Voodoo & Bad Medicine From Paul Krugman

Here is a quote from Paul Krugman, Keynesian economist and contributor to the New York Times.

Republicans are feeling good about the midterms — so good that they’ve started saying what they really think. This week the party’s Senate leadership stopped pretending that it cares about deficits, stating explicitly that while we can’t afford to aid the unemployed or prevent mass layoffs of schoolteachers, cost is literally no object when it comes to tax cuts for the affluent.

This quote is deplorable.  The only thing more pathetic than this ludicrous attempt at propping up a deservedly failing Democrat party is the attempt of the Federal Reserve Bank to prop up the house-of-cards economy.

This quote from Krugman is nothing but cheap heat and cheap tricks.  The following is a break down of this quote:

Republicans are feeling good about the midterms — so good that they’ve started saying what they really think.

This leads the sheepish (most likely Democrat) NY Times reader to the assumption that Republicans purposely hide what they think. They do not want to unleash their diabolical plot to the planet.  Why, Mr. Krugman…are you hinting at a conspiracy?  Are you a conspiracy theorist, Mr. Krugman? The irony here goes beyond this silly political posturing.   This tactic is precisely the same kind of thing the leftists complain about from Rush Limbaugh.  Yes, Rush Limbaugh does make a nearly exact comment periodically on his show.  It is the same political posturing. However, when Limbaugh does it, leftists bemoan it. On the other hand, Krugman is a favored intellectual. So, he gets a pass from those who prefer the left wing style of statism instead of the right wing version.

This week the party’s (GOP) Senate leadership stopped pretending that it cares about deficits

This statement is interesting.  Krugman does touch on something here. History has shown that Republicans are just as capable at spending our money in foolish, negligent and unscrupulous ways as Democrats. However, the GOP often claims to be the fiscally responsible party. Thanks for the insight, Mr. Krugman. We lived through George W. Bush’s administration. We have seen these tendencies in the GOP.  Although not talked about frequently by Republicans, Ronald Reagan spent like crazy.  What Krugman conveniently leaves out is the Democrat deficit fetish.  They are the party who claims we can spend our way out of the economic meltdown. They have a high ranking member that advocates spending the earned money of productive taxpayers on subsidies for those unemployed (for 99 weeks or more) and producing nothing.  This high ranking Democrat said that unemployment benefits are the best way to stimulate the economy.  Krugman is merely doing a tap dance move. He is deflecting on behalf of the Democrat party. What he is trying to do here is do a veiled two-wrongs-make-a-right argument. It’s weak.  The truth is both parties have shown in recent times that they are ultra big government spending addicts.  In either case it hurts the economy and eventually reduces the real wealth of Americans.  That said, the current Democrat congress and the Obama administration have gone to spending levels that made all predecessors look frugal.

stating explicitly that while we can’t afford to aid the unemployed or prevent mass layoffs of schoolteachers, cost is literally no object when it comes to tax cuts for the affluent.

Where to begin here?

• It’s true. America can’t afford the subsidies for extended subsidies for the unemployed.  Not only can we not afford them. It is a simply a terrible use of funds. It is bad economics.
• What massive layoffs of teachers? There are no layoffs.  Nor is there any potential for mass layoffs.  There are reports all the time documenting how in major metropolitan areas public schools go decades without firing a single teacher.  In addition, tenure policies ensure the union and teachers alike that any incompetence will be rewarded by the government. The tax paying parent’s of the children who are subject to this system of mediocrity are stuck with the bill.  Not only that, the teacher’s unions have a death grip on the government school system.  Costs per students rise continuously while student performance continually declines.  Regardless, the education budgets always rise. In the unlikely case funds were ever cut from the budget, the school system would surely not cut teacher pay or reduce the out-of-whack pension spending. More likely, decreases in costs would be in areas affecting students, not teachers. Krugman trying  to use this tactic is laughable.
• Like a true Keynesian and progressive liberal, Krugman attacks tax cuts.  Only a self-absorbed central planning collectivist such as Krugman (or maybe someone wrought with class envy) could be so put off by the idea of an individual being able to keep his own money.  Krugman and those like him feel eerily entitled to other people’s money. It’s quite creepy.  They feel as though they have more right to your money than you do. On top of that, even though Krugman has no way of knowing your personal circumstances, feels he knows better what to do with your money than you do. Let’s put aside for the moment that he has gotten nothing right about the current economy including not having a clue the meltdown was coming.  Even if he had a perfect record with regards to economic predictions, theories and decisions, that still wouldn’t entitle him (or anybody) to your money. Nor would it entitle him (or anybody) to decide what to do with your money or assets. This is a peek inside the head of an elitist.
• Krugman, a wealthy man, clearly plays the class envy card.   Limousine liberals are annoying.

Let’s look at another issue regarding the topic of tax cuts.  Just like other “experts” and media pundits Krugman discounts the benefits of tax cuts.  He scoffs at the idea that lowering taxes results in higher tax revenue.  Here’s what Krugman has to say:

Republicans remain committed to deep voodoo, the claim that cutting taxes actually increases revenues. It’s not true, of course. Ronald Reagan said that his tax cuts would reduce deficits, then presided over a near-tripling of federal debt.

Can you see the problem with this statement?  Krugman tries to make a comparison using two things unrelated.   In one breath Krugman is talking about the concept of reduced taxes increasing tax revenues. The next he is talking about reducing deficits. What he leaves out in his example is that Reagan spent massive amounts of money!  It is quite possible to increase revenues and increase debt at the same time.  As in the example of Ronald Reagan, this is accomplished by spending  lots of money, which is precisely what Krugman is a proponent of, after all. Krugman simply does not disprove the idea that tax cuts (letting people have more of their own money) generally result in more tax revenue.

Despite the claims of talking heads and those in the establishment media, time and again tax cuts have shown to increase tax revenues. How could this be?

• Tax cuts allow people and businesses to keep more of their own money.
• This leads to better use of capital (because of healthy incentives to improve one’s life).
• Better use of capital leads to better productivity.
• Better productivity increases profits.
• Increased profit allows more savings and investment of capital
• This further increases in productivity
• This increased productivity leads to a greater supply of goods and more jobs.
• The combination of  increased supply of goods produced at lower costs then leads to lower prices.
• A readily available supply of low priced goods means a higher standard of living and a more prosperous people.
• More prosperous people now have more jobs available to them from these increasingly productive business. These prosperous people can both spend and save more.
• The increase in employment (and thus more money paid in taxable earned wages) and consumer spending lead to higher tax revenues.

Compare this prosperous free market cycle to what Krugman is advocating here.  He is in favor of the federal government confiscating lots of money from productive people’s paychecks and spend it on subsidies, unemployment benefits, teachers and a host of other government programs that net nothing.

Krugman offers nothing of substance in his arguments except anecdotes.  Even then, his anecdotes only show correlation, not causation.  The lengths that Keynesian economists are willing to go to defend their failed policies and the establishment that has a large vested interest in perpetuating these myths  seem to have no limit.

I am growing tired of these pretentious intellectuals firing off smug comments such as these. It is high time that people recognize these cheap tricks from the likes of Paul Krugman, political mouthpieces and economic witch doctors of the establishment media.   They consistently use these type of tactics to lay down false premises and sell their bad medicine.