Saturday, November 9, 2013
My letter to the NY Times re: Krugman's economics of capital consumption
Re: The Mutilated Economy, by Paul Krugman
Paul Krugman's economics can be summarized as simply a childish desire to consume capital. Once viewed in this light, one may understand how little Krugman really has to say about economics. He is like the child who sees money in his daddy's wallet and demands that it be spent on toys and ice cream. His consistent demands for money printing by the Fed to support government's wasteful spending on make work projects assures us that those employed, even if temporarily, will be better off in the long run, because...well, Krugman never presents a theory that would explain how either money printing or make work spending are beneficial. He just assures us that they are. Perhaps he should consult the Japanese with their bullet trains to nowhere and the Spanish with their empty and crumbling superhighways.
Krugman displays monumental cognitive dissonance in failing to reconcile his view of an economy still in doldrums after five years with his demand that governments double down on their very Krugman-like policies of money printing and deficit spending. He tops off his latest column with the completely fallacious and discredited sophism that we need not worry about debt because "we owe it to ourselves"! If this is the case, Paul, then please lend me one million dollars, which I will never repay, of course. But don't be alarmed, you and I owe it to ourselves.
Here's my advice to the owners and editors of the New York Times--get new economic columnists. Your current crop haven't a clue about real economic theory, Austrian economic theory. Thursday's OpEd by Mr. Jared Bernstein and Mr. Dean Baker, titled "Taking Aim at the Wrong Deficit" is a case in point. It is nothing more than a hodgepodge of money manipulations that supposedly will move their favorite economic indicator, the trade deficit, into credit rather than debit territory. Their theory, such as it is, is that prosperity can be achieved through money manipulation. This is probably the greatest economic fallacy of the modern era. Austrian economists know, through proper theory, that money is as much a product of the market as any other economic good. Its manipulation will result in economic dislocations, and the more the manipulations the greater the dislocations.