I'm guessing that Paul Krugman and David Brooks don't hang out that much together. So when both turn up on the New York Times op-ed page this morning with columns calling for massive government spending, I'm assuming they came to their conclusions independently. My working hypothesis: if Krugman and Brooks agree on something this important, they must be wrong.
Here's Krugman's prescription, which comes in response to news that consumer spending has dropped sharply [emphasis added throughout]:
[W]hat the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.Let’s hope, then, that Congress gets to work on a package to rescue the economy as soon as the election is behind us.
From Brooks:
In times like these, the best a sensible leader can do is to take the short-term panic and channel it into a program that is good on its own merits even if it does nothing to stimulate the economy over the next year. That’s why I’m hoping the next president takes the general resolve to spend gobs of money, and channels it into a National Mobility Project, a long-term investment in the country’s infrastructure . . . A major infrastructure initiative would create jobs for the less-educated workers who have been hit hardest by the transition to an information economy. It would allow the U.S. to return to the fundamentals.
So Krugman wants the feds to spend because he thinks it will stimulate the economy, while Brooks urges similar action while admitting it might not work. But both share the same bottom line: our betters in DC should spend, as Brooks puts it in a rush of colloquialism, "gobs of money."
This is of course classic Keynesian economics, and as such, subject to the classic critique thereof. Washington can't find the money it would spend under a tree somewhere. Ultimately, public spending takes dollars from the private sector, and substitutes the judgment of politicians for that of the market. In doing so, it by definition allocates capital inefficiently. Sure, some jobs and some stimulus might be created in the short run. And yes, I know that Keynes said that in the long run we're all dead. But in a long run that wouldn't be so long off, such misapplied spending would ultimately produce less economic activity and fewer jobs than would the market, left to its own devices.
Between their shared scorn for Sarah Palin, and now their similar nostrums for the economy, this could be the beginning of a beautiful friendship between Paul and David. But that doesn't mean we should pay the price as they stroll off into the gathering gloom.
—Mark Finkelstein is a NewsBusters contributing editor and host of Right Angle. Contact him at mark@gunhill.net.
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half-wits
October 31, 2008 - 06:35 ET by totalkaosdaveTotalKaosDave
So, do two half-wits make one full-fledged idiot?
"stimulus should take the
October 31, 2008 - 08:45 ET by kg"stimulus should take the form of actual government spending rather than rebate checks"
Didn't the government just spend about $850 Billion? Isn't government spending one of the many reasons the US is in this mess?
"Forget change, I want improvement!"
Investing in Failure - The Barack Obama Plan
October 31, 2008 - 06:43 ET by Retired GeekBarack Obama's clarion call is to "Sacrifice for the Common Good" - to redistribute wealth, as Obama said to 'Joe the Plumber', "letting those behind catch up".
Who are these citizens that Obama will invest the money of those who work in?
Hard working people that need 'Just a Helping Hand' to catch up?
Hard working students that need help to finish or continue their brilliant educations?
NO, Barack Obama wants to invest OUR money in criminals, those chronically unemployed and those students that have low levels of student academic achievement.
That is like picking the poorest performing stocks one can find and investing their retirement and 401K money in failure - hoping to help those companies that are on a course of bankruptcy, complete their goals.
Those who work get to help criminals pursue their careers, those that won't work, continue not working (with some walking around money) and enable drug users, alcoholics and other addicts to continue their lifestyles.
"Establish 20 Promise Neighborhoods: Obama will create 20 Promise Neighborhoods in cities across the nation that have high levels of poverty and crime and low levels of student academic achievement." Barack Obama, Blueprint for Change
Barack Obama's 'Hope' and 'Change' = 'Investing in Failure' = coming to America with anyone who works help.
And what will these
October 31, 2008 - 06:48 ET by motherbeltAnd what will these "Promise Neighborhoods" do?
Will they be "chosen" or "created" (Oh, goody...more "projects")
I can see it now....complete with sinkhole to throw the money into.
More jobs for
October 31, 2008 - 06:45 ET by motherbeltMore jobs for ditch-diggers!! (Unionized, of course!!)
