Economics, Evidence and Enlightenment
By Randall Hoven
With today’s economy, wouldn’t it be nice if we knew how to make an economy grow? To know what works and what doesn’t? Well, we do. We just prefer to ignore the truth.

What works is economic freedom. What doesn’t work is more government.

I’m sorry that those words sound simplistic and like Republican “ideology” (or at least what used to be Republican ideology – before the Bailout Fairy arrived). But they have the benefit of being true. If you were to start from scratch, ignoring all ideology and going simply by the evidence of what produces prosperity, you would come to that conclusion: more freedom and less government lead to greater wealth and prosperity.

It’s not the ideology. It’s the evidence.

Unfortunately, we are ignoring the evidence and rushing headlong in the wrong direction. Alec Baldwin and others threatened to move to France when George W. Bush became President. They didn’t need to. France moved here.

Exhibit A is a thorough study of what works and what doesn’t, conducted over 200 years ago, by Adam Smith. He examined the economies at the time and through history and came to the following conclusion.

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”

The government need not “manage” the economy, but just stay pretty much out of the way, beyond securing “life, liberty and property.”

Exhibit B is the Heritage Foundation’s Index of Economic Freedom. Every year the data support Adam Smith’s conclusion: more economic freedom yields more prosperity, where economic freedom means secure property rights and limited government in terms of size and control of the economy.

“Previous editions of the Index have confirmed the tangible benefits of living in freer societies. Not only are the higher levels of economic freedom associated with higher per capita incomes and higher GDP growth rates, but those higher growth rates seem to create a virtuous cycle, triggering further improvements in economic freedom.”

The average GDP per capita of those considered “Free” was $40,253, about 10 times greater than those considered “Mostly Unfree” ($4,359) or “Repressed” ($3,926). There is strong and undeniable statistical correlation between economic freedom (as scored by the Heritage Foundation) and GDP per capita. And it shows up year after year.

Exhibit C is the case of Presidents Reagan and Mitterrand. Reagan was President of the US from 1981 to 1989 and was considered a very right-wing, free-market zealot. Mitterrand was President of France from 1981 to 1995 and was a socialist, the first socialist president of France. This would be an apples-to-apples comparison of free-market vs. socialist governance. How did that work out?

France was behind the US in 1980 and would fall further behind it in the following years. In 1980, France’s GDP per capita was 84% that of the US. By 1989 it was down to 79% and by 1995 it was 78%. (For the various international comparisons throughout this article, see the US Statistical Abstract.) In 2006, the latest year for which data is available, it was just 74%. All that wonderful socialism in France just set it back further and further from the US.

Exhibit D is Japan. Remember the Japanese miracle? From 1960 to 1991 its GDP per capita grew from 37% of the US’s to 86%. It was closing in on us! By 1991 we were all afraid that the Japanese would outpace us in computer chips, high definition televisions, artificial intelligence, automobiles and overall economic growth. It would buy up all the US assets worth having and we would soon all be working for Japanese bosses.

At that point, 1991, the Japanese government spent just 31.6% of its GDP, lower than that of any European country, Canada or the US. The US was spending 37.8%. The “small government” US had an even smaller government competitor, and it was eating our lunch. Only the US, West Germany and Norway were richer than Japan at that time (GDP per capita).

But then Japan did us a great favor. It decided to grow its government. By 1996 its government was bigger than the US’s as a fraction of GDP, and would remain so through 2005. In 2000 its government was bigger than that of Australia, Ireland, Luxembourg, Switzerland and the United Kingdom. It had definitely lost its “smallest government” title.

How did that work out for Japan? Its GDP per capita went from 86% that of the US to just 73% by 1995. It had fallen behind Canada, Australia, Austria, Belgium, Denmark, France, the Netherlands, Sweden and the United Kingdom by that same measure.

