearly two centuries ago, but the monster continues to poke up his head and people who should know better swallow the idiocy.

Krugman actually did succumb to this fallacy 11 years ago, as Reason.com points out:

The ultimate example of broken-window lunacy comes from Nobel Prize-winning economist Paul Krugman. On September 14, 2001, Krugman used his New York Times column to lecture Big Apple residents about the upside of the utter destruction of the World Trade Center and a good chunk of lower Manhattan just a few days earlier: "Now, all of a sudden, we need some new office buildings...the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending."

 Hey, economies are nothing more than spending, right? Just print, borrow, and spend and we'll all get rich, even if we throw a hurricane into the mix.

If anyone is wondering, we got hit with a blizzard of heavy, wet snow that snapped trees and power lines. We have been without power since Monday evening and, unlike Paul Krugman, we do not have a generator (which means we have no running water). Life has been interesting but hardly tragic. I now understand why the Amish tend to go to bed early.

I have included a couple of photos of our place to put this whole storm into perspective. Yes, that is our van on the right.

Krugman and Regime Uncertainty

In a recent blog post, Paul Krugman has labeled what Robert Higgs has called "Regime Uncertainty" nothing less than a "scam." Now, when speaking of research by another economist, especially an economist like Higgs who has developed a good reputation over the years, "scam" is a fighting word, so one would think that Krugman would do more than just write another partisan screed, especially since he is a decorated academic economist.

Think again. As usual, Krugman writes a partisan screed complete with Krugman logic (an oxymoron):

Premise#1: "Regime Uncertainty" has no effect, since business investors only want to know if the economy will be strong before they invest;

Premise #2: Everyone knows that if the government spends a lot of money via printing and borrowing, the economy automatically will be strong;

Conclusion: Since Republicans have not supported everything President Obama has done, they are responsible for creating "uncertainty," even though "uncertainty" really has no effect. But we should blame Republicans, anyway, because they don't support Obama's Jobs Act, which everyone knows would bring back prosperity because Krugman says so.

So, there it is.

Krugman: Hey, the Economy is Booming!

Wow, just in time! The election is two weeks away and finally -- FINALLY! -- the U.S. economy is doing great. Don't take my word for it, take Paul Krugman's:

The U.S. economy finally seems to be recovering in earnest, with housing on the rebound and job creation outpacing growth in the working-age population. But the news is good, not great — it will still take years to restore full employment — and it has been a very long time coming.

 Of course, the reason we are not absolutely booming is because of "Republican scorched-earth politics," except for the fact that the Democrats had an absolute majority in the Senate and huge majority in the House, and no Republican in sight to do anything but weep. Yet, even with that filibuster-proof majority, the Obama stimulus "was both too small and too short-lived."

Yes, Goldstein blocked everything, despite the fact that even Goldstein was neutered for two years.

Krugman's Snow Job on Economics

Thirty years ago, I saw a local TV debate in Chattanooga between the late William H. Peterson and a Marxist professor at the University of Tennessee-Chattanooga, Phillip Giffin. Peterson had just returned from a trip to Romania, which then was living in the era of the execrable Nicolae Ceaușescu, and spoke about the poverty and misery he observed.

"But," interrupted Giffin, "There's no unemployment there."

Indeed, that is the mentality of much of the economics profession, or at least the left side of the profession, including Krugman. (No, Krugman is not a Marxist, but his Keynesian analysis is built upon many of the same foundations Marx used, including the overproduction/underconsumption paradigm.) So, I see once again that Krugman is killing trees this week to once again preach that if Barack Obama is elected, he will "create more jobs" than will Mitt Romney.

Notice that this really has nothing to do with economics per se. The Romanian regime "created jobs," although in reality, many jobs were nearly useless and the vast majority or Romanians lived in grinding poverty. Yet, we continue to hear the "creating jobs" arguments given by economists who should know better.

For most people, a job carries a transmission of income, which is why we obviously think about our jobs. However, if one thinks that a job's only use is that of an income transmitter, then one clearly does not understand employment. After all, the government could mail everyone checks for whatever amount a job would pay, and that would substitute for the income transmission.

Obviously, there would be a problem if everyone stayed home and just received a check, and it would become abundantly clear that a job is NOT just a means of providing income, but jobs also are the mechanism through which we have labor services throughout the economy, and without those service, there IS no economy. At one level, I am sure that even Paul Krugman would understand that point, but it also is clear to me that he seems to think that the importance of work really is in the income that individuals receive, and not the wealth creation itself that a job can help achieve.

For example, when interviewed about the Keystone Pipeline that Obama blocked, Krugman approved the president's actions, using environmental criteria. (Note that Krugman also praises the building of wind farms, which have their own negative environmental effects and, unlike Keystone, stay alive only through massive subsidies, tax breaks, and government requirements that electric utilities purchase power from those farms, so if one thinks that Krugman is being selective in his environmental concern, one might be correct.)

However, after announcing his opposition to Keystone, Obama then declared that increased government payments to the unemployed would have a more powerful and important economic effect than the building of an oil pipeline, and I do not recall reading a word of criticism from Krugman about that statement. Keep in mind that what Obama is saying is that essentially borrowing or printing money creates more wealth than does the application of capital in moving resources from lower-valued uses to higher-valued uses. This is stunning, for it demonstrates just how economically-illiterate Obama really is, and it also exposes people like Krugman who apparently can see no difference in printing money and creating wealth or, even worse, seem to believe that printing money actually creates wealth.

In his latest column, Krugman accuses Mitt Romney of snowing voters on jobs, asking: "But does he have a plan to create any?" That is not the right question. Instead, Krugman should be asking whether or not Romney -- or Obama, for that matter -- have any "plans" to encourage capital formation, and to let entrepreneurs and entrepreneurial firms move resources from lower-valued to higher-valued uses. Krugman's claim that Obama's record can be defended, yet Obama has done almost nothing to encourage the things I have mentioned.

(I forgot. Like Obama, Krugman believes that government can print, borrow, and subsidize an economy into a real recovery. In the end, the "plan" is called by another name: inflation.)

And what is a Paul Krugman column without at least one real howler? How about this?

Just for the record, one study concluded that America might gain two million jobs if China stopped infringing on U.S. patents and other intellectual property; this would be nice, but Mr. Romney hasn’t proposed anything that would bring about that outcome. Another study suggested that growth in the energy sector might add three million jobs in the next few years — but these were predicted gains under current policy, that is, they would happen no matter who wins the election, not as a consequence of the Romney plan.

Notice that there is no cost assumed to enforcing the intellectual property laws, and I don't know how one can extrapolate the kind of wealth creation needed for two million new jobs by the use of increased police powers, but when one is spouting rhetoric, careful thought need not intervene. Furthermore, the only significant wealth-producing portion of the energy sector is in fossil fuels, and Krugman already is on the record as saying those are evil and should be abandoned altogether. As for "creating jobs" through subsidies, apparently Krugman cannot understand that subsidies ultimately must come from those sectors of the economy that are profitable, which means that jobs are lost elsewhere.

Oh, I forgot. Being a Keynesian means that one believes government can do away with the Law of Scarcity and the Law of Opportunity Cost by fiat and with a printing press.