Obama's Marxist/Socialism - coming to America
October 31, 2008 - 07:09 ET by Retired GeekWhat is the difference between socialism and communism?
Socialism can only grow directly from Capitalism.
Communism can only be achieved from Socialism.
Socialisms slogan is: "From each according to his ability, to each according to his DEEDS."
Communisms slogan is: "From each according to his ability, to each according to his NEEDS."
Socialism and communism are alike in that both are systems of production for use based on public ownership of the means of production and centralized planning.
Socialism is the first step in the process of developing the productive forces to achieve abundance and changing the mental and spiritual outlook of the people.
Socialism is the necessary transition stage from capitalism to communism.
There are two kinds of property to a Socialist:
1) Property used for private enjoyment, i.e. Automobile.
2) Property used to produce the Automobile.
Socialists will allow you personal property i.e. Automobile, but will take away and own the property used to manufacture the Automobile.
There is one kind of property to a Communist:
That which is owned by the state, including the citizens of that state.
The communist principle of distribution according to needs is not immediately possible and practical until the Socialist framework is in place.
The conjecture that Socialism is NOT Marxist thinking is both foolish and plain silly.
http://hisfacts.blogtownhall.com/2008/10/21/obamas_radical_and_communist_alliances.thtml
. . A major
October 31, 2008 - 07:13 ET by MidAmerica. . A major infrastructure initiative would create jobs for the less-educated workers who have been hit hardest by the transition to an information economy. It would allow the U.S. to return to the fundamentals.
Hold it! Stop right there. Is he suggesting the workers who build bridges and roads are not very well educated? Let him come out and rebuild a bridge high over a raging river or operate a massive dirt scraper up a steep bank and he'll see how much knowledge it takes to do the job and live to tell about it. Perhaps he's been watching old movies of FDR's depression era projects where armies of workers armed with shovels and wheelbarrows created massive public works projects. But then.... with a new socialist President we just might see that happen. Stalin used to force millions to work on infrastructure with only picks and shovels just to show them peasants that it was the state that controlled their destiny.
Not Necessarily the Case
October 31, 2008 - 07:13 ET by Remixer96Mark,
I don't agree with your critique of Krugman and Brooks' infrastructure investment plan, because I believe the argument fails both at the extremes and when considering intertemporal effects.
First, I agree that public spending takes money from the hands of private individuals and corporations, but this is not inherently inefficient in all cases. If this logic held, it would discredit government spending for anything. There are many goods such as a military, roads, a clean environment, etc. that do not attract private spending on an individual basis but we as a society agree are valuable enough to merit spending as a whole. Particularly in regards to infrastructure, such as roads or the initial backbone of the Internet, public dollars are often the best means of getting such platforms started for private enterprise to build on later.
Second, I believe you are underestimating the return of a solid infrastructure and the likely impacts of such a project. The United States, despite our current debt, can still borrow at some of the best rates in the world. As such, so long as our returns from the project outwiegh the debt we take on to complete it, the US could capture value from the project when considered over long periods of time.
Is it a risk? Of course, and that should be debated. But I don't believe it's justified to write off the project as an inherent waste so easily.
Props for first known use of
October 31, 2008 - 07:26 ET by Mark FinkelsteinProps for first known use of "intertemporal" in an NB comment ;-)
But seriously, it's true that my critique isn't, and doesn't really purport to be, a thorough analysis. It is really more the gut reaction of a fervent believer in markets. And yes, more and deeper discussion of these issues is in order. On the other hand, there was nothing deep or discerning about what Krugman or Brooks had to say, either. Let's not forget that the plan of the oh-so-intellectual Brooks is for the government to spend "gobs of money."
As for justified government spending on things such as the military: I consider that a necessary evil. But here, the spending being proposed is anything but necessary. It is spending explicitly for spending's sake. As such I think we're wise to be particularly skeptical about it.
Indeed
October 31, 2008 - 07:35 ET by Remixer96Indeed.
Spending for spending's sake can scarcely ever be called a good thing, be it in "gobs" or morsels.
I suppose I simply have hope that if the government goes the spending route, they'll do it in a way that pays off. I think it's possible, but only with (as you said) some real scrutiny and discussion of what they plan to do.