Exhibit E involves Japan again, but this piece of evidence is very relevant to today — it has to do with economic stimuli. As described by Benjamin Powell at the Ludwig von Mises Institute in 2002:

“Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen and cut income tax rates during 1994. In January 1998, Japan temporarily cut taxes again by 2 trillion yen. Then, in April of that year, the government unveiled a fiscal stimulus package worth more than 16.7 trillion yen, almost half of which was for public works. Again, in November 1998, another fiscal stimulus package worth 23.9 trillion yen was announced. A year later (November 1999), yet another fiscal stimulus package of 18 trillion yen was tried. Finally, in October 2000, Japan announced yet another fiscal stimulus package of 11 trillion yen. Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen.”

Sound familiar? Yet from 1991 to 2006 Japan’s economy grew slower than that of any of the other 16 countries listed in the US Statistical Abstract for comparison – even slower than Italy’s. Over those 16 years its GDP per capita grew just 16%. That of its Asian counterpart, South Korea, grew 94% in that same period. The US, Canada and most European countries grew at least twice as fast. And today Japan’s government debt is 182% of its GDP, by far the highest of any developed country .

Economic stimuli work — if what you want to grow is debt rather than real GDP.

Exhibit F is Ireland. In 1987, Ireland’s government was 52% of its GDP, a higher fraction than even that of France at the time (51.9%). But by 1998 it was only 34.5% — lower than that of the US or any other European country. It had cut income taxes across the board. Its top corporate tax rate was the lowest of all OECD countries by 2003.

How did that work for Ireland? From 1990 to 2000, its per capita real GDP grew 86%. By comparison, the US’s grew just 26% in that period. France’s grew just 12%. In 1980, Ireland’s GDP per capita was just 61% of France’s, but by 1998 it had overtaken France and by 2000 it was 118% of France’s.

Exhibit G is Sweden. In 1993, Sweden took the prize for big government. It spent 71% of GDP at a time when even France was spending less than 55%. By 2007 Sweden’s spending was trimmed to 51% of GDP. Still not a small government by any means, but smaller than France’s, at 52%.

Over that time, 1993 to 2006, its real GDP per capita grew 42% compared to France’s 24%. As its government shrank below France’s, it’s GDP per capita swelled above it — from 94% of France’s to 108%. Sweden cut its government burden and saw its economy take off.

Exhibit H is communism. The idea that an economy can be managed from top to bottom has been tried — multiple times. It never worked. Not in Russia. Not in China. Not in Cambodia. Not in Cuba. Not in North Korea. Not in Zimbabwe. Not anywhere. The results were widespread poverty, famine and war. The death count due to communism likely exceeds 100 million.

Exhibit I is US history. The US grew from a British colony to the richest and most powerful country on earth. It was founded on the very principle of freedom. After slavery was ended, the US had about as close to a truly laissez-faire free market as ever existed. During that time it enjoyed about 40 years of 4% real GDP growth per year (quintupling the size of the real economy) and absorbed millions of immigrants looking for freedom and opportunity, all while expanding westward and inventing or employing new technologies from steam engines to electricity, automobiles and airplanes.

In 1913 the US Constitution was changed to allow a federal income tax and the Federal Reserve System was established. Sixteen years later came the Great Depression. President Hoover at the time did almost everything counter to free-market principles: he raised taxes, increased federal spending, restricted free trade and encouraged faulty monetary policy.

President Roosevelt did much more of mostly the same: more federal spending, more regulation, more monetary manipulation. By the end of it, Henry Morgenthau Jr., close friend of FDR, FDR’s Treasury Secretary and architect of the New Deal said this:

“We have tried spending money. We are spending more than we have ever spent before and it does not work… We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot!”

Federal spending went from 3.4% of GDP in 1930 to 10.7% in 1934 — more than a tripling of such spending in only four years — and it would remain at those elevated levels throughout the Depression. Yet the unemployment rate went above 10% in 1930 and would stay above that level until February of 1941; it was as high as 20% as late as 1938.

Exhibits J-Z. We could go on with country after country, era after era. Whether we are talking the extremes of all countries on the planet (e.g., Australia vs. Zimbabwe) or relatively small differences (e.g., Sweden vs. France), or whether we are talking 200 years ago (e.g. Adam Smith), 100 years ago (the US vs. Europe) or the last 20 years, the evidence always leads to the same conclusion: that government is best which governs least.

