Paul Krugman,Pogo Redux

Paul Krugman, who spent most of this decade predicting a great depression wrote in the morning's Bee - "For avoiding a new Great Depression, thank government." He trumpets "seems like we're not going to have a second Great Depression afterall. What saved us, ? The answer, basically, is big government." Yeah, right.

Krugman compares our situation in the 1930s with today. He suggests that prices and the markets did not fall as far as they did in the 1930s and that "trend lines" then just kept falling. His history here is a bit off. First, contrary to the narrative of many historians of the 1930s, even during the time of Hoover, government did not do nothing. Indeed a lot of the changes that FDR used to confront the downturn were in place before FDR came into office. More importantly, the evidence of the 1930s suggests that despite a massive infusion of governmental activity as a result of the New Deal, the economy sputtered throughout the 1930s and did not begin to recover until WWII (or in a more realistic scenario after WWII). Stimulus packages never seem to come out the way supporters suggest they will.

Krugman estimates that the stimulus package has created a million jobs or at least saved that many. How does he come up with that number? Has he bothered to look at the statistics on economic growth in the states. There is a direct and negative correlation between state's tax rates and their rate of economic growth. Why has California lost manufacturing jobs to states like Arizona and Nevada - and what consequences does that have for the long term economic well being of residents? I guess Mr. Krugman doesn't bother to look at such things.

Krugman argues that the results of the massive infusion of cash (which some estimate in multiples of our GDP) was not enough. If some infusion is good, then lots more must be better. Evidently he does not believe that the trillions of adjustment monies started under W will have any adverse effects. Is there a realistic possibility that a) the injection of all this liquidity will cause some significant inflation down the line? Evidently Krugman is unconcerned. Most other economists suggest that will be the result we should expect. But Krugman continues to believe that there is such a thing as a free lunch, as long as it is government subsidized. Has he ever wondered where all those government dollars come from. As Pogo said, "I have met the enemy and he is us."