Tuesday, June 5, 2012

Economic Illiteracy on Parade - Paul Krugman's NYT's Column

Many days, I wonder just how people rise to the levels they have achieved in life. Today is one of those days. And one of those people is Paul Krugman, the self-admitted Keynesian cheerleader of Obamanomics. He has an article in the New York Times entitled "This Republican Economy." In it, he lamely attempts to place the blame for our economic doldrums squarely at the feet of "the Republican Congress."

How does one speak in such eloquently derisive prose when the premise is false? This incongruity doesn't seem to bother Krugman in the least. The truth that Republicans only control one-half of one house of Congress just doesn't register with Dr. K, but that doesn't dissuade him from building on his absurd claim that Republicans caused this miserable economy.

Here's a taste of, something, I'm not quite sure what it is, but it's certainly not the truth:
So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.
That's a con, how, exactly, Paul? Obama had a rubber-stamp Congress in his first two years, and he got nearly everything he wanted from that august body: ObamaCare, the Dodd-Frank bill, Cash 4 Clunkers, the Stimulus Package, all of which remains on the government's accounting books to this day. It's no secret that this administration is responsible for a record amount of federal spending that continues to drag on the economy today.

"In large part because the G,O.P. wouldn't let him? If I remember correctly, the Republicans were locked out of any meetings with Dems during that time.

It's also responsible for a record amount of regulation, which I covered yesterday.

Now, let's take a look at this "more of the same policies that have already failed" phrase, shall we?

What caused the housing market crash of 2008, Dr. K? In reference to yesterday's post, Citigroup subtly suggested what we in the real world already knew: it was caused by a specific piece of legislation, namely the Community Redevelopment Act that forced banks to lend money to people who couldn't afford to pay it back. It really is that simple.

This is a classic example of Progressive politics and policy, where instead of making sure the economy is humming along and Americans have the upward economic mobility that characterizes the Promise of the American Dream, meddling politicians decide to short-circuit free market capitalism and force banks to do what is against their best interests for short-term political gain. Politicians can thump their chest and proclaim, "Look what I did for working families!" Never mind what it does to the economy later.

The results were predictable to most except to Paul Krugman and others like him for whom real-world business experience is a mystery.

Paul, go run a business and meet a payroll every week. That's something that would do you some good.

Dr. K continues...
What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

How is that possible? Isn’t Mr. Obama a big spender? Actually, no; there was a brief burst of spending in late 2009 and early 2010 as the stimulus kicked in, but that boost is long behind us. Since then it has been all downhill. Cash-strapped state and local governments have laid off teachers, firefighters and police officers; meanwhile, unemployment benefits have been trailing off even though unemployment remains extremely high.

Dr. K lumps in federal, state, and local spending, which is not how it works. He studiously avoids the fact that states and local municipalities cannot print money as the federal government can, and must balance their books the old-fashioned way by cutting unnecessary expenditures. And he also hits the Progressive Go-To Point that teachers, firefighters and police officers are laid off as a result, instilling just a bit of fear into the discussion of "Why Republicans are Evil Cost Cutters." This ignores the salaries of many officials in local governments, who are paid well above the national private-sector average of $45K per year. Is there no room there for a pay cut for these people? Why are those salaries untouchable, while the rest of us live in daily fear of the "let's talk" talk from their boss?

Here's some more Reality-Avoidance from Paul,

As an aside, I think it’s worth pointing out that although the economy’s performance has been disappointing, to say the least, none of the disasters Republicans predicted have come to pass. Remember all those assertions that budget deficits would lead to soaring interest rates? Well, U.S. borrowing costs have just hit a record low. And remember those dire warnings about inflation and the “debasement” of the dollar? Well, inflation remains low, and the dollar has been stronger than it was in the Bush years.

Um, inflation remains low? Well, according to the Official Obama Numbers, it is. Only that their numbers don't count a couple of things we buy every week like groceries and gasoline, curiously, the two items that have increased in price the most lately. If you figure inflation the old, pre-1988 way, it's running about 11%. That's not low.

Sheesh, are all Keynesian economists this blind to reality? I guess when you're the Official Economic SpokesStooge for this administration, it does require a certain suspension of reality, for the sake of his own mental health.  What you say must make at least some sense to you just to keep from laughing. That's OK when you sit down to read a book, but when you're formulating policies that affect others, you really need to be grounded in Reality. Really.

Or else you wind up looking like Paul Krugman: delusional and out of touch.

Just like this administration. Now that I think about it, he's a perfect fit.

Just not for America.

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