There might be some point at which government is too small, where anarchy or tribal behavior might destroy such things as secure property rights, life and liberty. But with government in the developed world averaging over 40% of GDP, we are nowhere near such a point. In fact, our problem is the opposite: where the government itself becomes the thief, rather than the protector of property and individual rights.

Learning Lessons. Europe seemed to take such lessons to heart. The examples of Ireland and Sweden, above, are standouts, but not alone. From 1993 to 2007, Sweden cut its government spending by over 19% of GDP. Canada, Finland, Norway and Spain all cut theirs by at least 10%. The Euro area average cut was 6% of GDP.

How much did the US cut in that period? One half of one percent (0.5%). Portugal was the only country of the 28 listed to cut less — 0.3%. And Japan and South Korea were the only ones to grow government in that time period, but still came in under the US in government spending as a fraction of GDP, since they started so low.

Government in the US (federal, state and local) in 2007 spent a larger fraction of GDP than did Australia, Ireland, Japan, Slovakia, South Korea and Switzerland (among 28 listed countries). In the Heritage Foundation’s latest Index, the US ranks only 6th, below Hong Kong, Singapore, Australia, Ireland and New Zealand, and its score is falling. Our score was 80.7, with Canada breathing down our neck at 80.5.

And that was before the trillion-dollar bailout Bacchanalian debacle.

In short, the US is rapidly losing its standing as the free-market, limited-government leader of the world. While Europe was shrinking its government, the US stood pat. The US is becoming just another European country — a high-tax, welfare state with a large public sector and rigid work rules.

Unless President Obama governs counter to all his promises, campaign commercials and supporters’ wishes, he will only accelerate this trend, not reverse it.

We already overtook Australia, Ireland and Switzerland by 2007. We’ll soon overtake Canada, Spain, Luxembourg and the OECD average. Maybe with our trillion dollar bailouts and stimuli, we already did.

All through this time we have been lied to.

* The media called it “laissez-faire capitalism” as the government continued to eat over one third of the economy and regulated us at the equivalent of over 30 New Deals as measured by pages of the Federal Register.
* The media called President Bush a free-market extremist, while he increased federal spending from 18.4% of GDP in 2000 to 20.4% in 2006, added prescription coverage to Medicare, teamed up with Ted Kennedy to expand federal spending on education, subsidized ethanol, etc..
* The media fed the lie that out-of-control imperialism and warfare increased our defense spending to irresponsible and unsustainable levels. Yet defense spending rose from an historically low 3% of GDP in 2000 to a still-low 4% of GDP as we fought wars in both Iraq and Afghanistan, a level lower than the country experienced for over 50 years, from 1941 to 1994.

The electorate swallowed those lies and elected a man with just 11 years total experience in elective office, only 3 years at the national level, zero military experience and zero executive experience, but the most liberal voting record in the US Senate in 2007.

The conclusion I come to is a sad one: the US is no more.

At least not the US of freedom, free markets and limited government. Just when we should be reinvigorating the US brand of freedom as it had been known for generations, we are accelerating in the exactly opposite direction: salvation through government programs.

Imitating North Korea, Zimbabwe or even France is one way to get “change.” Just not the change I was hoping for.

TLDR.

No video at work. Who got pwn3d and by whom?

Would someone kindly remove this turd?

“No video at work. Who got pwn3d and by whom?”

Paul Krugman smacking down Joe Scarborough

Imitating North Korea, Zimbabwe or

Blartsville, Blartington, Blart City, Blartonapolis, Blarton, Blartland, Blartway, Blartia, Blart’oS, Blartula, Blartus, or Blartellia.

Here’s a hint, wingnuts: Message control. Comparing anything happening in the US right now with North Korea is patently ridiculous.

Wow! It can cut’n’paste! How impressive is that!

And by the way, the esteemed writer above, Randall Hoven, is one of our fine-feathered friends over at American Thinker. So, y’know, epic fail.

I love Krugman not only because he actually knows what he’s talking about, but because he stays calm when idiots like Buchanan are literally screaming at the top of their lungs.

