May 20, 2012
Krugman Dead Wrong!
I read an editorial by Paul Krugman in
the Times-News last Monday which was titled; “Structuralists won't
take no for an answer”. He opened by quoting a paper that appeared
in The American Economic Review in 1939. The gist of the article was
that America's continuing high unemployment problems (remember the
great depression was in it's tenth year) were not amenable to any
quick or easy solutions. The author argued that the problems had deep
“structural” roots that were causing the continuing lack of job
creation. Mr. Krugman then goes on to discredit the article by
pointing out that the structural defects began to quickly be repaired
a few months later when WW II broke out. America began a period of
war preparations that ended up leading to a decades long period of
massive job creation. Thus, according to his views, the problem was
solved. His recommendation to fix our current problems, not
surprisingly, given his rather liberal leanings, to have the
government massively spend in order to stimulate growth and thus
create jobs. He belittles those who worry about our future children
and grandchildren. He argues that we need to spend our energy
worrying about the current generation instead of the future, and
those who do the latter are actually irresponsible!
Mr. Krugman goes on to say that “every
time some self-important politician or pundit starts going on about
how the deficits are a burden on the next generation, remember that
the biggest problem facing young Americans today isn't the future
burden of debt...a burden, by the way, that premature spending cuts
probably makes worse, not better. It is, rather, the lack of jobs,
which is preventing many graduates from getting started on their
working lives.” I almost forgot that he also said that the long
term view by structuralists only serves to inflict pain on today's
workers and the poor.
Is Mr. Krugman blind? Does he not see
that WW II was an incredible tragedy of epic proportions from which
America was the fortunate economic beneficiary. Globally many
millions of human beings lost their lives and even more were left in
deep poverty. America was left in the fortunate aftermath of not
having it's manufacturing capacity negatively affected. We rode the
resulting wave of growth as the rest of the world rebuilt its
manufacturing capabilities for many decades following the war. This
period fostered the improvement in the lives of what was likely the
golden age of all times for the middle class in this country.
So, Mr. Krugman wants us all to forget
the long term and just give the government the authority to create
new stimulus programs because it will, according to him, fix
everything right now. (Do you hear the sound of that can being kicked
down the road again?) Has he conveniently forgotten the stimulus
spending surge that our President led when he was elected? How well
did that work? Others on the progressive side will argue that we
didn't spend nearly enough. How much is enough? What happens if we
take the additional gamble and it doesn't work like it hasn't worked?
Doesn't he see that we have a national debt that is now greater than
our anemically growing GDP? What about our unfunded entitlements that
now dwarf the national debt by at least a factor of seven-fold? Does
he understand that too many of our citizens have also buried
themselves in such personal debt that most can no longer remotely
consider continuing their prior levels of debt financed spending?
Does he see the nearly one trillion dollars in student loan debt that
many of our current citizens have accumulated in an effort to better
prepare for the future? Does he see the situation rapidly unraveling
in Europe? We all know that places like Greece, Italy, Ireland,
Portugal, and Spain are in imminent danger. Most experts think they
put all of Europe at risk? They are all buried under decades of
entitlements that could never have been afforded long term. Don't
forget that European countries collectively are major trading
partners with America. As their economies worsen, how will that
affect our chances of pulling out of our economic malaise? Finally,
he seems to ignore the reality that continuing to borrow, print, and
tax as our only solutions cannot go on forever. Sooner or later we,
as Europe is learning, will have to face the harsh truth that their
are no free lunches. Personally, I vote for facing the truth now, and
for all of us to share in the sacrifices that will be
necessary...rich and poor alike. Mr. Krugman reminds me of the
Ostrich which is known for its proclivity to bury it's head in the
sand in order to deny danger. He's even worse though because he wants
us to bury our heads in the sand too! Obviously some miracle of
technology might open up future job opportunities that I just can't
even imagine, however, as great as miracles are...they are impossible
to forecast. Perhaps I'm just missing his real point which is that we
need another world war to fix everything. Let's hope and pray not!
These are this structuralist's
opinions. What do you think?
Mike Tower
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