Let's not forget that the
October 31, 2008 - 08:24 ET by motherbeltLet's not forget that the plan of the oh-so-intellectual Brooks is for the government to spend "gobs of money."
I forget who said A few billion here, a few billion there; pretty soon you're talking about real money!
And remixer...you hope they will spend it in a way that "pays off"...
When has the government ever done that????
Well, not to worry; I'm sure it will pay off for somebody....;-)
Response
October 31, 2008 - 08:54 ET by Remixer96"When has the government ever done that????"
The Interstate Highway System, the network infrastructure that preceded the Internet, and the military to name three.
I think saying that government can do nothing right is dangerous. It has to be closely monitored and limited, but it does do many things right as well as wrong.
It's a tool like any other. Much more complicated, but only as good or bad as we use it.
I'd agree with you, except...
October 31, 2008 - 07:38 ET by JohnMcGrew...the effectiveness of such “investment” is predicated upon the premise that it would be executed efficiently and on projects with long-term value to society. Such projects of the “new deal” era crossed the spectrum. We continue to reap the benefits of many of those “investments” today, such as dams, rural electrification, the TVA, etc. On the other hand, there were just as many, if not more, projects that were just “make work” boondoggles that left no value whatsoever.
Considering the demonstrated proclivities of our current and hopelessly corrupt congress, I’m afraid that what we will be spending most of this “investment” on will be the latter.
»→ Efficient execution
October 31, 2008 - 07:43 ET by Cool ArrowEfficient execution of a government project hasn't occurred since Gary Gilmore met his commitment (under budget) in Utah.
I agree
October 31, 2008 - 08:21 ET by Remixer96I agree that there have been many failures as well as successes in government investment projects. However, I have to hope that a sufficient amount of scrutiny and debate will give us a better chance of choosing lasting investments, which I think we could very much use as a nation right now.
I don't believe Congress is "hopelessly" corrupt either, and I think writing off all projects for such reason is selling Congress a little short given the current economic situation facing the country. But I do agree that ensuring a genuine process would be... an above average feat for the present day Congress.
However I still think the risks, if executed correctly, would be worth it.
that a sufficient amount
October 31, 2008 - 08:28 ET by motherbelta sufficient amount of scrutiny and debate
<insert hysterical laughter>
You really are an optimist, aren't you?
I wish I could think that way.
If we have one-party government, the only debate will be about whose districts get the biggest projects, with more constantly added on so no one's left out!
You can't possibly be serious
October 31, 2008 - 09:45 ET by JohnMcGrewHow many pages of pork were in the nearly 500 that made up that "emergency" bailout bill just a few weeks ago?
Planning fiscal policy based purely on "hope" in the light of reality is laughable, if not plain insane. Are you also hoping to retire on Social Security as well?
Correction
October 31, 2008 - 15:59 ET by Remixer96The Emergency Bailout Bill was neither an investment in infrastructure nor thoroughly scrutinized in public debate. That example, while unfortunate, is not relevant.
I would use the phrase hope, yes. Others would call it good faith that the government will do it's best to serve the people. Others would call it simply a mild trust in the government to do it's job. I don't believe such hope is either laughable or insane.
And no, I have a personal retirement plan. But that's not an investment program either. So again, irrelevant.
The point is...
October 31, 2008 - 16:05 ET by JohnMcGrew...that if congress is incapable of attacking a single task, even in a supposed "emergency", without using it as a vehicle for special interests, then there's nothing that they can do honestly.
Central Planning
October 31, 2008 - 11:15 ET by JohnMcGrewHere's a great example: Ethenol. How has that worked out? Production consumes vast amounts of natural resources, diverts agribusiness from food production causing food costs to rise for consumers globally, consumes just as much in oil as it saves, consumers forced to purchase fuel tainted with it only to get lower mileage, and all at a cost of billions of dollars in taxpayer subsidies.
And you "hope" that the clowns responsible for this will do better with even more control over the economy? I'd laugh if this wasn't so completely obscene.
Rebuttal
October 31, 2008 - 16:04 ET by Remixer96Ethanol is a good example of failure in a government investment program. The complexity of the situation didn't bode well for it to begin with (given international competitors, entrenched markets in non-ethanol spaces, and food supply risks), but it certainly has not been handled as best it could be.