I imagine Buchanan is the kind of guy who screams at deaf people and non-English speakers thinking that if he just gets loud enough, they’ll understand him.

The esteemed Mr. Hoven also claims that we Iraq did too have WMD, so there! Fooled you all!

Oh, take out that extra “we.

1 – nice cut and paste –

2 – per the Google – Mr Hoven worked at McDonald Douglas and then Boeing (which bought MDD) compies that both screamed like banshees whenever the govement tit was removed from their mouths. So his own personal exprience with the free market is pretty much nill.

3 – as my late mother once said to me when I was being especially anoying about some point “you’re wrong and you’re stupid”.

I’ll bet Scarboy was so mad at this smackdown that he remembered that one time when that woman who worked in his office was said to have died by falling backwards into a desk so hard it split her head open by a medical examiner who had his license taken away from faking evidence in an autopsy.

And of course, now is the time we should listen to “small government” libertarian idiots. Libertarian market fundamentalists are always the most insightful, objective, sober people to listen to.

Just saw the clip. Pat was hilarious….what was wrong with what we did in the 20s, huh? HUH?. Yeah, good luck selling that.

D. N. Nation: Well, Pat was so happy with what happened in Spain in the late 1930s that he wouldn’t dare change a thing.

Gotta love Scarborough. One minute he’s accusing Democrats of hating America, the next minute (literally), he’s whining about partisanship.

Suck my shrill, bitches!

Classic Scarborough: “My ideal is ME!” That’s getting into Ultimate Warrior territory.

I can’t fucking stand that Mika woman. Also, Krugman forgot to mention that Clinton’s economic plan that worked out so well passed without a single repug vote (obviously before the repugs took the majority.). How is that bipartisan? I guess the scar “forgot” about that. Maybe he was strangling his aide on that day.

I love Krugman, he’s a personal hero of mine.

But did anyone else notice how rarely he blinks?

I swear that Republicans would rather the US turn into the 3rd world in a year than have one penny of their tax dollars go to feed a hungry child today. It’s why they can’t see the sense of what Perlstein’s saying. They are too emotional about money. It’s creepy.

Oh, above reference is to Steve Perlstein’s article which someone posted in some thread… today… or something. Read it. It’s good.

Joe Scabrous is a voice for stupid people.

But did anyone else notice how rarely he blinks?

Liberals: funny-looking. As with movies in which the villian is deformed or fat, this is revealing of Krugman’s essential perversion.

I underestimated just how selfish, vulgar and stupid people were capable of being. Please disregard everything I’ve ever written or said.

Boy do I look foolish and naive.

XOXOXO

Ayn

I’m not saying he’s funny looking. I just think it is unusual. Is it that he is that focused? Or that his brain clockwork doesn’t not require all the blinking that normal brains require? I always noticed it, but couldn’t put my finger on what it was…

I’m not saying he’s funny looking.

I said it! Curse you liberal freaks!

If only liberals were as telegenic as Karl Rove.

“But did anyone else notice how rarely he blinks?”

Paul Krugman is a meerkat.

http://www.wildanimalsonline.com/mammals/meerkat.php

Trust me on this.

I think he’s cute as a button.

And Jesus Mary Joseph, LEARN TO LINK, asshole.

Who knew that meerkats were so prescient?

That’s because all of his blinks got used up by Dan Quayle. Have you ever seen him on camera? It looks like he’s trying to fly with his eyelashes.

Asshole? Moi?

I like Krugman, I like meerkats. Even dead Objectivists can have a sense of humor.

What works is economic freedom.

We tried that.

Mind if someone else drives the bus after thirty years of boring dogma?

“But did anyone else notice how rarely he blinks?”

I did. And, now that you mention it, it reminds me of something Anthony Hopkins said about playing Hannibal Lecter. He said something like, “One thing about psychotics is, they rarely blink. So I made sure blink as little as possible when playing a scene.”

Just a coincidence. Move along.

Exhibit G is Sweden. In 1993, Sweden took the prize for big government. It spent 71% of GDP at a time when even France was spending less than 55%. By 2007 Sweden’s spending was trimmed to 51% of GDP. Still not a small government by any means, but smaller than France’s, at 52%.

Over that time, 1993 to 2006, its real GDP per capita grew 42% compared to France’s 24%. As its government shrank below France’s, it’s GDP per capita swelled above it — from 94% of France’s to 108%. Sweden cut its government burden and saw its economy take off.

LESSON FOR AMERICA

Spend just over half your GDP on your people, and your economy will boom!

Thank you for supporting the liberal position.

Dr. Krugman, please get some coaching on how to make successful TV appearances.

Your have a habit of ‘cocking’ your head to listen that gives your face an odd scrunched look on the screen. I think a coach could help you to project your ideas. A TV studio is not the place for quiet conversation.

Also, If you could also sit up a little straighter taht would be peachy.

If only liberals were as telegenic as Karl Rove.

If only liberals were as svelte as Rush Limbaugh.

Professor James Moriarty was also someone who reportedly never blinked much. Or am I mixing him up with Anne of Green Gables? I always get those two confused…

As for the greater subject at hand: If Obama decides to get serious in doing something about the deplorable state of the “liberal” media – I know, I know; but I’m playing a game of “What If?” here – then he could do worse than open an investigation into the death of the woman found in Scraborough’s office. Make it nice and public, with an extremely long prison sentence if a certain ranting-and-raving someone is found to be, oh, guilty in any way…

Or should we advocate for the death penalty in such a case? Musn’t coddle murderers and criminals with our namby-pamby, faggy liberal ways, after all.

“One thing about psychotics is, they rarely blink. So I made sure blink as little as possible when playing a scene.”

In all fairness to Krugman, it seems that being one of the only sane economists in the world might drive one a little bonkers.

“In all fairness to Krugman, it seems that being one of the only sane economists in the world might drive one a little bonkers.”

or he’s just unflappable.

I’ve always like that word

I loved it. Krugman very calmly and knowingly made Scabro and Pitty-Pat look like the gasbag know-nothings they are. And why are those jackasses ALWAYS SCREAMING? And what was with Scabro’s donning the glasses, tryin’ to look all intelligent-like and shit with the Nobel guy on there! Yeesh. Kill your Television Sets! Now! NOW!!!!!

Krugman’s finest hour. He fends off Mika, Joe, and Pat. Three against one and he friggin’ won.

Krugman belongs on the pundit version of this list.

Over the course of 100 days, Hayha killed 542 people with his rifle. He took out another 150 or so with his SMG, sending his credited kill-count up to 705.

NB: You can get rid of that line of text underneath the Mighty Sorry, No Body Cares video.

No free advertising!!

It’s a lot like three morons with a junior high school education arguing with a genius with advanced degrees and a Nobel Prize. Oh wait. Seriously, it’s embarrassing watching those three doing variations on, “I’m an idiot, but boy can I yell loud.”

I reckon that having to talk to Joey the S and his merry band would be the same as a shot of botox to the eyes. Thus, no blinking.

Everybody wants to talk about the 1930’s but none of them want to talk about those wars. What did Iraq and Afghanistan do, help to balance the budget?

I don’t have the TV so could somebody tell me, is this the lieberal MSM I hear so much about?

Aside from the absolutely naked Republicanosity, they suck at the concept.

“Hunh, hunh, what about that, Mr. Pointy-headed Professor Man?”

And Scarface with his ‘constitutional separation of powers’? R vs D in the House of Representin’ is constitutional separation of powers? I’m my own ideal fo’ shizzle.

Why are these people on TV? Really. Why?

When someone cites the Heritage Foundation and the Ludwig von Mises Institute, I know I’m dealing with the top tier of right-wing thinkers. Of course, right-wing think tanks are a lot like septic tanks: the really big chunks always float to the top.

What works is economic freedom.

The only kind of economic freedom we haven’t yet tried is freedom from economic fear.
So, you’re expected to put your shoulder to the wheel while we give that a shot.

Re: psychotics don’t blink as much.