Supporting another investment program is not the same as supporting more government "control over the economy." That would involve supporting akin to the bailout bill, or the expansionary powers the Fed has taken recently, where they are re-writing the rules of Central Banking as they go. Both, again, are irrelevant to the issue at hand of a large government investment in an infrastructure program.
Exacly how is it different?
October 31, 2008 - 16:08 ET by JohnMcGrewCan you name a single "investment" plan undertaken in the last 40 years or so that has not been conducted this way? I'm still waiting for my cheap "shale" oil Carter promised me in '78.
»→ Ethanol
October 31, 2008 - 16:15 ET by Cool ArrowBut ethanol makes Liberals feeeel good about their efforts to be kind to Mother Gaia?
Doesn't ethanol production help Liberals reduce those human eyesores in third world countries in much the same way as the DDT ban is doing its part?
I think Liberals get a two-fer on ethanol production.
Gee, add some new taxes, tariffs and other trade barriers...
October 31, 2008 - 07:17 ET by JohnMcGrew…along with a sprinkling of fascism, and it’ll be 1933 all over again. My grandparents always told me what a rip-roaring good time the depression was. Of course, they lived on a farm, so they weren't as concerned about where their next meal was coming from as I am...
Spending More?
October 31, 2008 - 08:22 ET by MediaMikeIf government spending could save the economy, we'd be doing great. We need companies and people spending more, creating jobs and consuming goods and services. Unfortunately, the bottom line is that we've ALL been spending more money than we have. Adding to the national debt isn't going to help. We're in a recession, and if memory serves me, we usually have one every 10 years or so.
What's the Differance
October 31, 2008 - 10:29 ET by thericoDwayne P. Theriot
Let's see If I got this straight. Krugman wants the goverment to spend money to stinulate the economy because "Americans are not spending money. So Mr. Krugman I ask you, who's money is the government going to spend? Oh Yeah, our money, you know the money none of us want to spend becuase of the slow down. Webster may have to invent some new words to decribe how STUPID these people are. Or how STUPID they think WE are.
Arrrgggh, I really wish
October 31, 2008 - 13:26 ET by dscottArrrgggh, I really wish people would act and draw conclusions from history and knowledge. First off, Mark, regarding your gut check in believing if Krugman and Brooks "agree on anything it is probably wrong". I will agree with that in so far as intuitively you're on the right track for being against PUMP PRIMING ECONOMICS but for the wrong reason.
Pump Priming is based on the faulty notion that government spending or injection of money/liquidity will start the economy rolling when in fact all it does cause a momentary uptick of economic activity IF the underlying reason for the economic downturn isn't addressed. The reason why this notion is faulty is because printed money is nothing more than a place holder which is used to facilitate the trade (economic activity). If there are no trades to be made, no amount of injected money will sustain the economy. What you get instead is pronounced business cycles or extreme highs and lows.
Krugman and Brooks are wrong because they fail to address the cause of the economic downturn, i.e. the price of energy. The market is correcting that price descrepancy via an economic downturn. Now that energy costs are down, economic activity can resume since less money is being withdrawn from the US domestic economy. While retail spending may produce 70% of the economic activity, it is a faulty notion to believe simply spiking consumer spending will bring the economy out of the tail spin. What these two fail to realize is injecting money at this point is totally unnecessary, the price of gas is down thus money is available now for consumer spending. However, this will be short lived IF Congress doesn't get off it's lazy PC butt sets aside the AGW nonsense and start pushing domestic drilling. Every barrel of oil coming from foreign sources is draining needed money for recycling within the economy. The drain reached a tipping point back in 2005 and must be reversed immediately.
Nancy Pelosi and Harry Reid, starving the poor one gallon of ethanol at a time. Fill your tank with E85 and cull a village.
It must be really
October 31, 2008 - 20:59 ET by fitzfongIt must be really frustrating for all those poor blue collar former Times employees who had to lose their jobs in order to keep these two imbeciles on staff.
Brooks & Krugman: Loss Losers.
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -Ronald Reagan
fitzfong.blogspot.com