Liars blink more often.

Joe: Oh Krugman, I sure do wish you’d come down to the studio. Me an’ Pat and Mika could talk with you for hours.

Paul: Uh… yeah. Yeah, I’ll be doing that.

Shorter REALLY: We represent the Lollipop Guild.

ha, watch til the end. Joe got pwned so hard he wanted more.

also yay trolls.

I love the way Krugman just wasn’t having any of it when America’s Racist Uncle started fellating zombie Reagan… and he accomplished it all without raising his voice once.

Also, Krugman’s actually pretty handsome, in an “East Coast Intellectual” way, and I am a str8 d00d.

Paul Krugman is my hero. Unflappable, unafraid. He could have delivered a smackdown to Scarborough the way Mika’s Daddy did the other week, but he didn’t really have to, because plain, calm talk was enough. (Unless you are insane, but then very little works.)

The only thing I can say about the infrequent blinking is that I bet he doesn’t have to wear contact lenses, lucky man.

B4: That he is. And I’m a str8 d00dette from teh Southland.

hi larkspur!

Yes indeedy, Krugman is hot. You can always tell the guys and gals who know their stuff by the way they totally don’t play along with the TV screaming meemies’ exercises in narcissism.

Funny how Joe glossed over the fact that Clinton years disproved the tax-effect on economy. He rather tried to pin the 90s boom on the “bi-partisanship”, rather than actually having a vibrant economic boom and truly sound market fundamentals.

I agree and I like Krugman to. But i think he did not really answer Pat Buchanan’s question, which i thought was a good one, but which did not really express it the way I would have:

Under George W. Bush, we spent billions, no hundreds of bilions on the Iraq War. Now why should we spend hundreds of billions more of tax dollars when after spending hundreds of billions of dollars on a (useless and illegal war) didn’t stop us from getting into this mess?

Now why should we spend hundreds of billions more of tax dollars when after spending hundreds of billions of dollars on a (useless and illegal war) didn’t stop us from getting into this mess?

History will look at us and ask, “Why did they spend $800 billion in Iraq on 23 million people, and then let their own people starve?”

Krugman to Scarborough: “You’ve got a mythical idea of what a modern conservative is.”

Damn straight.

Beautiful. K-Man didn’t even break a sweat pwning these puds … LOL, they should’ve brought more idjits.

Bonus points for Teh Scar calling his ex-hero Bush a disaster. Good timing on that one, head-crusher – your Kommisar Kookies are in the mail.

Under George W. Bush, we spent billions, no hundreds of bilions on the Iraq War. Now why should we spend hundreds of billions more of tax dollars when after spending hundreds of billions of dollars on a (useless and illegal war) didn’t stop us from getting into this mess?

Money to kill & destroy versus money to save & build = bad analogy. That’s like saying you’ve got a broken-off knife-blade lodged in your lung, so how can anyone possibly justify using another blade (a scalpel) on your poor maimed body?

More jobs means more tax-input means America’s debt & deficit go down sooner means credit opens up means a faster recovery. I’m more or less an economics-autistic, & even MY brain gets that.

Puke-Cannon knows this but is too busy admiring the panoramic view of his own colon to find out what the “Logical Consistency” button on his brain-box is there for.

Isn’t it odd how that GOP “the clock is running” meme magically died as of circa November 5th? Problem is, it’s not really stopped at all – & the longer this goes on without a functional response, the more that sweeping second-hand starts to resemble a guillotine-blade. Feedback’s funny that way.

“Money to kill & destroy versus money to save & build = bad analogy. That’s like saying you’ve got a broken-off knife-blade lodged in your lung, so how can anyone possibly justify using another blade (a scalpel) on your poor maimed body?

“More jobs means more tax-input means America’s debt & deficit go down sooner means credit opens up means a faster recovery. I’m more or less an economics-autistic, & even MY brain gets that.”

Not so fast. I’m not trying to be obtuse. I have a legitimate question. The argument for the stimulus bill is that it doesn’t matter what the money is used for, we have to spend the money. If that’s true, it should’;t make any difference if the money is used for guns or butter. You dismissal of the question as a “bad analogy” doesn’t answer the question and as much as I want to believe Krugman, his answer is not enough either. Scarborough and Buchanan and their ilk are too enslaved to their limited world views to ask the question in an informative way.

The argument for the stimulus bill is that it doesn’t matter what the money is used for, we have to spend the money. If that’s true, it shouldn’t make any difference if the money is used for guns or butter.

The argument for the stimulus bill is that the economy needs stimulation.

For the second part, it’s not just throwing money around that’s good: it could all be sent to China as one option, or spent on Twinkies, or used to build hospitals. Something like the last thing – a permanent thing of value – is a much more efficient use of the money: you have temporary boosts in employment in areas that need it, and long-term value and employment when the boost ends.

There’s an extent to which spending on defense is indeed a subsidy to the American economy. I’m not Paul Krugman but I think there are more efficient subsidies and I’ll bet he’d say the same: a $100,000 missile might possibly be entirely American-made, but it gets blowed up whereas the money might have gone into a road or a water-treatment plant instead.

Only one crit for Krugman – really wish he would point out that Clinton created the surplus by *defeating* the Republicans in his second term. They wanted to use the extra money as an excuse to cut taxes; Clinton wanted the money to keep rolling in and be saved for a rainy day.

So the GOP sent him a spending bill with tax cuts, and he vetoed it. They fought him to the point of shutting down the government ’cause it didn’t have spending; Clinton just pushed back until the polls against the GOP caused them to crumble.

To my mind, that means Clinton and Democratic policies won, not some theoretical mixture of both.

That said, kudos to every other bit of Krugman’s performance. Smoothly blocking and countering those jabs like a black belt among sixth graders.

The argument for the stimulus bill is that it doesn’t matter what the money is used for, we have to spend the money. If that’s true, it should’;t make any difference if the money is used for guns or butter.

The main concern is not just getting money into the economy, or Capitol Hill would take up a collection and dump it into the Potomac. There is also the conern of who is getting money – because guns have been in power more or less without interruption since 1963, handing more money to guns is just going to inflate an already-robust profit margin in a sector whose distribution of wealth has already been fixed such that a rising tide will lift only the boats they like.

Spending being on guns or butter would be true in the 30s, before the defense industry got to be an enormous & largely hermetic body, saturated with the rich and powerful and with zero or less intrusion from third parties. Unfortunately, now that isn’t the case – and as a result, military spending is going to have a low multiplier, draining out of the economy VERY quickly and with that which remains largely being saved rather than kept moving.

America hasn’t had systematic spending on butter for twenty years; while I’m a little leery of food stamps in that (what with their being cards and all) they tend to favor established mega-marts, in general giving people money to spend on basic necessities is going to result in that money (a) being near-exclusively spent immediately and (b) remaining within the economy at least until it is respent, and likely for longer than that.

It’s that type of explanation that I find missing. I have studied basic economics in college and I understand the concepts of deficit spending and multipliers but large parts of the public don’t. It’s difficult for anyone to separate what is “pork” spending and what is a legitimate stimulus that will get the economy going again.

The problem with Bush’s policies of tax cuts + wars wasn’t really the resulting deficit, except in that the huge deficit left us with no room to turn around now. The “bipartisans” would still bleat about the deficit but it would be much easier to dismiss them if we didn’t have a massive mtn of current debt.

I think. I am not a licensed economist.

And that’s what Krugman failed to make clear, I believe; but he had limited time and almost limitless stupidity to deal with.

Uh, Jim, would that be the paper surplus that never existed? The national debt continued to climb even after the so-called Balanced Budget.

Clinton had the benefit of the PC and Internet boom of the mid- to late-90s goosing the ecomony. It wasn’t because of his brilliant policies. He, like most Presidents (Kennedy–Bush 43), was an underachiever. I’m sure Obama will be no different.

PS: The US does not and has not had unregulated markets, we have a highly regulated market and we have for more than a century. Try starting a bank and then tell me how easy it is because the market is so free.

…economy…

dammit, I hit the button too fast.